[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] _______________________________________________________________________ Part IV Department of Education _______________________________________________________________________ 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. ----------------------------------------------------------------------- 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