# SUPPORTING STATEMENT

Information Collections Under the Final Regulations Governing the
Federal Perkins Loan Program

# Justification

1.  **Necessity of Information Collected**

The Federal Perkins Loan Program (Perkins Loan) final regulations revise
current regulation in the areas of program administration.

These final regulations are a result of regulatory review of the program
to reduce administrative burden for program participants, provide
benefits to borrowers, and protect the taxpayer's interest. This request
is for approval of reporting and recordkeeping requirements contained in
the attached final regulation related to the administrative requirements
of the Perkins Loan Program. The information collection requirements in
these final regulations are necessary to determine eligibility to
receive program benefits and to prevent fraud and abuse of program
funds.

**Perkins Loan Program:** (OMB control number 1845-0023)

[OMB control number 1845-0023)]{.underline}

Sections 674.39, 674.41, 674.42, 674.43, 674.45, 674.47, 674.48, and
674.49 contain information collection requirements currently approved by
OMB under control number 1845-0023. In addition to the currently
approved burden for these sections we are requesting increased burden to
the following sections as a result of regulatory changes generated as a
result of negotiated rulemaking.

**Section 674.39 -- Loan rehabilitation.**

Participating institutions are required to have a loan rehabilitation
program for the purpose of rehabilitating defaulted loans. There is
change to the burden assessed with the regulation. The number of Perkins
loans in rehabilitation has significantly increased; however the number
of schools has remained the same.

**Section 674.41 -- Due diligence -- general requirements.**

Institutions are required to inform the borrower on a timely basis and
exercise due diligence in the collection of Perkins loans. Additionally,
institutions are required to coordinate among the various campus
administrative offices involved in the billing and collection process,
all information that bears upon the borrower. There is an increase in
the burden associated with this regulation.

**Section 674.42 -- Contact with the borrower.**

Institutions are required to provide borrowers with information about
the repayment of the loan, a description of the charges, an explanation
of loan consolidation or other refinancing, as well as other information
about the amount of the repayment, the frequency, and to whom the
payments must be made. Generally, this information is provided the
borrower as part of the required exit interview process. The institution
is required to maintain information substantiating the institution's
compliance with these due diligence regulations. There is an increase to
the burden associated with this regulation. The number of loans in
rehabilitation has increased significantly; however the number of
schools has remained the same.

**Section 674.43 -- Billing procedures.**

Institutions are required to notify borrowers about the amount of
repayment due, to remind borrowers when their payment is overdue, and to
demand payment of overdue amounts. There is an increase to the burden
associated with this regulation. The school's use of technology has not
increased the burden of reminders to borrowers.

**Section 674.45 -- Collection procedures.**

Borrowers who do not respond satisfactorily to demand notices for
repayment of defaulted loans must be referred for intensive collection
efforts. Those efforts include reporting default to a national credit
bureau, either the use of institutional resources to collect or the use
of a collection agency, and ultimately litigation to resolve the debt.
There is an increase to the burden associated with this regulation due
to borrowers pursuing consolidation and broadened eligibility for
cancellation procedures.

# Section 674.47 -- Costs chargeable to the Fund

The regulation provide detail about the billing costs, late charge
costs, other collection costs, as well as write-offs and waivers of
collection costs and the limitations of those costs that can be charged
to the Perkins fund. This is an increase to the burden associated with
this regulation.

**Section 674.48 -- Use of contractors to perform billing and collection
activities.**

Institutions that use contractors to perform billing and collection
activities retain all responsibility to comply with the Title IV program
requirements and must insure that the third-party provider meets all the
compliance requirements as well. There is an increase to the burden
associated with this regulation.

**Section 674.49 -- Bankruptcy of borrower.**

Institutions that receive a notice that a borrower has filed a petition
for relief in bankruptcy must follow the procedures in this section of
the regulations to avoid discharge of the loan. The institution must
assert any defense consistent with its status under applicable law to
avoid discharge. There is an increase in the burden associated with this
regulation.

**2. Purpose and Use of Information Collected**

**Perkins Loan Program:**

The information collected, recorded, and /or disclosed in Sections
674.39, 674.41, 674.42, 674.43, 674.45, 674.47, and 674.49 under OMB
control number 1845-0023 will continue to be used as necessary to
provide for the making and servicing of Perkins Loans. (NOTE: The
information collected, recorded, and/or disclosed in Sections 674.16,
674.19, 674.33 and 674.34 is under OMB control number 1845-0019.) If we
did not require collection, recordation, and/or disclosure of
information as specified in these sections, the processing of Perkins
Loans would not be possible.

**3. Consideration of Improved Information Technology**

**Perkins Loan Program:**

We continue to revise our regulation so that they allow institutions to
maximize the use of available technology in making and servicing Perkins
loans.

**4. Efforts to Identify Duplication**

A thorough review of procedures indicates that current requirements are
minimal and avoid duplication. This review was done in conjunction with
affected parties who have a vested interest in eliminating duplication.

**5. Burden Minimization as Applied to Small Business**

No small businesses are impacted by this collection.

**6. Consequences of Less Frequent Data Collection**

Recordkeeping requirements are imposed to assure accountability of
program participants for proper program administration and less frequent
collection could impair accountability of program participants.

**7. Special Circumstances Governing Data Collection**

The collection of this information will be conducted in a manner that is
consistent with the guidelines in 5 CFR 1320.5(d)(2).

**8. Consultation Outside the Agency**

These regulations were discussed at regulatory negotiated rulemaking
meetings of the Department with the financial aid community annually, as
detailed in the preamble to the Notice of Proposed Regulations published
on June 12, 2007 (See 72 FR 32410)

**9. Payments or Gifts to Respondents**

No payments or gift will be provided to the respondents that provide
this information.

**10. Assurance of Confidentiality**

A Privacy Act Notice is included on the Application Form and Promissory
Note. In this notice, the borrower is informed of the statutory
authority for collecting the information requested. Although disclosure
of the information is voluntary, the borrower is informed that in order
to be considered for Perkins Loan Program funds, the information must be
provided. The information provided is used to verify the borrower's
identity, to determine the borrower's eligibility to receive a Perkins
Loan Program loan and benefits, to permit the servicing of the
borrower's loan(s) and to locate the borrower and collect on the loan(s)
if the loan(s) become delinquent or default. A listing of the persons
and entities to which the information may be disclosed and for what
purposes the information may be disclosed is also included.

**11. Questions of Sensitive Nature**

The Department is not requesting any sensitive data.

**12. Annual Hour Burden for Respondents/Recordkeepers.**

**Perkins Loan Program:**

The current inventory of number of respondents, responses, and burden
hours is being disaggregated based upon affected parties for purposes of
the submission to OMB. An Excel table gives the breakdowns by affected
entity -- with a further breakdown by requirement part. The explanation
below gives further details by section of the requirements.

**Section 674.39 -- Loan rehabilitation.**

Participating institutions are required to have a loan rehabilitation
program for the purpose of rehabilitating defaulted loans.

\# of Perkins loans in rehabilitation:

Affected Parties:

Individuals 479,443 X .011655836 hours = 5,588 burden hours

Institutions 1,980 X .449775112 hours = 891 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

481,423 481,423 6,479

**Section 674.41 -- Due Diligence -- general requirements.**

Institutions are required to inform the borrower on a timely basis and
exercise due diligence in the collection of Perkins loans. Additionally,
institutions are required to coordinate among the various campus
administrative offices involved in the billing and collection process,
all information that bears upon the borrower.

\# of Perkins borrowers:

Affected Parties:

Individuals 2,675,273 X .0166665975 hours = 44,588 burden hours

Institutions 1,980 X 1.4602 = 2,892 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

2,677,253 2,677,253 47,480

**Section 674.42 -- Contact with the borrower.**

Institutions are required to provide borrowers with information about
the repayment of the loan, a description of the charges, an explanation
of loan consolidation or other refinancing, as well as other information
about the amount of the repayment, the frequency, and to whom the
repayments must be made. Generally, this information is provided the
borrowers as part of the required exit interview process. The
institution is required to maintain information substantiating the
institution's compliance with these due diligence regulations.

\# of Perkins borrowers:

Affected Parties:

Individuals 2,675,273 X .0166665975 hours = 44,588 burden hours

Institutions 1,980 X 1.4602 = 2,892 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

2,677,253 2,677,253 47,480

**Section 674.43 -- Billing procedures.**

Institutions are required to notify borrowers about the amount of
repayment due, to remind borrowers when their payment is overdue, and to
demand payment of overdue amounts.

\# of Perkins Loans

Individuals 2,675,273 X .0166665975 hours = 44,588 burden hours

Institutions 1,980 X 1.4602 = 2,892 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

2,677,253 2,677,253 47,480

**Section 674.45 -- Collection procedures.**

Borrowers who do not respond satisfactorily to demand notices for
repayment of defaulted loans must be referred for intensive collection
efforts. Those efforts include reporting the default to a national
credit bureau, either the use of institutional resources to collect or
the use of a collection agency, and ultimately litigation to resolve the
debt.

\# of Perkins loans:

Affected Parties:

Individuals 622,004 X .016666 hours = 10,366 burden hours

Institutions 1,980 X 1.005 hours = 1,989 burden hours

\# of Respondents \# of Responses \# of Burden Hours

623,984 623,984 12,355

# Section 674.47 -- Costs Chargeable to the Fund

The regulations provide detail about the billing costs, late charge
costs, other collection costs, as well as write-offs and waivers of
collection costs and the limitations of these costs that can be charged
to the Perkins fund.

\# of Perkins loans:

Affected Parties:

Individuals 622,004 X .016666 hours = 10,366 burden hours

Institutions 1,980 X 1.005 hours = 1,989 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

623,984 623,984 12,355

**Section 674.48 -- Use of contractors to perform billing and collection
activities.**

Institutions that use contractors to perform billing and collection
activities retain all responsibility to comply with the Title IV program
requirements and must insure that the third-party provider meets all the
compliance requirements as well.

\# of Perkins loans:

Affected Parties:

Individuals 479,443 X .0166663823 hours = 7,991 burden hours

Institutions 1,980 X .9295 hours = 1,839 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

481,423 481,423 9,830

**Section 674.49 -- Bankruptcy of borrower.**

Institutions that receive a notice that a borrower has filed a petition
for relief in bankruptcy, must follow the procedures in this section of
the regulations to avoid discharge of the loan. The institution must
assert any defense consistent with its status under applicable law to
avoid discharge.

\# of Perkins loans:

Affected Parties:

Individuals 85,005 .0166662347 hours = 1,417 burden hours

Institutions 1,980 .169 = 336 burden hours

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

86,985 86,985 1,753

**13. Annual Cost Burden to Respondents**

**Perkins Loan Program:**

No change from current inventory.

**14. Estimated Annual Cost to the Federal Government**

There are no additional costs to the Federal government.

**15. Reasons for Changes to Burden Hour Estimated**

There are program changes of 185,209 that are the result of changes in
the administrative requirements that were generated as a result of
negotiated rulemaking and are in the final regulations of the Perkins
Loan program. A summary table is provided illustrating the current
burden to the various affected parties. (NOTE: There are slight
differences in the numbers between these breakdowns and those in
reported in Rocis. This is due to rounding as well as the fact that
burden and responses have been reported by affected parties in Rocis.)

**Section 674.39 -- Loan rehabilitation.**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

481,431 481,431 6,473

**Section 674.41 -- Due diligence -- general requirements.**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

2,677,253 2,677,253 47,480

**Section 674.42 -- Contact with borrower.**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

2,677,253 2,677,253 47,480

**Section 674.43 -- Billing procedures**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

2,677,253 2,677,253 47,480

**Section 674.45 -- Collections procedures.**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

623,984 623,984 12,355

# Section 674.47 -- Costs Chargeable to the Fund

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

623,984 623,984 12,355

**Section 674.48 -- Use of contractors to perform billing and collection
activities.**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

481,423 481,423 9,830

**Section 674.49 Bankruptcy of borrower.**

[Respondents, Responses and Burden Hours:]{.underline}

\# of Respondents \# of Responses \# of Burden Hours

86,985 86,985 1,753

**FINAL REG TOTAL:**

\# of Respondents \# of Responses \# of Burden Hours

**10,329,566 10,329,566 185,209\
**

**Current Inventory:**

\# of Respondents \# of Responses \# of Burden Hours

**2,800,642 2,800,642 61,879\
**

**Revised Inventory:**

\# of Respondents \# of Responses \# of Burden Hours

**13,130,208 13,130,208 247,088\
**

**16. Collection of Information with Published Results**

The results of the collection of information will not be published.

**17. Approval to Not Display Expiration Date**

ED is not seeking this approval.

**18. Exception to the Certification Statement**

ED is not requesting any exceptions to the "Certification for Paperwork
Reduction Act Submissions".