September 7, 2007

RE: **ED-2007-OPE-0134**

> ***Federal Register* dated August 8, 2007, Notice of Proposed
> Rulemaking (NPRM) for the federal student aid programs, student
> assistance general provisions**

To Whom it May Concern:

The Iowa College Student Aid Commission (ICSAC), the designated FFELP
guarantor for the state of Iowa, submits the following comments for your
consideration relative to the aforementioned Notice of Proposed
Rulemaking. Per your request, we have arranged our comments in the order
of the proposed regulations.

**1**

**§668.4**

**Installment payments during a payment period**

In the proposed rule preamble discussion on page 44624 of the August 8,
2007, *Federal Register*, third column, the Department states, "To
continue to allow an institution some flexibility to meet a student's
individual circumstances, no change would be made to the FSEOG, Pell,
Grant, ACG, and national SMART Grant regulations that permit an
institution to pay the grant amount for the payment period at such times
and in such installments in each payment period as the institution
determines will best meet the student's needs." It is the ICSAC's belief
that the flexibilities described above have always been available to
institutions for the payment of FFEL and Direct Loan funds, provided
that installment payments were substantially equal subdivisions of a
disbursement. The preamble commentary infers that such flexibility is
only permitted for federal grant program payments.

The ICSAC requests that the Department clarify in the final rule
preamble that institutions may exercise the same flexibility to pay a
FFEL or Direct Loan disbursement to a student or parent borrower; for
example, by delaying delivery of the Stafford loan disbursement for a
payment period until after the 60% point in the payment period, or by
paying a Stafford loan disbursement in two substantially equal
installments that coincide with the beginning date of two consecutive
modules that the student is scheduled to attend within a standard term.

**2**

**§668.4(h)(2)**

**Definition of \"successfully completes\"**

As the result of an inquiry we received from an institution with
nonstandard term programs, the ICSAC requests that the Department
clarify the distinction between the definition of *successfully
completes* in §668.4(h)(2) and the definition of *successfully
completed* as that term is used in §668.164(g)(4)(ii), limitations on
making a late disbursement: \". . .An institution may not make a second
or subsequent late disbursement of a loan under the FFEL or Direct Loan
programs unless the student *successfully completed* the period of
enrollment for which the loan was intended.\"  The ICSAC believes that
the definition of *successfully completed* for the purpose of making a
late second or subsequent disbursement of FFEL or Direct loan funds
refers to a student who completes the loan period on at least a
half-time basis, regardless of whether the student passes the coursework
associated with those hours.  If that is an accurate assessment, the
ICSAC requests that the Department explain that distinction in the final
rule preamble, and suggests that the Department clarify the late
disbursement regulations so that there is no confusion with the
definition of *successfully completes* in section §668.4(h)(2).

**3**

**§668.21 and §682.604**

**Treatment of Title IV grant and loan funds if a recipient does not
begin attendance**

The ICSAC requests that the Department reconsider its proposed time
frame for returning Title IV grant and loan funds that a student is not
eligible to receive because he or she never began attendance. We agree
with the negotiators who requested that the time frame for returning
funds in these cases should be 45 instead of 30 days. The ICSAC urges
the Department to consider the already complex nature of the
requirements for administering Title IV funds and provide some
administrative relief for institutions by establishing a time frame for
returning ineligible funds when a student fails to attend class that is
consistent with the 45-day time frame for returning unearned funds when
a student withdraws.

**5**

**§668.22(a)(5)(ii)(B)(1), §668.22(a)(5)(iii)(C), and
§668.164(g)(4)(i)**

**Late Disbursement and Post-Withdrawal Disbursement Time Frames**

Currently, regulations prescribe a consistent, 120-day time frame for
making a late or post-withdrawal disbursement. The proposed changes in
the time frames for making late and post-withdrawal disbursements add
significantly to the complexity of these requirements by creating three
separate deadlines -- 30 days to make a post-withdrawal disbursement of
grant funds, 120 days to make a post-withdrawal disbursement of loan
funds, and 180 days to make a late disbursement. The ICSAC urges the
Department to reconsider its proposals and establish one, consistent
time frame for making all post-withdrawal and late disbursements.

**6**

**§682.603**

The ICSAC commends the Department for implementing rule changes that
permit nonstandard term-based programs with substantially equal terms to
be treated the same as standard term-based programs relative to the
minimum period for which a loan may be certified and annual loan limit
progression. The ICSAC requested that the Department consider such
changes in early 2006 during a meeting between our CEO, Karen Misjak,
David Bergeron and other USDE officials. We greatly appreciate the fact
that the Department took the first negotiated rulemaking opportunity to
consider these changes.

However, we agree with the negotiators acknowledged in the proposed rule
preamble who believed that the minimum nonstandard term length for the
purpose of these rule changes should be *eight,* not nine weeks. The
ICSAC believes that there are a number of existing programs established
for nontraditional students that were structured in 8-week terms, a
natural subdivision of the 16-week, standard semester format of the same
programs offered to its traditional students.

In addition, we note that institutions are currently prohibited from
certifying or originating an increase in the student's Stafford loan
amount if a student attending a nonstandard term program advances his or
her grade level and gains eligibility for a higher Stafford annual loan
limit during an academic year. Also, currently, an undergraduate student
attending a final period of study in any nonstandard term program who is
enrolled in the number of terms in the program's Title IV academic year
definition but less than the number of credit hours in that definition
is subject to proration of the annual loan limit. The ICSAC does not see
that the proposed rule changes for nonstandard term programs with
substantially equal terms address either of these issues. We therefore
request that the Department either clarify in the final rule preamble or
make an additional modification to regulations that would a) permit an
institution to certify or originate a Stafford loan increase for a
student attending a nonstandard term program with substantially equal
terms of the appropriate length when that student advances his or her
grade level standing and gains eligibility for a higher Stafford annual
loan limit during an academic year; and b) require proration of the
Stafford annual loan limit for a student attending an undergraduate
nonstandard term program with substantially equal terms of the
appropriate minimum length when the student is enrolled in a final
period of study consisting of fewer terms than in the academic year.

**7**

**§682.604(c)(6), (7), and (8)**

**Disbursements of FFEL and Direct Loan Funds to Less Than Full-Time
Students**

The ICSAC requests that the Department clarify proposed rule preamble
discussion on page 44625 of the August 8, 2007, *Federal Register*,
concerning a change that affects the timing of second disbursements to
less than full-time students in nonterm credit hour programs, clock hour
programs, and nonstandard term credit hour programs with terms that are
*not* substantially equal in length.

The preamble discussion states, "Instead of receiving the second
disbursement at the calendar midpoint of the period of enrollment (the
academic year or program, as applicable), the student would receive the
second disbursement after he or she completes half of the credit hours
or clock hours, as applicable, and half of the weeks of instructional
time in the *payment period*. . .Under the proposed change, the student
\[illustrated in an example published in Appendix C of the preamble\]
would receive the second disbursement after completion of half of the
credit hours and half of the weeks of instructional time in the academic
year. Because the student in the example is a half-time student, this
would not occur until the student has successfully completed *24 credit
hours and 30 weeks of instructional time.*

The ICSAC questions whether the Department meant to say that, under the
proposed rule change, a student attending a nonterm credit or clock hour
program, or a nonstandard term program with terms that are not
substantially equal, would receive the second loan disbursement after
the student successfully completed half of the credit or clock hours and
half of the instructional weeks in the *academic year*, not in the
payment period as stated above. We also question whether the Department
intended to state that the student in the preamble Appendix C example,
who is attending a program with a Title IV academic year definition of
24 credit hours and 30 instructional weeks, would be eligible to receive
the second disbursement of a FFEL or Direct Loan after successful
completion of *12* credit hours and *15* instructional weeks, not 24
credit hours and 30 instructional weeks. If this is a correct analysis,
the ICSAC requests that the Department please clarify its proposed rule
preamble discussion about this rule change and the accompanying example.

Thank you for the opportunity to comment. If questions arise, please
contact the ICSAC's Policy Analyst, Carolyn Small, at
<Carolyn.small@iowa.gov> or 800-383-4222.

Sincerely,

Karen Misjak

Executive Director