Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program), 39360-39366 [2023-12977]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 88, Number 116 (Friday, June 16, 2023)]
[Rules and Regulations]
[Pages 39360-39366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12977]


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DEPARTMENT OF EDUCATION

34 CFR Parts 600, 674, 682, and 685


Federal Student Aid Programs (Student Assistance General 
Provisions, Federal Perkins Loan Program, Federal Family Education Loan 
Program, and William D. Ford Federal Direct Loan Program)

AGENCY: Office of Postsecondary Education, Department of Education (the 
Department).

ACTION: Updated waivers and modifications of statutory and regulatory 
provisions.

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SUMMARY: The Secretary is issuing updated waivers and modifications of 
statutory and regulatory provisions governing the Federal student 
financial aid programs under the authority of the Higher Education 
Relief Opportunities for Students Act of 2003 (HEROES Act). The waivers 
and modifications in this document apply only to the national emergency 
declared in regard to the coronavirus disease 2019 (COVID-19) pandemic. 
With the termination of the COVID-19 national emergency, effective 
April 10, 2023, each waiver and modification identified in this 
document expires at the end of the award year that ends on June 30, 
2023, unless otherwise noted in this document or unless it is otherwise 
extended by the Secretary in a document published in the Federal 
Register. HEROES Act waivers and modifications included in earlier 
documents sunset in accordance with the timeframes provided in those 
documents.

DATES: Effective June 16, 2023.

FOR FURTHER INFORMATION CONTACT: Vanessa Freeman, by telephone: (202) 
987-1336 or by email: [email protected].
    If you are deaf, hard of hearing, or have a speech disability and 
wish to access telecommunications relay services, please dial 7-1-1.

SUPPLEMENTARY INFORMATION: On December 11, 2020, the Secretary 
published a document in the Federal

[[Page 39361]]

Register announcing waivers and modifications of statutory and 
regulatory requirements governing the Federal student financial aid 
programs under the authority of the HEROES Act (20 U.S.C. 1098bb(a)(2)) 
in response to the COVID-19 national emergency. (85 FR 79856). On 
January 19, 2021, the Secretary published a notice correcting the date 
through which some of the waivers and modifications included in the 
prior document were extended. (86 FR 5008). The Secretary is issuing 
this document to provide updated waivers and modifications under the 
HEROES Act and to provide notice of their expiration date in connection 
with the termination of the COVID-19 national emergency.
    The HEROES Act authorizes the Secretary to waive or modify any 
statutory or regulatory provision applicable to the Federal student 
financial assistance programs under title IV of the Higher Education 
Act of 1965, as amended (HEA) 20 U.S.C. 1070 et seq., as the Secretary 
deems necessary in connection with a war or other military operation or 
national emergency. Such waivers or modifications may be provided to 
affected individuals who are recipients of Federal student financial 
assistance under title IV of the HEA, institutions of higher education 
(IHEs), eligible lenders, guaranty agencies (GAs), and other entities 
participating in the Federal student financial assistance programs 
under title IV of the HEA that are located in areas declared disaster 
areas by any Federal, State, or local official in connection with a 
national emergency, or whose operations are significantly affected by 
such a disaster. These entities may be granted temporary relief from 
requirements that are rendered infeasible or unreasonable by a national 
emergency, including due diligence requirements and reporting 
deadlines.
    Under 20 U.S.C. 1098bb(b)(1), section 437 of the General Education 
Provisions Act (20 U.S.C. 1232) and section 553 of the Administrative 
Procedure Act (5 U.S.C. 553) do not apply to the contents of this 
document.
    On March 13, 2020, by Proclamation 9994, the President declared a 
national emergency concerning the COVID-19 pandemic, which was extended 
on February 24, 2021 (86 FR 11599), and February 18, 2022 (87 FR 
10289). On February 10, 2023, President Biden announced his intention 
to terminate the COVID-19 national emergency. (88 FR 9385). On April 
10, 2023, the President signed H.J. Res. 7 into law, which terminates 
this national emergency. The waivers and modifications provided in this 
document apply only to the declared COVID-19 national emergency. Prior 
waivers granted by the Secretary under the HEROES Act remain in effect 
for affected individuals, as defined in those waivers.
    The terms ``institution of higher education'' and ``institution of 
higher education for purposes of title IV programs'' (IHE) used in this 
document are defined in sections 101 and 102 of the HEA.
    In 20 U.S.C. 1098ee, the HEROES Act provides definitions critical 
to determining whether a person is an ``affected individual'' under the 
Act and, if so, which waivers and modifications apply to the affected 
individual. However, because these definitions do not include the 
specific circumstances under which these waivers and modifications are 
provided under the HEROES Act, we provide these definitions below.
    For purposes of this document, ``affected individual'' means a 
student enrolled in an institution of higher education. An ``affected 
borrower'' is one whose Federal student loans provided under title IV 
are in repayment. These definitions are in keeping with 20 U.S.C. 
1098bb(a)(2), which establishes that statutory and regulatory 
provisions can be waived or modified ``as necessary to ensure that 
recipients of student financial assistance under title IV of the HEA 
who are affected individuals are not placed in a worse position 
financially in relation to that financial assistance because of their 
status as affected individuals.'' The statute also authorizes the 
Secretary to minimize administrative requirements placed on affected 
individuals who are recipients of student financial assistance to the 
extent possible without impairing the integrity of the student 
financial assistance programs, to ease the burden on such individuals 
and avoid inadvertent technical violations or defaults.
    In accordance with the HEROES Act and the national emergency that 
was declared by the President on March 13, 2020, and subsequently 
extended on February 24, 2021, and February 18, 2022, the Secretary is 
publishing the following waivers and modifications of statutory and 
regulatory provisions applicable to the student assistance general 
provisions and student financial assistance programs under title IV of 
the HEA that the Secretary deems necessary in connection with the 
COVID-19 national emergency. Each provision is discussed further below:
     IHEs are permitted to waive the requirement for a parental 
signature in the event that it cannot be obtained, or to accept a 
document signed and photographed and sent by email or text message 
attachment, on any verification documentation required to validate a 
student's title IV eligibility.
     Borrowers with loans under the Federal Perkins Loan 
Program whose loans have been placed in a forbearance status on or 
after March 13, 2020, will have that period excluded from the 3-year 
cumulative limit on forbearances.
     Borrowers with Federal Perkins Loans who are employed 
full-time in specified occupations, such as teaching or law 
enforcement, may receive loan cancellation for every year of service if 
their service is uninterrupted. Under this waiver, borrowers working 
toward service cancellation of such loans are exempted from the 
requirement that performing service must be uninterrupted or 
consecutive to qualify for loan cancellation, if qualifying service was 
disrupted due to the COVID-19 national emergency. Institutions are 
required to obtain and retain a written attestation from the borrower 
(which may be by email or text message) requesting cancellation and 
describing how the qualifying service was interrupted as a result of 
the COVID-19 national emergency.
    Appropriate explanations for the interruption of service include, 
but are not limited to, the closure of the facility where the borrower 
was working or decreased work hours as a result of the COVID-19 
national emergency. Information provided by the borrower (that in the 
judgment of the IHE is reliable) is acceptable for documentation 
purposes.
     Borrowers who have received a total and permanent 
disability discharge are not required to certify their annual earnings 
during the 3-year post-discharge monitoring period.
     Borrowers who were in an in-school status or an in-school 
deferment status on or after March 13, 2020, for Direct Loan repayment 
purposes remain in such status when the borrower's attendance was 
interrupted by the COVID-19 national emergency, unless the borrower's 
institution ceased operations on or after March 13, 2020, and does not 
expect to reopen for more than 90 days, or the borrower officially 
withdraws or otherwise indicates their intent not to resume attendance 
at least half-time at the institution.
     Borrowers participating in income-driven repayment (IDR) 
plans under Sec. Sec.  685.209(a)(5)(i) and 685.221(e)(1) are not 
required to provide documentation that enables the annual calculation 
of the borrower's payment amount for each year the borrower remains on 
the plan

[[Page 39362]]

and will be notified of a new recertification date in advance of the 
deadline on which such documentation is required.
     The Secretary approved and announced the Fresh Start 
initiative on April 6, 2022.\1\ During the COVID-19 national emergency 
many borrowers lost their jobs and fell behind on student loans 
payments. The Fresh Start Initiative will enable approximately 7.5 
million borrowers with defaulted Federal student loans to return to 
repayment without any past due balance, just like non-defaulted 
borrowers. These borrowers are disproportionately likely to be first 
generation college students, have received a Federal Pell Grant, and 
qualify for low monthly payments under affordable IDR plans.
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    \1\ https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2022-08-17/information-about-restored-aid-eligibility-under-fresh-start-initiative.
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    The Fresh Start initiative eliminates the negative effects on 
borrowers who defaulted on student loans made under the William D. Ford 
Federal Direct Loan Program prior to March 13, 2020 (prior to the 
payment pause); borrowers with Federal Family Education Loan (FFEL) 
Program loans that defaulted prior to March 13, 2020, that are held by 
the Department and GAs; and borrowers with defaulted Department-held 
Perkins loans. Borrowers who take advantage of Fresh Start will have 
renewed eligibility for additional title IV aid (without going through 
loan rehabilitation or consolidation) and would have a pathway to 
return to repayment on their defaulted loans without an overdue 
balance. Borrowers who take advantage of the opportunity provided by 
Fresh Start will also regain access to the full list of repayment 
options for loans not in default, including the opportunity to enter 
into an IDR repayment plan allowing a more affordable monthly payment. 
In addition, borrowers who attempted to rehabilitate their defaulted 
loan during the payment pause will regain access to the one-time loan 
rehabilitation opportunity, which provides credit reporting benefits 
and protects borrowers from involuntary debt collection.
     The Department waives the requirement that GAs meet 
minimum reserve levels in their Federal Funds for Federal fiscal years 
at least partially overlapping with the Fresh Start Initiative.
     The Department waives the requirement that GAs remit to 
the Secretary excess proceeds from the consolidation of defaulted loans 
that exceed 45 percent of the agency's total collections during Federal 
fiscal years at least partially overlapping with the Fresh Start 
Initiative.
     A GA will not have its reinsurance rate reduced if the 
total of reinsurance claims paid by the Secretary reaches specified 
thresholds prescribed in regulations for Federal fiscal years that 
partially overlap with the Fresh Start Initiative.
     The Department modifies the formula for the Account 
Maintenance Fee received by GAs so that a GA's revenue will not be 
significantly decreased due to the pause on collections of FFEL loans 
in default held by a GA. Modifications to the formula will continue 
through the fiscal year that partially overlaps with the Fresh Start 
Initiative.
     Perkins Loan and Health Education Assistance Loan (HEAL) 
borrowers whose loans are held by the Department are afforded the same 
benefits extended to Direct Loan borrowers in the Coronavirus Aid, 
Relief, and Economic Security (CARES) Act.\2\
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    \2\ www.congress.gov/bill/116th-congress/house-bill/748/text.
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     Borrowers with federally held Direct Loans, FFEL loans, 
Perkins Loans, and HEAL loans did not accrue interest on those loans 
from March 13, 2020, to March 27, 2020. Borrowers were also permitted 
to suspend payment on their loans without any penalties during this 
period. The automatic suspension of payment and the application of a 
zero percent interest rate on loans held by the Department was extended 
to October 1, 2020, under the CARES Act. On August 24, 2022, the 
Secretary extended the pause on student loan payments and interest 
benefits through December 31, 2022.\3\ The Secretary announced on 
November 22, 2022, another extension of the pause on student loan 
repayment, interest, and collections.\4\ The Fiscal Responsibility Act 
of 2023 (Pub. L. 118-15) ends these waivers 60 days after June 30, 
2023.
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    \3\ www.ed.gov/news/press-releases/biden-harris-administration-announces-final-student-loan-pause-extension-through-december-31-and-targeted-debt-cancellation-smooth-transition-repayment.
    \4\ www.ed.gov/news/press-releases/biden-harris-administration-continues-fight-student-debt-relief-millions-borrowers-extends-student-loan-repayment-pause.
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     The Department paused collections on loans in default on a 
commercial FFEL loan at a guaranty agency and set interest to 0 percent 
retroactively to March 13, 2020, until the end date for the overall 
payment pause, interest, and collections provision. This included a 
refund of all involuntary collections, the option to refund voluntary 
payments, and the cessation of collection charges for successful loan 
rehabilitations. Borrowers who are in the process of completing a loan 
rehabilitation agreement could have months of the pause count toward 
successful completion of that agreement, regardless of whether they 
made a payment. During and through the end of the payment pause, the 
guaranty agencies will assign any FFEL loans that defaulted on or after 
March 13, 2020, to the Department which will return those loans to good 
standing.
     Upon the end of the payment pause, the Department will not 
capitalize any interest that accrued on federally held Direct Loans or 
FFEL loans that were in a deferment, forbearance, in-school, grace 
period, or any other status in which payments were not required on 
March 12, 2020.
     Borrowers with qualifying loans working toward Public 
Service Loan Forgiveness (PSLF) and Temporary Expanded Public Service 
Loan Forgiveness (TEPSLF) were exempted from the requirement under 
section 455(m)(1)(B)(i) of the HEA that the borrower work for a 
qualifying employer at the time they apply for or receive forgiveness. 
To benefit from this waiver, borrowers with qualifying loans must have 
applied for the limited PSLF waiver announced by the Department on 
October 6, 2021, by October 31, 2022.\5\
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    \5\ www.ed.gov/news/press-releases/fact-sheet-public-service-loan-forgiveness-pslf-program-overhaul.
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     Borrowers who submitted applications for a borrower 
defense discharge on or prior to August 31, 2022, that related to any 
Direct or Federal non-Direct loans made prior to July 1, 2020, and who 
consolidated those loans into a Direct Consolidation Loan on or after 
July 1, 2020, will have their application for a discharge adjudicated 
under the standards for borrower defense discharges on Direct Loans 
disbursed between July 1, 2017, and July 1, 2020.
     The Department waived the United States Medical Licensing 
Exam (USMLE) pass rate requirement for currently approved participating 
foreign graduate medical institutions for the duration of years when 
the test was unavailable due to the COVID-19 national emergency.
    Each of the waivers and modifications described in this notice 
independently serves the purposes of the HEROES Act. The Secretary 
accordingly deems each of these waivers and modifications to be 
necessary in connection with the COVID-19 national emergency, and

[[Page 39363]]

intends that these waivers and modifications be legally severable. Were 
a court to stay or invalidate any of these waivers or modifications, or 
to deem any waiver or modification unlawful as applied in certain 
factual circumstances, the Secretary would intend that all other 
waivers and modifications set forth in this notice remain in effect to 
the maximum possible extent.
    Prior waivers granted by the Secretary under the HEROES Act that 
are not otherwise discussed in this document remain in effect for 
affected individuals, as defined in those waivers. (85 FR 79856, as 
corrected in 86 FR 5008).

Waivers and Modifications Granted Under the Heroes Act in Connection 
With the Covid-19 National Emergency

Verification

Acceptable Documentation (34 CFR 668.57(b), (c), and (d))
    Sections 668.57(b) and (c) require a statement signed by both the 
applicant and one of the applicant's parents if the applicant is a 
dependent student, or only the applicant if the applicant is an 
independent student, to verify the number of family members in the 
household and the number of family members enrolled in IHEs. Pursuant 
to Sec.  668.57(d), an applicant may also be required to verify other 
information specified in the annual Federal Register document that 
announces the Free Application for Federal Student Aid (FAFSA) 
information as well as the acceptable documentation for verifying that 
FAFSA information. The Department waived the requirement that IHEs 
require parental signatures. IHEs may waive the requirement for a 
parental signature in the event that it cannot be obtained, or accept a 
document signed and photographed and sent by email or text message 
attachment, on any verification documentation required to validate a 
student's title IV eligibility. This waiver expires at the end of the 
payment period that begins after April 10, 2023, when the federally 
declared national emergency related to COVID-19 ended. Payment periods 
are as defined in 34 CFR 668.4. In a program measured in standard 
terms, the payment period is the term, i.e., semester, trimester, or 
quarter.

Forbearance (34 CFR 674.33(d)(2))

    Under section 464(e) of the HEA and Sec.  674.33(d)(2), there is a 
3-year cumulative limit on the length of forbearances that a Federal 
Perkins Loan borrower can receive. To assist Federal Perkins Loan 
borrowers during the COVID-19 national emergency, for a borrower whose 
Perkins Loan was in forbearance status on or after March 13, 2020, the 
Secretary waived these statutory and regulatory requirements and will 
exclude that period of forbearance during the payment pause from the 3-
year cumulative limit. The Secretary also applies the waivers described 
in this paragraph to loans held by the Department.

Service-Based Loan Cancellation (34 CFR 674.53, 674.55, 674.55(b), 
674.56, 674.57, 674.58, 674.60, 682.216, and 685.217)

    Federal Perkins Loan borrowers may qualify for loan cancellation if 
they are employed full-time in specified occupations and meet 
additional eligibility requirements or are providing eligible volunteer 
service, pursuant to sections 460 and 465 of the HEA. An eligible 
Perkins Loan borrower may qualify for a service cancellation under 
Sec. Sec.  674.53 (Teacher), 674.55 (Teacher), 674.56 (Nurse, medical 
technician, employee in a child or family service agency, professional 
provider of early intervention services, firefighter, faculty member at 
a Tribal College or University, librarian, speech pathologist), 674.57 
(Law enforcement officer, corrections officer, attorney in an eligible 
Federal public defender or community defender organization), 674.58 
(Full-time staff member in a Head Start, pre-kindergarten, or child 
care program), and 674.60 (Volunteer under the Peace Corps Act or the 
Domestic Volunteer Service Act of 1973).
    For Perkins Loan teacher cancellations under Sec. Sec.  674.53 and 
674.55, borrowers must perform uninterrupted, otherwise-qualifying 
service for a complete academic year.
    For the Perkins Loan service cancellations under Sec. Sec.  674.56, 
674.57, 674.58, and 674.60, borrowers must perform uninterrupted 
otherwise-qualifying service for a complete year.
    FFEL and Direct Loan borrowers may qualify for teacher loan 
forgiveness pursuant to section 428J of the HEA and Sec. Sec.  682.216 
and 685.217. To qualify for teacher loan forgiveness, a FFEL or Direct 
Loan borrower must provide qualifying teaching service for 5 
consecutive, complete academic years.
    The Secretary waived the requirements that provide that periods of 
qualifying service for the loan forgiveness opportunities mentioned 
above be uninterrupted or consecutive to qualify the borrower for loan 
cancellation or loan forgiveness if the service was interrupted due to 
COVID-19.
    Institutions must obtain and retain a written attestation from the 
borrower (which may be by email or text message) requesting 
cancellation and which describes how the qualifying service was 
interrupted as a result of the COVID-19 national emergency.
    Appropriate explanations for the interruption of service include, 
but are not limited to, the closure of the facility where the borrower 
was working or decreased work hours as a result of the COVID-19 
national emergency. Information provided by the borrower (that in the 
judgment of the IHE is reliable) is acceptable for documentation 
purposes.
    Therefore, the service period required for the borrower to receive 
or retain a loan cancellation or loan forgiveness for which they are 
otherwise eligible will not be considered interrupted by any period 
that these waivers are in effect. The Secretary applies the waivers 
described in this paragraph to loans held by the Department.

Total and Permanent Disability Discharges (34 CFR 674.61(b), 
682.402(c), and 685.213(b))

    Under Sec. Sec.  674.61(b)(7)(iii), 682.402(c)(7)(iii), and 
685.213(b)(8)(iii), a borrower who receives a total and permanent 
disability discharge through the Social Security Administration or 
physician's certification process must certify their annual earnings 
during the 3-year post-discharge monitoring period. To assist 
borrowers, the Secretary waived the requirement that the borrower 
provide the Secretary with documentation of annual earnings from 
employment.

Borrowers in In-School Loan Status (34 CFR 682.209 and 685.207) and In-
School Deferment Status (34 CFR 682.210 and 685.204)

    Under Sec. Sec.  682.209(a) and 685.207, for purposes of the FFEL 
and Direct Loan Programs, a borrower ceases to be in an ``in-school'' 
status, and either resumes repayment or enters a grace period on a 
loan, when the borrower ceases to be enrolled at an eligible school on 
at least a half-time basis. Similarly, Sec. Sec.  682.210 and 685.204 
provide that, for purposes of the Direct Loan and FFEL Programs, a 
borrower's deferment while enrolled in an eligible school ends when the 
borrower ceases to be enrolled at least half-time. Section 668.2(b) 
defines a ``half-time student'' as one who is carrying a half-time 
academic workload, as determined by the institution, that amounts to at 
least half of the workload of the applicable minimum requirement 
outlined in the definition of a ``full-time student,'' or, if the 
student is enrolled

[[Page 39364]]

solely in a program of study by correspondence, is carrying a workload 
of at least 12 hours of work per week, or is earning at least 6 credit 
hours per semester, trimester, or quarter.
    The Secretary waived Sec.  668.2(b), such that a student who met 
the institution's definition of a ``half-time student'' at the time the 
student's enrollment was interrupted due to the COVID-19 national 
emergency continues to be treated as enrolled at least half-time for 
purposes of the borrower's ``in-school'' and ``in-school deferment'' 
statuses, unless the borrower's institution ceased operations on or 
after March 13, 2020, and does not expect to reopen for more than 90 
days; or unless the borrower officially withdraws or otherwise 
indicates their intent not to resume attendance at an institution on at 
least a half-time basis. A borrower whose enrollment was interrupted 
due to the COVID-19 national emergency, may not be treated as withdrawn 
or enrolled less-than-half-time for enrollment reporting purposes, 
unless the borrower officially withdraws; the borrower indicates their 
intent not to resume attendance on at least a half-time basis; or the 
borrower's institution ceased operations on or after March 13, 2020, 
and does not expect to reopen for more than 90 days. The institution 
must document this decision in its records.

Recertification of Income-Driven Repayment Plans (34 CFR 685.209 and 
685.221)

    Under Sec. Sec.  685.209 and 685.221, a borrower participating in 
an income-driven repayment plan is required to provide documentation, 
acceptable to the Secretary, that enables annual calculation of the 
borrower's payment amount for each year that the borrower remains on 
the plan.
    The Secretary waived the recertification documentation requirements 
of Sec. Sec.  685.209(a)(5)(i) and 685.221(e)(1) and borrowers will be 
notified by their loan servicer of their new certification date, in 
advance of the deadline on which such documentation is required.

Fresh Start Initiative

    The Secretary waived the title IV eligibility requirements of Sec.  
668.32(g)(1) for a borrower who is in default on a Federal student loan 
and waived 20 U.S.C. 1091(a)(3), which makes defaulted borrowers 
ineligible for any title IV aid. Borrowers who qualify under the Fresh 
Start Initiative will be eligible for title IV student aid.
    The Secretary also waived the conditions needed to regain title IV 
eligibility in Sec.  668.35(a) for a student who is in default on a 
title IV loan.
    The Fresh Start initiative will be available to qualifying 
borrowers for 1 full year following the end of the payment pause. The 
waivers provided as part of the Fresh Start Initiative will expire on 
October 1, 2024.

Minimum Reserve Ratios (34 CFR 682.410)

    Section 682.410(a)(10) provides the minimum reserve fund levels 
that a GA is required to maintain. The reserve fund level is calculated 
as the GA's total reserve fund assets less the amount of reserve fund 
assets used in accordance with Sec.  682.410(a)(2) and (3). The minimum 
reserve ratio is calculated by dividing a GA's reserve fund level by 
the amount of loans outstanding as defined in Sec.  682.410(a)(11)(ii) 
and expressed as a percentage.
    The Secretary waived the requirement that a GA meet a minimum 
reserve ratio requirement as provided in Sec.  682.410(a)(10) for 
Federal fiscal years at least partially overlapping with the Fresh 
Start Initiative as described earlier in this document.

Limits on Loan Consolidation Volume (34 CFR 682.401(b)(18))

    Under Sec.  682.401(b)(18), a GA may charge collection costs in an 
amount not to exceed 18.5 percent of the outstanding principal and 
interest on a defaulted FFEL Program loan that is paid off by a Direct 
Consolidation loan. A GA that returns proceeds to the Secretary from 
the consolidation of a defaulted loan must remit the applicable amounts 
prescribed in Sec.  682.401(b)(18)(ii) or (iii).
    The Secretary waived the requirement in Sec.  682.401(b)(18) that 
the GA return the funds identified as excess consolidation proceeds in 
Sec.  682.401(b)(18)(ii) or (iii) to the Secretary during Federal 
fiscal years at least partially overlapping with the Fresh Start 
Initiative, described earlier in this document.

Reinsurance Trigger Rate (34 CFR 682.404(b))

    Under Sec.  682.404(b), the reinsurance rate for payments of 
reinsurance to the GA is reduced if the total of reinsurance claims 
paid by the Secretary to the GA during any fiscal year reaches 
specified thresholds.
    The Secretary waived the requirement in Sec.  682.404(b) that would 
provide for the reduction in the reinsurance rate under Sec.  
682.404(b) for Federal fiscal years at least partially overlapping with 
the Fresh Start Initiative, described earlier in this document.

Federal Reinsurance Agreement (34 CFR 682.404)

    Section 682.404 outlines the ways GAs may receive compensation from 
their Federal fund for collections activity. This includes the 
provisions in Sec.  682.404(g) that address the portion of borrower 
payments returned to the Secretary, the account maintenance fee equal 
to 0.06 percent of original principal amount of outstanding guaranteed 
loans in Sec.  682.404(h), and the default aversion fee in Sec.  
682.404(j).
    The Secretary modified the terms of Sec.  682.404 to ensure that 
GAs will not have their revenue significantly decrease as a result of 
the pause on collections activity for FFEL loans in default held by a 
GA as required by the Secretary in connection with the COVID-19 
national emergency.
    In addition, the Secretary modified 34 CFR 682.404(h) to provide 
that GAs will receive an account maintenance fee on an annual basis 
equal to 0.76 percent of the original principal amount of outstanding 
loans. Under the modification, the fee is calculated each quarter from 
the period that covers the end of the pause on collections of defaulted 
FFEL loans at a GA through the fiscal year that is at least partially 
overlapping with the Fresh Start Initiative.

Section 3513 of the CARES Act

    Section 3513 of the CARES Act directs the Secretary to (1) suspend 
all payments due, (2) cease interest accrual, and (3) suspend 
involuntary collections for loans that are held by the Department and 
made under parts D and B of title IV of the HEA through September 30, 
2020. The section also directs the Secretary to deem each month for 
which a loan payment was suspended as if the borrower of the loan had 
made a payment for the purpose of any loan forgiveness program or loan 
rehabilitation program authorized under parts D or B for which the 
borrower would have otherwise qualified. Lastly, this section directs 
the Secretary to ensure that, for the purpose of reporting information 
about the loan to a consumer reporting agency, any payment that has 
been suspended is treated as if it were a regularly scheduled payment 
made by a borrower.
    On August 8, 2020, President Trump issued a memorandum directing 
the Secretary to continue to waive interest and payments on such loans 
until December 31, 2020. On December 4, 2020, the pause was further 
extended to January 31, 2021. On January 21, 2021, President Biden 
extended the pause through September 30, 2021. On August

[[Page 39365]]

6, 2021, the President authorized the Secretary to use his authority 
under the HEROES Act to extend the benefits provided under section 3513 
of the CARES Act until January 31, 2022, for borrowers with federally 
held Perkins, HEAL, Direct, and FFEL loans. President Biden announced 
on December 22, 2021, that the Secretary would extend the waiver on 
interest and payments on such loans through May 1, 2022. In accordance 
with these prior announcements, on August 24, 2022, the Secretary 
announced he was using his authority under the HEROES Act to modify the 
terms of the CARES Act to extend its benefits until December 31, 
2022.\6\
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    \6\ www.ed.gov/news/press-releases/biden-harris-administration-announces-final-student-loan-pause-extension-through-december-31-and-targeted-debt-cancellation-smooth-transition-repayment.
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    On November 22, 2022, the Secretary announced another extension of 
the pause on student loan repayment, interest, and collections. Under 
the Fiscal Responsibility Act of 2023 (Pub. L. 118-15), the payment 
pause will end 60 days after June 30, 2023.

Treatment of Defaulted FFEL Loans Held by a Guaranty Agency

    On March 30, 2021, the Department announced that it would be 
extending the waivers on interest and payments originally provided 
under the CARES Act and extended by the Department as discussed above 
to also include defaulted commercial FFEL loans held by a GA. The 
information in this announcement was clarified in DCL Gen-21-03, which 
was published on May 12, 2021.
    This announcement of the extension of the waivers required GAs to 
set the interest rate to 0 percent on commercial FFEL loans in default 
and cease collections activity and charges. Moreover, the GAs had to 
refund any involuntary collections payments received on or after March 
13, 2020, and offer borrowers the ability to have voluntary payments 
refunded. Borrowers that were in the process of pursuing a loan 
rehabilitation were able to have any months during the pause count 
toward the successful completion of that rehabilitation agreement. The 
Secretary also waives the provisions in section 428F(a)(1)(D)(II) of 
the HEA, 20 U.S.C. 1078-6(a)(1)(D)(II) and 34 CFR 682.405(b)(1)(vi)(B) 
which authorizes guaranty agencies to charge collection costs when a 
borrower rehabilitates a defaulted loan.
    The Department's announcement also noted that, during and through 
the end of the payment pause, the guaranty agencies must assign the 
FFEL loans that defaulted on or after March 13, 2020, to the Department 
in accordance with 34 CFR 682.409(a)(1) and that the Department will 
return those loans to good standing.
    Prior to such assignment the GAs must delete their trade line from 
the borrower's credit report entirely.

Interest Capitalization

    Under Sec.  685.202(b), Sec.  685.204, and Sec.  685.205 the 
Secretary capitalizes unpaid interest upon the end of a borrower's 
grace period and after expiration of a borrower's deferment or 
forbearance. Similar provisions that apply to FFEL loans are in Sec.  
682.200, Sec.  682.210, and Sec.  682.211.
    As part of the waivers and modifications included in the Federal 
Register notice published on December 11, 2020, the Department 
announced that if the borrower's loan payments were current before 
March 13, 2020, interest accrued prior to that date, interest would not 
capitalize at the end of the coronavirus-related administrative 
forbearance period. However, interest that accrued on loans during the 
grace period and deferments and forbearances would be capitalized.
    The Secretary has now waived the provisions related to 
capitalization of interest on loans held by the Department that, on 
March 12, 2020, were in a status during which interest was accruing and 
would be capitalized when the borrower exits that status. For instance, 
if a borrower was in their grace period on an unsubsidized loan on 
March 12, 2020, the interest on the loan that was due as of March 13, 
2020, would not be capitalized when the borrower returns to repayment 
after the end of the payment pause. The same would be true of a loan 
that was in a deferment or forbearance immediately prior to the payment 
pause. Interest that accrued on those loans until March 13, 2020, would 
not be capitalized but would still have to be repaid.

Public Service Loan Forgiveness (34 CFR 685.219)

    First, Sec.  685.219 provides that borrowers must be employed by a 
qualifying employer when making each qualifying payment, as well as 
when applying for and receiving PSLF. Section 3513 of the CARES Act and 
the waivers extending its student loan repayment benefits provide 
credit toward PSLF and TEPSLF during months when payments would have 
been due but for the suspension of payments. Borrowers are still 
required to have worked for a qualifying employer during those months 
to receive full credit toward PSLF and TEPSLF.
    The Secretary waived the requirement under Sec.  
685.219(c)(1)(ii)(B) that the borrower must be working for a qualifying 
employer at the time they receive forgiveness if they otherwise meet 
the requirements for forgiveness from March 2020 through the end of the 
student loan repayment pause authorized by section 3513 of the CARES 
Act and extended through the HEROES Act waivers. Borrowers, however, 
still have to have accumulated 120 months of qualifying employment. For 
borrowers who reach the 120 qualifying payment mark as a result of 
section 3513 of the CARES Act, the Secretary further waived the 
requirement that the borrower apply to receive PSLF or TEPSLF.
    Second, on October 6, 2021, as prescribed under Sec.  
685.219(c)(1)(iii) and (c)(1)(iv), the Department announced a temporary 
waiver to give borrowers credit for prior, late, or partial payments 
that would not otherwise count toward PSLF, as well as payments made on 
a repayment plan that do not otherwise qualify for credit toward PSLF, 
such as payments made under the extended or graduated repayment 
plans.\7\ Specifically, any months in which the borrower is in a 
repayment status on their loan while they are also working for a 
qualifying employer counted as a qualifying payment, regardless of the 
Federal loan type or repayment plan. This waiver was limited only to 
borrowers who submitted PSLF Forms or Employer Certification Forms or 
who completed the PSLF Help Tool prior to October 31, 2022, that were 
subsequently approved.
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    \7\ www.studentaid.gov/announcements-events/pslf-limited-waiver.
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    Further, the Secretary waived section 455(m)(4) of the HEA and 34 
CFR 685.217(c)(12)(ii) and borrowers who have applied for teacher loan 
forgiveness and PSLF credit will be able to receive credit toward both 
benefits for the same period of time.
    This limited waiver applies to all Federal student loans, as well 
as to current borrowers with Direct Loans, those who have already 
consolidated into the Direct Loan Program, and those with other types 
of Federal student loans who submitted a Direct Consolidation Loan 
application between October 6, 2021, and October 30, 2022.

Borrower Defense (34 CFR 685.206)

    On December 11, 2020, the Department announced that borrowers who 
had applied prior to July 1, 2020, for a borrower defense discharge of

[[Page 39366]]

FFEL, Perkins, and other loans that were not Direct Loans (non-Direct 
Loans), but who had not consolidated their non-Direct Loans prior to 
July 1, 2020, would have their applications for borrower defense 
discharges adjudicated under the standards for Direct Loans disbursed 
between July 1, 2017, and July 1, 2020. 85 FR at 79862.
    To ensure those borrowers are treated equitably, and to align this 
waiver with prior extensions of the payment pause, borrowers who 
submitted applications for a borrower defense discharge on or before 
August 31, 2022, that relate to any Direct or non-Direct loans that 
were made prior to July 1, 2020, but which are consolidated on or after 
July 1, 2020, will be adjudicated under the standards for Direct Loans 
disbursed between July 1, 2017, and July 1, 2020.

USMLE Exam Scores at Foreign Medical Schools (34 CFR 600.55(f)(1)(ii) 
and (f)(2)-(4))

    Under Sec.  600.55(f), unless exempt under the law, all foreign 
graduate medical schools must, on an annual basis, have at least a 75 
percent pass rate on each step/test of the USMLE administered by the 
Educational Commission for Foreign Medical Graduates (ECFMG), including 
Step 1, Step 2--Clinical Knowledge (Step 2-CK), and Step 2--Clinical 
Skills (Step 2-CS). However, during the pandemic, the Step 2-CS test 
was permanently discontinued, and, upon expiration of this waiver, 
institutions will only resume reporting results for Step 1 and Step 2-
CK. Pass rate scores must be submitted to the Department by April 30 of 
each year.
    The Secretary waived the minimum 75 percent pass rate requirement 
for currently approved foreign graduate medical schools that 
participate in the Direct Loan program for the duration of admissions 
years when the test was unavailable for a period of time due to the 
COVID-19 national emergency. For admissions years that begin after the 
end of the COVID-19 national emergency on April 10, 2023, normal USMLE 
pass rate requirements will apply.
    Accessible Format: On request to Mr. Jean-Didier Gaina, by 
telephone: 202-987-1333 or by email: [email protected], 
individuals with disabilities can obtain this document in an accessible 
format. The Department will provide the requestor with an accessible 
format that may include Rich Text Format (RTF) or text format (txt), a 
thumb drive, an MP3 file, braille, large print, audiotape, or compact 
disc, or other accessible format.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or Portable Document Format (PDF). To 
use PDF, you must have Adobe Acrobat Reader, which is available free at 
the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.
    (Assistance Listing Numbers: 84.032 Federal Family Education Loan 
Program; 84.032 Federal PLUS Program; 84.038 Federal Perkins Loan 
Program; 84.063 and 84.268 William D. Ford Federal Direct Loan 
Program.)
    Program Authority: 20 U.S.C. 1071, 1082, 1087a, 1087aa, 1098bb.

Nasser H. Paydar,
Assistant Secretary for Postsecondary Education.
[FR Doc. 2023-12977 Filed 6-15-23; 8:45 am]
BILLING CODE 4000-01-P