Rule2024-01227
Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and the Federal Direct Loan Program)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 24, 2024
Effective
January 24, 2024
Issuing agencies
Education Department
Abstract
The Secretary is issuing updates of longstanding waivers and modifications of statutory and regulatory requirements governing the Federal student financial aid programs under the authority of the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). The HEROES Act requires the Secretary to publish a document in the Federal Register providing notice of the waivers or modifications of statutory or regulatory requirements applicable to the student financial assistance programs under title IV of the Higher Education Act of 1965, as amended (HEA), to assist individuals who are performing qualifying military service, and individuals who are affected by a disaster, war or other military operation, or national emergency, as described in the SUPPLEMENTARY INFORMATION section of this document.
Full Text
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<title>Federal Register, Volume 89 Issue 16 (Wednesday, January 24, 2024)</title>
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[Federal Register Volume 89, Number 16 (Wednesday, January 24, 2024)]
[Rules and Regulations]
[Pages 4553-4559]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-01227]
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DEPARTMENT OF EDUCATION
34 CFR Parts 668, 674, 682, and 685
Federal Student Aid Programs (Student Assistance General
Provisions, Federal Perkins Loan Program, Federal Family Education Loan
Program, and the Federal Direct Loan Program)
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Updated waivers and modifications of statutory and regulatory
requirements.
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SUMMARY: The Secretary is issuing updates of longstanding waivers and
modifications of statutory and regulatory requirements governing the
Federal student financial aid programs under the authority of the
Higher Education Relief Opportunities for Students Act of 2003 (HEROES
Act). The HEROES Act requires the Secretary to publish a document in
the Federal Register providing notice of the waivers or modifications
of statutory or regulatory requirements applicable to the student
financial assistance programs under title IV of the Higher Education
Act of 1965, as amended (HEA), to assist individuals who are performing
qualifying military service, and individuals who are affected by a
disaster, war or other military operation, or national emergency, as
described in the SUPPLEMENTARY INFORMATION section of this document.
DATES: Effective January 24, 2024. The waivers and modifications in
this document expire on January 24, 2029.
FOR FURTHER INFORMATION CONTACT: For provisions related to the Federal
Perkins Loan Program, Federal Family Education Loan (FFEL) Program, and
Federal Direct Loan (Direct Loan) Program: Brian Smith, Telephone:
(202) 987-1327. Email: <a href="/cdn-cgi/l/email-protection#0f4d7d666e61215c62667b674f6a6b21686079"><span class="__cf_email__" data-cfemail="e3a1918a828dcdb08e8a978ba38687cd848c95">[email protected]</span></a>. For other provisions: Aaron
Washington, Telephone: (202) 453-7241. Email: <a href="/cdn-cgi/l/email-protection#ecad8d9e8382c2bb8d9f8485828b988382ac8988c28b839a"><span class="__cf_email__" data-cfemail="f8b9998a9796d6af998b9091969f8c9796b89d9cd69f978e">[email protected]</span></a>.
The mailing address for both individuals is U.S. Department of
Education, Office of Postsecondary Education, 400 Maryland Ave. SW, 2nd
Floor, Washington, DC 20202.
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: The Secretary is issuing updated waivers and
modifications of statutory and regulatory requirements governing the
Federal student financial aid programs under the authority of the
HEROES Act. As described below, these waivers and modifications
primarily focus on servicemembers who are called for active duty. We
note below where there is overlap between the waivers and modifications
issued in this document and the waivers and modifications related to
the Fresh Start Initiative, which is described below.
In a document published in the Federal Register on December 12,
2003 (68 FR 69312), the Secretary first exercised the authority under
the HEROES Act (Pub. L. 108-76, 20 U.S.C. 1098bb(b)) and announced
waivers and modifications of statutory and regulatory provisions
designed to assist ``affected individuals.'' Under 20 U.S.C. 1098ee(2),
the term ``affected individual'' means an individual who--
<bullet> Is serving on active duty during a war or other military
operation or national emergency;
<bullet> Is performing qualifying National Guard duty during a war
or other military operation or national emergency;
<bullet> Resides or is employed in an area that is declared a
disaster area by any Federal, State, or local official in connection
with a national emergency; or
<bullet> Suffered direct economic hardship as a direct result of a
war or other military operation or national emergency, as determined by
the Secretary.
Please note that these waivers and modifications do not apply to an
individual who resides or is employed in an area declared a disaster
area by any Federal, State, or local official unless that declaration
has been made in connection with a national emergency.
In a document published in the Federal Register on September 29,
2017 (82 FR 45465), the Secretary updated the waivers and modifications
to reflect statutory and regulatory changes that had occurred since the
most recent prior waiver and modification document was published. The
2017 waivers and modifications expired on September 30, 2022.
The Secretary is updating the waivers and modifications to reflect
statutory
[[Page 4554]]
and regulatory changes that have occurred since publication of the 2017
waivers and modifications. The waivers and modifications in this
document will expire on January 24, 2029. With a few exceptions, the
waivers and modifications in this document are the same as the 2017
waivers and modifications. However, the 2017 waivers and modifications
have been updated as follows:
(1) The Secretary is not including in this document the 2017 waiver
that allowed institutions to use the applicant's original Expected
Family Contribution (EFC) (the EFC based on the income and tax
information reported on the Free Application for Federal Student Aid
(FAFSA[supreg])), the EFC based on the data from the first calendar
year of the award year, or the EFC based on another annual income that
more accurately reflects the family's current financial circumstances.
A financial aid administrator has the authority to use professional
judgment on a case-by-case basis for affected individuals. The
Department believes that the authority provided through the 2017 waiver
is already within the authority of the financial aid administrator. The
Department has also issued Dear Colleague Letters GEN-21-02 and GEN-22-
15 further explaining the authority and responsibilities of the
financial aid administrator in regard to professional judgment.
(2) The Secretary is not including the 2017 waiver and modification
that allowed institutions to exercise professional judgment to make
adjustments to the cost of attendance or the items used in calculating
the EFC on a broader basis than the case-by-case basis reflected in the
HEA. Accordingly, an institution that exercises professional judgment
must make those determinations on a case-by-case basis for affected
individuals.
(3) The Secretary is not including the 2017 waivers and
modifications related to verification. The Secretary will announce any
changes related to verification in a separate Federal Register notice,
Dear Colleague letter, or electronic announcement.
The Secretary is issuing these waivers and modifications under the
authority of the HEROES Act, 20 U.S.C. 1098bb(a). In accordance with
the HEROES Act, the Secretary is providing the waivers and
modifications of statutory and regulatory requirements applicable to
the student financial assistance programs under title IV of the HEA
that the Secretary believes are appropriate to ensure that--
<bullet> Affected individuals who are recipients of student
financial assistance under title IV are not placed in a worse position
financially in relation to that financial assistance because they are
affected individuals;
<bullet> Affected individuals who are recipients of student
financial assistance are not unduly subject to administrative burden or
inadvertent technical violations or defaults;
<bullet> Affected individuals are not penalized when a
determination of need for student financial assistance is calculated;
<bullet> Affected individuals are not required to return or repay
an overpayment of grant funds based on the HEA's Return of Title IV
Funds provision; and
<bullet> Entities that participate in the student financial
assistance programs under title IV of the HEA and that are located in
areas that are 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, receive temporary relief
from administrative requirements.
In 20 U.S.C. 1098bb(b)(1), the HEROES Act further provides that
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.
The following terms used in this document are defined in 20 U.S.C.
1098ee: ``active duty,'' ``military operation,'' ``national
emergency,'' ``qualifying National Guard duty during a war or other
military operation or national emergency,'' and ``serving on active
duty during a war or other military operation or national emergency.''
The Department intends for each of the waivers and modifications
described in this document to be severable. If any waiver or
modification in this document or its application to any person, act, or
practice is held invalid, the remainder of the waivers and
modifications or the application of such waiver or modification to any
person, act, or practice will not be affected thereby.
The following waivers and modifications are grouped into three
categories, according to the affected individuals to whom they apply.
Category 1: The Secretary is waiving or modifying the following
requirements of title IV of the HEA and the Department's regulations
for ALL affected individuals.
Return of Title IV Funds--Grant Overpayments Owed by the Student
Section 484B(b)(2) of the HEA and 34 CFR 668.22(h)(3)(ii) require a
student to return or repay, as appropriate, unearned grant funds for
which the student is responsible under the Return of Title IV Funds
calculation. For a student who withdraws from an institution because of
the student's status as an affected individual, the Secretary is
waiving these statutory and regulatory requirements so that a student
is not required to return or repay any overpayment of grant funds based
on the Return of Title IV Funds provisions.
For these students, the Secretary also waives 34 CFR 668.22(h)(4),
which--
<bullet> Requires an institution to notify a student of a grant
overpayment and the actions the student must take to resolve the
overpayment;
<bullet> Denies eligibility to a student who owes a grant
overpayment and does not take an action to resolve the overpayment; and
<bullet> Requires an institution to refer a grant overpayment to
the Secretary under certain conditions.
Therefore, an institution is not required to contact the student,
notify the National Student Loan Data System, or refer the overpayment
to the Secretary. However, the institution must document in the
student's file the amount of any overpayment as part of the
documentation of the application of this waiver.
The student is not required to return or repay an overpayment of
grant funds based on the Return of Title IV Funds provision. Therefore,
an institution must not apply any title IV credit balance to the grant
overpayment prior to: using a credit balance to pay authorized charges;
paying any amount of the title IV credit balance to the student or
parent, in the case of a parent PLUS loan; or using the credit balance
to reduce the student's title IV loan debt (with the student's
authorization) as provided in Dear Colleague Letter GEN-04-03 (February
2004; revised November 2004).
Category 2: The Secretary is waiving or modifying requirements in
the following provisions of title IV of the HEA and the Department's
regulations for affected individuals who are serving on active duty or
performing qualifying National Guard duty during a war or other
military operation or national emergency, or who reside or are employed
in a disaster area.
Return of Title IV Funds--Post-Withdrawal Disbursements of Loan Funds
Under 34 CFR 668.22(a)(6)(iii)(A)(5) and (D), a student (or parent
for a parent PLUS loan) must be provided a post-withdrawal disbursement
of a title IV
[[Page 4555]]
loan if the student (or parent) responds to an institution's
notification of the post-withdrawal disbursement within 14 days of the
date that the institution sent the notice, or a later deadline set by
the institution. If a student or parent submits a late response, an
institution may, but is not required to, make the post-withdrawal
disbursement.
The Secretary is modifying this requirement so that, for a student
who withdraws because of their status as an affected individual in this
category and who is eligible for a post- withdrawal disbursement, the
14-day time period in which the student (or parent) must normally
respond to the offer of the post-withdrawal disbursement is extended to
45 days, or to a later deadline set by the institution. If the student
or parent submits a response after the designated period, the
institution may, but is not required to, make the post-withdrawal
disbursement. As required under the current regulations, if the student
or parent submits the timely response instructing the institution to
make all or a portion of the post-withdrawal disbursement, or the
institution chooses to make a post-withdrawal disbursement based on
receipt of a late response, the institution must disburse the funds
within 180 days of the date of the institution's determination that the
student withdrew.
Leaves of Absence
Under 34 CFR 668.22(d)(3)(iii)(B), a student is required to provide
a written, signed, and dated request, which includes the reason for
that request, for an approved leave of absence prior to the leave of
absence. However, if unforeseen circumstances prevent a student from
providing a prior written request, the institution may grant the
student's request for a leave of absence if the institution documents
its decision and collects the written request at a later date. It may
be appropriate in certain limited cases for an institution to provide
an approved leave of absence to a student who must interrupt his or her
enrollment because he or she is an affected individual in this
category. Therefore, the Secretary is waiving the requirement that the
student provide a written request for affected individuals who have
difficulty providing a written request as a result of being an affected
individual in this category. The institution's documentation of its
decision to grant the leave of absence must include, in addition to the
reason for the leave of absence, the reason for waiving the requirement
that the leave of absence be requested in writing.
Treatment of Title IV Credit Balances When a Student Withdraws
Under 34 CFR 668.164(h)(2), an institution must pay any title IV
credit balance to the student, or parent in the case of a parent PLUS
loan, as soon as possible, but no later than 14 days after the balance
occurred if the balance occurred after the first day of class of a
payment period, or 14 days after the first day of class of a payment
period if the balance occurred on or before the first day of class of
that payment period. If the student (or parent) has provided
authorization, an institution may use a title IV credit balance to
reduce the borrower's total title IV loan debt, not just the title IV
loan debt for the period for which the Return of Title IV Funds
calculation is performed.
For students who withdraw because they are affected individuals in
this category, the Secretary finds that the institution has met the 14-
day requirement under 34 CFR 668.164(h)(2) if, within that time frame,
the institution attempts to contact the student (or parent) to suggest
that the institution be authorized to return the credit balance to the
loan program(s).
Based upon the instructions of the student (or parent), the
institution must promptly return the funds to the title IV loan
programs or pay the credit balance to the student (or parent).
In addition, if an institution chooses to attempt to contact the
student (or parent) for authorization to apply the credit balance to
reduce the student's title IV loan debt, it must allow the student (or
parent) 45 days to respond. If there is no response within 45 days, the
institution must promptly pay the credit balance to the student (or
parent) or return the funds to the title IV programs if the student (or
parent) cannot be located.
Consistent with the guidance provided in Dear Colleague Letter GEN-
04-03 (February 2004; revised November 2004), the institution may also
choose to pay the credit balance to the student (or parent) without
first requesting permission to apply the credit balance to reduce the
student's title IV loan debt.
Cash Management--Student or Parent Request for Loan or TEACH Grant
Cancellation
Under 34 CFR 668.165(a)(4)(ii), an institution must return loan or
TEACH Grant proceeds, cancel the loan or TEACH Grant, or do both, if
the institution receives a loan or TEACH Grant cancellation request
from a student or parent--
<bullet> By the later of the first day of a payment period or 14
days after the date the institution notifies the student or parent of
his or her right to cancel all or a portion of a loan or TEACH Grant if
the institution obtains affirmative confirmation from the student under
34 CFR 668.165(a)(6)(i); or
<bullet> Within 30 days of the date the institution notifies the
student or parent of their right to cancel all or a portion of a loan
if the institution does not obtain affirmative confirmation from the
student under 34 CFR 668.165(a)(6)(i).
Under 34 CFR 668.165(a)(4)(iii), if an institution receives a loan
cancellation request from a borrower after the period specified in 34
CFR 668.165(a)(4)(ii), the institution may, but is not required to,
comply with the request. The Secretary is modifying this requirement so
that an institution must allow at least 60 days for the student or
parent to request the cancellation of all or a portion of a loan or
TEACH Grant for which proceeds have been credited to the account at the
institution. If an institution receives a loan or TEACH Grant
cancellation request after the 60-day period, the institution may, but
is not required to, comply with the request.
Cash Management--Student and Parent Authorizations
Under 34 CFR 668.165(b)(1), an institution must obtain a written
authorization from a student or parent, as applicable, to--
<bullet> Use title IV funds to pay for educationally related
charges incurred by the student at the institution other than charges
for tuition and fees and, as applicable, room and board; and
<bullet> Hold on behalf of the student or parent any title IV funds
that would otherwise be paid directly to the student or parent.
The Secretary is modifying these requirements to permit an
institution to accept an authorization provided by a student (or parent
for a parent PLUS loan) orally, rather than in writing, if the student
or parent is prevented from providing a written authorization because
of his or her status as an affected individual in this category. The
institution must document the oral consent or authorization.
Satisfactory Academic Progress
In cases where a student failed to meet the institution's
satisfactory academic progress standards as a direct result of being an
affected individual in this category, institutions may apply the
exception provision of ``other special circumstances'' in 34 CFR
668.34(a)(9)(ii).
[[Page 4556]]
Borrowers in a Grace Period
Sections 428(b)(7)(D) of the HEA and 34 CFR 685.207(b)(2)(ii) and
(c)(2)(ii) exclude from a Direct Loan borrower's initial grace period
any period during which a borrower who is a member of an Armed Forces
reserve component is called or ordered to active duty for a period of
more than 30 days. The statutory and regulatory provisions further
require that any single excluded period may not exceed three years and
must include the time necessary for the borrower to resume enrollment
at the next available regular enrollment period. Lastly, any borrower
who is in a grace period when called or ordered to active duty is
entitled to another six or nine-month grace period, as applicable, upon
completion of the excluded period of service.
The Secretary is modifying these statutory and regulatory
requirements to exclude from a title IV borrower's initial grace
period, any period, not to exceed three years, during which a borrower
is an affected individual in this category. Any excluded period must
include the time necessary for an affected individual in this category
to resume enrollment at the next available enrollment period.
Borrowers in an ``In-School'' Period
A title IV borrower is considered to be in an ``in-school'' status
and is not required to make payments on a title IV loan that has not
entered repayment as long as the borrower is enrolled at an eligible
institution on at least a half-time basis. Under sections 428(b)(7)(A)
and 464(c)(1)(A) of the HEA and 34 CFR 674.31(b)(2), 682.209(a), and
685.207(b), (c), and (e)(2) and (3), when a borrower of a loan under
the Federal Family Education Loan (FFEL) Program, the Direct Loan
Program, or the Federal Perkins Loan Program ceases to be enrolled at
an eligible institution on at least a half-time basis, the borrower is
obligated to begin repayment of the loan after a six or nine-month
grace period, depending on the title IV loan program under which the
loan was made and the terms of the borrower's promissory note. The
Secretary is modifying the statutory and regulatory requirements that
obligate an ``in-school'' borrower who has dropped below half-time
status to begin repayment if the borrower is an affected individual in
this category, by requiring the holder of the loan to maintain the loan
in an ``in-school'' status for a period not to exceed three years,
including the time necessary for the borrower to resume enrollment in
the next regular enrollment period, if the borrower is planning to go
back to school.
Borrowers in an In-School, Graduate Fellowship, or Rehabilitation
Training Program Deferment
Under HEA sections 427(a)(2)(C)(i), 428(b)(1)(M)(i), 428B(a)(2) and
(d)(1), 428C(b)(4)(C), 455(f)(2)(A), and 464(c)(2)(A)(i) and 34 CFR
674.34(b)(1), 682.210(b)(1)(i), (ii), and (iii), 682.210(s)(2), (3),
and (4), 685.204(b), 685.204(c)(1), 685.204(d), and 685.204(e), a title
IV borrower is eligible for a deferment on a loan during periods after
the commencement or resumption of the repayment period on the loan when
the borrower is enrolled and in attendance as a regular student on at
least a half-time basis (or full-time, if required by the terms of the
borrower's promissory note) at an eligible institution; enrolled and in
attendance as a regular student in a course of study that is part of a
graduate fellowship program; engaged in an eligible rehabilitation
training program; or, for Federal Perkins Loan borrowers, engaged in
graduate or post-graduate fellowship-supported study outside the United
States. The borrower's deferment period ends when the borrower no
longer meets one of the above conditions. Under 34 CFR 685.204(c)(2), a
Direct parent PLUS Loan borrower is eligible for a deferment during the
time when the student on whose behalf the loan was obtained is enrolled
on at least a half-time basis.
The Secretary is waiving the statutory and regulatory eligibility
requirements for this deferment for title IV borrowers who were
required to interrupt a graduate fellowship or rehabilitation training
program deferment, or who were in an in-school deferment but who left
school, because of their status as an affected individual in this
category. The holder of the loan is required to maintain the loan in
the graduate fellowship, rehabilitation training program, or in-school
deferment status for a period not to exceed three years, during which
the borrower (or, in the case of an in-school deferment on a parent
PLUS loan, the student on whose behalf the loan was obtained) is an
affected individual in this category. This period includes the time
necessary for the borrower to resume the graduate fellowship program,
resume a rehabilitation training program, or resume enrollment in the
next regular enrollment period if the borrower (or in the case of a
parent PLUS loan, the student) returns to school.
Forbearance
Under section 464(e) of the HEA and 34 CFR 674.33(d)(2), there is a
three-year cumulative limit on the length of forbearances that a
Federal Perkins Loan borrower can receive. To assist Federal Perkins
Loan borrowers who are affected individuals in this category, the
Secretary is waiving these statutory and regulatory requirements so
that any forbearance based on a borrower's status as an affected
individual in this category is excluded from the three-year cumulative
limit.
Under section 464(e) of the HEA and 34 CFR 674.33(d)(2) and (3), a
school must receive a request and supporting documentation from a
Federal Perkins Loan borrower before granting the borrower a
forbearance, the terms of which must be in the form of a written
agreement. The Secretary is waiving these statutory and regulatory
requirements to require an institution to grant forbearance based on
the borrower's status as an affected individual in this category for a
one-year period, including a three-month ``transition period''
immediately following, without supporting documentation or a written
agreement, based on the written or oral request of the borrower, a
member of the borrower's family, or another reliable source. The
purpose of the three-month transition period is to assist borrowers so
that they will not be required to reenter repayment immediately after
they are no longer affected individuals in this category. To grant the
borrower forbearance beyond the initial 12- to 15-month period,
supporting documentation from the borrower, a member of the borrower's
family, or another reliable source is required.
Under 34 CFR 674.33(d)(2) and 682.211(i)(1), a Perkins or FFEL
borrower who requests forbearance because of a military mobilization
must provide the loan holder with documentation showing that he or she
is subject to a military mobilization. The Secretary is waiving this
requirement to allow a borrower who is not otherwise eligible for the
military service deferment under 34 CFR 682.210(t), and 674.34(h) to
receive forbearance at the request of the borrower, a member of the
borrower's family, or another reliable source for a one-year period,
including a three-month transition period that immediately follows,
without providing the loan holder with documentation. To grant the
borrower forbearance beyond this period, documentation supporting the
borrower's military mobilization must be submitted to the loan holder.
[[Page 4557]]
The Secretary will apply the forbearance waivers and modifications
in this section to loans held by the Department.
Collection of Defaulted Loans
In accordance with 34 CFR part 674, subpart C--Due Diligence, and
682.410(b)(6), schools and guaranty agencies must attempt to recover
amounts owed from defaulted Federal Perkins Loan and FFEL borrowers,
respectively. The Secretary is waiving the regulatory provisions that
require schools and guaranty agencies to attempt collection on
defaulted loans for the time period during which the borrower is an
affected individual in this category and for a three-month transition
period. The school or guaranty agency may stop collection activities
upon notification by the borrower, a member of the borrower's family,
or another reliable source that the borrower is an affected individual
in this category. The school or guaranty agency must resume collection
activities after the borrower has notified the school or guaranty
agency that the affected individual status no longer applies and that
the three-month transition period has expired. Alternatively, the
school or guaranty agency may rely upon evidence that the borrower is
receiving Imminent Danger Pay or Hostile Fire Pay (IDP/HFP) to
determine the time frame during which collection should be suspended;
collection may be suspended while the borrower is receiving IDP/HFP and
for three months after that special pay ends. The loan holder must
document in the loan file why it has suspended collection activities on
the loan, and the loan holder is not required to obtain evidence of the
borrower's status while collection activities have been suspended. The
Secretary will apply the waivers described in this paragraph to loans
held by the Department.
Fresh Start Initiative
In March 2021, the Department directed guaranty agencies to halt
collection efforts on defaulted loans to be consistent with the
treatment of Direct Loans. On April 6, 2022, the Department announced
that it would provide borrowers who defaulted on their Federal student
loans prior to the COVID-19 pandemic with additional opportunities to
get their loans out of default. This initiative, called ``Fresh Start''
is described in the Department's Notice of updated waivers and
modifications of statutory and regulatory provisions published on June
16, 2023 (88 FR 39360). Borrowers who take advantage of this
opportunity to get their loans out of default will, as a result, regain
eligibility for title IV, HEA Federal student aid, including Federal
Pell Grants and campus-based aid like Federal Work-Study. The Fresh
Start opportunity will remain available to previously defaulted
borrowers for one year after the end of the COVID-19 pandemic student
loan payment pause. Borrowers eligible for Fresh Start will have one
year to make payment arrangements before being treated as defaulting on
their debt and before their loans will be subject to further collection
efforts. Fresh Start applies to a broader group of individuals than
outlined in this Federal Register notice so for additional information
regarding implementation of the Fresh Start Initiative, refer to
Electronic Announcement (General 22-58) Information About Restored Aid
Eligibility Under Fresh Start Initiative and Dear Colleague Letter GEN-
22-13 Federal Student Aid Eligibility for Borrowers with Defaulted
Loans.
Service-Based Loan Cancellation
Depending on the loan program, borrowers may qualify for loan
cancellation if they are employed full-time in specified occupations,
such as teaching or in law enforcement, or providing eligible volunteer
service pursuant to sections 428J, 460(b)(1), and 465(a)(2)(A)-(M) and
(3) of the HEA, and 34 CFR 674.53, 674.55, 674.56, 674.57, 674.58,
674.60, 682.216, and 685.217. Generally, to qualify for loan
cancellation, borrowers must perform uninterrupted, otherwise
qualifying service for a specified length of time (for example, one
year) or for consecutive periods of time, such as five consecutive
years.
For borrowers who are affected individuals in this category, the
Secretary is waiving the requirements that apply to the various loan
cancellations that such periods of service be uninterrupted or
consecutive, if the reason for the interruption is related to the
borrower's status as an affected individual in this category.
Therefore, the service period required for the borrower to receive or
retain a loan cancellation for which he or she is otherwise eligible
will not be considered interrupted by any period during which the
borrower is an affected individual in this category, including the
three-month transition period. The Secretary will apply the waivers
described in this paragraph to loans held by the Department.
Rehabilitation of Defaulted Loans
A borrower of a Direct Loan or a FFEL Loan must make nine voluntary
on-time, monthly payments over 10 consecutive months to rehabilitate a
defaulted loan in accordance with section 428F(a) of the HEA and 34 CFR
682.405(a)(2)(i) and 685.211(f)(1). Federal Perkins Loan borrowers must
make nine consecutive, on-time monthly payments to rehabilitate a
defaulted Federal Perkins Loan in accordance with section 464(h)(1)(A)
of the HEA and 34 CFR 674.39(a)(2). To assist title IV borrowers who
are affected individuals in this category, the Secretary is waiving the
statutory and regulatory requirements that payments made to
rehabilitate a loan must be consecutive or made over no more than 10
consecutive months. Loan holders should not treat any payment missed
during the time that a borrower is an affected individual in this
category, or during the three-month transition period, as an
interruption in the number of monthly, on-time payments required to be
made consecutively, or the number of consecutive months in which
payment is required to be made, for loan rehabilitation. If there is an
arrangement or agreement in place between the borrower and loan holder
and the borrower makes a payment during this period, the loan holder
must treat the payment as an eligible payment in the required series of
payments. When the borrower is no longer an affected individual in this
category, and the three-month transition period has expired, the
required sequence of qualifying payments may resume at the point they
were discontinued as a result of the borrower's status. The Secretary
will apply the waivers described in this paragraph to loans held by the
Department.
Reinstatement of Title IV Eligibility
Under sections 428F(b) and 464(h)(2) of the HEA and under the
definition of ``satisfactory repayment arrangement'' in 34 CFR
668.35(a)(2), 674.2(b), 682.200(b), and 685.102(b), a defaulted title
IV borrower may make six consecutive, on-time, voluntary, full, monthly
payments to reestablish eligibility for title IV Federal student
financial assistance. To assist title IV borrowers who are affected
individuals in this category, the Secretary is waiving statutory and
regulatory provisions that require the borrower to make consecutive
payments to reestablish eligibility for title IV Federal student
financial assistance. Loan holders should not treat any payment missed
during the time that a borrower is an affected individual in this
category as an interruption in the six consecutive, on-time, voluntary,
full, monthly payments required for reestablishing title IV
[[Page 4558]]
eligibility. If there is an arrangement or agreement in place between
the borrower and loan holder and the borrower makes a payment during
this period, the loan holder must treat the payment as an eligible
payment in the required series of payments. When the borrower is no
longer an affected individual or in the three-month transition period
for purposes of this document, the required sequence of qualifying
payments may resume at the point they were discontinued as a result of
the borrower's status. The Secretary will apply the waivers described
in this paragraph to loans held by the Department.
Consolidation of Defaulted Loans
Under the definition of ``satisfactory repayment arrangement'' in
34 CFR 685.102(b), a borrower with a defaulted FFEL or Direct Loan may
consolidate the defaulted loan into a Direct Consolidation Loan by
making three consecutive, voluntary, on-time, monthly, full payments on
the loan. The Secretary is waiving the regulatory requirement that such
payments be consecutive. FFEL loan holders should not treat any payment
missed during the time that a borrower is an affected individual in
this category as an interruption in the three consecutive, voluntary,
monthly, full, on-time payments required for establishing eligibility
to consolidate a defaulted loan in the Direct Consolidation Loan
Program. If there is an arrangement or agreement in place between the
borrower and loan holder and the borrower makes a payment during this
period, the loan holder must treat the payment as an eligible payment
in the required series of payments. When the borrower is no longer an
affected individual in this category or in the three-month transition
period, the required sequence of qualifying payments may resume at the
point they were discontinued as a result of the borrower's status as an
affected individual. The Secretary will apply the waivers described in
this paragraph to loans held by the Department.
Annual Income Documentation Requirements for Direct Loan and FFEL
Borrowers Under the Income-Based Repayment (IBR), Pay as You Earn
(PAYE), Saving on a Valuable Education (SAVE), Formerly Known as
Revised Pay as You Earn (REPAYE), and Income-Contingent Repayment (ICR)
Plans
Section 493C(c) of the HEA requires the Secretary to establish
procedures for annually determining a borrower's eligibility for the
IBR plan, including verification of a borrower's annual income and the
annual amount due on the total amount of the borrower's loans. Section
455(e)(1) of the HEA provides that the Secretary may obtain such
information as is reasonably necessary regarding the income of a
borrower for the purpose of determining the annual repayment obligation
of the borrower under an ICR plan. Under current 34 CFR 682.215(e);
685.209(a)(5), (b)(3)(vi), and (c)(4); and 685.221(e), borrowers
repaying under the IBR, PAYE, SAVE, formerly known as REPAYE, or ICR
plans must annually provide their loan holder with documentation of
their income and family size so that the loan holder may, if necessary,
adjust the borrower's monthly payment amount based on changes in the
borrower's income or family size. Please note that, as of July 1, 2024,
the application and annual recertification procedures for the IBR,
PAYE, and SAVE plans will be located in Sec. Sec. 685.209(l) and
682.215(e). Borrowers are required to provide information about their
annual income and family size to the loan holder each year by a
deadline specified by the holder. If a borrower who is repaying his or
her loans under the IBR, PAYE, SAVE (formerly known as REPAYE), or ICR
plans fails to provide the required information by the specified
deadline, the borrower's monthly payment amount is adjusted and is no
longer based on the borrower's income. This adjusted monthly payment
amount is generally higher than the payment amount that was based on
the borrower's income.
The Secretary is waiving these statutory and regulatory provisions
to require loan holders to maintain an affected borrower's payment at
the most recently calculated IBR, PAYE, SAVE (formerly known as
REPAYE), or ICR monthly payment amount for up to a three-year period,
including a three-month transition period immediately following the
three-year period, if the borrower's status as an affected individual
in this category has prevented the borrower from providing
documentation of updated income and family size by the specified
deadline.
Category 3: The Secretary is waiving or modifying the following
provisions of title IV of the HEA and the Department's regulations for
affected individuals who are serving on active duty or performing
qualifying National Guard duty during a war or other military operation
or national emergency.
Institutional Charges and Refunds
The HEROES Act encourages institutions to provide a full refund of
tuition, fees, and other institutional charges for the portion of a
period of instruction that a student was unable to complete, or for
which the student did not receive academic credit, because he or she
was called up for active duty or for qualifying National Guard duty
during a war or other military operation or national emergency.
Alternatively, the Secretary encourages institutions to provide a
credit in a comparable amount against future charges.
The HEROES Act also recommends that institutions consider providing
easy and flexible reenrollment options to students who are affected
individuals in this category. At a minimum, an institution must comply
with the requirements of 34 CFR 668.18, which addresses the readmission
requirements for service members serving for a period of more than 30
consecutive days under certain conditions. Some institutions must also
provide protections to service members who are absent for shorter
periods of service, under the Principles of Excellence (Executive Order
13607, issued April 27, 2012). More information is available at:
<a href="https://www.va.gov/education/choosing-a-school/principles-of-excellence/">https://www.va.gov/education/choosing-a-school/principles-of-excellence/</a>.
Of course, an institution may provide such treatment to affected
individuals other than those who are called up to active duty or for
qualifying National Guard duty during a war or other military operation
or national emergency. Before an institution makes a refund of
institutional charges, it must perform the required Return of Title IV
Funds calculations based upon the originally assessed institutional
charges. After determining the amount that the institution must return
to the title IV Federal student aid programs, any reduction of
institutional charges may consider the funds that the institution is
required to return. In other words, we do not expect that an
institution would both return funds to the Federal programs and also
provide a refund of those same funds to the student.
Accessible Format: On request to one of the program contact persons
listed under FOR FURTHER INFORMATION CONTACT, 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
[[Page 4559]]
<a href="http://www.govinfo.gov">www.govinfo.gov</a>. 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
<a href="http://www.federalregister.gov">www.federalregister.gov</a>. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal
Supplemental Educational Opportunity Grant Program; 84.032 Federal
Family Education Loan Program; 84.032 Federal PLUS Program; 84.033
Federal Work Study Program; 84.038 Federal Perkins Loan Program;
84.063 Federal Pell Grant Program; and 84.268 William D. Ford
Federal Direct Loan Program.)
Program Authority: 20 U.S.C. 1071, 1082, 1087a, 1087aa, Part F-
1, 1098aa.
Miguel A. Cardona,
Secretary of Education.
[FR Doc. 2024-01227 Filed 1-23-24; 8:45 am]
BILLING CODE 4000-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.