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cprice-sewell on PROD1PC67 with PROPOSALS2Federal Register / Vol. 72, No. 112 / Tuesday, June 12, 2007 / Proposed Rules September 19, 2006, at theUniversity of California-Berkeley inBerkeley, California. October 5, 2006, at the LoyolaUniversity in Chicago, Illinois. November 2, 2006, at the RoyalPacific Hotel Conference Center inOrlando, Florida. November 8, 2006, at the U.S.Department of Education inWashington, DC.In addition, the Department receivedwritten comments on possibleregulatory changes submitted directly tothe Department by interested partiesand organizations. All regional meetingsand a summary of all commentsreceived orally and in writing are postedas background material in the docketand can also be accessed at g/2007/hearings.html.Staff within the Department alsoidentified issues for discussion andnegotiation. Lastly, because The ThirdHigher Education Extension Act of2006, (Pub. L. 109–292), made changesto the law governing eligible lendertrustee relationships as of September 30,2006, the Department added this issueto the Loans Committee agenda.At its first meeting in December, 2006,the Loans Committee reached agreementon its protocols and proposed agenda.These protocols provided that the nonFederal negotiators would not representthe interests of stakeholderconstituencies, but would insteadparticipate in the negotiated rulemakingprocess based on each Committeemember’s experience and expertise inthe Title IV, HEA loan programs.The members of the Loans Committeewere: Jennifer Pae, United States StudentsAssociation, and Luke Swarthout(alternate), State PIRG (Public InterestResearch Groups) Higher EducationProject; Deanne Loonin and Alys Cohen(alternate) of the National ConsumerLaw Center. Darrel Hammon, LaramieCommunity College, and KennethWhitehurst (alternate), North CarolinaCommunity Colleges. Pamela W. Fowler, University ofMichigan, Patricia McClurg (alternate),University of Wyoming, and SaraBauder (alternate), University ofMaryland. Elizabeth Hicks, MassachusettsInstitute of Technology, and EllenFrishberg (alternate), Johns HopkinsUniversity. Jeff Arthur, ECPI College ofTechnology, Robert Collins (alternate),Apollo Group, and Nancy Broff(alternate), Career College Association.VerDate Aug 31 200511:39 Jun 11, 2007Jkt 211001 Shari Crittendon, United NegroCollege Fund, and William ‘‘Buddy’’Blakey (alternate), William A. Blakey &Associates, PLLC. Scott Giles, Vermont StudentAssistance Corporation, and RachaelLohman (alternate), PennsylvaniaHigher Education Assistance Agency. Tom Levandowski, WachoviaCorporation, and Lee Woods (alternate),Chase Education Finance. Phil Van Horn, Wyoming StudentLoan Corporation, and Robert L. Zier(alternate), Indiana Secondary Marketfor Education Loans. Robert Sommer, Sallie Mae, andWanda Hall (alternate), EdFinancialServices. Richard George, Great Lakes HigherEducation Guaranty Corporation, andGene Hutchins (alternate), New JerseyHigher Education Student AssistanceAuthority. Eileen O’Leary, Stonehill College,and Christine McGuire (alternate),Boston University. Alisa Abadinsky, University ofIllinois at Chicago, and Karen Fooks(alternate), University of Florida. Dan Madzelan, U.S. Department ofEducation.Ellen Frishberg of Johns HopkinsUniversity resigned from the Committeeafter the third negotiated rulemakingsession.During its meetings, the LoansCommittee reviewed and discusseddrafts of proposed regulations. It did notreach consensus on the proposedregulations in this NPRM. Moreinformation on the work of thiscommittee can be found at: g/2007/loans.html.These regulations were further refinedby the Task Force on Student Loans.The Secretary created this task force onApril 24, 2007, to review issues withinthe student loan industry. The task forcewas comprised of representatives fromseveral offices within the Department,including the Office of PostsecondaryEducation, Office of Federal StudentAid, Office of the General Counsel,Office of Budget Service, Office ofPlanning, Evaluation, and PolicyDevelopment, and Office of InspectorGeneral. The task force submitted itsrecommendations regarding theseregulations to the Secretary on May 9,2007.Significant Proposed RegulationsThe following discussion of theproposed regulations begins withchanges that affect more than one of thetitle IV student loan programs—thePerkins Loan Program, the FFELProgram, or the Direct Loan Program.PO 00000Frm 00003Fmt 4701Sfmt 470232411This discussion is followed byseparate discussions of proposedchanges that affect only one of the threeprograms. Generally, we do not addressproposed regulatory provisions that aretechnical or otherwise minor in effect.Simplification of Deferment Process(§§ 674.38, 682.210, 682.210, 682.210,and 685.204)Statute: Sections 428(b)(1)(M),455(f)(2), and 464(c)(2)(A) of the HEAauthorize deferments for borrowers inthe FFEL, Direct Loan, and Perkins Loanprograms under certain circumstances.A FFEL, Direct Loan, or Perkins Loanborrower may receive a defermentduring a period when the borrower is:Enrolled at least half-time in aninstitution of higher education; enrolledin an approved graduate fellowshipprogram; enrolled in an approvedrehabilitation training program; seekingand unable to find full-timeemployment; performing qualifyingactive duty military service; orexperiencing an economic hardship.Current Regulations: Currently, aborrower who has loans held by one ormore lenders must apply separately toeach lender for a deferment inaccordance with §§ 674.38, 682.210, and685.204 of the Department’s regulations.Each lender is required to review theborrower’s deferment request, and makeits own determination of the borrower’seligibility for the deferment. There is anexception to this requirement for inschool deferments. Under§§ 674.38(a)(2) and 682.210(c)(1), aPerkins institution or a FFEL lendermay grant an in-school deferment basedon information from the borrower’sschool, or student status informationfrom another source. The Secretary alsohas this option in the Direct LoanProgram under § 685.204(b)(1)(iii)(A)(3).When an in-school deferment is grantedusing this procedure, the institution,lender or Secretary must notify theborrower that the deferment has beengranted, and provide the borrower anopportunity to decline the deferment.Proposed Regulations: The proposedregulations in § 682.210(s)(1)(iii) wouldallow FFEL lenders to grant graduatefellowship deferments, rehabilitationtraining program deferments,unemployment deferments, militaryservice deferments, and economichardship deferments based oninformation that another FFEL lender orthe Department has granted theborrower a deferment for the samereason and the same time period. Theproposed regulations in § 685.204(g)(2)would also permit the Department togrant a deferment on a Direct Loanbased on deferment information from aE:\FR\FM\12JNP2.SGM12JNP2

cprice-sewell on PROD1PC67 with PROPOSALS232412Federal Register / Vol. 72, No. 112 / Tuesday, June 12, 2007 / Proposed RulesFFEL Program lender. The proposedregulations in § 674.38(a)(2) wouldpermit schools in the Perkins LoanProgram to grant deferments based oninformation from another Perkins Loanholder, FFEL lender, or the Department.Under the proposed regulations in§§ 674.38(a)(3), 682.210(s)(1)(iv) and685.204(g)(3), Title IV, HEA loanholders will be able to rely in good faithon the deferment eligibilitydeterminations of other lenders,including the Department. However, if aloan holder has evidence indicating thatthe borrower does not qualify for adeferment, the loan holder may notgrant a deferment based on anotherholder’s determination of defermenteligibility.In addition, the proposed regulationsin §§ 674.38(a)(6), 682.210(i)(1) and(t)(7), and 685.204(g)(5) would allow aborrower’s representative to apply for amilitary service deferment on behalf ofthe borrower. This change would applyto both the Armed Forces defermentavailable for loans made before July 1,1993 and the current military servicedeferment.Reasons: The non-Federal negotiatorsrecommended adding provisions to§ 682.210 of the regulations to allowFFEL lenders to grant deferments basedon deferments granted by other lenders.They noted that this is allowable for inschool deferments and asked to extendthis authority to other deferments.Under this proposal, the FFEL lenderwould determine borrower eligibility forthe deferment by contacting the otherlender or by checking the Department’sNational Student Loan Data System(NSLDS). The Department agreed toconsider this addition to the regulations.In addition, the Department agreed withthe negotiators to allow Perkins Loanschools to grant deferments based on aborrower’s FFEL or Direct Loandeferment eligibility as reflected in theproposed changes to § 674.38(a).However, since eligibility anddocumentation requirements for somePerkins Loan deferments are differentfrom corresponding defermentrequirements in the FFEL and DirectLoan programs, these proposedregulations would not allow FFELlenders, or the Department for DirectLoans, to grant deferments based on aborrower receiving a deferment on hisor her Perkins Loan.The proposed regulations limit thissimplified deferment process todeferments that are available to aborrower who received a Title IV, HEAloan on or after July 1, 1993. Thenegotiators suggested that the newregulations should also apply todeferments that were available to aVerDate Aug 31 200511:39 Jun 11, 2007Jkt 211001borrower who first received a Title IV,HEA loan prior to July 1, 1993.However, the Department decidedthat the pre-July 1, 1993 deferments aremore complex and have more detailedqualifications than the currentdeferments. In addition, the olderdeferments are not the same for all typesof loans. A borrower could qualify for adeferment on some of their loans but notothers. The post-July 1, 1993 defermentsare relatively uniform across the TitleIV, HEA loan programs and across loantypes. In light of these differences, theDepartment decided that the new policyshould apply only to the defermentsavailable on current loans.Some negotiators asked that theregulations include protection forlenders that grant a deferment in errorbased on another lender’s determinationof deferment eligibility. In response, theDepartment is proposing to addlanguage to §§ 674.38(a)(3),682.210(s)(1)(iv) and 685.204(g)(3)stating that loan holders may rely ingood faith on the defermentdetermination of another holder, butmay not knowingly grant an ineligibleborrower a deferment if the loan holderhas information indicating that theborrower is not eligible.Some negotiators proposed that loanholders be allowed to grant a defermentunilaterally, without any contact fromthe borrower. The Department did notaccept this proposal because, although aborrower may qualify for a deferment onall of his or her loans, the borrower maynot necessarily want a deferment on allof his or her loans. Under the simplifiedprocess, the borrower would not have tosubmit a deferment application to eachlender, but would still have to requestthe deferment, in writing, electronicallyor verbally.Some negotiators requested a changeto the regulations that would allow arequest for a military service defermentto be submitted by a representative ofthe borrower as well as the borrower.They noted that borrowers who qualifyfor these deferments may not be in aposition to easily apply for them. TheDepartment agreed that a specialprovision for these borrowers iswarranted. The Department is proposingto amend the regulations in§§ 674.38(a)(6), 682.210(i)(5) and (t)(7),and 685.204(g)(5) to allow a borrower’srepresentative to apply for a militaryservice deferment or an Armed Forcesdeferment on the borrower’s behalf.The Department notes that granting adeferment under this simplified processis optional for lenders. A lender is notrequired to use this process whenreviewing deferment requests.PO 00000Frm 00004Fmt 4701Sfmt 4702Accurate and Complete Copy of a DeathCertificate (§§ 674.61, 682.402, and685.212)Statute: Sections 437(a) and (d) of theHEA provide for the discharge of a FFELloan if the borrower, or a dependent onwhose behalf a parent has borrowed,dies. This provision also applies toDirect Loans under section 455(a)(1) ofthe HEA. Section 464(c)(1)(F) providesfor the discharge of a Perkins Loan if theborrower dies.Current Regulations: Currentregulations in §§ 674.61(a), 682.402(b),and 685.212(a) state that if a Perkins,FFEL, or Direct Loan borrower dies, orif the student for whom a FFEL or DirectPLUS Loan was borrowed dies, theborrower’s loan will be dischargedbased on an original or certified copy ofthe death certificate. Under exceptionalcircumstances, and on a case-by-casebasis, a discharge due to the death of theborrower may be

32410 Federal Register/Vol. 72, No. 112/Tuesday, June 12, 2007/Proposed Rules DEPARTMENT OF EDUCATION 34 CFR Parts 674, 682, and 685 [Docket ID ED–2007-OPE–0133] RIN 1840-AC89 Federal Perkins Loan Program, Federal