[Federal Register Volume 59, Number 71 (Wednesday, April 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8889]
[[Page Unknown]]
[Federal Register: April 13, 1994]
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Part IV
Department of Education
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34 CFR Part 668 et al.
Student Assistance General Provisions, Federal Perkins Loan, Federal
Work-Study, Federal Supplemental Educational Opportunity Grant; Final
Rule
DEPARTMENT OF EDUCATION
34 CFR Parts 668, 674, 675, 676, 682, 685, and 690
Student Assistance General Provisions, Federal Perkins Loan,
Federal Work-Study, Federal Supplemental Educational Opportunity Grant,
Federal Family Education Loan, Federal Direct Student Loan, and Federal
Pell Grant Programs
AGENCY: Department of Education.
ACTION: Notice of relief from regulatory provisions.
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SUMMARY: The Secretary of Education announces regulatory relief from
specific regulations governing the Federal Perkins Loan, Federal Work-
Study (FWS), Federal Supplemental Educational Opportunity Grant
(FSEOG), Federal Family Education Loan (FFEL), Federal Direct Student
Loan, and Federal Pell Grant programs, for the 1993-94 and 1994-95
award years, to assist institutions and individuals who suffered
financial harm from the California earthquake of January 1994.
EFFECTIVE DATE: This notice takes effect either 45 days after
publication in the Federal Register or later if the Congress takes
certain adjournments. If you want to know the effective date of this
notice, call or write the Department of Education contact person. A
document announcing the effective date will be published in the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Kathy S. Gause, Senior Program
Specialist, Grants Branch, Division of Policy Development, Policy,
Training, and Analysis Service, U.S. Department of Education, 400
Maryland Avenue SW., (Regional Office Building 3, room 4018),
Washington, DC 20202-5447. Telephone (202) 708-4690. Individuals who
use a telecommunications device for the deaf (TDD) may call the Federal
Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8
p.m., Eastern time, Monday through Friday.
SUPPLEMENTARY INFORMATION: Many institutions of higher education,
student financial aid applicants, and recipients have been adversely
affected by the earthquake in California. The President signed the
Emergency Supplemental Appropriations Act of 1994 (Pub. L. 103-211) on
February 12, 1994. The Act authorizes the Secretary to reallocate any
excess funds under the Federal Perkins Loan and the FWS programs from
the 1993-94 award year to assist individuals who suffered financial
harm as a result of the California earthquake of January 1994. The
Secretary has the authority to reallocate these funds only to
institutions for use in the 1994-95 award year. Institutions will be
informed of the application procedures for obtaining reallocated funds
to assist California earthquake victims in a letter issued by the
Department to financial aid administrators.
The Emergency Supplemental Appropriations Act of 1994, however,
does not expressly authorize the reallocation of funds returned under
the FSEOG Program. The Higher Education Act of 1965, as amended (HEA),
in section 413D permits the Secretary, in accordance with regulations,
to reallocate excess FSEOG funds returned by an institution to other
institutions. Under current FSEOG regulations (34 CFR 676.4), the
Secretary reallocates funds on a pro rata basis, i.e., the amount of an
institution's fair-share shortfall as a percentage of the fair-share
shortfalls of all participating institutions with an unmet FSEOG
request. The Secretary has decided to promulgate standards to allow
excess funds under the FSEOG Program from the 1993-94 award year to be
reallocated during the 1994-95 award year to assist students adversely
affected by the California earthquake. The funds will be reallocated to
institutions that enroll students adversely affected by the earthquake
and submit applications in the format required by the Secretary. If the
total funds requested exceed the total funds available, the funds will
then be reallocated on a pro rata basis only among these institutions
to provide assistance to students whose financial need has increased as
a result of the 1994 California earthquake.
The Secretary recognizes the severe impact the earthquake has had
on institutions and their students located in the designated natural
disaster areas. Many institutions and individuals adversely affected by
the earthquake are facing immediate problems concerning the
disbursement and repayment of student loans.
The Title IV student financial aid programs affected by this notice
are the FFEL Program (consisting of the Federal Stafford Loan Program,
the Federal Supplemental Loans for Students (SLS) Program, the Federal
PLUS Program, and the Federal Consolidation Loan Program); the Federal
Direct Student Loan Program; the Federal Pell Grant Program; and the
Federal Perkins Loan, FWS, and FSEOG programs (known collectively as
the campus-based programs). To assist both institutions and
individuals, this notice also provides certain regulatory relief to
institutions in their administration of these student financial aid
programs.
The Secretary has already provided certain regulatory relief to
lenders and guaranty agencies in the FFEL Program under section
432(a)(6) of the HEA and 34 CFR 682.406(b) and 682.413(f). The guaranty
agency directors were informed of this relief in a letter dated January
31, 1994.
Covered Individuals
This notice is intended to assist institutions and individuals that
have been adversely affected by the California earthquake of January
1994. This notice will apply to institutions that were unable to
maintain normal operations because they were located in Los Angeles,
Orange, or Ventura Counties on the date on which the President declared
the existence of a major disaster. This notice of relief also applies
only to individuals who suffered financial harm from the disaster and,
at the time the disaster occurred, were residing, attending an
institution of higher education, or employed in the counties designated
as disaster areas (or, in the case of an individual who is a dependent
student, whose parent or stepparent suffered financial harm from such
disaster and resided or was employed in such an area at that time).
This notice of regulatory relief will be applicable for awards made
under the Title IV programs and collection activities conducted under
the Federal Perkins Loan Program during the 1993-94 and 1994-95 award
years (the periods from July 1, 1993 to June 30, 1994 and July 1, 1994
to June 30, 1995).
Note: For further updates to the list of designated disaster
areas, institutions may contact the Department on its toll-free
number at 1-800-433-3243 between 9 a.m. and 5:30 p.m., Eastern time,
Monday through Friday. Individuals who use a telecommunications
device for the deaf (TDD) may call 1-800-730-8913 between 9 a.m. and
5:30 p.m., Eastern time, Monday through Friday.
The Secretary provides the following enforcement relief from the
regulations governing the student financial aid programs under Title IV
of the HEA:
I. 34 CFR Part 668--Student Assistance General Provisions
A. 34 CFR 668.19 Financial Aid Transcript
Under current regulations, before a student who previously attended
another eligible institution may receive any Title IV, HEA program
funds, the institution to which the student is transferring must make
an effort to obtain the student's financial aid transcript. The
Secretary is waiving the requirement to obtain financial aid
transcripts before disbursing funds for individuals who attended
institutions covered by this notice for the 1993-94 and 1994-95 award
years. If the financial aid transcript is not available as a result of
damage caused by the California earthquake, the institution may
disburse Title IV funds. Any institution affected by this situation
must document in the student's file that the financial aid transcript
is unavailable due to damage stemming from the natural disaster. In
addition, the student will still be expected to provide statements
concerning all prior financial aid received, and the institution will
be expected to retain this information in the student's file.
B. 34 CFR 668.51-668.61 Subpart E--Selection of Applicants for
Verification
The Secretary is waiving verification requirements under 34 CFR
668.51-668.61 during the 1993-94 and 1994-95 award years for those
applicants who are selected for verification and whose records were
lost or destroyed because of the California earthquake. The institution
must document in the student's file that the records are unavailable
due to damage stemming from the natural disaster. For these students,
Verification Status Code ``S'' may be used when reporting a Federal
Pell Grant disbursement.
II. 34 CFR Part 690--Federal Pell Grant Program
34 CFR 690.83 Submission of Reports
The Secretary modifies the deadline in 34 CFR 690.83(a)(1)(i) that
an institution submit all SAR Payment Vouchers (or the equivalent) for
an award year by September 30 following the end of the award year in
which the grant is made. The Secretary will extend this reporting date,
on a ``case-by-case'' basis, for institutions affected by the
California earthquake.
III. 34 CFR Part 674 and 676--Federal Perkins Loan and FSEOG
Programs
A. Federal Perkins Loan Program
1. 34 CFR 674.31 Promissory Note
Under 34 CFR 674.31(b)(2), the terms of a student's promissory note
require that repayment of a loan must begin six (6) or nine (9) months
after a borrower ceases to be at least a half-time regular student and
that the repayment period normally ends 10 years later. The Secretary
is modifying this provision that specifies the commencement of a
borrower's repayment period to provide that any borrower who was in an
``in-school'' status at the time the natural disaster occurred and was
unable to complete course requirements or enroll in classes due to the
earthquake will continue to be in an ``in-school'' status until such
time as the borrower withdraws or until the end of the 1993-94 award
year, whichever is earlier. The institution must document this reason
for continued ``in-school'' status in the student's file.
2. 34 CFR 674.42 Contact With the Borrower
The Secretary will not require an institution to comply with the
provisions of Sec. 674.42(b) that require an institution to make
contact with the borrower during an initial or postdeferment grace
period if that grace period coincides with the California earthquake.
These requirements shall be suspended for a period of time not to
exceed the earlier of either the date on which the institution is able
to resume normal contact with the borrower or June 30, 1994. An
institution must document the reason for suspension of these activities
in the borrower's file.
3. 34 CFR 674.41-674.50 Subpart C--Due Diligence
The Secretary will not enforce 34 CFR part 674, subpart C--Due
Diligence. An institution may suspend the collection activities for
borrowers already in default at the time of the natural disaster. These
requirements shall resume on July 1, 1994. An institution must document
the reason for suspension of these activities in the borrower's file.
4. 34 CFR 674.34-674.37 Deferment of Repayment
The Secretary modifies the provisions for hardship deferment in 34
CFR 674.34(i), 674.35(e), and 674.36(e) and authorizes an institution
to grant an administrative hardship deferment to a borrower who is in
repayment at the time of the natural disaster but who is unable to
continue to repay the loan due to the disaster. Interest will accrue
during any period of administrative hardship deferment. 34 CFR 674.37
requires that a borrower submit a written request for deferment. Under
this administrative hardship deferment, a borrower may request this
deferment orally and will not be required to submit a deferment
documentation form to be considered eligible for this deferment. The
administrative hardship deferment may be granted for a period of time
not to exceed the earlier of either the date on which the borrower is
able to resume making payments on the loan or June 30, 1995.
Documentation must be maintained according to the governing
regulations.
B. FSEOG Program
34 CFR 676.4 Allocation and Reallocation
For the 1994-95 award year, FSEOG funds returned by institutions
from the 1993-94 award year will be reallocated to institutions that
enroll students adversely affected by the 1994 California earthquake
and submit applications in the format required by the Secretary. If the
total funds requested exceed the total amount of funds available, the
funds will then be reallocated on a pro rata basis only among these
institutions to provide assistance to students whose financial need has
increased as a result of the earthquake.
IV. 34 CFR Part 682--Federal Family Education Loan (FFEL) Program
A. 34 CFR 682.604 Processing the Borrower's Loan Proceeds and
Counseling Borrowers
To assist affected individuals, the Secretary modifies the
requirement in 34 CFR 682.604(c)(2) that loan proceeds be delivered to
the borrower within 45 days of the institution's receipt of the check
but will instead permit the institution to deliver loan proceeds to the
borrower up to 120 days from the institution's receipt of the check.
Documentation must be maintained according to the governing
regulations. The Department still expects delivery of a borrower's loan
proceeds as soon as possible.
Also, because some institutions may have to delay opening or have
ceased operation for an undetermined period of time, the Secretary
authorizes lenders not to disburse loan checks to institutions or to
parent PLUS borrowers in the affected areas until the lenders receive
revised disbursement schedules from the affected institutions. The
Secretary instructs guaranty agencies and lenders to revise information
on loan periods, graduation dates, and so forth, on the loan
applications related to these disbursements as the information becomes
available. This change means that a borrower need not reapply for the
loan. This change also will allow a student to receive his or her loan
proceeds according to a schedule that fits the institution's new
academic schedule.
B. 34 CFR 682.605 Determining the Date of a Student's Withdrawal
The Secretary modifies the requirement in 34 CFR 682.605(b) to
permit an institution affected by the disaster to determine that the
student has withdrawn within 90 days (instead of 45) after the
expiration of the academic term for an institution that uses academic
terms, except that 60 days (instead of 30) after the first day of the
next scheduled term may be used in the case of a summer break, and 50
days (instead of 25) after the student's last date of attendance may be
used for an institution that measures academic progress in clock hours
or credit hours, but does not use a semester, trimester, or quarter
system.
C. 34 CFR 682.607 Payment of a Refund to a Lender
The Secretary modifies the deadlines by which an affected
institution shall pay a refund that is due to a lender, within 60 days
after the student's withdrawal as determined under 34 CFR
682.605(b)(1)-(3) or within 30 days in the case of a student who does
not return to the institution at the expiration of an approved leave of
absence under 34 CFR 682.605(c). Instead, the Secretary will require
the institution to pay a refund to the lender within 120 days (instead
of 60) after the student's withdrawal or within 60 days (instead of 30)
after the last day of the leave of absence.
D. 34 CFR 682.610 Records, Reports, and Inspection Requirements for
Participating Schools
The Secretary modifies the deadline in 34 CFR 682.610(c) that an
institution complete and submit required Student Status Confirmation
Reports (SSCRs) to the Secretary or guaranty agency within 30 days of
the institution's receipt of the report but will instead require
completion and submission of these reports within 90 days. Reports of
changes of borrower status if the institution does not expect to submit
its next SSCR within the next 60 days may also be submitted within 90
days (instead of 30 days).
Waiver of Rulemaking
In accordance with section 431(b)(2)(A) of the General Education
Provisions Act, 20 U.S.C. 1232(b)(2)(A), and the Administrative
Procedure Act, 5 U.S.C. 553, it is the practice of the Secretary to
offer interested parties the opportunity to comment on proposed
regulations. However, the severe impact of the earthquake in California
has caused a national emergency that has been recognized by the
Congress. The Secretary, recognizing the severe devastation of the
California earthquake victims, finds that soliciting further public
comment with respect to this notice of relief from regulatory
requirements is impracticable and contrary to the public interest under
5 U.S.C. 553(b)(B).
Executive Order 12866
This notice has been reviewed in accordance with Executive Order
12866. Under the terms of the order the Secretary has assessed the
potential costs and benefits of this regulatory action.
The potential costs associated with this notice are those resulting
from statutory requirements and those determined necessary for
providing emergency relief during a natural disaster. This notice
provides relief from administrative burden associated with information
collection requirements.
Regulatory Flexibility Act Certification
The Secretary certifies that this notice will not have a
significant economic impact on a substantial number of small entities.
The small entities affected by this notice are small institutions of
postsecondary education. This notice provides temporary regulatory
relief and will not increase institutions' workload or costs associated
with administering the Title IV, HEA programs. It will therefore not
have a significant economic impact on the entities affected.
Assessment of Educational Impact
The Secretary has determined that this document does not require
transmission of information that is being gathered by or is available
from any other agency or authority of the United States.
(Catalog of Federal Domestic Assistance Numbers: 84.032 Federal
Family Education Loan Program; 84.038 Federal Perkins Loan Program;
84.007 Federal Supplemental Educational Opportunity Grant Program;
84.033 Federal Work-Study Program; 84.063 Federal Pell Grant
Program; 84.268 Federal Direct Student Loan Program)
Dated: April 8, 1994.
Richard W. Riley,
Secretary of Education.
[FR Doc. 94-8889 Filed 4-12-94; 8:45 am]
BILLING CODE 4000-01-P
