**SUPPORTING STATEMENT**

Information Collections Under the Final Regulations Governing the
Federal Perkins Loan Program, and the Federal Work Study Program.

**A. Justification**

**1. Necessity of Information Collected**

> The Federal Perkins Loan Program (Perkins Loan) notice of proposed
> rulemaking regulations propose revisions to the current regulations in
> the areas of program administration.
>
> These proposed regulations are a result of regulatory review of the
> program regulations to reduce administrative burden for program
> participants, provide benefits to borrowers, and protect the
> taxpayers\' interest. This request is for approval of reporting and
> recordkeeping requirements contained in the attached proposed
> regulations related to the administrative requirements of the Perkins
> Loan program. The information collection requirements in these
> proposed 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: 1845-0019

> Sections 674.8, 674.16, 674.19, 674.38, 674.45, 674.50, 674.61 contain
> information collection requirements and are currently approved by OMB
> under control number 1845-0019. We are making the following changes to
> those sections:

####### **Section 674.8 and 674.50 \-- Program Participation Agreement and Assignment of defaulted loans to the United States.**

The proposed changes provides the Department with the authority to
require assignment of Perkins loan where the outstanding principle
balance is \$100 or more, the loan had been in default for seven or more
years, and a payment has not been received on the loan for the past
twelve months. This change would be an increase in burden for the
affected institutions participating in the Federal Perkins Loan program.

####### **Section 674.16 -- Making and disbursing loans.**

> The proposed changes to §674.16 require schools, lenders, and guaranty
> agencies to report enrollment and loan status information, or any
> other data required by the Secretary, to the National Student Loan
> Data system by the deadline date established by the Secretary. The
> proposed changes do not represent an increase in burden because the
> new language simply codifies existing Departmental practice.
> Currently, reporting requirements are disseminated in "Data Provider
> Guidance" on the Department's Information for Financial Aid
> Professional website.

####### 

####### **Section 674.19 and 674.50 \-- Fiscal procedures and records and Assignment of defaulted loans to the United States.**

######## 

# Certification of Electronic Signatures on Loan MPNs assigned to the 

# Department -- The proposed regulations would require that upon request schools would submit an affidavit or certification regarding the creation and maintenance of electronic Master Promissory Notes (MPNs) or promissory notes including the authentication and signature process. Also, the records retention requirement for affected parties would increase from the current requirement of three years after the end of the award year to seven years after all the loans on the MPN are satisfied.

# Retention of Disbursement Records Supporting MPNs - The proposed regulations would require that upon request that schools retain disbursement records for each loan made to a borrower on a MPN until all the loans on the MPN are satisfied. The proposed changes would also require an institution to submit disbursement records, upon request, for each loan assigned to the Department for the enforcement of the loan.

#  Sections 674.38 \-- Deferment procedures.

> The proposed regulations would allow schools that participate in the
> Perkins Loan Program to grant deferments based upon information from
> another FFEL Loan holder or from the Department of Education instead
> of requiring the borrower to provide a duplicate request for deferment
> to multiple loan holders. As a result, burden for the borrowers and
> loan holders would decrease.

# Section 674.45 -- Collection procedures.

> The proposed changes in §674.45 would limit collection costs an
> institution may assess against a Perkins Loan borrower to 30 percent
> of principal, interest, and late charges collected for first
> collection efforts, 40 percent for second collection efforts, and 40
> percent plus court costs in cases of litigation. The changes affect
> institutions that participate in the Perkins Loan Program and
> collection agencies.
>
> The changes do not represent a change in burden. Collection practices
> and procedures would not change; only the amount assessed against a
> defaulted borrower would change. Therefore, there is no additional
> burden associated with this provision.

# Section 674.61 \-- Loan discharge for death and disability.

> **Deferment of repayment\--Federal Perkins loans, NDSLs and Defense
> loans.**
>
> The proposed regulations would allow the use of an accurate and
> complete copy of a borrower's death certificate, instead of only
> permitting the submission of the original or a certified copy of the
> certificate.
>
> Sections 674.10, 674.13, 674.20, 674.31, 674.35, 674.36, and 674.37
> contain information requirements and are currently approved by OMB
> under control number 1845-0019. We are not making changes to these
> sections. We are requesting continued approval of these sections.
>
> Section 673.5 is also cleared under OMB control number 1845-0019. We
> are making a change to this section in a separate package under the
> General Provisions regulations. We are requesting continued approval
> of this section.

Sections 675.10, 675.16, 675.19, 675.20, 675.27, 675.34, 675.35, 675.47,
675.48, 676.16, 676.19 also contain information requirements under the
General Provisions regulations and are currently approved by OMB under
1845-0019. We are not making changes to these sections. We are
requesting continued approval of these sections.

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

**Perkins Loan Program:**

> The information collected, recorded, and/or disclosed in §§674.8,
> 674.16, 674.19, 674.38, 674.45, 674.50, and 674.61 will continue to be
> used as necessary to provide for the making and servicing of Perkins
> Loans. If we did not require the 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 regulations 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 over a
> five-month period, as detailed in the preamble to the Notice of
> Proposed Regulations published June, 2007.

**9.** **Payments or Gifts to Respondents**

No payments or gifts will be provided to the respondents.

**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 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 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.**

# Section 674.8 and 674.50 -- Mandatory Assignment

> The proposed changes provides the Department with the authority to
> require assignment of Perkins loan where the outstanding principal
> balance is \$100 or more, the loan has been in default for seven or
> more years, and a payment has not been received on the loan for the
> past twelve months. This change would be an increase in burden for the
> affected institutions participating in the Federal Perkins Loan
> program.
>
> [\# of Perkins loans in default for more than 7 years:]{.underline}
>
> 289,070
>
> Amt. time to assign a
>
> Perkins loan the ED [X .33]{.underline} hours (20 minutes)
>
> [Affected Entity:]{.underline}
>
> INSTITUTIONS: 95,393 hours
>
> [Respondents, Responses and Burden Hours:]{.underline}
>
> \# of Respondents \# of Responses \# Hrs/Response #Hrs
>
> Burden
>
> 321 289,070 .33 hrs = 95,393

##### Sections 674.19 and 674.50 -- Certification of Electronic Signatures on Loan MPNs assigned to the Department

> The proposed regulations would require that upon request schools would
> submit an affidavit or certification regarding the creation and
> maintenance of electronic Master Promissory Notes (MPNs) or promissory
> notes including the authentication and signature process. Also, the
> records retention requirement for affected parties would increase from
> the current requirement of three years after the end of the award year
> to seven years after all the loans on the MPN are satisfied.
>
> [\# of borrowers referred for litigation -- 2006-2007:]{.underline}
>
> [Program Type:]{.underline} [\# of loans]{.underline} X [% of
> E-MPNs]{.underline} = [\# affected]{.underline}
>
> [by program]{.underline}
>
> Perkins Loan Program 28 .15 4
>
> FFEL Program [842]{.underline} [.85]{.underline} [716]{.underline}
>
> Total \# of Perkins Loans and 870 1.00 720
>
> FFEL Loans Referred for
>
> Litigation
>
> [Burden associated with data collection:]{.underline}
>
> Providing ED with a copy of
>
> the affidavit or certification .5 hours (30 minutes)
>
> The burden associated with the collection of the original data and its
> retention, exists under the current rules. There is no increase in
> burden to retain these loan records until 7 years after the loans are
> satisfied.
>
> [Total burden increase:]{.underline}
>
> \# loans referred for litigation 720
>
> amount of burden reduction [X .5 hours]{.underline} (30 minutes)
>
> Total burden hour increase 360 hours
>
> [Affected Entity:]{.underline}
>
> \# of affected X burden = increase in burden
>
> loans per MPN hours
>
> INSTITUTIONS 4 .5 2
>
> \[NOTE: The remaining additional burden of 358 hours is attributable
> to FFEL lenders and guarantors found in OMB 1845-0020.\]
>
> [Respondents, Responses and Burden Hours:]{.underline}
>
> \# of Respondents \# of Responses \# Hrs/Response #Hrs
>
> Burden
>
> 4 4 .5 = 2

Sections 674.19 and 674.50 -- Retention of Disbursement Records
Supporting MPNs

> The proposed regulations would require that upon request that schools
> retain disbursement records for each loan made to a borrower on a MPN
> until all the loans on the MPN are satisfied. The proposed changes
> would also require an institution to submit disbursement records, upon
> request, for each loan assigned to the Department for the enforcement
> of the loan.
>
> [\# of loans projected for 2007-2008:]{.underline}
>
> [Program Type]{.underline} [\# of loans]{.underline} X [% of
> E-MPNs]{.underline} = [\# affected]{.underline}
>
> [by program]{.underline}
>
> Perkins Loan Program 501,000 .15 75,150
>
> [Projected \# of Perkins Loans assigned:]{.underline}
>
> \# affected 75,150
>
> \% assigned to ED [X .0005]{.underline}
>
> Projected \# of Perkins assigned 38
>
> to ED w/documentation
>
> [Amount of time to submit:]{.underline}
>
> Electronic records .08 hours (5 minutes)
>
> Copy and mail paper documents [+ .50 hours]{.underline} (30 minutes)
>
> Total time per loan assigned .58 hours
>
> [Affected Entity:]{.underline}
>
> \# of assignments X hours of burden = total hours
>
> increased burden
>
> INSTITUTIONS: 38 .58 22
>
> [Respondents, Responses and Burden Hours:]{.underline}
>
> \# of Respondents \# of Responses \# Hrs/Response #Hrs
>
> Burden
>
> 38 38 .58 = 22

# Section 674.38 -- Deferment

> The proposed regulations would allow schools that participate in the
> Perkins Loan Program to grant deferments based upon information from
> another FFEL holder or from the Department of Education instead of
> requiring the borrower to provide a duplicate request for deferment to
> multiple loan holders. As a result, burden for borrowers and loan
> holders would decrease.
>
> A total of 41,700 Perkins, FFEL and Direct loan borrowers were granted
> a non-in-school deferment in Award Year 2006 and received loans with
> more than one loan holder.
>
> 41,700 borrowers granted non-in-school deferment with multiple holders
>
> [X .25]{.underline} hours projected amount of decreased burden per
> borrower
>
> 10,425 hours total number of hours of decreased burden
>
> [For 2007-2008:]{.underline} [\# of Loans:]{.underline}
> [%]{.underline}
>
> Total projected \# of Perkins Loan Program awards 501,000 .03
>
> Total projected \# of FFEL Program awards 12,483,000 .78
>
> Total projected \# of Direct Loan Program awards
> [3,039,000]{.underline} [.19]{.underline}
>
> Total \# of Title IV projected loans 16,023,000 1.00
>
> [Total Burden Reduction for the Perkins Loan Program:]{.underline}
>
> 10,425 total hours of burden reduction
>
> [X .03]{.underline} percentage of all projected loans as Perkins
>
> 313 total \# of hours of decreased burden in the Perkins Loan program
>
> [Affected Entities:]{.underline}
>
> The amount of burden reduction is split between borrowers and loan
> holders. The majority of the burden reduction is provided to the
> borrowers since they will not have to complete and submit additional,
> duplicative deferment requests.
>
> [Affected Entity:]{.underline} % of burden hours of burden = total
> hours of
>
> reduction reduction reduction
>
> BORROWERS: .9 313 282
>
> LOAN HOLDERS: .1 313 [31]{.underline} 313
>
> [Respondents, Responses and Burden Hours:]{.underline}
>
> \# of Respondents \# of Responses \# Hrs/Response #Hrs
>
> Burden
>
> 1251 1251 .25 = -313

# Section 674.61 -- Loan Discharge for Death

> The proposed regulations would allow the use of an accurate and
> complete copy of a borrower's death certificate, instead of only
> permitting the submission of the original or a certified copy of the
> certificate. While all respondents (survivors who submit death
> certificate information to obtain a Title IV loan death discharge), we
> estimate that 83.5% will take advantage of the provisions of this
> proposed regulation. Therefore, while there are 1,692 respondents and
> responses, 83.5% or 1,413 will potentially benefit by submitting a
> copy of the death certicate.
>
> The \# of death discharges for Title IV loans as of September 30, 2006
> are as follows:
>
> [Program Type]{.underline} [\# of loans]{.underline} [% by
> program]{.underline}
>
> FFEL Program 55,148 .78
>
> Direct Loan Program 14,199 .20
>
> Perkins Loan Program [1,692]{.underline} [.02]{.underline}
>
> Total \# of Title IV Loan 71,039 1.00
>
> Discharges for Death
>
> [Current Requirement:]{.underline}
>
> Amount of time to contact the Office of Vital Statistics (or its
> equivalent) to obtain a certified copy of a death certificate = .25
> hour (15 minutes).
>
> [Proposed Requirement:]{.underline}
>
> Amount of time to copy and submit a copy of an original or certified
> copy of a death certificate = .17 hour (10 minutes).
>
> .25 hour (15 minutes)
>
> [less .17 hour]{.underline} (10 minutes)
>
> Burden reduction per record .08 hour (5 minutes)
>
> [Total burden reduction:]{.underline}
>
> \# of death discharges 71,039
>
> amount of burden reduction [X .08 hour]{.underline} (5 minutes)
>
> Total burden hours reduced 5,683 hours
>
> [Total burden reduction by program:]{.underline}
>
> Program type: % of discharges total hours of hours of
>
> by program burden reduction reduction by
>
> program
>
> FFEL Program .78 5,683 4,433
>
> Direct Loan Program .20 5,683 1,137
>
> Perkins Loan Program .02 5,683 [113]{.underline}
>
> 5,638
>
> [Affected Entities:]{.underline} % of entities hours of amount of
> burden reduction
>
> impacted reduction by by affected entity
>
> PERKINS program
>
> SURVIVOR OF
>
> BORROWER: .6 113 68
>
> LOAN HOLDER: .4 113 [45]{.underline}
>
> 113
>
> Of the 1,692 Respondents and Responses, 83.5% are estimated to benefit
> from the proposed regulation (the other 16.5% we estimate will provide
> the original or certified copy of the death certificate).
>
> [Respondents, Responses and Burden Hours:]{.underline}
>
> \# of Respondents \# of Responses \# Hrs/Response #Hrs
>
> Burden
>
> 1692 1692 .835\* .08 = - 113

**13. Annual Cost Burden to Respondents**

There is no change from the current inventory.

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

> There are no additional costs to the Federal government as a result of
> the final regulations.

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

As a result of the Perkins Loan Program proposed regulations there are
increases and decreases to the burden hours for the affected entities as
indicated in Item 12 above. Below is a summary of the changes in burden.

> [\# of Respondents]{.underline} [\# of Responses]{.underline} [\#
> Hrs/Response]{.underline} [#Hrs]{.underline}
>
> [Burden]{.underline}

Section 674.8 and 674.50 -- Mandatory Assignment

> 321 289,070 .33 hrs = 95,393

Sections 674.19 and 674.50 -- Certification of Electronic Signatures on
Loan MPNs assigned to the Department

> 4 4 .5 = 2

Sections 674.19 and 674.50 -- Retention of Disbursement Records
Supporting MPNs

> 38 38 .58 = 22
>
> Section 674.38 -- Deferment
>
> 1251 1251 .25 = -313

Section 674.61 -- Loan Discharge for Death

> 1692 1692 .835 \* .08 = - 113

Sub-total:

> [\# of Respondents]{.underline} [\# of Responses]{.underline}
> [#Hrs]{.underline}
>
> [Burden]{.underline}
>
> 3,306 292,055 94,991

Current

Inventory: [\# of Respondents]{.underline} [\# of Responses]{.underline}
[#Hrs]{.underline}

[Burden]{.underline}

> 95,262 95,262 25,859

Revised

Inventory: [\# of Respondents]{.underline} [\# of Responses]{.underline}
[#Hrs]{.underline}

[Burden]{.underline}

98,568 387,317 120,850

**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 \"Information Collection"
> form Parts 1 & 2.