Rule2024-26698
Income Contingent Repayment Plan Options
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
November 15, 2024
Effective
July 1, 2026
Issuing agencies
Education Department
Abstract
The Department of Education (Department) issues this interim final rule (IFR) to amend the regulations governing income contingent repayment (ICR) plans available to Federal student loan borrowers to make certain that the Department meets its statutory obligation under the Higher Education Act of 1965, as amended, (HEA) to offer borrowers access to an income contingent repayment plan. The scope of this rule is narrow. It just revises the end date for most borrowers to enroll in ICR or Pay as You Earn plans from July 1, 2024, to July 1, 2027. This time-limited change to eligibility restrictions that went into effect on July 1, 2024, will allow the Department to meet its statutory obligations while it undertakes the necessary administrative changes to make its repayment plans that would otherwise be available for borrowers compliant with the terms of an injunction from the U.S. Court of Appeals for the Eighth Circuit (Eighth Circuit).
Full Text
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<title>Federal Register, Volume 89 Issue 221 (Friday, November 15, 2024)</title>
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[Federal Register Volume 89, Number 221 (Friday, November 15, 2024)]
[Rules and Regulations]
[Pages 90221-90230]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-26698]
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DEPARTMENT OF EDUCATION
34 CFR Part 685
[Docket ID ED-2024-OPE-0135]
RIN 1840-AD97
Income Contingent Repayment Plan Options
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Interim final rule; request for comments.
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SUMMARY: The Department of Education (Department) issues this interim
final rule (IFR) to amend the regulations governing income contingent
repayment (ICR) plans available to Federal student loan borrowers to
make certain that the Department meets its statutory obligation under
the Higher Education Act of 1965, as amended, (HEA) to offer borrowers
access to an income contingent repayment plan. The scope of this rule
is narrow. It just revises the end date for most borrowers to enroll in
ICR or Pay as You Earn plans from July 1, 2024, to July 1, 2027. This
time-limited change to eligibility restrictions that went into effect
on July 1, 2024, will allow the Department to meet its statutory
obligations while it undertakes the necessary administrative changes to
make its repayment plans that would otherwise be available for
borrowers compliant with the terms of an injunction from the U.S. Court
of Appeals for the Eighth Circuit (Eighth Circuit).
DATES:
Effective date: These regulations are effective on July 1, 2026.
Implementation date: For the implementation date of these
regulatory changes, see the Implementation Date of These Regulations
section of this document.
Comments due date: We must receive your comments on or before
December 16, 2024.
ADDRESSES: For more information regarding submission of comments,
please see SUPPLEMENTARY INFORMATION. Comments must be submitted via
the Federal eRulemaking Portal at <a href="http://Regulations.gov">Regulations.gov</a>. However, if you
require an accommodation or cannot otherwise submit your comments via
<a href="http://Regulations.gov">Regulations.gov</a>, please email the Help Desk at
<a href="/cdn-cgi/l/email-protection#2d5f484a58414c594442435e4548415d49485e466d4a5e4c034a425b"><span class="__cf_email__" data-cfemail="01736466746d6075686e6f7269646d716564726a416672602f666e77">[email protected]</span></a> or contact by phone at 866-498-2945.
Federal eRulemaking Portal: Please go to <a href="http://www.regulations.gov">www.regulations.gov</a> to
submit your comments electronically. Information on using
<a href="http://Regulations.gov">Regulations.gov</a>, including instructions for finding a rule on the site
and submitting comments, is available on the site under ``FAQ.''
A summary of the rule is available at <a href="https://www.regulations.gov/docket/ED-2024-OPE-0135">https://www.regulations.gov/docket/ED-2024-OPE-0135</a>.
FOR FURTHER INFORMATION CONTACT: For further information contact Tamy
Abernathy, U.S. Department of Education, Office of Postsecondary
Education, 400 Maryland Avenue SW, 5th Floor, Washington, DC 20202.
Telephone: (202) 245-4595. Email: <a href="/cdn-cgi/l/email-protection#ade3c8caffc8cae3fdffe0e5c8c1ddedc8c983cac2db"><span class="__cf_email__" data-cfemail="a2ecc7c5f0c7c5ecf2f0efeac7ced2e2c7c68cc5cdd4">[email protected]</span></a>.
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:
Implementation Date of These Regulations: These regulations are
effective on July 1, 2026. Section 482(c) of the HEA requires that
regulations affecting programs under title IV of the HEA be published
in final form by November 1, prior to the start of the award year (July
1) to which they apply. However, that section also permits the
Secretary to designate any regulation as one that an entity subject to
the regulations may choose to implement earlier, as well as the
conditions for early implementation.
[[Page 90222]]
The Secretary is exercising the authority under section 482(c) of
the HEA to designate the regulatory changes to 34 CFR part 685 included
in this document for early implementation effective on December 16,
2024, for the reasons set forth in the Background and Need for
Regulatory Action sections of this document. This date reflects when
the Department anticipates being ready to process borrower applications
for these plans.
Invitation to Comment: We invite you to submit comments regarding
this IFR. For your comments to have maximum effect in developing the
final regulations, we urge you to clearly identify the specific section
of the regulations that each of your comments addresses. The Department
will not accept comments submitted after the comment period closes.
Please submit your comments only once so that we do not receive
duplicate copies.
The following tips are meant to help you prepare your comments and
provide a basis for the Department to respond to issues raised in your
comments in the final regulations:
<bullet> Be concise but support your claims.
<bullet> Explain your views as clearly as possible and avoid using
profanity.
<bullet> Refer to specific sections and subsections of the
regulations throughout your comments, particularly in any headings that
are used to organize your submission.
<bullet> Explain why you agree or disagree with the regulatory text
and support these reasons with data-driven evidence, including the
depth and breadth of your personal or professional experiences.
<bullet> Where you disagree with the regulatory text, suggest
alternatives, including regulatory language, and your rationale for the
alternative suggestion.
<bullet> Do not include personally identifiable information (PII)
such as Social Security numbers or loan account numbers for yourself or
for others in your submission. Should you include any PII in your
comment, such information may be posted publicly.
<bullet> Do not include any information that directly identifies or
could identify other individuals or that permits readers to identify
other individuals. Your comment may not be posted publicly if it
includes PII about other individuals.
Privacy Note: The Department's policy is to generally make comments
received from members of the public available for public viewing on the
Federal eRulemaking Portal at <a href="http://Regulations.gov">Regulations.gov</a>. Therefore, commenters
should include in their comments only information about themselves that
they wish to make publicly available. Commenters should not include in
their comments any information that identifies other individuals or
that permits readers to identify other individuals. If, for example,
your comment describes an experience of someone other than yourself,
please do not identify that individual or include information that
would allow readers to identify that individual. The Department may not
make comments that contain personally identifiable information (PII)
about someone other than the commenter publicly available on
<a href="http://Regulations.gov">Regulations.gov</a> for privacy reasons. This may include comments where
the commenter refers to a third-party individual without using their
name if the Department determines that the comment provides enough
detail that could allow one or more readers to link the information to
the third-party individual. If your comment refers to a third-party
individual, please refer to the third-party individual anonymously to
reduce the chance that information in your comment could be linked to
the third party. For example, ``a former student with a graduate level
degree'' does not provide information that identifies a third-party
individual, as opposed to ``my sister, Jane Doe, had this experience
while attending University X,'' which does provide enough information
to identify a specific third-party individual. For privacy reasons, the
Department reserves the right to not make available on <a href="http://Regulations.gov">Regulations.gov</a>
any information in comments that identifies other individuals, includes
information that would allow readers to identify other individuals, or
includes threats of harm to another person or to oneself.
Mass Writing Campaigns: In instances where individual submissions
appear to be duplicates or near duplicates of comments prepared as part
of a writing campaign, the Department will post one representative
sample comment along with the total comment count for that campaign to
<a href="http://Regulations.gov">Regulations.gov</a>. The Department will consider these comments along with
all other comments received.
In instances where individual submissions are bundled together
(submitted as a single document or packaged together), the Department
will post all the substantive comments included in the submissions
along with the total comment count for that document or package to
<a href="http://Regulations.gov">Regulations.gov</a>. A well-supported comment is often more informative to
the agency than multiple form letters.
Public Comments: The Department invites you to submit comments on
all aspects of this IFR, specifically the regulatory provisions in
Sec. 685.209(c)(4) and (5), the Regulatory Impact Analysis, and the
Paperwork Reduction Act sections.
The Department may, at its discretion, decide not to post or to
withdraw certain comments and other materials that are computer-
generated. Comments containing the promotion of commercial services or
products, and spam will be removed.
We may not address comments outside of the scope of this IFR.
Generally, comments that are outside of the scope of this IFR are
comments that do not discuss the content or impact of the rule or the
Department's evidence or reasons for this IFR. For instance, the
Department is not changing the terms of the Income Based Repayment
(IBR) plan, so we would not respond to a comment exclusively about the
terms of IBR because it is outside the scope of these regulations.
Comments that are submitted after the comment period closes will
not be posted to <a href="http://Regulations.gov">Regulations.gov</a> or addressed in the IFR.
Comments containing personal threats will not be posted to
<a href="http://Regulations.gov">Regulations.gov</a> and may be referred to the appropriate authorities.
We invite you to assist us in complying with the specific
requirements of Executive Orders 12866, 13563, and 14094 and their
overall requirement of reducing regulatory burden that might result
from these regulations. Please let us know of any further ways we could
reduce potential costs or increase potential benefits while preserving
the effective and efficient administration of the Department's programs
and activities.
During and after the comment period, you may inspect public
comments about this IFR by accessing <a href="http://Regulations.gov">Regulations.gov</a>.
Assistance to Individuals with Disabilities in Reviewing the
Rulemaking Record: On request, we will provide an appropriate
accommodation or auxiliary aid to an individual with a disability who
needs assistance to review the comments or other documents in the
public rulemaking record for these regulations. If you want to schedule
an appointment for this type of accommodation or auxiliary aid, please
contact one of the persons listed under FOR FURTHER INFORMATION
CONTACT.
Background
In this interim final rule, the Department uses ``income contingent
repayment plans'' to refer to repayment plans promulgated by regulation
pursuant to the statutory requirement to create an opportunity for
borrowers to
[[Page 90223]]
pursue income contingent repayment. This includes the plan known as
``ICR,'' as well as Pay As You Earn (PAYE), Revised Pay As You Earn
(REPAYE), and the Saving on a Valuable Education (SAVE) plans.
Section 455(d)(1) of the HEA requires the Secretary of Education
(Secretary) to offer Direct Loan borrowers a variety of student loan
repayment plans. This includes an ``income contingent repayment plan,''
under which a borrower makes payments ``based on the borrower's
income'' for ``an extended period of time prescribed by the Secretary,
not to exceed 25 years.'' \1\ Until recently, the Department offered
three repayment plans in that category: the Income Contingent Repayment
(ICR) plan, the Pay As You Earn (PAYE) plan, and the Revised Pay As You
Earn plan, which we refer to as the ``2015 REPAYE plan'' in this IFR.
Separately, the Department offers an income-based repayment (IBR) plan
created under section 493C of the HEA. The IBR plan has slightly
different terms and conditions for borrowers depending on whether they
first borrowed on or after July 1, 2014. The pre- and post-2014
versions are referred to as ``old IBR'' and ``new IBR,'' respectively.
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\1\ 20 U.S.C. 1087e(d)(1)(D).
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On May 26, 2021, the Department announced its intent to consider
changes to regulations on a range of topics, including income driven
repayment (IDR) plans.\2\ As required by the HEA, these changes were
considered and developed by a negotiated rulemaking committee. On
August 10, 2021, the Department announced the creation of the
Affordability and Student Loans Committee to consider changes to IDR
plans, among other issues.\3\ That committee held week-long meetings in
October, November, and December 2021. On January 11, 2023, the
Department published a notice of proposed rulemaking (NPRM) that
proposed a range of changes to IDR plans, including proposals to limit
the future eligibility of certain repayment plans created under the
income contingent repayment authority because the Department was
creating a single plan issued under this authority that would be the
best choice for the vast majority of borrowers.\4\ After carefully
considering the more than 13,600 public comments \5\ received on the
proposed rule, the Department issued a final rule making changes to IDR
plans on July 10, 2023.\6\ As noted, one of the goals of the regulatory
changes in the IDR final rule was to streamline the income contingent
repayment options available to borrowers by offering a repayment option
that would be the best choice for the majority of borrowers.
Specifically, Sec. 685.209(c)(4)(iv) restricts enrollment in the PAYE
plan to borrowers already enrolled in the plan as of July 1, 2024.
Section 685.209(c)(5)(i) also restricts enrollment in the ICR plan to
borrowers who were on that plan as of July 1, 2024, except under Sec.
685.209(c)(5)(ii), for borrowers who had a Direct Consolidation Loan
disbursed on or after July 1, 2006, that repaid a parent Direct PLUS
Loan or a parent Federal PLUS Loan. Finally, the rule made improvements
to the 2015 REPAYE plan and renamed it the Saving on a Valuable
Education (SAVE) plan.
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\2\ 86 FR 28299 (May 26, 2021).
\3\ 86 FR 43609 (Aug. 10, 2021).
\4\ 88 FR 1894 (Jan. 11, 2023).
\5\ <a href="https://www.regulations.gov/document/ED-2023-OPE-0004-0001/comment">https://www.regulations.gov/document/ED-2023-OPE-0004-0001/comment</a>.
\6\ 88 FR 43820 (July 10, 2023).
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As noted in the IDR final rule's preamble and in response to public
comments, the Department chose to limit future eligibility for PAYE and
ICR because we believed the changes that the rule made to the 2015
REPAYE plan were such that virtually all borrowers who might otherwise
have chosen ICR or PAYE would be better off under the updated REPAYE
plan.\7\ (The Department refers to the amended version of the 2015
REPAYE plan as the ``SAVE plan'' in the remainder of this document.)
Under that final rule, because the Department would be offering
borrowers an option to repay their loans on the SAVE plan, limiting
future enrolment on ICR and PAYE would not be inconsistent with the HEA
requirements that the Department provide borrowers access to a
repayment plan created under the income contingent repayment authority.
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\7\ 88 FR 43836 (July 10, 2023).
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Since the publication of the IDR final rule, the SAVE plan has been
challenged in Federal court actions.\8\ Those challenges have resulted
in several preliminary orders stopping implementation of some or all
major provisions of the SAVE plan.\9\ At the time of this writing, an
injunction pending appeal entered by the Eighth Circuit is in
effect.\10\ That court order enjoins changes in loan repayment terms
that increase the amount of income protected from payments, decrease
the share of income borrowers pay on undergraduate loans, cease
charging monthly interest that is not covered by a borrower's payment
so that they do not see their balance grow from unpaid interest, and
provide loan forgiveness after a shorter period for borrowers with
lower original principal balances.\11\ That order also covers
provisions not specific to the SAVE plan, including enjoining the
Department from providing loan forgiveness to borrowers on the ICR,
PAYE, and both SAVE and the 2015 REPAYE plans, as well as certain
interest benefits available on those plans.\12\
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\8\ See Alaska v. Cardona, No. 24-cv-1057 (D. Kan.) (filed Mar.
28, 2024); Missouri v. Biden, No. 24-cv-520 (E.D. Mo.) (filed Apr.
9, 2024).
\9\ Specifically, in the Missouri case, the U.S. District Court
for the Eastern District of Missouri entered a preliminary
injunction on June 24, 2024, enjoining the shortened time to
forgiveness that had been offered by the SAVE Plan. Missouri v.
Biden, No. 4:24-CV-00520-JAR, 2024 WL 3104514, at *1 (E.D. Mo. June
24, 2024) (preliminary injunction). The challengers appealed and on
July 18, 2024, the Eighth Circuit stayed the entire rule pending
appeal, Missouri v. Biden, No. 24-2332, 2024 WL 3462265, at *1 (8th
Cir. July 18, 2024), and then on August 9, 2024, the Eighth Circuit
entered an injunction pending appeal that replaced the previously
entered stay, Missouri v. Biden, 112 F.4th 531 (8th Cir. 2024) (per
curiam) (injunction pending appeal). In the Alaska case, the U.S.
District Court for the District of Kansas entered a preliminary
injunction on June 24, 2024. See Alaska v. Cardona, No. 24-1057-DDC-
ADM, 2024 WL 3104578, at *1 (D. Kan. June 24, 2024). Thereafter, the
Tenth Circuit Court of Appeals stayed the preliminary injunction
pending appeal. See Alaska v. Cardona, No. 20-3089, Order Staying
Prelim. Inj. (10th Cir. June 30, 2024). That Tenth Circuit appeal
has been held in abeyance pending the outcome of the Eighth Circuit
proceedings.
\10\ Missouri, 112 F.4th at 538.
\11\ See id.
\12\ See id.
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In the IDR final rule, the Department explained that each of those
SAVE plan provisions operated in a manner that was separate and
independent from the others.\13\ For instance, we discussed how the
provision to protect more income from payments operates separately from
the provision affecting the share of income put toward undergraduate
loans. We also noted in the IDR final rule that each of those four main
provisions separately would make SAVE more advantageous for many
borrowers than the existing repayment options, even if only any one of
those four provisions was in place.
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\13\ 88 FR 43828 (July 10, 2023); <a href="https://www.federalregister.gov/d/2023-13112/p-147">https://www.federalregister.gov/d/2023-13112/p-147</a>.
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Following the Eighth Circuit's injunction pending appeal and
ongoing litigation, the Department is not currently complying with the
HEA requirement to provide all Direct Loan borrowers with a repayment
option issued under the income contingent repayment authority. The
Department has placed borrowers enrolled in the SAVE plan into
forbearance and is not currently able to offer borrowers a version of
the SAVE plan that reflects the terms of the 2015 REPAYE plan that was
in place prior to the issuance of the IDR final rule and is now in
effect due
[[Page 90224]]
to the Eighth Circuit's injunction. The Department is actively working
to offer borrowers a version of the SAVE plan that complies with the
Eighth Circuit's injunction pending appeal, but doing so requires
additional coding and development work across major systems and
contractors in the Federal student loan system. The Department
anticipates that such work will not be completed until well into 2025.
While the Department works to implement a compliant version of the
SAVE plan, the absence of such a plan, coupled with the regulatory
limitations on new borrowers enrolling in ICR and PAYE established by
the IDR final rule, have rendered the Department unable to meet its
statutory obligation to offer all Direct Loan borrowers in repayment
the ability to make payments on an income contingent repayment plan as
required by the HEA.\14\ In particular, the Department is not currently
meeting its legal obligation to offer a plan under the income
contingent repayment authority for student borrowers in repayment who
are not already enrolled in PAYE, ICR, or SAVE. And for borrowers on
SAVE who would like to make payments, such as those seeking Public
Service Loan Forgiveness (PSLF), the Department is not able to accept
payments or offer these borrowers a different plan under the income
contingent repayment authority.
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\14\ HEA section 455(d)(1)(D).
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The changes in this IFR therefore address the immediate issue of
the Department's inability to offer plans under the income contingent
repayment authority to all Direct Loan borrowers in repayment, by
adjusting the restrictions in the IDR final rule that prevented
borrowers from enrolling in the PAYE or ICR plans after July 1, 2024,
unless they were already on that plan on that date (provisions
affecting borrowers who consolidate a Parent PLUS loan do not currently
have an enrollment limitation date on ICR). Moving this date from July
1, 2024, to July 1, 2027, allows the Department to comply with the HEA
while we continue to build a version of the SAVE plan that complies
with the Eighth Circuit's injunction pending appeal. This adjustment
also allows time for the Department to implement further changes that
may result from final court orders on the merits of the SAVE plan, and
would accommodate, if necessary, the master calendar for any additional
required rulemaking. Because these changes are time-limited, the long-
term effect of this IFR after July 1, 2027, is the same as what the
Department established in the IDR final rule.
Good Cause To Waive Notice-and-Comment Rulemaking
The Department for good cause finds that conducting notice-and-
comment rulemaking would be impracticable, as explained further below.
Under the Administrative Procedure Act (APA), an agency is not required
to conduct notice-and-comment rulemaking when the agency ``for good
cause finds . . . that notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.'' \15\
It is impracticable for the Department to conduct notice-and-comment
rulemaking in this case, because doing so would further prevent us from
complying with our statutory duty under the HEA to provide borrowers
with an income contingent repayment plan option. See, e.g., Riverbend
Farms, Inc. v. Madigan, 958 F.2d 1479, 1484 n.2 (9th Cir. 1992)
(``Notice and comment is `impracticable' when the agency cannot `both
follow section 553 and execute its statutory duties.' . . .
Emergencies, though not the only situations constituting good cause,
are the most common.'') (quoting Levesque v. Block, 723 F.2d 175, 184
(1st Cir. 1983)).
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\15\ 5 U.S.C. 553(b)(B).
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The Department issues this IFR so that it can expeditiously provide
affected borrowers with the option to make payments on an income
contingent repayment plan. Providing such a plan is an HEA requirement
that the Department is not currently meeting for the vast majority of
borrowers. In particular, borrowers who are not currently enrolled on
PAYE or ICR do not have access to any repayment plan created under the
income contingent repayment authority on which they can make payments,
as is their statutory right. Borrowers not enrolled in an income
contingent repayment plan can only sign up for the SAVE plan. But the
Department cannot bill borrowers on SAVE, and has therefore placed them
all in forbearance, because we are still making the administrative
changes necessary to offer a version of that plan that complies with
the Eighth Circuit injunction.\16\ Similarly, a borrower on the SAVE
plan who wishes to make payments, such as a borrower seeking PSLF, does
not have an income contingent repayment plan available to them that
would provide such an opportunity.
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\16\ See Missouri, 112 F.4th at 538 (injunction pending appeal).
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Under section 492(b)(2) of the HEA, regulations governing rules
under title IV of the HEA are generally subject to negotiated
rulemaking, unless the Secretary determines that applying such a
requirement with respect to given regulations is impracticable,
unnecessary, or contrary to the public interest (within the meaning of
section 553(b) of title 5, United States Code), and publishes the basis
for such determination in the Federal Register at the same time as the
proposed regulations in question are first published. This standard is
the same as the standard used under the under the APA to waive notice-
and-comment rulemaking. Conducting a negotiated rulemaking process,
followed by notice and comment rulemaking, typically takes 18 months
from start to finish. It is important that the Department be able to
comply with its statutory obligation to offer borrowers an income
contingent repayment plan as quickly as possible so that borrowers can
resume repaying their loans. By issuing this interim final rule, the
Department is undertaking stop-gap measures to comply with the HEA by
revising its regulations to adjust the dates limiting enrollment in
PAYE and ICR that were previously adopted through negotiated
rulemaking, followed by notice-and-comment rulemaking. The current
provisions have benefited from negotiated rulemaking in the past, as
well as notice-and-comment rulemaking.
Conducting negotiated and notice-and-comment rulemaking regarding
availability of the ICR and PAYE plans would create an extended time-
period during which the Secretary could not meet the statutory
obligation to offer income contingent repayment to most borrowers.
Accordingly, consistent with section 492(b)(2) of the HEA, the
Secretary determines that applying the negotiated rulemaking
requirement with respect to these regulations is impracticable within
the meaning of 5 U.S.C. 553(b).
The Department undertook work over many months to prepare for the
implementation of all provisions of the IDR final rule by July 2024.
Although the regulations were issued in summer 2023 and some pieces
were implemented beginning in July 2023, cases challenging the rule
were filed in late March and early April 2024, with motions for
emergency relief nearly concurrent with the complaints. Two district
courts ruled on preliminary injunction motions on June 24, 2024, and
from there the two cases have taken divergent paths through the
district and appellate courts. These two different rulings just a few
days prior to the rule's effective date meant it was not possible to
reverse the many months of prior work immediately. The two circuit
courts entered their own orders--one limiting the district court's
injunction
[[Page 90225]]
and the other significantly expanding it. After each of these rulings,
the Department had to reconfigure its stopgap measures to avoid
violating any court rulings and to follow its obligations to borrowers.
Following the Eighth Circuit's injunction, the Department focused on
immediate compliance with the order, including going through the
necessary change management with servicers, issuing stop work orders,
and examining effects on a range of different systems. For example, the
Department had to pause processing of applications, pause the new
features that automatically calculated borrowers' payment amounts using
a data match with another Federal agency, and reconfigure the online
application for IDR plans, following a lengthy outage, in order to be
in compliance.
This IFR allows the Department to comply as quickly as possible
with the HEA requirement to offer an income contingent repayment plan.
The Department is actively working to offer borrowers a version of the
SAVE plan that complies with the Eighth Circuit injunction but
anticipates that will not be completed until well into 2025. Providing
such a plan requires making coding changes to major FSA systems related
to loan repayment and working with all major student loan contractors.
That involves a ``change management process'' that takes significant
time to negotiate costs, test the new programming to confirm accuracy,
and other necessary steps to make sure the Department does not violate
any terms of the injunction. It is not until the first few steps of
this process (drafting requirements, submitting change requests to
servicers, receiving times and estimates and negotiating with servicers
to complete the required work) are finished that the Department can
accurately assess how long the rebuild will take. Once it became clear
that this process would take the better part of a year, the Department
needed to find a stopgap solution to meet its statutory obligations. As
noted above, implementing these changes for a limited period also
allows the Department to address any further alterations to income
contingent repayment plans required by future court orders, while
continuing to meet its HEA requirements. The long-term effect of these
changes is the same as what was issued in the final IDR rules.
Regulations
The following is a discussion of the regulations in this IFR.
Statute: Section 455(d) of the HEA provides that the Secretary will
offer a variety of plans for repayment of eligible Direct Loans,
including principal and interest on the loans. Section 455(d)(1)(D) of
the HEA requires the Secretary to offer an income contingent repayment
plan that allows borrowers to make payments of varying annual repayment
amounts based on the borrower's income, paid over an extended period
prescribed by the Secretary, not to exceed 25 years. Section 455(e)(4)
of the HEA authorizes the Secretary to establish income contingent
repayment plan procedures and repayment schedules through regulations.
Section 455(e)(2) of the HEA provides that a repayment schedule for a
Direct Loan that is repaid pursuant to the income contingent repayment
authority is based on the adjusted gross income (AGI) (as defined in
section 62 of the Internal Revenue Code of 1986) of the borrower or, if
the borrower is married and files a Federal income tax return jointly
with the borrower's spouse, on the AGI of both the borrower and the
borrower's spouse. Section 455(e)(7) of the HEA identifies the periods
that the Secretary must include in the calculation of the maximum
repayment period under the income contingent repayment plans.
Current Regulations: Section 685.209(c)(4)(iv) states that a
borrower cannot repay a loan under the PAYE plan unless they were
enrolled in that plan on July 1, 2024. Section 685.209(c)(5) also
restricts enrollment in the ICR plan to borrowers who were on that plan
as of July 1, 2024, or who had a Direct Consolidation Loan disbursed on
or after July 1, 2006, that repaid a parent Direct PLUS Loan or a
parent Federal PLUS Loan.
New Regulations: The Department adjusts the date after which a
borrower cannot begin to repay a loan under PAYE unless they are
already on the plan as provided in Sec. 685.209(c)(4)(iv) from July 1,
2024, to July 1, 2027. Similarly, we revise the date after which
borrowers cannot begin to repay a loan under ICR unless they are
already on that plan or have a consolidation loan that repaid a Parent
PLUS loan as provided in Sec. 685.209(c)(5)(i)(B) from July 1, 2024 to
July 1, 2027. Note that we are not changing Sec. 685.209(c)(5)(iii),
which provides that a borrower with a consolidation loan disbursed on
or after July 1, 2025, that repaid a Parent PLUS loan may only access
the ICR plan.
Reasons: Section 455(d)(1)(D) of the HEA requires the Secretary to
offer Direct Loan borrowers in repayment the opportunity to make
payments under an income contingent repayment plan that is based upon
the borrower's income and for a period not to exceed 25 years. In the
IDR final rule, the Department adopted restrictions that limited PAYE
to only borrowers who were enrolled in that plan as of July 1, 2024,
and ICR to only borrowers who were enrolled in that plan as of July 1,
2024, or who had a consolidation loan that repaid a Parent PLUS loan.
The Department adopted those policies on two grounds. First, we
believed that borrowers were not harmed by the removal of access to
PAYE and ICR, because the SAVE plan was superior to ICR and PAYE. The
sunsetting of new enrollment in those plans still allowed the
Department to meet its obligations to offer an income contingent
repayment plan due to the presence of SAVE, and not leave any borrowers
worse off. Second, we were concerned at the time that offering many
repayment plans based upon borrowers' incomes created confusion for
borrowers that made it harder for them to select the best plan and
could cause some borrowers to not choose any of these plans and instead
risk delinquency and default.
However, the Department is concerned that current restrictions on
REPAYE plus the current inability to offer a version of the SAVE plan
that complies with the Eighth Circuit's injunction pending appeal
leaves us unable to meet our HEA requirement to offer an income
contingent repayment plan to Direct Loan borrowers in repayment. The
Department does not have discretion to waive this requirement.
The Department is therefore changing the dates limiting eligibility
for the ICR and PAYE plans so that we can comply with the HEA
requirement to offer an income contingent repayment plan to borrowers
as fast as possible through a time-limited adjustment. Absent these
changes, the only income contingent repayment plan currently available
to borrowers who are newly entering repayment or who did not remain in
the ICR or PAYE plan is the SAVE plan. However, the Eighth Circuit's
injunction pending appeal requires the Department to update and modify
that plan to offer a version that is compliant with the court order.
The Department is actively working to make such changes. However, we
anticipate they will not be ready until well into 2025, as changes must
be made to every major system that touches student loan repayment,
including significant additional work by Department contractors, the
speed of which the Department is often unable to fully control. Those
changes must be negotiated through the change management process and
include extensive development and testing. Altering the eligibility
dates for the PAYE and ICR plans therefore is the
[[Page 90226]]
only course available to the Department to make certain it meets its
obligations under the HEA as fast as possible. These changes make no
other alterations to the underlying terms or conditions of such plans,
including no changes to the amount a borrower pays each month or the
types of loans otherwise available.
The Department views these changes to the eligibility dates as
severable, as each could operate sensibly and independently if the
other were struck down. Specifically, Sec. 685.209(c)(4)(iv) relates
only to borrower eligibility to repay under PAYE, while Sec.
685.209(c)(5)(i)(B) relates only to borrower eligibility to repay under
ICR.
The Department is making these changes time-limited to reflect that
providing a compliant version of SAVE will eventually allow us to
otherwise fulfill our obligations under the HEA to offer an income
contingent repayment plan. We ultimately selected the end date of July
1, 2027, because we believe that date provides a sufficient window to
implement any future court-ordered changes to SAVE. Although the
Department hopes for a final decision on the merits of the SAVE plan by
summer 2025, it is possible the cases could not be fully resolved until
later, even extending as far as summer 2026 or beyond. The Department
also wants to make sure that if any further implementation work is
needed to comply with a final decision, that the Department has time to
meet its HEA requirement to offer borrowers an income contingent
repayment plan. Because the Department generally implements changes to
the title IV programs on July 1, at the start of the new award year, we
believe July 1, 2027, is the most reasonable date that makes certain we
will not need to further adjust dates if the litigation is not resolved
relatively quickly.
Though the Department's focus in this IFR is on meeting its
statutory requirement to offer borrowers an income contingent repayment
plan, we note that the timing of the early implementation of these
changes is also critical for borrowers due to the expiration of
temporary benefits to help ease the transition to repayment following
the national pause on payments, interest, and collections. In
particular, until September 2024 the Department had in effect an on-
ramp period that assisted borrowers who were unable to make their
payments or needed more time to access information to best determine
the right repayment plan. The on-ramp required borrowers to make their
payments, and interest continued to accrue. However, the policy
prevented the worst consequences of missed, late, or partial payments,
including negative credit reporting delinquent payments. Now that the
on-ramp period has ended, borrowers who miss at least 90 days of
payments will start seeing negative credit reporting as early as
January 2025 and borrowers will start moving toward default. Making
these time-limited changes now will allow borrowers to have the full
set of repayment options required under the HEA as they begin to
navigate this final stage of return to repayment.
The Department recognizes that granting access to PAYE and ICR for
some additional time is contrary to the other policy goal stated in the
IDR final rule of simplifying the set of repayment options for
borrowers. However, we believe this step is reasonable in light of
changed circumstances and legal developments that have occurred since
the finalization of the rule that created those eligibility
limitations. In particular, we enacted those limitations because
borrowers would have access to the SAVE plan. But the Department is not
currently able to offer a version of that plan that complies with the
Eighth Circuit injunction. Therefore, the simplification goal of the
IDR final rule is not currently achievable, and the Department is not
otherwise meeting the HEA requirement to offer an income contingent
repayment plan for borrowers who are not currently enrolled in ICR,
PAYE, or REPAYE.
Finally, the Department notes that restoring access to PAYE and ICR
is not inconsistent with the Eighth Circuit's injunction pending appeal
that prevents the Department from providing loan forgiveness to
borrowers on plans established under the income contingent repayment
authority, nor with any other court order. The Eighth Circuit's
injunction pending appeal affects the provision of forgiveness to
borrowers on these plans, not the authority to offer them. The
injunction, as the court noted, does not otherwise apply to borrowers
on the PAYE and ICR plans and borrowers currently enrolled in those
plans continue to make payments. The Department will continue to comply
with any orders from any court preventing the offering of forgiveness
on plans promulgated using the income contingent repayment authority.
Until borrowers receive final certainty about the pending cases,
the necessary step taken by this IFR represents a stop-gap solution for
the Department to carry out its responsibilities under the HEA. At the
same time, it is critical to note that the Eighth Circuit's injunction
against forgiveness, if continued long-term, would impose a significant
limitation on the share of borrowers who would achieve their best
financial outcomes through a restored PAYE or ICR plan. As noted above,
borrowers seeking PSLF and other subsets of borrowers who would benefit
from entering repayment at a reduced payment amount would derive the
greatest benefit from PAYE and ICR.
Regulatory Impact Analysis (RIA)
Under Executive Order 12866, the Office of Management and Budget
(OMB) must determine whether this regulatory action is ``significant''
and, therefore, subject to the requirements of the Executive order and
subject to review by OMB. Section 3(f) of Executive Order 12866, as
amended by Executive Order 14094, defines a ``significant regulatory
action'' as an action likely to result in a rule that may--
(1) Have an annual effect on the economy of $200 million or more
(adjusted every 3 years by the Administrator of the Office of
Information and Regulatory Affairs (OIRA) at OMB for changes in gross
domestic product), or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
Tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise legal or policy issues for which centralized review would
meaningfully further the President's priorities, or the principles
stated in the Executive order, as specifically authorized in a timely
manner by the Administrator of OIRA in each case.
This regulatory action is a significant regulatory action subject
to review by OMB under section 3(f)(4) of Executive Order 12866, as
amended by Executive Order 14094. The proposed annual net budget effect
is not larger than $200 million, as a result this regulatory action is
not significant under section 3(f)(1) of Executive Order 12866, as
amended by Executive Order 14094. Notwithstanding this determination,
we have assessed the potential costs and benefits, both quantitative
and qualitative, of this regulatory action and have determined that the
benefits will justify the costs.
We have also reviewed these regulations under Executive Order
13563, which supplements and
[[Page 90227]]
explicitly reaffirms the principles, structures, and definitions
governing regulatory review established in Executive Order 12866. To
the extent permitted by law, Executive Order 13563 requires that an
agency--
(1) Propose or adopt regulations only on a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives and considering--among
other things and to the extent practicable--the costs of cumulative
regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance a regulated entity must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including economic incentives--such as user fees or
marketable permits--to encourage the desired behavior, or provide
information that enables the public to make choices.
Executive Order 13563 also requires an agency ``to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible.'' OIRA has emphasized
that these techniques may include ``identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes.''
We are issuing these final regulations only on a reasoned
determination that their benefits would justify their costs. In
choosing among alternative regulatory approaches, we selected those
approaches that in the Department's estimation best balance the size of
the estimated transfer and qualitative benefits and costs. Based on the
analysis that follows, the Department believes that these final
regulations are consistent with the principles in Executive Order
13563.
We have also determined that this regulatory action will not unduly
interfere with State, local, territorial, and Tribal governments in the
exercise of their governmental functions.
As required by OMB Circular A-4, we compare the final regulations
to the current regulations. In this regulatory impact analysis, we
discuss the need for regulatory action and summarize key provisions,
potential costs and benefits, net budget impacts, and the regulatory
alternatives we considered.
Elsewhere in this section under Paperwork Reduction Act, we
identify and explain burdens specifically associated with information
collection requirements.
1. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
OIRA has found that this rule does not meet the criteria in 5 U.S.C.
804(2).
2. Need for Regulatory Action
These regulations address an urgent challenge that prevents the
Department from currently complying with requirements in section
455(d)(1)(D) of the HEA to offer an income contingent repayment plan to
Direct Loan borrowers. This is a result of restrictions on the ability
of borrowers not currently enrolled in PAYE or ICR to participate in
those plans, plus the urgent need to revise the SAVE plan to comply
with an injunction issued by the Eighth Circuit. These regulations
allow the Department to offer at least one repayment option under the
income contingent repayment authority to borrowers on a time-limited
basis while the Department actively works to carry out the operational
steps necessary to offer an injunction-compliant version of SAVE.
3. Summary of Key Provisions
----------------------------------------------------------------------------------------------------------------
Provision Regulatory section Description of provision
----------------------------------------------------------------------------------------------------------------
Change eligibility limitation on Sec. 685.209(c)(4)(iv)............... Limits PAYE to borrowers enrolled
PAYE to 2027. in that plan as of July 1, 2027,
instead of July 1, 2024.
Change eligibility limitation on ICR Sec. 685.209(c)(5)(i)(B)............. Limits ICR to a borrower who was
enrolled in that plan as of July
1, 2027, instead of July 1,
2024, while continuing the
exception for borrowers repaying
a Direct consolidation loan that
repaid a Parent PLUS loan.
----------------------------------------------------------------------------------------------------------------
4. Discussion of Costs, Benefits and Transfers
This rule adjusts the eligibility requirements that allow borrowers
to enroll in the ICR and PAYE plans until July 1, 2027, an extension
from the existing date of July 1, 2024.
As described further in the Net Budget Impact section of this RIA,
the Department does not estimate a significant budgetary impact from
this regulation. For existing borrowers, the Department already assumes
in our budget baseline that borrowers who would benefit from PAYE or
ICR over SAVE in the long term are already in those plans. As noted in
the IDR final rule that created the SAVE plan,\17\ the Department's
budget modeling assigns IDR borrowers to specific plans based on a
comparison of the net present value of the payments the borrower makes
under the various plans for which they are eligible. For future
borrowers, we anticipate continued availability of the SAVE plan and do
not evaluate borrowers having the choice of ICR or PAYE against IBR in
the absence of SAVE. Moreover, the time-limited nature of these changes
means that only a future borrower who enters repayment by July 1, 2027,
would be able to select the ICR or PAYE plans.
---------------------------------------------------------------------------
\17\ 88 FR 43820 (July 10, 2023).
---------------------------------------------------------------------------
The primary benefit of these changes for the Department is that
they allow us to meet our statutory obligation under the HEA to offer
payments under the income contingent repayment authority. There may
also be secondary benefits to the Department. This includes the
possibility that borrowers choose to enroll in PAYE or ICR instead of
falling delinquent or going into default. It could also mean a
reduction in questions or concerns from borrowers, such as those
seeking PSLF, who are trying to figure out how to make qualifying
monthly payments.
Borrowers who elect to enroll in the PAYE or ICR plans during this
time-limited period may also see some benefits, which would include
some additional certainty about their payment amounts in the face of
litigation as well as the ability to make progress toward certain types
of forgiveness during the time until the pending cases are resolved.
For instance, there are approximately 200,000 borrowers enrolled in the
SAVE plan who have certified at least some employment toward PSLF, and
who are eligible for the PAYE plan, but who are not eligible for the
terms of the IBR plan offered to borrowers who first took out a loan on
or after July 1, 2014. If these individuals choose to sign up for PAYE,
they would
[[Page 90228]]
be able to continue making progress toward PSLF by making payments
equal to 10 percent of their discretionary income. By contrast, if
these borrowers did not have access to PAYE, they would have to choose
a version of the IBR plan that sets their payments at 15 percent of
discretionary income. For instance, a single borrower who makes $60,000
a year would pay $318 a month on PAYE instead of $477 on the older IBR
plan, a savings of $159. It is possible that there may be other
borrowers on SAVE who would consider a switch on a temporary basis,
such as a borrower who would have a $0 payment on either PAYE or ICR.
There were also just over 800,000 borrowers who switched from either of
these plans onto SAVE after its creation.
Beyond borrowers currently enrolled in SAVE, there are
approximately 13.9 million borrowers who are in repayment and who do
not have Parent PLUS loans who are not currently on an income
contingent repayment plan.\18\ While the Department cannot speculate on
how many of these borrowers may want to sign up for either ICR or PAYE,
depending on their eligibility, the Department is not currently meeting
its obligations under the HEA to provide these borrowers with an income
contingent repayment option.
---------------------------------------------------------------------------
\18\ We exclude borrowers with a Parent PLUS loan because those
who consolidate would have access to the ICR plan regardless of this
IFR. This number also excludes borrowers in deferments.
---------------------------------------------------------------------------
The monthly payment savings described above would be similar for
any borrower with older loans that are not eligible for the version of
IBR for newer borrowers but who is eligible for PAYE. This could
include borrowers who have recently returned to repayment through the
Fresh Start Initiative, which allowed borrowers to exit default. It
also could include older borrowers who are now considering IDR plans.
This IFR creates administrative costs relating to systems updates
that allow borrowers to access PAYE and ICR. We anticipate these would
be one-time costs of $400,000 as these plans still exist for
continuously enrolled borrowers. The ability to select PAYE or ICR
could also create costs in the form of transfers if borrowers are able
to select plans that produce lower payments over the borrower's time in
repayment. The nature and extent of these costs depends on baseline
policy, namely what other plans are available and the terms of those
plans. We do not anticipate these costs will be significant, as we
discuss in the Net Budget Impact section.
There may be additional costs related to the potential that
borrowers may have a harder time choosing among repayment plans.
However, we think several factors mitigate this concern. One is that,
until a version of the SAVE plan that is compliant with the court
injunction is available, the number of options for borrowers to make
payments on an income contingent repayment plan will not be appreciably
larger. For some borrowers, the ICR plan may be their only option,
while the choice for borrowers who are eligible for PAYE and ICR should
be simple, because the former generally produces lower payments for
most borrowers. Over the long run, the time-limited nature of these
changes means that eventually borrowers will go back to only choosing
the SAVE plan, or the ICR plan if they have a consolidation loan that
repaid a Parent PLUS loan. The Department will also continue working to
improve and update tools available to help borrowers choose their
plans.
5. Net Budget Impact
As the Department expects the SAVE plan to be available and
advantageous to most borrowers in the long run, we do not estimate a
significant budget impact from making PAYE and ICR available again to
eligible borrowers, including those who had chosen SAVE. As was noted
in the final rule that created the SAVE plan (88 FR 43820), the
Department's budget modeling assigns IDR borrowers to specific plans
based on a comparison of the net present value of the payments the
borrower makes under the various plans for which they are eligible.\19\
That means the borrowers we estimate would be better off in PAYE or ICR
are already in that plan in the President's Budget for fiscal year (FY)
2025 (PB2025) baseline. These borrowers are generally going to be those
who have graduate debt and those with incomes that are expected to rise
to the point where their calculated payment would eventually be equal
to or greater than what they would owe on the 10-year standard
repayment plan. These borrowers might be better off on PAYE because the
terms of PAYE, absent the current injunction, provide for forgiveness
after 20 years of payments instead of the 25 years on IBR if the loan
was borrowed before July 1, 2014, or the 25 years for graduate
borrowers on SAVE.\20\ In addition, PAYE caps payments at the amount
determined under the 10-year standard plan for borrowers so long as
their payments were below that level when they first enrolled. By
contrast, there is no payment cap on SAVE. With this assumption that
borrowers know their income and family profile trajectories over the
life of their loans and choose the plan that offers the lowest
lifetime, present-discounted payments, the regulation provides
borrowers with an option to enroll in a non-SAVE income contingent
repayment plan that does not have a significant scoreable budgetary
impact.
---------------------------------------------------------------------------
\19\ <a href="https://www.federalregister.gov/d/2023-13112/p-1006">https://www.federalregister.gov/d/2023-13112/p-1006</a>.
\20\ Forgiveness on income contingent repayment plans is
currently enjoined, but the modeling discussed here took place prior
to that injunction.
---------------------------------------------------------------------------
However, there is considerable uncertainty regarding when borrowers
in SAVE may see their payments resume due to ongoing litigation. A
lengthy forbearance for borrowers in the SAVE plan could lead some
borrowers to decide to enroll in a different income contingent
repayment plan if that would result in lower net present value of
payments. In order to evaluate this, the Department has done a
sensitivity analysis that includes a nine-month forbearance in FY 2025
that does not count toward IDR forgiveness with the PB2025 baseline
SAVE borrowers and compared that to a run with the SAVE or PAYE/ICR
choice redone to include that forbearance in the choice decision. As is
the case for the baseline choice decision, the plan choice for the
sensitivity is based on the net present value (NPV) at a 30 percent
discount rate between the cashflow streams for each plan generated for
the borrower sample. This is the approach the Department has used for
modeling IDR plan choice decisions and takes into account changes
across the entire payment stream. This approach assumes borrowers know
their income and family profile trajectories over the life of their
loans and choose the plan that offers the lowest lifetime, present-
discounted payments. The Department recognizes that borrowers may use
different logic when choosing a repayment plan, such as comparing near-
term monthly payments, and will not have information about their future
incomes and family patterns to match this type of analysis, but we
believe any decision logic would result in a relatively small
percentage of borrowers choosing to revert to PAYE or ICR long-term.
The sensitivity run resulted in a cost of $70.5 million, which
represents the effect of the change in payments on the estimated net
present value of all future non-administrative Federal costs associated
with cohorts of loans.
6. Accounting Statement
As required by OMB Circular A-4, we have prepared an accounting
statement
[[Page 90229]]
showing the classification of the expenditures associated with the
provisions of these regulations. These effects occur over the lifetime
of the first ten loan cohorts following implementation of this rule.
The cashflows are discounted to the year of the origination cohort in
the modeling process and then those amounts are discounted at two
percent to the present year in this Accounting Statement. This table
provides our best estimate of the changes in annualized monetized
transfers that result from these final regulations. Expenditures are
classified as transfers from the Federal Government to affected student
loan borrowers.
------------------------------------------------------------------------
Category Benefits
------------------------------------------------------------------------
Complying with statutory requirements to Not quantified.
offer an income contingent repayment plan.
------------------------------------------------------------------------
Category Costs
(2%)
------------------------------------------------------------------------
One-time administrative costs to Federal $0.04.
Government to update systems and contracts
to implement the final regulations.
------------------------------------------------------------------------
Category Transfers
(2%)
------------------------------------------------------------------------
Reduced transfers from borrowers based on Not quantified.
borrowers now accessing PAYE or ICR.
------------------------------------------------------------------------
7. Alternatives Considered
The Department considered a few alternatives in issuing this IFR.
First, we considered not issuing any regulations and leaving access to
IDR plans unchanged. Second, we considered not issuing these
regulations as an IFR and instead conducting negotiated rulemaking
followed by notice and comment. However, for the reasons explained
above, we decided to make these changes in an IFR. As outlined in the
preamble to this IFR, we are making these time-limited changes because
the Department is not currently complying with the statutory
requirement to offer borrowers an income contingent repayment plan
while we work to offer a version of the SAVE plan that complies with
the Eighth Circuit's injunction. We also considered alternative new
dates for when a borrower would no longer be able to access PAYE or ICR
unless they were already enrolled in that plan. All the dates we
considered were on July 1 to reflect the start of the new award year,
which is when changes to Federal student aid regulations generally go
into effect. We initially considered dates before July 1, 2026 but were
concerned that we may not have a final decision on SAVE by that point
and therefore will not know if we need to make any further changes that
would prevent us from offering a compliant version of SAVE by that
date. We also declined to use these earlier dates because we thought
choosing a date to sunset these provisions that was the same as or
before the effective date of this IFR would generate unwanted
confusion. Because we want to provide clarity to borrowers and not make
further adjustments to the dates in this IFR, we chose July 1, 2027, as
the date that provides sufficient time to make certain the Department
is not again in a position of being unable to offer an income
contingent repayment plan without making a change that reopens PAYE and
ICR without a cutoff.
8. Regulatory Flexibility Act
The Secretary certifies, under the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), that this final regulatory action will not have a
significant economic impact on a substantial number of ``small
entities.'' \21\
---------------------------------------------------------------------------
\21\ 5 U.S.C. 601(3), (4), (5), and (6) defines small business,
small organization, small governmental jurisdiction, and small
entity, respectively.
---------------------------------------------------------------------------
These regulations will not have a significant impact on a
substantial number of small entities because they are focused on
arrangements between the individual borrower and the Department. There
are no small entities that are impacted by this rule. This rule does
not affect institutions of higher education in any way, and those
entities are typically the focus of the Regulatory Flexibility Act
analysis for the Department of Education.
9. Paperwork Reduction Act
We have determined that there are no Paperwork Reduction Act of
1995 implications specifically associated with regulations in this IFR.
Borrowers who wish to sign up for PAYE or ICR repayment plans under
this IFR will be completing the form that already exists for enrollment
in other IDR plans, OMB Control Number 1845-0102. To accommodate the
changes made to the programs in the IDR final rule and the court
challenges, we are separately updating the current IDR form under an
emergency clearance and will be providing a full 60-day and 30-day
public comment period. We do not estimate any new burden to 1845-0102
from this IFR.
10. Intergovernmental Review
This program is subject to Executive Order 12372 and the
regulations in 34 CFR part 79. One of the objectives of the Executive
order is to foster an intergovernmental partnership and a strengthened
federalism. The Executive order relies on processes developed by State
and local governments for coordination and review of proposed Federal
financial assistance.
This document provides early notification of our specific plans and
actions for this program.
11. Assessment of Educational Impact
In accordance with section 411 of the General Education Provisions
Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on
whether these final regulations would require transmission of
information that any other agency or authority of the United States
gathers or makes available.
12. Federalism
Executive Order 13132 requires us to provide meaningful and timely
input by State and local elected officials in the development of
regulatory policies that have federalism implications. ``Federalism
implications'' means substantial direct effects on the States, on the
relationship between the National Government and the States, or on the
distribution of power and responsibilities among the various levels of
government. The regulations do not have federalism implications.
Accessible Format: On request to the program contact person(s)
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
[[Page 90230]]
text format (txt), a thumb drive, an MP3 file, braille, large print,
audiotape, or compact disc, or another 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 <a href="http://www.govinfo.gov">www.govinfo.gov</a>. You can view this document, as
well as all other Department documents published in the Federal
Register, in text or Adobe Portable Document Format (PDF) at this site.
To use PDF, you must have Adobe Acrobat Reader, which is available free
at the site.
You may also access Department documents 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.
List of Subjects in 34 CFR Part 685
Administrative practice and procedure, Colleges and universities,
Education, Loan programs--education, Reporting and recordkeeping
requirements, Student aid, Vocational education.
Miguel Cardona,
Secretary of Education.
For the reasons discussed in the preamble, the Secretary of
Education amends part 685 of title 34 of the Code of Federal
Regulations as follows:
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
0
1. The authority citation for part 685 continues to read as follows:
Authority: 20 U.S.C. 1070g, 1087a, et seq., unless otherwise
noted.
0
2. Amend Sec. 685.209 by revising paragraphs (c)(4) and (5) to read as
follows:
Sec. 685.209 Income-driven repayment plans.
* * * * *
(c) * * *
(4) A borrower may repay under the PAYE plan only if the borrower--
(i) Has loans eligible for repayment under the plan;
(ii) Is a new borrower;
(iii) Has a partial financial hardship when the borrower initially
enters the plan; and
(iv) Was repaying a loan under the PAYE plan on July 1, 2027. A
borrower who was repaying under the PAYE plan on or after July 1, 2027,
and changes to a different repayment plan in accordance with Sec.
685.210(b) may not re-enroll in the PAYE plan.
(5)(i) Except as provided in paragraph (c)(5)(ii) or (iii) of this
section, a borrower may enroll under the ICR plan only if the
borrower--
(A) Has loans eligible for repayment under the plan; and
(B) Was repaying a loan under the ICR plan on July 1, 2027. A
borrower who was repaying under the ICR plan on or after July 1, 2027,
and changes to a different repayment plan in accordance with Sec.
685.210(b) may not re-enroll in the ICR plan unless they meet the
criteria in paragraph (c)(5)(ii) or (iii) of this section.
(ii) A borrower may choose the ICR plan to repay a Direct
Consolidation Loan disbursed on or after July 1, 2006, and that repaid
a parent Direct PLUS Loan or a parent Federal PLUS Loan.
(iii) A borrower who has a Direct Consolidation Loan disbursed on
or after July 1, 2025, which repaid a Direct parent PLUS loan, a FFEL
parent PLUS loan, or a Direct Consolidation Loan that repaid a
consolidation loan that included a Direct parent PLUS or FFEL parent
PLUS loan, may not choose any IDR plan except the ICR plan.
* * * * *
[FR Doc. 2024-26698 Filed 11-14-24; 8:45 am]
BILLING CODE 4000-01-P
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</html>Indexed from Federal Register on November 15, 2024.
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.