Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63317 

§ 165.T14–0849 Safety Zone; Ordinance 

Removal, Saipan Harbor, CNMI. 

(a) Location. The following area, 

within the Guam Captain of the Port 

(COTP) Zone (See 33 CFR 3.70–15), 

from the surface of the water to the 

ocean floor, is a safety zone: All waters 

bounded by a circle with a 140-yard 

radius, centered around the World War 

II era ordinance, located at 

approximately 15 degrees 13.370 

minutes North Latitude, 145 degrees 

42.256 minutes East Longitude, 

southeast of Buoy 3 in Saipan Harbor 

(NAD 1983). 

(b) Effective period. This rule is 

effective from September 19, 2014 until 

December 18, 2014. 

(c) Enforcement period. This safety 

zone will be enforced from September 

19, 2014 until December 18, 2014. 

(d) Regulations. The general 

regulations governing safety zones 

contained in § 165.23 apply. Entry into, 

transit through or within this zone is 

prohibited unless authorized by the 

COTP or a designated representative 

thereof. 

(e) Enforcement. Any Coast Guard 

commissioned, warrant, or petty officer, 

and any other COTP representative 

permitted by law, may enforce this 

temporary safety zone. 

(f) Waiver. The COTP may waive any 

of the requirements of this rule for any 

person, vessel, or class of vessel upon 

finding that application of the safety 

zone is unnecessary or impractical for 

the purpose of maritime security. 

(g) Penalties. Vessels or persons 

violating this rule are subject to the 

penalties set forth in 33 U.S.C. 1232 and 

50 U.S.C. 192. 

Dated: September 19, 2014. 

B.J. Kettner, 

Commander, U. S. Coast Guard, Captain of 

the Port Guam, Acting. 

[FR Doc. 2014–25273 Filed 10–22–14; 8:45 am] 

BILLING CODE 9110–04–P 

DEPARTMENT OF EDUCATION 

34 CFR Part 685 

RIN 1840–AD17 

[Docket ID ED–2014–OPE–0082] 

William D. Ford Federal Direct Loan 

Program 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Final regulations. 

SUMMARY: The Secretary amends the 

regulations governing the William D. 

Ford Federal Direct Loan (Direct Loan) 

Program. These regulations strengthen 

and improve administration of the 

Federal Direct PLUS Loan Program 

authorized under title IV of the Higher 

Education Act of 1965, as amended 

(HEA). 

DATES: These regulations are effective 

July 1, 2015. Implementation date: For 

the implementation date, see the 

Implementation Date of These 

Regulations section of this document. 

FOR FURTHER INFORMATION CONTACT: 

Brian Smith, U.S. Department of 

Education, 1990 K Street NW., Room 

8082, Washington, DC 20006. 

Telephone (202) 502–7551 or by email: 

Brian.Smith@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD) or a text 

telephone (TTY), call the Federal Relay 

Service (FRS), toll free, at 1–800–877– 

8339. 

SUPPLEMENTARY INFORMATION: 

Executive Summary: Purpose of This 

Regulatory Action: We are amending 

§ 685.200 of title 34 of the Code of 

Federal Regulations (CFR) to update the 

standard for determining if a potential 

parent or student borrower has an 

adverse credit history for purposes of 

eligibility for a Direct PLUS Loan (PLUS 

loan). Specifically, the final regulations 

will revise the definition of ‘‘adverse 

credit history’’ and require that parents 

and students who have an adverse 

credit history but who are approved for 

a PLUS loan on the basis that 

extenuating circumstances exist or who 

obtain an endorser for the PLUS loan 

must receive loan counseling before 

receiving the loan. The current 

regulations governing adverse credit 

history determinations have not been 

updated since the Direct Loan Program 

was established in 1994. The final 

regulations will reflect programmatic 

and economic changes that have 

occurred since 1994. 

Summary of the Major Provisions of 

This Regulatory Action: These final 

regulations will— 

• Revise the student PLUS loan 

borrower eligibility criteria to state more 

clearly that the PLUS loan adverse 

credit history requirements apply to 

student, as well as parent, PLUS loan 

borrowers. 

• Add definitions of the terms 

‘‘charged off’’ and ‘‘in collection’’ for 

purposes of determining whether an 

applicant for a PLUS loan has an 

adverse credit history. 

• Specify that a PLUS loan applicant 

has an adverse credit history if the 

applicant has one or more debts with a 

total combined outstanding balance 

greater than $2,085 that are 90 or more 

days delinquent as of the date of the 

credit report, or that have been placed 

in collection or charged off during the 

two years preceding the date of the 

credit report. 

• Provide that the combined 

outstanding balance threshold of $2,085 

will be increased over time based on the 

rate of inflation, as measured by the 

Consumer Price Index for All Urban 

Consumers (CPI–U). 

• Revise the provision that specifies 

the types of documentation the 

Secretary may accept as a basis for 

determining that extenuating 

circumstances exist for a PLUS loan 

applicant who is determined to have an 

adverse credit history. 

• Specify that an applicant for a 

PLUS loan who is determined to have 

an adverse credit history, but who 

obtains an endorser, must complete 

PLUS loan counseling offered by the 

Secretary before receiving a PLUS loan. 

• Specify that an applicant for a 

PLUS loan who is determined to have 

an adverse credit history, but who 

documents to the Secretary’s 

satisfaction that extenuating 

circumstances exist, must complete 

PLUS loan counseling offered by the 

Secretary before receiving the PLUS 

loan. 

Costs and Benefits: As further detailed 

in the Regulatory Impact Analysis 

section of this document, the final 

regulations will affect applicants for 

parent and student PLUS loans by 

modifying the standard for a 

determination of an adverse credit 

history. In particular, a student or 

parent will be considered to have an 

adverse credit history if the student or 

parent has one or more debts with a 

combined outstanding balance greater 

than $2,085 that are 90 or more days 

delinquent as of the date of the credit 

report, or that have been placed in 

collection or charged off during the two 

years preceding the date of the credit 

report. 

The final regulations will also require 

that an applicant for a PLUS loan who 

is determined to have an adverse credit 

history but who documents to the 

satisfaction of the Secretary that 

extenuating circumstances exist or who 

obtains an endorser must complete 

PLUS loan counseling offered by the 

Secretary prior to receiving the loan. 

In November 2011, the Department 

modified its procedures relating to 

adverse credit history determinations to 

be consistent with the regulations. This 

modification resulted in an increase in 

the number of PLUS loan applicants 

who were determined to have an 

adverse credit history. The Department 

expects that the final regulations will 

increase the number of PLUS loan 

applicants who pass the adverse credit 


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63318 Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 

1The NPRM is available at www.gpo.gov/fdsys/

pkg/FR-2014-08-08/pdf/2014-18673.pdf. 

history check. We estimate an increase 

of approximately 370,000 PLUS loan 

applicants who will pass the adverse 

credit history check under the final 

regulations. As a result of the changes 

in these final regulations, these 

applicants will not need to apply for 

reconsideration of an initial PLUS loan 

denial due to an adverse credit history, 

saving them time and effort. 

Additionally, because the final 

regulations strike a balance between 

increased availability of PLUS loan 

funds to improve student access to 

postsecondary education and helping to 

limit overborrowing through improved 

financial literacy, we believe that there 

will be benefits for both borrowers and 

the Department. 

On August 8, 2014, the Secretary 

published a notice of proposed 

rulemaking (NPRM) for this part in the 

Federal Register (79 FR 46640).1 The 

final regulations contain changes from 

the NPRM, which are fully explained in 

the Analysis of Comments and Changes 

section of this document. 

Implementation Date of These 

Regulations: 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 and the 

conditions for early implementation. 

Consistent with the Department’s 

objective to improve the loan 

application process for Direct PLUS 

loan borrowers, the Secretary is 

exercising his authority under section 

482(c) to implement the new and 

amended regulations included in this 

document as soon as possible after the 

publication date of these final 

regulations. We will publish a separate 

Federal Register notice to announce 

when we are ready to implement these 

regulations. 

Public Comment: In response to our 

invitation in the NPRM, 310 parties 

submitted comments on the proposed 

regulations. We group major issues 

according to subject, with appropriate 

sections of the regulations referenced in 

parentheses. We discuss other 

substantive issues under the sections of 

the proposed regulations to which they 

pertain. Generally, we do not address 

technical or other minor changes. 

Analysis of Comments and Changes: 

An analysis of the comments and of any 

changes in the regulations since 

publication of the NPRM follows. 

General Comments: The majority of 

commenters expressed strong support 

for the proposed regulations. One 

commenter described the proposed 

regulations as an important step in 

making PLUS loans work better for 

students. 

Several commenters urged the 

Department to launch an aggressive 

awareness and outreach campaign so 

that parents and students are made 

aware of the changes to the PLUS loan 

eligibility requirements. 

A small number of commenters 

objected to the proposed regulations. 

One commenter expressed 

disappointment that, in the 

commenter’s view, only small changes 

were made to the regulatory definition 

of ‘‘adverse credit history.’’ This 

commenter felt that the revisions to the 

definition would make no difference for 

low-income families who may take on 

more debt than they can afford when 

borrowing PLUS loans. 

We also received comments 

recommending additional changes to 

the PLUS loan regulations. One 

commenter recommended allowing 

parent borrowers to repay PLUS loans 

using the Income Based Repayment 

(IBR) plan. Another commenter 

recommended that we include 

‘‘aggressive’’ loan forgiveness policies 

for PLUS loans. A commenter 

recommended that parent PLUS loans 

and graduate and professional student 

PLUS loans be separated into two 

different lending programs. One 

commenter recommended that parent 

PLUS loan borrowers not be allowed to 

borrow more for all their children than 

they can afford to repay in ten years, or 

by time the parent retires, whichever 

comes first. 

Discussion: We appreciate the support 

from the overwhelming majority of 

commenters. 

We disagree that the changes to the 

adverse credit history requirements are 

minor and will have little impact. We 

believe these changes will have a 

significant impact in providing lowincome students with access to higher 

education and will make the financial 

aid process more transparent for 

students and their parents. In our view, 

the enthusiastic support for these 

regulations evidenced in comments 

submitted by students, alumni and 

employees of institutions of higher 

education, and by organizations 

representing students and institutions of 

higher education bolster that belief. 

While we share the commenters’ 

concerns about the ability of lowincome students and parents who 

borrow PLUS loans to repay their loans, 

we disagree that these regulations will 

put low-income borrowers at risk. We 

believe that the enhanced consumer 

information that the Department will 

provide, which will include voluntary 

PLUS loan counseling for all student 

and parent PLUS borrowers, and the 

mandatory PLUS loan counseling for 

certain borrowers will help students and 

parents to understand the obligations 

associated with borrowing a PLUS loan 

and assist them in making careful 

decisions about taking on student loan 

debt. 

The recommendations relating to IBR, 

loan forgiveness, creating two separate 

PLUS loan programs, and limiting the 

amount parent PLUS borrowers may 

borrow would require statutory changes. 

Changes: None. 

Implementation 

Comments: Several commenters 

requested that we implement these final 

regulations early, by making them 

effective no later than January 1, 2015. 

One commenter noted that the 

procedural modifications to the process 

for determining whether a borrower has 

an adverse credit history have been in 

effect for three years. This commenter 

stated that there is a critical need to 

restore access to PLUS loans for lowincome borrowers who do not meet the 

current adverse credit history standards. 

Discussion: We agree that it would be 

beneficial to student and parent 

borrowers for these final regulations to 

be implemented as soon as possible. As 

stated in the Implementation Date of 

These Regulations section of this 

document, the Department has 

designated these final regulations for 

early implementation. The Department 

will implement these regulations as 

soon as possible after the publication 

date. The Department will work with 

schools to inform parents and students 

of the changes to the PLUS loan adverse 

credit history standards and will 

publish a separate Federal Register 

notice announcing the implementation 

date. 

Student PLUS Borrower (34 CFR 

685.200(b)) 

Comments: One commenter agreed 

that the adverse credit history 

requirements should apply to both 

student and parent PLUS loan 

applicants. This commenter also stated 

that a parent’s adverse credit history 

should not prevent an eligible student 

from obtaining a PLUS loan. 

Another commenter recommended 

that the Department develop separate 

definitions of ‘‘adverse credit history’’ 

for student PLUS loan applicants and 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63319 

parent PLUS loan applicants. The 

commenter argued that the typical 

borrowing profiles of parents and of 

graduate and professional students are 

quite different, and believed that 

different definitions of ‘‘adverse credit 

history’’ would allow variations in the 

credit approval process tailored to each 

type of borrower. 

Discussion: We appreciate the support 

of the commenter who agreed that the 

adverse credit history requirements 

should apply to both parent and 

graduate and professional student 

borrowers. These final regulations will 

state more clearly that the same 

requirement applies to all PLUS loan 

borrowers. We also note that a parent’s 

credit history does not affect a student 

PLUS loan applicant’s eligibility for a 

PLUS loan, nor does the dependent 

student’s credit history affect the 

parent’s PLUS loan eligibility. 

We disagree with the commenter who 

recommended separate definitions of 

‘‘adverse credit history’’ for parent and 

graduate and professional student 

borrowers. As noted in the NPRM, the 

HEA authorizes a single PLUS loan 

program and limits borrowing to 

graduate and professional students or 

parents who do not have an adverse 

credit history, as determined pursuant 

to regulations promulgated by the 

Secretary. This requirement applies 

equally to student and parent borrowers. 

The HEA does not support different 

definitions of ‘‘adverse credit history’’ 

for student PLUS loan applicants and 

parent PLUS loan applicants. 

Changes: None. 

Parent PLUS Borrower: Definitions (34 

CFR 685.200(c)(1)) 

Comments: Two commenters 

recommended alternative definitions for 

the terms ‘‘charged off’’ and ‘‘in 

collection.’’ One of these commenters 

believed these definitions should be 

consistent with definitions found on the 

Investopedia Web site. Another 

commenter recommended that the 90- 

day delinquent standard be 

incorporated into the definitions of ‘‘in 

collection’’ and ‘‘charged off.’’ This 

commenter interpreted the proposed 

regulations to provide that debts in an 

‘‘in collection’’ or ‘‘charged off’’ status 

for less than 90 days would not be 

considered to represent an adverse 

credit history. This commenter also 

recommended incorporating language 

into the definitions stating that a debt 

would not be considered to be ‘‘in 

collection’’ or ‘‘charged off’’ unless an 

appropriate administrative or judicial 

body had determined that the debt was 

90-days delinquent. 

Discussion: While we appreciate the 

commenter’s suggestion that the 

Department adopt the definitions of 

‘‘charged off’’ and ‘‘in collection’’ from 

Investopedia, using commonly 

understood definitions that are used in 

the collections industry will provide 

greater clarity and transparency in the 

PLUS loan application process. We do 

not agree with the suggestion that we 

incorporate language into the 

definitions stating that an appropriate 

administrative or judicial body would 

have to determine that a debt was 90 

days delinquent before the debt is 

considered ‘‘charged off’’ or ‘‘in 

collection.’’ It is unlikely that a creditor 

would incur the cost of putting a debt 

in collection, or would charge off a debt 

and stop collecting on it altogether, 

before the debt is at least 90 days 

delinquent. This is why we proposed 

the 90-day delinquency standard as 

separate from the ‘‘charged off’’ or ‘‘in 

collection’’ standards. Further, it is 

impractical, burdensome, and 

unnecessary to require an 

administrative or judicial body to 

determine that a debt is 90 days 

delinquent before it is appropriate to 

consider the delinquency as 

demonstrating an adverse credit history. 

Changes: None. 

Parent PLUS Borrower: Adverse Credit 

History (34 CFR 685.200(c)(2)) 

Comments: A few commenters 

recommended that the PLUS adverse 

credit history regulations take into 

consideration an applicant’s ability to 

repay the PLUS loan. These commenters 

argued that parent eligibility under the 

adverse credit history criteria should 

include some measure of likely ability 

to repay the loan based on the 

applicant’s current financial 

circumstances. These commenters 

recommended including factors such as 

debt-to-income ratios, minimum income 

requirements, credit scores, or debtservice-to-income ratios in the 

definition of ‘‘adverse credit history.’’ 

One commenter recommended revising 

the PLUS loan eligibility criteria to 

prevent borrowing by parents whose 

income is below the poverty line. 

These commenters stated that they 

did not agree with our position that 

consideration of a borrower’s ability to 

repay would require an amendment to 

the HEA. These commenters offered 

several rationales to support their 

position. 

One commenter recommended 

expanding the definition of adverse 

credit history to include those without 

a credit history. This commenter asked 

if lack of a credit history could be 

considered an indicator of a borrower’s 

willingness or ability to repay a loan. 

Another commenter recommended 

that any changes to the adverse credit 

history standards that would restrict 

PLUS loan access be implemented for 

new borrowers only, so as not to affect 

currently enrolled students who rely on 

PLUS loans to assist in financing their 

education. 

Discussion: As noted in the NPRM, 

adverse credit history is a measure of an 

individual’s history of repaying existing 

debt. It does not measure whether the 

individual will have the financial ability 

in the future to repay a specific debt; but 

whether the individual has paid debt in 

the past. As such, the commenters’ 

recommendations to include measures 

of creditworthiness in determining 

whether an applicant has an adverse 

credit history are not supported by 

section 428B(a)(1)(A) of the HEA, which 

provides that an applicant is not eligible 

to borrow a PLUS loan if the applicant 

has an adverse credit history. Lack of a 

credit history is not an indicator that a 

borrower was unable or unwilling to 

repay a prior debt. Therefore, we do not 

consider lack of a credit history to be an 

indicator of an adverse credit history. 

These final regulations will increase 

the number of applicants who qualify 

for PLUS loans based on the initial 

credit check and consequently decrease 

the total number of applicants who are 

approved through the extenuating 

circumstances process. We do not 

anticipate that the changes to the 

adverse credit history standards in these 

regulations will restrict access to PLUS 

loans for borrowers who are currently 

eligible for PLUS loans. Therefore, we 

do not see the need to limit the 

applicability of these final regulations to 

new borrowers. 

Changes: None. 

Component 1—Outstanding Balance 

Greater Than $2,085 

Comments: Many commenters 

supported the provision that would use 

the threshold amount of $2,085 in debts 

that are 90 or more days delinquent for 

determining whether the applicant has 

an adverse credit history. However, 

some commenters objected to the $2,085 

amount as either too low or too high. 

Two commenters recommended that 

the threshold amount be increased to 

$5,000. However, one commenter 

argued that the $2,085 threshold amount 

was too high and noted that this amount 

could lead to a determination that an 

applicant who has debts significant 

enough to warrant ongoing collection 

attempts and lawsuits does not have an 

adverse credit history for purposes of 

the PLUS loan program. This 


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63320 Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 

commenter recommended reducing the 

threshold amount to $1,000. 

Another commenter asserted that 

there is no evidence to suggest that 

granting unlimited credit to applicants 

with $2,085 of delinquent debt will not 

harm borrowers and taxpayers. 

Several commenters recommended 

that in determining whether an 

applicant has an adverse credit history, 

we should exclude debt that is not 

correlated with credit risk from 

consideration. Several commenters cited 

medical debt as an example of debt that 

does not affect the likelihood that a 

consumer will repay other debt. 

Commenters also recommended that 

delinquencies on debts relating to 

accidents, illness, or unemployment in 

the immediately preceding two years be 

disregarded. One commenter suggested 

that the Department disregard car loans 

under $7,000. 

Discussion: We believe that the $2,085 

threshold amount is the appropriate 

amount to use in determining whether 

a PLUS loan applicant has an adverse 

credit history. As explained in the 

NPRM, we arrived at the amount of 

$2,085 by calculating the estimated 

median debt level for the purposes of 

documenting extenuating circumstances 

for all debts with a status of in 

collection, charged off, or 90 or more 

days delinquent, for all parent PLUS 

loan denials resulting from all credit 

checks conducted between the spring of 

2012 and the spring of 2013. In these 

regulations, we use the $2,085 threshold 

as a standard for the determination of an 

adverse credit history, rather than as 

part of the process for documenting 

extenuating circumstances to reduce the 

burden on borrowers. Lastly, the 

Department already provides special 

consideration for medical debt or 

delinquencies relating to accidents, 

illness, or unemployment when 

determining whether an applicant has 

an adverse credit history. Under 

§ 685.200(c)(2)(viii)(D), the Secretary 

may consider the type of debt when 

deciding that extenuating circumstances 

exist with regard to an adverse credit 

history determination. However, we do 

not believe there is a justification for 

treating a delinquency on a car loan 

differently than other consumer debt 

which does not relate to accidents, 

illness or unemployment. 

Changes: None. 

Component 2—Adjustment Over Time 

Comments: Several commenters 

strongly supported the provision in the 

proposed regulations that would 

provide for the Department to adjust the 

$2,085 threshold amount over time. 

Most commenters recommended using 

the Consumer Price Index for All Urban 

Consumers (CPI–U) as the basis for 

indexing the threshold amount. One 

commenter pointed out that CPI–U is 

the most commonly used measure of 

inflation. Another commenter noted that 

using CPI–U would be consistent with 

inflation measures used in other Federal 

programs such as the Social Security 

Administration’s Old-Age, Survivors, 

and Disability Insurance (OASDI) 

program. The commenter stated that as 

the CPI rises, what is considered as 

‘‘negligible debt’’ should also rise. 

Another commenter suggested that we 

utilize the same methodology we used 

to calculate the initial $2,085 threshold 

amount to recalculate the threshold 

amount annually. The commenter 

argued that the threshold amount is a 

function of total consumer debt and 

overall economic conditions and that it 

is not affected by inflation. The 

commenter noted that during the time 

period measured to arrive at the $2,085 

threshold amount, consumers had just 

gone through a period of easy credit 

followed by a recession, resulting in 

larger debt levels and more 

delinquencies. The commenter stated 

that, in future years, the $2,085 

threshold amount may need to be 

reduced as debt levels and 

delinquencies decrease. 

One commenter recommended that 

the Department not adjust the $2,085 

threshold amount. This commenter 

noted that the threshold amount is 

relatively high, and represents 

potentially significant financial trouble 

for an applicant. The commenter stated 

that the threshold amount should not be 

adjusted, to ensure that parents with 

substantial financial troubles do not 

overborrow. However, this commenter 

recommended that if the Department 

decides to adjust the threshold amount 

any future changes should be based on 

CPI, as a recognized measure of 

inflation. The commenter also 

recommended that we inform 

institutions and borrowers of the yearly 

adjustment when we announce the new 

Federal student loan interest rates. 

One commenter recommended that 

the regulations require the Secretary to 

increase the threshold amount, rather 

than permit the Secretary to adjust the 

amount periodically. The commenter 

believed that a mandatory annual 

adjustment to the threshold amount 

would prevent the value of the 

threshold amount from eroding over 

time, and could have a significant 

impact in preventing future PLUS loan 

denials. 

Several commenters recommended 

that there be no reduction in the 

threshold amount in years when the 

CPI–U is a negative number. 

Discussion: We agree with the 

recommendation that we index the 

$2,085 threshold to the Consumer Price 

Index (CPI–U). As the commenters 

noted, indexing the threshold amount to 

inflation will help ensure that it remains 

a meaningful limit to the amount of 

delinquent debt a PLUS loan applicant 

may have and still qualify for a PLUS 

loan. 

We disagree with the 

recommendation that, instead of using 

the rate of inflation, we use the median 

debt levels for all debts with a status of 

in collection, charged off, or 90 or more 

days delinquent. Although this 

calculation of delinquent debt of PLUS 

borrowers was a factor used in 

determining the $2,085 threshold 

amount, we do not believe that this 

methodology is appropriate for use for 

determining appropriate changes to the 

future threshold amount. As the 

commenter pointed out, debt levels and 

delinquencies may decrease in the 

future, meaning that we would have to 

either decrease or not adjust the 

threshold amount. Using the CPI–U 

index gives borrowers and schools 

transparency about the limit of debt that 

is not considered to reflect an ‘‘an 

adverse credit history’’. 

Similarly, we disagree with the 

commenter who recommended that we 

not index the threshold amount. In our 

view, if the threshold amount is not 

indexed to inflation, over time it would 

erode the value of the threshold amount 

due to inflation. 

We agree with the commenters that 

the CPI–U is an appropriate measure of 

inflation for indexing the threshold 

amount. The CPI–U is used by the 

Social Security Administration and 

other Federal programs and by private 

firms in collective bargaining 

agreements. A more detailed discussion 

of the widespread application of the 

CPI–U is provided in the Threshold 

Amount Indexed to Inflation section. 

Although we agree with the 

commenters who suggested adjusting for 

inflation, we disagree with the 

recommendation that the threshold 

amount be adjusted annually. An 

annual adjustment for inflation may 

result in minimal changes to the 

threshold amount that could cause 

confusion for institutions and loan 

applicants. Therefore these final 

regulations provide for increasing the 

$2,085 threshold amount periodically 

but only when the adjustment results in 

a significant change in the threshold 

amount. The Department will determine 

when the change in the CPI–U since the 

publication of these regulations or the 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63321 

most recent adjustment would result in 

an increase of at least $100. In addition, 

any inflation-adjusted increase to the 

threshold amount will be rounded 

upward to the nearest $5. 

Changes: We have added 

§ 685.200(c)(2)(viii)(C) and 

§ 685.200(c)(2)(viii)(D) to provide that 

the Secretary adjusts the $2,085 

threshold amount, or the most recent 

inflation-adjusted threshold amount, 

when the application of the percentage 

change in the CPI–U to the then current 

threshold amount results in an increase 

of $100 or more. The provision also 

specifies that the Secretary will round 

up adjustments, when made, to the 

nearest $5. 

Component 3—Debts 90 or More Days 

Delinquent 

Comments: One commenter 

recommended that an applicant with 

delinquent debts not be considered as 

having an adverse credit history unless 

40 percent or more of the applicant’s 

total accounts are an average of 120 days 

or more past due. 

Discussion: Under the commenter’s 

proposal, an unlimited amount of 

delinquent debt would not be 

considered to be an indicator of an 

adverse credit history, as long as the 

debt represented less than 40 percent of 

the applicant’s total accounts. Such an 

open-ended standard would not be in 

the best interests of the PLUS loan 

program, or of potential PLUS loan 

borrowers. 

Changes: None. 

Component 4—In Collection or Charged 

Off 

Comments: One commenter objected 

to us considering debts that have been 

charged off as an indicator of an adverse 

credit history. This commenter asserted 

a creditor may charge off a debt for 

many reasons that are not indicative of 

a borrower’s ability to repay. The 

commenter asserted that it is common 

practice in some fields, such as the 

agriculture industry, to charge off debts 

when there are significant changes 

beyond the control of the lender or 

borrower, such as natural disasters or 

unforeseen and unanticipated changes 

in economic circumstances. 

This commenter also asserted that, in 

other industries, creditors will refer 

debts that are not delinquent to a 

collection agency as a way of escalating 

collection efforts. As a result, the fact 

that a debt is in collection does not 

necessarily mean that the borrower is 

delinquent in payment or even that the 

borrower owes the amount in question. 

Rather, it is an expression of the 

lender’s intent to move the collection 

efforts to the next level. 

One commenter stated that the 

Department had not provided evidence 

to demonstrate that the consideration of 

debts in collection or charged off as 

reflecting an adverse credit history will 

reduce PLUS loan default rates. The 

commenter argued that whether an 

applicant has accounts that are in 

collection or have been charged off does 

not provide insight into the applicant’s 

likely repayment behavior. The 

commenter noted that the proposed 

regulatory changes may deny PLUS 

loans to borrowers who are capable of 

repaying the loans. 

Several commenters expressed 

support for the proposal to change the 

period in which we consider debts in 

collection or charged off as reflecting an 

adverse credit history from the current 

five years to two years. One commenter 

suggested that two years is a reasonable 

time frame to demonstrate that 

borrowers are likely to be able to repay 

their loans. These commenters asserted 

that a longer look-back period might 

hamper parental access to PLUS loans 

due to the lingering effects of the 

recession. One commenter expressed 

the view that a one-year look-back 

period is not sufficient and that a fiveyear look-back period is not appropriate 

for PLUS loan applicants. This 

commenter stated that using a two-year 

look-back period, instead of a five-year 

look-back period, will limit the impact 

of unusual economic conditions. 

One commenter recommended that 

the Department change the look-back 

period from two years to three years, 

because many States have a three-year 

statute of limitations on debts for 

written contracts. The commenter 

recommended extending the look-back 

period to reflect these statutes of 

limitations and to ensure that PLUS 

borrowers with debt that is delinquent, 

charged off, or in collection, are able to 

either rehabilitate that debt or avoid 

costly lawsuits that may hinder their 

ability to repay a PLUS loan. 

Another commenter noted that the 

statute of limitations on a written 

contract varies from State to State. 

According to this commenter, the 

average statute of limitations period in 

all States and the District of Columbia 

is just over six years. The shortest 

statute of limitations in any State is 

three years, and the most common 

statute of limitations is six years. 

Another commenter who 

recommended setting the look-back 

period at three years noted that 

applicants with debts in collection or 

that have been charged off for two years 

could still be subject to aggressive 

collection practices, which may cause 

further financial distress to the borrower 

in the near future. This commenter 

stated that such applicants are not good 

candidates for automatic approval for a 

PLUS loan. 

Discussion: While it may be true that 

a debt can be charged off for reasons 

other than the debtor’s ability or 

willingness to repay, generally, if a 

creditor has written off a debt as a loss 

it is an indicator that the applicant has 

had some difficulty repaying the 

amounts owed. If the reason for the 

charge off was something outside of the 

applicant’s control, as suggested by the 

commenter, the applicant could 

document that reason during the 

extenuating circumstances process. 

We are skeptical of the commenter’s 

assertion that a creditor would refer a 

debt to a collection agency if a borrower 

is current on his or her payments. 

Referring a debt to a collection agency 

costs the creditor. Further, the 

commenter does not explain why a 

creditor would escalate collection 

efforts on a borrower who consistently 

makes on-time payments. 

We also disagree that whether an 

applicant has accounts in collection or 

a charged off status does not provide 

insight into likely repayment behavior. 

The HEA requires us to determine 

whether an applicant has an adverse 

credit history and we believe that past 

repayment behavior is a necessary part 

of this required adverse credit history 

determination. 

We thank the commenters for their 

support for a two-year look-back period. 

The Department reviewed other lenders’ 

look-back periods (as discussed in the 

NPRM) and determined that the two 

year look-back period presents a more 

accurate sample of an applicant’s recent 

credit history than the longer periods 

recommended by a small number of 

commenters. 

Changes: None. 

Extenuating Circumstances (34 CFR 

685.200(c)(2)(viii)(A)(3)) 

Comments: Commenters generally 

expressed support for adding a 

provision to require loan counseling for 

PLUS loan applicants who are 

determined to have an adverse credit 

history, but who qualify for a PLUS loan 

by demonstrating that extenuating 

circumstances exist. However, one 

commenter questioned the premise that 

loan counseling is helpful and reduces 

overborrowing. This commenter was not 

aware of any studies demonstrating that 

requiring additional counseling for 

parent borrowers has a positive effect on 

loan repayment. Another commenter 

echoed this statement, citing a report 


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that questions the benefit of financial 

education programs. 

One commenter recommended that, 

before requiring PLUS loan counseling, 

the Department conduct a 

comprehensive review of how such 

counseling would add value to the 

PLUS loan borrowing experience and 

how it would affect PLUS loan 

outcomes. This commenter 

recommended that the Department 

conduct focus groups to evaluate future 

PLUS loan counseling. 

The proposed regulations would not 

have required PLUS loan counseling for 

a borrower with an adverse credit 

history who qualifies for a PLUS loan by 

obtaining an endorser. In the NPRM, the 

Department requested comment on 

whether an applicant who qualifies for 

a PLUS loan by obtaining an endorser 

who does not have an adverse credit 

history should be required to complete 

PLUS loan counseling. Several 

commenters expressed support for a 

counseling requirement for these 

applicants. One commenter noted that, 

although the applicant has an endorser, 

the applicant is still primarily 

responsible for repaying the loan. 

Another commenter stated that the 

change requiring counseling for these 

two groups would target some of the 

most vulnerable borrowers, and would 

help to ensure that they understand the 

terms and conditions of the PLUS loan. 

Another commenter asserted that the 

Department should establish standards 

for documentation of extenuating 

circumstances. Examples of 

documentation that this commenter 

stated should be acceptable include 

income tax returns, bank statements or 

a documented lack of alternative 

financial support. 

One commenter recommended that 

the extenuating circumstances that the 

Department would consider should be 

all-inclusive. The commenter stated that 

an applicant’s good faith effort to submit 

documentation of extenuating 

circumstances should be sufficient for 

the applicant to obtain the loan. 

Another commenter contended that 

the new standards for PLUS loan 

eligibility should apply to endorsers as 

well as parent and student PLUS loan 

borrowers. This commenter pointed out 

that, while an applicant with an adverse 

credit history may still qualify for a 

PLUS loan if extenuating circumstances 

exist, an endorser does not have the 

opportunity to demonstrate extenuating 

circumstances. 

Discussion: We believe that loan 

counseling is a helpful tool for all 

borrowers but especially borrowers who 

may have experienced difficulties in 

repaying debts in the past. The 

Department will make voluntary 

counseling materials available to all 

PLUS loan borrowers and endorsers but 

require counseling for borrowers who 

receive PLUS loans due to extenuating 

circumstances or by obtaining an 

endorser. The counseling will provide 

borrowers with information specific to 

PLUS loans and with information that 

can help them successfully manage 

debt. The mandatory counseling will 

include information on the borrowers’ 

current loan indebtedness, provide 

estimated loan repayment amounts, 

describe ways to avoid delinquency and 

default and provide additional financial 

aid literacy information. The voluntary 

counseling is discussed in the 

‘‘Enhanced PLUS Borrower Consumer 

Information’’ section of this document. 

We will consider the suggestion to 

conduct consumer testing to evaluate 

PLUS loan counseling tools and 

materials. 

We thank the commenters who 

responded to our request for comment 

on whether an applicant who qualifies 

for a PLUS loan by obtaining an 

endorser should be required to complete 

PLUS loan counseling. We agree with 

the commenters that these applicants, as 

well as applicants who qualify for PLUS 

loans based on extenuating 

circumstances, should be required to 

complete PLUS loan counseling. 

We thank the commenter for 

recommendations on the types of 

documentation that the Secretary 

should accept to document extenuating 

circumstances. We agree that the types 

of documentation that the commenter 

described would be helpful in making 

extenuating circumstances 

determinations, but we do not believe it 

is necessary to include the examples in 

the regulations. 

We disagree with the 

recommendation that extenuating 

circumstances be all inclusive. Under 

this proposal, a borrower with an 

adverse credit history could obtain a 

PLUS loan under the extenuating 

circumstances provisions for any reason 

at all, regardless of whether the 

extenuating circumstance was truly 

justified. 

We disagree with the 

recommendation that an individual 

with an adverse credit history be 

permitted to act as an endorser for a 

PLUS loan applicant if the endorser can 

demonstrate that extenuating 

circumstances exist. While the ‘‘adverse 

credit history’’ definition is the same for 

endorsers as it is for borrowers, we do 

not believe that it would provide 

sufficient protection for taxpayers to 

allow an applicant who has been 

determined to have an adverse credit 

history to qualify for the loan by 

obtaining an endorser who also has an 

adverse credit history. 

Changes: We have revised 

§ 685.200(c)(2)(viii)(A)(2) to specify that 

an applicant with an adverse credit 

history and who has obtained an 

endorser must complete PLUS loan 

counseling offered by the Secretary to 

receive a PLUS loan. 

Operational Issues 

Extending the Validity of Credit Checks 

From 90 Days to 180 Days 

In the NPRM, the Department 

announced its intention to modify its 

procedures so that a credit check 

indicating that a PLUS loan applicant 

does not have an adverse credit history 

will remain valid for 180 days, instead 

of the current 90 days. 

With this change to the Department’s 

procedures, any action that would 

normally trigger a credit check (for 

example, the submission of a Direct 

PLUS Loan Request or a PLUS loan 

origination record) will not do so if a 

prior credit check on the applicant that 

revealed no adverse credit issues was 

conducted within the past 180 days. We 

plan to implement this procedural 

change as soon as possible, and will 

inform schools in advance of the 

effective date of the change through an 

announcement on the Department’s 

Information for Financial Aid 

Professionals Web site. 

Comments: Several commenters 

expressed support for this increase in 

the length of the period during which a 

credit check is valid. One commenter 

encouraged the Department to continue 

to review this issue, with the goal of 

eventually extending the validity of an 

approved credit check for at least one 

award year, so that PLUS borrowers 

would have additional certainty about 

their continued eligibility to receive 

PLUS loan funds. Another commenter 

agreed that the current 90-day period 

was too short, but felt that a period 

longer than 180 days may be too long. 

Discussion: We appreciate the support 

for this change. We believe that 

extending the window for more than 

180 days would result in individuals 

receiving PLUS loans based on credit 

checks that do not reasonably reflect 

their current financial circumstances. 

Collecting and Publishing Information 

on the Performance of PLUS Loans 

In the NPRM, the Department stated 

that it intends to collect and, where 

appropriate, publish information about 

the performance of parent and graduate 

and professional student PLUS loans, 

including default rate information based 


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on credit history characteristics of PLUS 

loan applicants and individual 

institutional default rates. 

Comments: Several commenters 

responded to the Department’s plan to 

collect and publish this information. 

One organization stated that it is not 

opposed to the Department improving 

transparency by providing more 

information about participation in the 

PLUS Loan program, such as the 

number of applications; approval, 

denial and reconsideration rates; and 

amounts borrowed. However, the 

commenter expressed concerns about 

the Department’s intent to publish PLUS 

loan default rate information. The 

commenter argued that, in its view, the 

overall PLUS loan default rate is 

relatively low. The commenter also 

argued that since the Department, not 

institutions, establishes PLUS loan 

eligibility criteria and makes the loans, 

it would not be fair to publish 

institutional PLUS loan default rates. 

Another commenter asserted that it 

would make sense to provide 

institutional default rates for PLUS 

loans made to graduate and professional 

students, but expressed concerns about 

publishing parent PLUS loan default 

rates. The commenter asserted that there 

is no correlation between a parent PLUS 

borrower’s repayment behavior and the 

earnings capacity of an institution’s 

graduates. 

One commenter supported the 

Department’s plan to release more 

information about the PLUS loan 

program, including default rate 

information, but felt that default rates 

alone do not provide a complete picture 

of how widespread financial distress 

might be. The commenter urged us to 

collect, analyze, and publish robust data 

on the repayment patterns of PLUS loan 

borrowers, and to disaggregate the data 

for student and parent borrowers. 

One commenter noted that the 

Department provided the members of 

the negotiated rulemaking committee 

that considered the draft proposed 

regulations with data on this topic, 

including PLUS loan application 

rejection rates, reasons for rejection, 

sector-level default rates, and other 

information (see the discussion in the 

NPRM at 79 FR 46640, 46641–46643 

(August 8, 2014)). The commenter urged 

the Department to continue providing 

this information annually, keeping 

student and parent PLUS borrower data 

separate, so that researchers and 

policymakers can better understand the 

performance of the PLUS loan program. 

The commenter also strongly 

recommended that the Department 

create a process for institutions to 

review PLUS loan default rate data and 

then publish institutional PLUS loan 

cohort default rates annually. 

Discussion: We appreciate the 

feedback and will take the commenters’ 

concerns and recommendations into 

consideration as we formalize our plans 

to collect and publish information on 

the performance of PLUS loans. The 

Department will collect and, where 

appropriate, publish information about 

the performance of parent and graduate 

and professional student PLUS loans, 

including default rate information based 

on credit history characteristics of PLUS 

loan applicants and individual 

institutional default rates. 

Enhanced PLUS Borrower Consumer 

Information 

In the NPRM, we invited suggestions 

for specific types of enhanced consumer 

information that the Department should 

develop for PLUS applicants, 

particularly parent PLUS applicants 

who may be planning to borrow for 

more than one dependent over multiple 

academic years. 

Comments: Several commenters 

supported the Department’s plans to 

develop enhanced consumer 

information for PLUS loan borrowers 

and provided suggestions for topics to 

be covered. These suggestions included 

the following: 

• An explanation of the definition of 

‘‘adverse credit history’’ and a 

description of consumer credit reports; 

• For parent PLUS loan borrowers, a 

reminder that the parent, not the 

student on whose behalf the loan is 

obtained, is responsible for repaying the 

loan, and that a parent PLUS loan 

cannot be transferred to the student; 

• An explanation of the repayment 

options available to parent PLUS loan 

borrowers; 

• A reminder to borrowers who take 

out more than one PLUS loan on how 

future PLUS loans will affect loan 

payments; and 

• A calculator to permit PLUS loan 

applicants to enter non-mortgage debt 

and net income to determine whether 

they can manage additional debt. 

One commenter strongly encouraged 

us to explore ways for PLUS loan 

borrowers and their families to receive 

personalized, customized, and sustained 

counseling from subject-matter experts 

on navigating the financial aid process, 

avoiding over-borrowing, the 

importance of managing student loan 

debt, and budgeting and personal 

financial management skills. The 

commenter noted that such specialized 

counseling services should be available 

to those with adverse credit histories to 

help prevent delinquency and default 

and promote long-term financial wellbeing. 

Discussion: We agree that it would be 

helpful to include some of the 

recommended items in our enhanced 

consumer information for all PLUS 

applicants. The enhanced consumer 

information will include voluntary 

PLUS loan counseling for all student 

and parent PLUS borrowers. The 

voluntary PLUS loan counseling will be 

easily accessible to borrowers who are 

seeking PLUS loans and will also be 

made available through links on other 

Department Web sites. The following 

are some of the items that will be 

included in the voluntary counseling for 

all PLUS borrowers: 

• A calculator that will allow 

borrowers to estimate their future 

required monthly payment amount 

under available repayment plans. 

• Tools to assist borrowers in 

determining how factors such as taking 

out additional PLUS loans or deferring 

repayment until the student leaves 

school will affect the required monthly 

payment amount and total loan amount 

to be repaid. 

• Available repayment plans for 

student and parent PLUS borrowers. 

• Information about loan 

consolidation. 

• Budgeting information, with an 

emphasis on borrowing only the 

minimum amount needed. 

• Strategies for avoiding delinquency 

and default. 

This enhanced consumer information 

will be made available prior to the start 

of the 2015–2016 academic year. 

PLUS Loan Information for Institutions 

and Consumers and the Most Effective 

Way To Communicate With Parent 

PLUS Borrowers 

In the NPRM, we invited comments 

on what other types of information 

about parent PLUS loans would be 

helpful for institutions and consumers, 

and suggestions on the most effective 

way for the Department to communicate 

with parent PLUS loan borrowers. 

Comments: We received suggestions 

that included some of the 

recommendations for enhanced PLUS 

loan borrower consumer information 

described earlier in this section, as well 

as the following: 

• Resources for borrowers to learn 

how to improve their credit history to 

qualify for future borrowing; 

• The definition of ‘‘endorser’’ and an 

explanation of the responsibilities 

assumed by a PLUS loan endorser; 

• The importance of understanding 

debt-to-earnings considerations before 

an individual takes on new loan debt; 

and 


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• The penalties for fraudulent PLUS 

loan applications. 

One commenter suggested that 

effective ways to communicate with 

parent PLUS loan borrowers include the 

following: 

• In-person counseling with qualified 

professionals; 

• Online counseling that is engaging, 

interactive, and includes knowledge 

checks; 

• Online tutorials on specific topics; 

and 

• Customer service using certified 

financial counselors who understand 

the concepts and tools needed to assist 

parents throughout the PLUS loan 

process. 

Another commenter suggested that it 

may be helpful for the Department to 

provide paper informational materials to 

parent PLUS borrowers in addition to 

providing online resources, since some 

parent borrowers may have computer 

literacy challenges or may not have 

access to a computer. 

Discussion: We appreciate these 

comments. The commenters provided 

many useful recommendations that will 

assist the Department as we consider 

options for better communicating with 

parent PLUS borrowers and providing 

enhanced information about parent 

PLUS loans to borrowers and 

institutions. Consistent with these goals, 

the voluntary PLUS loan counseling that 

the Department is developing will make 

use of graphs and charts to more clearly 

and effectively explain important 

concepts. The counseling will include 

knowledge checks to assess the 

borrower’s understanding of the 

material. Borrowers will be able to 

download the content of the voluntary 

counseling for future reference. 

Executive Orders 12866 and 13563 

Regulatory Impact Analysis 

Introduction 

The Department makes Direct PLUS 

Loans to graduate and professional 

students and to parents of dependent 

undergraduate students to help them 

pay for education expenses not covered 

by other financial aid. According to data 

from the Department’s Federal Student 

Aid (FSA) office, approximately 3.9 

million borrowers owe a combined 

balance of $100 billion in total Direct 

PLUS loans. The Department is 

amending these regulations to update 

the standard for determining if a 

potential borrower has an adverse credit 

history for purposes of eligibility for a 

Direct PLUS loan. 

Under Executive Order 12866, the 

Secretary must determine whether this 

regulatory action is ‘‘significant’’ and, 

therefore, subject to the requirements of 

the Executive order and subject to 

review by the Office of Management and 

Budget (OMB). Section 3(f) of Executive 

Order 12866 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 $100 million or more, or 

adversely affect a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or tribal governments or 

communities in a material way (also 

referred to as an ‘‘economically 

significant’’ rule); 

(2) Create serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; 

(3) Materially alter the budgetary 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or 

(4) Raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

stated in the Executive order. 

This final regulatory action is a 

significant regulatory action subject to 

review by OMB under section 3(f) of 

Executive Order 12866. 

We have also reviewed these 

regulations under Executive Order 

13563, which supplements and 

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 

upon 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 

taking into account—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.’’ The Office of 

Information and Regulatory Affairs of 

OMB 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 maximize net 

benefits to borrowers and institutions. 

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 does not unduly 

interfere with State, local, or tribal 

governments in the exercise of their 

governmental functions. 

In accordance with both Executive 

orders, the Department has assessed the 

potential costs and benefits, both 

quantitative and qualitative, of this 

regulatory action. The potential costs 

associated with this regulatory action 

are those we have determined as 

necessary for administering the 

Department’s programs and activities. 

This Regulatory Impact Analysis is 

divided into six sections. The ‘‘Need for 

Regulatory Action’’ section discusses 

why updating the regulatory 

requirements governing PLUS loan 

adverse credit history determinations is 

necessary. 

The ‘‘Summary of Changes from the 

NPRM’’ section summarizes the most 

important revisions the Department 

made in these final regulations since 

publication of the NPRM. These changes 

were informed by the Department’s 

consideration of the comments of 310 

parties who submitted comments on the 

proposed regulations. The changes are 

intended to clarify the Department’s 

regulations on adverse credit history 

determinations and eligibility for PLUS 

loans. In these final regulations, the 

Department is making two major 

changes in the proposed rules since the 

NPRM: (1) Permitting the Secretary to 

increase the debt threshold amount of 

$2,085 based on a measure of inflation; 

and (2) requiring borrowers who qualify 

for a PLUS loan by obtaining an 

endorser to complete PLUS loan 

counseling provided by the Department. 

The ‘‘Discussion of Costs, Benefits, 

and Transfers’’ section considers the 

cost and benefit implications of these 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63325 

2 ‘‘Consumer Price Index: Addendum to 

Frequently Asked Questions.’’ Bureau of Labor 

Statistics. (http://stats.bls.gov/cpi/cpiadd.htm#2_3) 

regulations for institutions of higher 

education, students, and parents. We 

anticipate that the final regulations will 

result in a lower denial rate for PLUS 

loan applicants and a decline in the 

number of applicants who are subject to 

the extenuating circumstances process. 

For some parents and graduate and 

professional students who would be 

denied PLUS loans under the current 

standards, the final regulations will 

allow them to borrow a PLUS loan. 

Under ‘‘Net Budget Impacts,’’ the 

Department presents its estimate that 

the final regulations will not have a 

significant net budgetary impact on the 

Federal government. 

In ‘‘Alternatives Considered,’’ we 

describe other approaches we 

considered for key provisions of these 

regulations, including an automatic 

annual adjustment of the $2,085 

threshold based on the CPI–U. 

Finally, the ‘‘Final Regulatory 

Flexibility Analysis’’ considers issues 

relevant to small businesses and 

nonprofit institutions. 

Elsewhere in this section under 

Paperwork Reduction Act of 1995, we 

identify and explain burdens 

specifically associated with information 

collection requirements. 

Need for Regulatory Action 

Executive Order 12866 emphasizes 

that ‘‘Federal agencies should 

promulgate only such regulations as are 

required by law, are necessary to 

interpret the law, or are made necessary 

by compelling public need, such as 

material failures of private markets to 

protect or improve the health and safety 

of the public, the environment, or the 

well-being of the American people.’’ In 

this case, there is indeed a compelling 

public need for regulation. Congress 

amended the HEA in 2010 to end the 

origination of new loans under the 

Federal Family Education Loan (FFEL) 

Program. All new subsidized and 

unsubsidized Stafford loans, PLUS 

loans, and Consolidation loans are made 

under the Direct Loan Program. To be 

eligible for a Federal Direct PLUS loan, 

under the statute, an applicant must not 

have an adverse credit history. To 

determine if an applicant has an adverse 

credit history, the Department conducts 

a credit check on the applicant. Under 

current regulations, a PLUS loan 

applicant is considered to have an 

adverse credit history if the credit report 

shows that the applicant is 90 days 

delinquent on any debt, or has been the 

subject of a default determination, 

bankruptcy discharge, foreclosure, 

repossession, tax lien, wage 

garnishment, or write-off of a title IV, 

HEA program debt in the five years 

preceding the date of the credit report. 

Since 2011, we have made operational 

changes to the Direct Loan Program to 

improve compliance with the applicable 

regulations. In accordance with those 

regulations, the Department has applied 

standards for adverse credit history 

determinations for PLUS loan 

applicants under which an applicant 

with debts in collection or charged off 

is considered to have an adverse credit 

history because the applicant is 90 or 

more days delinquent on a debt. Based 

on these standards, more PLUS loan 

applicants were determined to have an 

adverse credit history and had to 

request reconsideration of the PLUS 

loan denial through the Department’s 

process for determining whether there 

are extenuating circumstances for an 

adverse credit history. After these 

changes resulted in an increase in PLUS 

loan denials, the Department made 

operational changes to the extenuating 

circumstances process to ensure that the 

statutory adverse credit history 

requirement was applied fairly without 

burdening borrowers or restricting 

access to higher education. In the 

interest of providing transparency to 

institutions and families, we concluded 

that the Department’s operational 

changes should be reflected in the 

regulatory requirements governing 

PLUS loan adverse credit history 

determinations, which were originally 

established in 1994. 

The final regulations will amend the 

definition of ‘‘adverse credit history’’ 

and will update the standard for 

determining if a potential PLUS loan 

borrower has an adverse credit history. 

In addition, the final regulations require 

that a parent or student with an adverse 

credit history who is approved for a 

PLUS loan as a result of the Secretary’s 

determination that extenuating 

circumstances exist or who qualifies for 

a PLUS loan by obtaining an endorser 

must complete PLUS loan counseling 

before receiving the loan. 

Summary of Changes From the NPRM 

1. Threshold Amount Indexed to 

Inflation 

In the NPRM, the Department 

solicited comments on the appropriate 

inflation measure to use to index the 

$2,085 threshold debt amount. Most of 

the commenters that responded to this 

solicitation agreed that the Department 

should index the $2,085 to an inflation 

measure, and that the CPI–U produced 

by the Bureau of Labor Statistics would 

be the most appropriate measure. The 

Department believes that indexing the 

threshold amount to inflation will 

ensure that it remains a meaningful 

limit on the amount of delinquent debt 

a PLUS applicant may have. The CPI– 

U is the most commonly used measure 

of inflation and it is also commonly 

used as a means of adjusting dollar 

values. The CPI–U is used to adjust 

consumers’ income payments (for 

example, Social Security), to adjust 

income eligibility levels for government 

assistance and to provide cost-of-living 

wage adjustments to workers. Over 50 

million Social Security beneficiaries 

and military and Federal Civil Service 

retirees, have cost-of-living adjustments 

tied to the CPI–U. In addition, eligibility 

criteria for millions of food stamp 

recipients are tied to the CPI–U.2 Along 

with other agencies, the Department 

also uses the CPI–U for many purposes 

such as determining various amounts 

under the Individuals with Disabilities 

Education Act (IDEA) and the 

Rehabilitation Act of 1973. To be 

consistent with the practice of other 

Federal agencies and the Department 

itself, we have determined that the CPI– 

U is the most appropriate inflation 

measure to use to adjust the threshold 

debt amount. 

The initial threshold amount will be 

$2,085. The Department will adjust this 

amount for inflation, using the CPI–U, 

only when doing so will result in a 

cumulative increase in the threshold 

amount of $100 or more. The 

adjustments will be determined by 

multiplying $2,085, or the most recent 

inflation adjusted amount, by the sum of 

all subsequent annual average 

percentage changes of All Items CPI–U, 

before seasonal adjustment, for the 12- 

month periods ending in December. 

When the product of this calculation 

equals or exceeds $100, the product will 

be rounded up to the nearest $5. This 

adjustment amount will then be added 

to the threshold amount to derive a 

revised higher threshold amount that 

reflects inflation. When the recalculated 

adjustment amount increases by $100 or 

more, the Department will notify the 

public of the new threshold amount and 

apply it to PLUS loan eligibility 

determinations after it is announced. 

Some commenters recommended an 

annual adjustment of the threshold 

amount based on inflation. The 

Department believes that adjusting the 

threshold amount for inflation annually 

would result in minimal annual 

increases and is unnecessary. Therefore 

these final regulations provide for 

increasing the $2,085 threshold only 

when applying the CPI–U for prior years 


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would result in an increase of $100 or 

more. 

2. Counseling for PLUS Loan Borrowers 

Who Qualify for a PLUS Loan by 

Obtaining an Endorser 

The proposed regulations in the 

NPRM did not include a requirement 

that an applicant with an adverse credit 

history who qualifies for a PLUS loan by 

obtaining an endorser must receive 

PLUS loan counseling before receiving 

the loan. The Department solicited 

comments on whether these applicants 

should be required to complete PLUS 

loan counseling. Most commenters 

expressed support for a counseling 

requirement for these applicants. One 

commenter noted that, although the 

applicant has an endorser, the applicant 

is still primarily responsible for 

repaying the loan. Another commenter 

stated that the change requiring 

counseling for these two groups would 

target some of the most vulnerable 

borrowers, and would help to ensure 

that they understand the terms and 

conditions of the PLUS loan. 

The Department agrees with the 

comments suggesting that loan 

counseling is a helpful tool for all 

borrowers, especially borrowers who 

may have experienced difficulties in 

repaying debts in the past. Counseling 

designed to provide borrowers with 

information specific to PLUS loans and 

to help borrowers successfully manage 

debt is important. The Department has 

revised these regulations to require that 

an applicant who has an adverse credit 

history and who has obtained an 

endorser complete PLUS loan 

counseling offered by the Secretary in 

order to receive a PLUS loan. 

Discussion of Costs, Benefits, and 

Transfers 

The Department expects that, as a 

result of these regulations, the number 

of approved applications for parent and 

graduate and professional student PLUS 

loans will increase from current levels 

and that this will result in a series of 

costs, benefits, and transfers. The most 

significant factor leading to this increase 

is expected to be the establishment of a 

new standard for the determination that 

an applicant has an adverse credit 

history. In particular, under these final 

regulations, an adverse credit history 

means that the applicant has one or 

more debts with a total combined 

outstanding balance greater than $2,085 

that are 90 or more days delinquent as 

of the date of the credit report, or that 

have been placed in collection or 

charged off during the two years 

preceding the date of the credit report. 

These final regulations also clarify the 

process by which PLUS loan applicants 

who were denied a loan may request 

reconsideration, and may increase the 

percentage of denied loan applicants 

who eventually qualify for PLUS loans 

after requesting reconsideration or 

obtaining an endorser who does not 

have an adverse credit history. 

As discussed in the NPRM, parent 

PLUS loan applicants and their 

dependent students would be affected 

by these final regulations. Under these 

regulations, a larger number of parent 

PLUS loan applicants would be 

approved for PLUS loans on behalf of 

their dependent students without the 

extenuating circumstances process. As a 

result, some families could accrue 

higher loan debt amounts. 

Parents who take out PLUS loans on 

behalf of their dependent children are 

acquiring some of the debt burden 

associated with their child’s education 

and in some cases, most of the burden 

since there are no loan limits on how 

much parents may borrow, unlike the 

subsidized and unsubsidized loan limits 

for undergraduate students. Parent 

PLUS loans have higher interest rates 

and origination fees than Direct 

Subsidized and Direct Unsubsidized 

loans. 

Increased access to PLUS loans may 

allow some students to continue their 

attendance in programs that they 

otherwise would not be able to afford. 

While some applicants may use 

additional Direct Unsubsidized loans to 

cover their educational expenses after 

their applicant parents have been 

denied PLUS loans, others may be 

unable to make up the difference 

because of annual or lifetime aggregate 

limits on Stafford loans and the larger 

cost of their selected institution. This 

could result in a student having to 

withdraw from a particular education 

program, transfer to another lessexpensive program or institution, or 

find additional means of financing 

education, such as private student 

loans. Since PLUS loans can be 

borrowed up to the cost of attendance, 

they may be used to more fully cover 

funding gaps for dependent students 

who have exhausted their annual or 

lifetime aggregate limits for Direct 

Subsidized and Unsubsidized loans or 

allow students to attend more expensive 

institutions. PLUS loans often help 

lower-income students whose parents 

may lack the personal or family 

resources to pay for college. PLUS loans 

can also help graduate and professional 

students without their own personal 

resources achieve graduate degrees. 

Applicants with an adverse credit 

history who qualify for a PLUS Loan by 

demonstrating that extenuating 

circumstances exist, or who qualify for 

a PLUS loan by obtaining an endorser, 

will be required to participate in loan 

counseling provided by the Department. 

This requirement could help PLUS loan 

applicants make better-informed 

decisions and avoid overborrowing for 

their own or their child’s education. 

Net Budget Impacts 

As detailed in the NPRM, many of the 

changes are already reflected in the 

baseline budget estimates related to the 

PLUS loan program. However, due to 

data limitations, the net budget impact 

of this proposal could not be 

determined at this time. Consistent with 

the requirements of the Credit Reform 

Act of 1990, budget cost estimates for 

the student loan programs reflect the 

estimated net present value of all future 

non-administrative Federal costs 

associated with a cohort of loans. (A 

cohort reflects all loans originated in a 

given fiscal year.) 

As described in the NPRM, the 

Department’s changes to the process for 

making adverse credit history 

determinations in 2011 have already 

been incorporated into the Department’s 

budget baseline. A commenter argued 

that the Department should have 

compared the effects of the proposed 

regulations to a baseline that did not 

include the 2011 changes so that the 

effect of the regulations would be a net 

increase in the level of PLUS loan 

application denials. The Department 

appreciates the comment. However, the 

Department believes that using the 

President’s Budget 2015 baseline that 

reflects current operations and any 

changes in PLUS loan volume from the 

2011 changes in the process for adverse 

credit determinations is appropriate 

As discussed in the NPRM, the 

changes in the regulations, including (1) 

using $2,085 as an upfront threshold 

amount in the determination of an 

adverse credit history, and (2) the 

reduced look-back period of two years 

for accounts in collection and accounts 

that have been charged off to trigger a 

determination of adverse credit, will 

likely decrease the number of PLUS 

loan applicants who are denied loans 

based on an adverse credit history 

determination. 

However, loans made to borrowers 

who would have been considered to 

have an adverse credit history before the 

changes in the regulations could have a 

higher incidence of default or could be 

difficult for borrowers to repay. If that 

were the case, potential savings from 

any increased PLUS volume resulting 

from the regulations would be reduced 

or even reversed. The Department does 


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not have data to determine if borrowers 

who would have been considered to 

have an adverse credit history in the 

absence of the regulations have a greater 

incidence of default or repayment 

difficulty but, if a subsidy rate were 

available for this subgroup of PLUS 

borrowers, it would likely differ from 

the overall PLUS subsidy rate. The 

budget baseline already reflects the 

$2,085 threshold amount as currently 

used in the Department’s process for 

considering requests for reconsideration 

and most of the charged-off accounts or 

accounts in collection that would result 

in an adverse credit history 

determination fall within the two-year 

period that is in the final regulations. 

Therefore, the Department has not 

estimated a significant net budget 

impact from the regulations. 

Assumptions, Limitations, and Data 

Sources 

In developing these estimates, a wide 

range of data sources were used, 

including data from the National 

Student Loan Data System; operational 

and financial data from Department of 

Education systems, including especially 

the Fiscal Operations Report and 

Application to Participate (FISAP) from 

institutions; and data from a range of 

surveys conducted by the National 

Center for Education Statistics, such as 

the 2011–2012 National Postsecondary 

Student Aid Survey and the 2004/09 

Beginning Postsecondary Student 

Survey. Data from other sources, such as 

the U.S. Census Bureau, were also used. 

Accounting Statement 

As required by OMB Circular A–4 

(available at www.whitehouse.gov/sites/ 

default/files/omb/assets/omb/circulars/

a004/a-4.pdf), in Table 1, we have 

prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of these regulations. 

Expenditures are classified as transfers 

from the Federal Government to student 

loan borrowers. 

TABLE 1—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

[In millions] 

Category Benefits 

Improved clarity in process for adverse credit determinations for PLUS loans ...................................... Not quantified 

Category Costs 

7% 3% 

Costs of compliance with paperwork requirements ................................................................................ $6.21 $6.25 

Alternatives Considered 

The regulatory alternatives that were 

considered were discussed in the NPRM 

(79 FR 46653). Further, as discussed in 

the Analysis of Comments and Changes 

section of this document, we received 

comments from 310 parties during the 

comment period following publication 

of the NPRM. These comments covered 

a range of issues, including indexing the 

$2,085 minimum threshold amount to 

an inflation measure. The Department 

considered the suggestion made by 

commenters that the $2,085 debt 

threshold amount be automatically 

adjusted each year based on CPI–U but 

decided that adjusting for inflation 

annually for what may be a minimal 

increase is unnecessary. 

Final Regulatory Flexibility Analysis 

The regulations will affect institutions 

that participate in the title IV, HEA 

programs, including alternative 

certification programs not housed at 

institutions, and individual borrowers. 

The U.S. Small Business Administration 

(SBA) Size Standards define for-profit 

institutions as ‘‘small businesses’’ if 

they are independently owned and 

operated and not dominant in their field 

of operation, with total annual revenue 

below $7,000,000. The SBA Size 

Standards define nonprofit institutions 

as ‘‘small organizations’’ if they are 

independently owned and operated and 

not dominant in their field of operation, 

or as ‘‘small entities’’ if they are 

institutions controlled by governmental 

entities with populations below 50,000. 

The number of title IV, HEA-eligible 

institutions that are small entities would 

be limited because of the revenues 

involved in the sector that would be 

affected by the regulations and the 

concentration of ownership of 

institutions by private owners or public 

systems. However, the definition of 

‘‘small organization’’ does not factor in 

revenue. Accordingly, several of the 

entities subject to the regulations are 

‘‘small entities,’’ and we have prepared 

this Final Regulatory Flexibility 

Analysis. 

Description of the Reasons That Action 

by the Agency Is Being Considered 

These regulations will update the 

standards for determining whether a 

parent or student has an adverse credit 

history for purposes of eligibility for a 

Direct PLUS Loan. The regulations will 

require PLUS loan counseling for a 

parent or student with an adverse credit 

history who obtains a PLUS loan as a 

result of the Secretary’s determination 

that extenuating circumstances exist or 

who receives a loan after obtaining an 

endorser. 

Succinct Statement of the Objectives of, 

and Legal Basis for, the Regulations 

Current Direct Loan regulations (34 

CFR 685.200(b) and (c)) specify that 

graduate and professional students, and 

parents borrowing on behalf of their 

dependent children, may borrow PLUS 

loans. PLUS loan borrowers must meet 

applicable eligibility requirements. 

Description of and, Where Feasible, an 

Estimate of the Number of Small 

Entities to Which the Regulations Will 

Apply 

The regulations will affect the 

approximately 7,500 institutions that 

participate in the title IV, HEA loan 

programs, as the amount and 

composition of title IV, HEA program 

aid that is available to students affects 

students’ enrollment decisions and 

institutional choice. Approximately 60 

percent of institutions of higher 

education qualify as small entities. 

Using data from the Integrated 

Postsecondary Education Data System, 

we estimate that 4,365 institutions 

qualify as small entities—1,891 are 

nonprofit institutions, 2,196 are forprofit institutions with programs of two 

years or less, and 278 are for-profit 

institutions with four-year programs. 


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Description of the Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements of the Regulations, 

Including an Estimate of the Classes of 

Small Entities That Will Be Subject to 

the Requirements and the Type of 

Professional Skills Necessary for 

Preparation of the Report or Record 

The new regulations will not change 

the reporting requirements related to 

PLUS loans for institutions. 

Accordingly, the Department does not 

expect a change in institutional burden 

from the current regulations. However, 

PLUS loan borrowers with an adverse 

credit history who request 

reconsideration based on extenuating 

circumstances must provide satisfactory 

documentation that extenuating 

circumstances exist, and will be 

required to complete loan counseling 

offered by the Secretary. In addition, 

PLUS loan borrowers who qualify for a 

PLUS loan after obtaining an endorser 

will also be required to complete loan 

counseling. 

Identification, to the Extent Practicable, 

of All Relevant Federal Regulations 

That May Duplicate, Overlap, or 

Conflict With the Regulations 

The regulations are unlikely to 

conflict with or duplicate existing 

Federal regulations. 

Alternatives Considered 

The Department conducted a 

negotiated rulemaking process to 

develop the proposed regulations and 

considered a number of options for 

some of the provisions. No alternatives 

were aimed specifically at small 

entities. 

Paperwork Reduction Act of 1995 

Section 685.200 contains information 

collection requirements. Under the 

Paperwork Reduction Act of 1995 (PRA) 

(44 U.S.C. 3507(d)), the Department has 

submitted a copy of the section, and 

will submit the Information Collections 

Request (ICR) to the Office of 

Management and Budget (OMB) for its 

review. 

A Federal agency may not conduct or 

sponsor a collection of information 

unless OMB approves the collection 

under the PRA and the corresponding 

information collection instrument 

displays a currently valid OMB control 

number. Notwithstanding any other 

provision of law, no person is required 

to comply with, or is subject to penalty 

for failure to comply with, a collection 

of information if the collection 

instrument does not display a currently 

valid OMB control number. 

Section 685.200 Borrower Eligibility 

Requirements: Under the final 

regulations in § 685.200(b)(5)and 

(c)(2)(viii)(A)(3), we require that a PLUS 

loan applicant who is determined to 

have an adverse credit history, in 

addition to providing documentation to 

the Secretary demonstrating that 

extenuating circumstances exist, must 

complete enhanced PLUS loan 

counseling to receive the PLUS loan. We 

believe that enhanced loan counseling 

will help these PLUS loan applicants to 

understand the ramifications of 

incurring this additional debt. 

Based on comments received on the 

NPRM, we are expanding the 

requirement that PLUS loan applicants 

receive new enhanced PLUS loan 

counseling to also apply to PLUS loan 

applicants who have an adverse credit 

history, but who qualify for a PLUS loan 

by obtaining an endorser who does not 

have an adverse credit history. The 

PLUS loan applicant (but not the 

endorser) will be required to complete 

enhanced PLUS loan counseling under 

§ 685.200(c)(2)(viii)(A)(2). 

General: Since the publication of the 

NPRM, we have continued to examine 

available data and have based our 

revised burden calculation on the actual 

number of borrowers with adverse 

credit histories who documented 

extenuating circumstances, and the 

actual number of borrowers with 

adverse credit histories who obtained an 

endorser who does not have an adverse 

credit history during the period of 

March 23, 2013, through February 26, 

2014, instead of basing our burden 

estimate on derived numbers. 

Burden Calculation: During the 

period of March 23, 2013 through 

February 26, 2014, there were 785,734 

PLUS loan denials. Our records indicate 

that, of those denials, 147,400 PLUS 

loans were approved after the 

extenuating circumstances process was 

completed and 63,126 PLUS loans were 

approved after the borrower obtained an 

endorser who does not have an adverse 

credit history. 

Graduate and Professional PLUS 

Borrowers 

All graduate and professional 

students who are first-time PLUS 

borrowers are currently required to 

undergo PLUS loan entrance 

counseling. We estimate that the 

enhanced PLUS loan borrower 

counseling requirements for each 

graduate and professional student who 

qualifies for a PLUS loan based on 

extenuating circumstances will, on 

average, increase loan counseling by 

0.50 hours (30 minutes). 

We estimate that, on average, each 

borrower’s submission of 

documentation for the Secretary’s 

consideration of the borrower’s 

extenuating circumstances will take 1 

hour. 

We estimate that, on average, a 

borrower with an adverse credit history 

who elects to obtain an endorser who 

does not have an adverse credit history 

will require 1 hour to obtain such an 

endorser. 

For applicants that qualify for a PLUS 

loan after obtaining an endorser, we 

estimate that, on average, each borrower 

will require an additional 0.50 hours to 

complete the enhanced PLUS loan 

counseling. 

Of the 29,179 applicants for PLUS 

loans to pay for attendance at private 

for-profit institutions whose 

applications were denied, our data show 

that there were 10,984 graduate and 

professional students who received a 

loan after the initial denial of a PLUS 

loan request using the extenuating 

circumstances process review or after 

obtaining an endorser who does not 

have an adverse credit history. Of the 

10,984 PLUS loan applicants, 7,607 

were approved by documenting that 

extenuating circumstances existed and 

3,377 PLUS loan applicants were 

approved after the applicant obtained an 

endorser who does not have an adverse 

credit history. 

Our data show that there were 7,607 

borrowers who were approved for a loan 

based on documentation of existing 

extenuating circumstances and we 

estimate that the burden will increase 

by 3,804 hours (7,607 approved requests 

multiplied by 0.50 hours per enhanced 

counseling session). Our data show that 

there were 3,377 borrowers who 

received a loan after obtaining an 

endorser who does not have an adverse 

credit history and we estimate that the 

burden will increase by 1,689 hours 

(3,377 approved requests multiplied by 

0.50 hours per enhanced counseling 

session). 

We estimate a total increase of 16,477 

hours of burden for graduate and 

professional student PLUS borrowers at 

private for-profit institutions (10,984 

hours for the collection and submission 

of documentation of existing 

extenuating circumstances or to obtain 

an endorser who does not have an 

adverse credit history, plus an 

additional 3,804 hours of enhanced 

counseling for borrowers who qualify 

for a loan after demonstrating that 

extenuating circumstances exist, and an 

additional 1,689 hours of enhanced 

counseling for the borrowers who 

receive a loan after obtaining an 

endorser who does not have an adverse 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63329 

credit history) under OMB Control 

Number 1845–0129. 

Of the 56,484 applicants for PLUS 

loans to pay for attendance at private 

non-profit institutions whose 

applications were denied, our data show 

that there were 33,594 graduate and 

professional students who received a 

loan after the initial denial of a PLUS 

loan request using the extenuating 

circumstances process review or after 

obtaining an endorser who did not have 

an adverse credit history. Of the 33,594 

PLUS applicants, 21,424 were approved 

by documenting that extenuating 

circumstances existed and 12,170 PLUS 

applicants were approved after the 

applicant obtained an endorser who 

does not have an adverse credit history. 

Our 2013–14 data show that there 

were 21,424 borrowers who were 

approved for a loan based on 

documentation of existing extenuating 

circumstances and we estimate that the 

burden will increase by 10,712 hours 

(21,424 approved requests multiplied by 

0.50 hours per enhanced counseling 

session). Our data show that there were 

12,170 borrowers who received a loan 

after obtaining an endorser who does 

not have an adverse credit history and 

we estimate that the burden will 

increase by 6,085 hours (12,170 

approved requests multiplied by 0.50 

hours per enhanced counseling session). 

We estimate a total increase of 50,391 

hours of burden for graduate and 

professional PLUS borrowers at private 

non-profit institutions (33,594 hours for 

the collection and submission of 

documentation of existing extenuating 

circumstances or to obtain an endorser 

who does not have an adverse credit 

history plus an additional 10,712 hours 

of enhanced counseling for borrowers 

who received a loan after demonstrating 

that extenuating circumstances exist 

and an additional 6,085 hours of 

enhanced counseling for the borrowers 

who received a loan after obtaining an 

endorser who does not have an adverse 

credit history) under OMB Control 

Number 1845–0129. 

Of the 40,385 applicants for PLUS 

loans to pay for attendance at public 

institutions whose applications were 

denied, our data show that there were 

18,503 graduate and professional 

students who received a loan after the 

initial denial of a PLUS loan request 

using the extenuating circumstances 

process review or after obtaining an 

endorser who does not have an adverse 

credit history. Of the 18,503 PLUS 

applicants, 12,650 were approved by 

documenting existing extenuating 

circumstances and 5,853 were approved 

after the applicant obtained an endorser 

who does not have an adverse credit 

history. 

Our data show that there were 12,650 

borrowers who were approved for a loan 

based on documentation of existing 

extenuating circumstances and we 

estimate that the burden will increase 

by 6,325 hours (12,650 approved 

requests multiplied by 0.50 hours per 

enhanced counseling session). Our data 

show that there were 5,853 borrowers 

who received a loan after obtaining an 

endorser who does not have an adverse 

credit history and we estimate that the 

burden will increase by 2,927 hours 

(5,853 approved requests multiplied by 

0.50 hours per enhanced counseling 

session). 

We estimate a total increase of 27,755 

hours of burden for graduate and 

professional student PLUS borrowers at 

public institutions (18,503 hours for the 

collection and submission of 

documentation of extenuating 

circumstances or to obtain an endorser 

who does not have an adverse credit 

history plus an additional 6,325 hours 

of enhanced counseling for borrowers 

with extenuating circumstances and an 

additional 2,927 hours of enhanced 

counseling for the borrowers who 

receive a loan after obtaining an 

endorser who does not have an adverse 

credit history) under OMB Control 

Number 1845–0129. 

Of the 3,052 denials of applicants for 

PLUS loans to pay for attendance at 

foreign institutions whose applications 

were denied, our data show that there 

were 2,426 graduate and professional 

students who received a loan after the 

initial denial of a PLUS loan request 

using the extenuating circumstances 

process review or after obtaining an 

endorser who does not have an adverse 

credit history. Of the 2,426 PLUS loan 

applicants, 1,505 were approved by 

documenting existing extenuating 

circumstances and 921 PLUS applicants 

approved after the applicant obtained an 

endorser who does not have an adverse 

credit history. 

Our data show that there were 1,505 

borrowers who were approved for a loan 

based on documentation of existing 

extenuating circumstances and we 

estimate that the burden will increase 

by 753 hours (1,505 approved requests 

multiplied by 0.50 hours per enhanced 

counseling session). Our data show that 

there were 921 borrowers who received 

a loan after obtaining an endorser who 

does not have an adverse credit history 

and we estimate that the burden will 

increase by 461 hours (921 approved 

requests multiplied by 0.50 hours per 

enhanced counseling session). 

We estimate a total increase of 3,640 

hours of burden for graduate and 

professional student borrowers at 

foreign institutions (2,426 hours for the 

collection and submission of 

documentation of extenuating 

circumstances, or to obtain an endorser 

who does not have an adverse credit 

history, plus an additional 753 hours of 

enhanced counseling for borrowers who 

qualify for a loan after demonstrating 

that extenuating circumstances exist, 

and an additional 461 hours of 

enhanced counseling for the borrowers 

who receive a loan after obtaining an 

endorser who does not have an adverse 

credit history) under OMB Control 

Number 1845–0129. 

The total increase in burden for 

§ 685.200(b)(5) will be 98,263 hours 

under OMB Control Number 1845–0129. 

Parent PLUS Loan Borrowers 

Based on comments received on the 

NPRM, these final regulations provide 

that any parent PLUS loan applicant 

who has an adverse credit history, but 

who qualifies for a loan after 

demonstrating extenuating circumstance 

or after obtaining an endorser who does 

not have an adverse credit history, must 

complete enhanced PLUS loan 

counseling before receiving a PLUS 

loan. Under the proposed regulations 

only a parent with an adverse credit 

history who was approved for a loan 

after demonstrating extenuating 

circumstances would have been 

required to complete the enhanced 

PLUS loan counseling before receiving a 

PLUS loan. 

As a result of the Department’s 

development of enhanced PLUS loan 

counseling, the amount of time that it 

will take a parent to complete the PLUS 

loan counseling has been increased from 

the NPRM estimate. We now estimate 

that, on average, each parent PLUS loan 

borrower who is required to complete 

the enhanced PLUS loan counseling 

will take 0.75 hours (45 minutes) to 

complete the loan counseling session. 

This is an additional 15 minutes from 

the NPRM estimate. 

We estimate that, on average, each 

borrower submission of documentation 

for the Secretary’s consideration of the 

borrower’s extenuating circumstances 

will take 1 hour. 

We estimate that, on average, a 

borrower who elects to obtain an 

endorser who does not have an adverse 

credit history will require 1 hour to 

obtain an endorser. 

For applicants who receive a PLUS 

loan after obtaining an endorser, we 

estimate that, on average, each borrower 

(but not the endorser) will require an 

additional 0.75 hours to complete the 

enhanced PLUS loan counseling. 


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63330 Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 

Of the 83,432 applicants for parent 

PLUS loans to pay for attendance at 

private for-profit institutions whose 

applications were denied, our data show 

that there were 10,480 parent borrowers 

who received a loan after the initial 

denial of a PLUS loan using the 

extenuating circumstances review 

process or after obtaining an endorser 

who did not have an adverse credit 

history. Of the 10,480 PLUS applicants, 

7,612 were approved by documenting 

that extenuating circumstances existed 

and 2,868 PLUS applicants were 

approved after the applicant obtained an 

endorser who does not have an adverse 

credit history. 

Our data show that there were 7,612 

parent borrowers who were approved 

for a loan based on documentation of 

existing extenuating circumstances and 

we estimate that the burden will 

increase by 5,709 hours (7,612 approved 

requests multiplied by 0.75 hours per 

enhanced PLUS loan counseling 

session). Our data show that there were 

2,868 parent borrowers who received a 

loan after obtaining an endorser who 

does not have an adverse credit history 

and we estimate that burden will 

increase by 2,151 hours (2,868 approved 

requests multiplied by 0.75 hours per 

enhanced loan counseling session). 

We estimate a total increase of 18,340 

hours of burden for parent PLUS 

borrowers at private for-profit 

institutions (10,480 hours for the 

collection and submission of 

documentation of extenuating 

circumstances or to obtain an endorser 

who does not have an adverse credit 

history, plus an additional 5,709 hours 

of enhanced counseling for parent 

borrowers who qualify for a loan after 

demonstrating extenuating 

circumstances, and an additional 2,151 

hours of enhanced counseling for the 

parent borrowers who received a loan 

after obtaining an endorser who does 

not have an adverse credit history) 

under OMB Control Number 1845–0129. 

Of the 210,621 applicants for parent 

PLUS loans to pay for attendance at 

private nonprofit institutions whose 

applications were denied, our data show 

that there were 56,192 parent borrowers 

who received a loan after the initial 

denial of a PLUS loan using the 

extenuating circumstances process 

review or after obtaining an endorser 

who did not have an adverse credit 

history. Of the 56,192 parent PLUS 

applicants, 38,707 parent applicants 

were approved by documenting that 

extenuating circumstances exist and 

17,485 parent applicants were approved 

after the applicant obtained an endorser 

who does not have an adverse credit 

history. 

Our data show that there were 38,707 

parent PLUS borrowers who were 

approved for a loan based on 

documentation of existing extenuating 

circumstances and we estimate that the 

burden will increase by 29,030 hours 

(38,707 approved requests times 0.75 

hours per enhanced loan counseling 

session). Our data show that there were 

17,485 parent PLUS borrowers who 

received a loan after obtaining an 

endorser who does not have an adverse 

credit history and we estimate that 

burden will increase by 13,114 hours 

(17,485 approved requests multiplied by 

0.75 hours per enhanced PLUS loan 

counseling session). 

We estimate a total increase of 98,336 

hours of burden for parent PLUS 

applicants at private non-profit 

institutions (56,192 hours for the 

collection and submission of 

documentation of existing extenuating 

circumstances or to obtain an endorser 

who does not have an adverse credit 

history, plus an additional 29,030 hours 

of enhanced counseling for parent 

applicants who qualify for a loan after 

demonstrating that extenuating 

circumstances exist, and an additional 

13,114 hours of enhanced counseling for 

parent applicants who receive a loan 

after obtaining an endorser who does 

not have an adverse credit history) 

under OMB Control Number 1845–0129. 

Of the 361,894 applicants for PLUS 

loans to pay for attendance at public 

institutions whose applications were 

denied, our data show that there were 

78,039 parents borrowers who received 

a loan after an initial denial of a PLUS 

loan using the extenuating 

circumstances process review or after 

obtaining an endorser who does not 

have an adverse credit history. Of the 

78,039 PLUS applicants, 57,706 were 

approved by documenting that 

extenuating circumstances exist and 

20,333 parent applicants were approved 

after the applicant obtained an endorser 

who does not have an adverse credit 

history. 

Our data show that there were 57,706 

parent borrowers who were approved 

for a loan based on documentation of 

existing extenuating circumstances and 

we estimate that the burden will 

increase by 43,280 hours (57,706 

approved requests multiplied by 0.75 

hours per enhanced loan counseling 

session). Our data show that there were 

20,333 parent applicants who received a 

loan after obtaining an endorser who 

does not have an adverse credit history, 

and we estimate that burden will 

increase by 15,250 hours (20,333 

approved requests multiplied by 0.75 

hours per enhanced loan counseling 

session). 

We estimate a total increase of 

136,569 hours of burden for parent 

PLUS applicants at public institutions 

(78,039 hours for the collection and 

submission of documentation of existing 

extenuating circumstances or to obtain 

an endorser who does not have an 

adverse credit history, plus an 

additional 43,280 hours of enhanced 

counseling for parent applicants who 

qualify for a loan after demonstrating 

that extenuating circumstances exist, 

and an additional 15,250 hours of 

enhanced counseling for parent 

applicants who received a loan after 

obtaining an endorser who does not 

have an adverse credit history) under 

OMB Control Number 1845–0129. 

Of the 687 applicants for parent PLUS 

loans to pay for attendance at foreign 

institutions whose applications were 

denied, our data show that there were 

308 parent borrowers who received a 

loan after the initial denial of a PLUS 

loan using the extenuating 

circumstances process review or after 

obtaining an endorser who does not 

have an adverse credit history. Of the 

308 PLUS applicants, 189 were 

approved by documenting that 

extenuating circumstances exist and 119 

parent applicants were approved after 

the applicant obtained an endorser who 

did not have an adverse credit history. 

Our data show that there were 189 

parent borrowers who were approved 

for a loan based on documentation of 

existing extenuating circumstances and 

we estimate that the burden will 

increase by 142 hours (189 approved 

requests review multiplied by 0.75 

hours per enhanced loan counseling 

session). Our data show that there were 

119 parent applicants who received a 

loan after obtaining an endorser who 

does not have an adverse credit history 

and we estimate that burden will 

increase by 89 hours (119 approved 

requests multiplied by 0.75 hours per 

enhanced loan counseling session). 

We estimate a total increase of 539 

hours of burden for parent PLUS loan 

applicants at foreign institutions (308 

hours for the collection and submission 

of documentation of extenuating 

circumstances or to obtain an endorser 

who does not have an adverse credit 

history, plus an additional 142 hours for 

enhanced counseling for parent PLUS 

loan applicants who qualify for a loan 

after demonstrating extenuating 

circumstances and an additional 89 

hours of enhanced counseling for 

applicants who receive a loan after 

obtaining an endorser who does not 

have an adverse credit history) under 

OMB Control Number 1845–0129. 

The total increase in burden for 

§ 685.200(c)(2)(viii)(A)(2) and (3) will be 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63331 

253,784 hours under OMB Control 

Number 1845–0129. 

Overall, burden would increase by 

352,047 hours under OMB Control 

Number 1845–0129. 

Consistent with the discussion above, 

the following chart describes the 

sections of these final regulations 

involving information collections, the 

information being collected, the 

collections that the Department will 

submit to OMB for approval, and the 

estimated costs associated with the 

information collections. The monetized 

net costs of the increased burden on 

applicants and borrowers, using wage 

data developed using BLS data, 

available at www.bls.gov/ncs/ect/sp/

ecsuphst.pdf, is $5,738,366, as shown in 

the chart below. This cost was based on 

an hourly rate of $16.30 for applicants 

and borrowers. 

Collection of Information 

Regulatory section Information collection OMB Control No. and estimated burden 

(change in burden) 

Estimated 

costs 

Sections 685.200(b)(5) and 

685.200(c)(1)(viii)(A)(2) and (3) Borrower Eligibility.

Revises language requiring documentation for extenuating circumstances 

and requires enhanced PLUS loan 

counseling for graduate and professional students. These final regulations also require loan counseling for 

parent PLUS borrowers with a determination of adverse credit.

OMB 1845–0129 .....................................

We estimate that the burden will increase by 352,047 hours.

$5,738,366 

Assessment of Educational Impact 

In the NPRM we requested comments 

on whether the proposed regulations 

would require transmission of 

information that any other agency or 

authority of the United States gathers or 

makes available. 

Based on the response to the NPRM 

and on our review, we have determined 

that these final regulations do not 

require transmission of information that 

any other agency or authority of the 

United States gathers or makes 

available. 

Accessible Format: Individuals with 

disabilities can obtain this document in 

an accessible format (e.g., Braille, large 

print, audiotape, or compact disc) on 

request to the program contact person 

listed under FOR FURTHER INFORMATION

CONTACT. 

Electronic Access to This Document: 

The official version of this document is 

the document published in the Federal 

Register. Free Internet access to the 

official edition of the Federal Register 

and the Code of Federal Regulations is 

available via the Federal Digital System 

at: www.gpo.gov/fdsys. At this site you 

can view this document, as well as all 

other documents of this Department 

published in the Federal Register, in 

text or Adobe Portable Document 

Format (PDF). To use PDF you must 

have Adobe Acrobat Reader, which is 

available free at the site. 

You may also access documents of the 

Department published in the Federal 

Register by using the article search 

feature at: www.federalregister.gov. 

Specifically, through the advanced 

search feature at this site, you can limit 

your search to documents published by 

the Department. 

(Catalog of Federal Domestic Assistance 

Number does not apply.) 

List of Subjects in 34 CFR Part 685 

Administrative practice and 

procedure, Colleges and universities, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

Dated: October 20, 2014. 

Arne Duncan, 

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 

■ 1. The authority citation for part 685 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, 1087a, et seq., 

unless otherwise noted. 

■ 2. Section 685.200 is amended by: 

■ A. In paragraph (b)(5), removing the 

words ‘‘of paragraph (c)(1)(vii)’’ and 

adding, in their place, the words ‘‘that 

apply to a parent under paragraphs 

(c)(2)(viii)(A) through (G) of this 

section’’; and 

■ B. Revising paragraph (c) to read as 

follows: 

§ 685.200 Borrower eligibility. 

* * * * * 

(c) Parent PLUS borrower—(1) 

Definitions. The following definitions 

apply to this paragraph (c): 

(i) Charged off means a debt that a 

creditor has written off as a loss, but 

that is still subject to collection action. 

(ii) In collection means a debt that has 

been placed with a collection agency by 

a creditor or that is subject to more 

intensive efforts by a creditor to recover 

amounts owed from a borrower who has 

not responded satisfactorily to the 

demands routinely made as part of the 

creditor’s billing procedures. 

(2) Eligibility. A parent is eligible to 

receive a Direct PLUS Loan if the parent 

meets the following requirements: 

(i) The parent is borrowing to pay for 

the educational costs of a dependent 

undergraduate student who meets the 

requirements for an eligible student 

under 34 CFR part 668. 

(ii) The parent provides his or her and 

the student’s social security number. 

(iii) The parent meets the 

requirements pertaining to citizenship 

and residency that apply to the student 

under 34 CFR 668.33. 

(iv) The parent meets the 

requirements concerning defaults and 

overpayments that apply to the student 

in 34 CFR 668.32(g). 

(v) The parent complies with the 

requirements for submission of a 

Statement of Educational Purpose that 

apply to the student under 34 CFR part 

668, except for the completion of a 

Statement of Selective Service 

Registration Status. 

(vi) The parent meets the 

requirements that apply to a student 

under paragraph (a)(1)(iv) of this 

section. 

(vii) The parent has completed 

repayment of any title IV, HEA program 

assistance obtained by fraud, if the 

parent has been convicted of, or has 

pled nolo contendere or guilty to, a 

crime involving fraud in obtaining title 

IV, HEA program assistance. 

(viii)(A) The parent— 

(1) Does not have an adverse credit 

history; 

(2) Has an adverse credit history, but 

has obtained an endorser who does not 

have an adverse credit history, and 

completes PLUS loan counseling offered 

by the Secretary; or 

(3) Has an adverse credit history but 

documents to the satisfaction of the 

Secretary that extenuating 

circumstances exist and completes 


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63332 Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 

PLUS loan counseling offered by the 

Secretary. 

(B) For purposes of this paragraph (c), 

an adverse credit history means that the 

parent— 

(1) Has one or more debts with a total 

combined outstanding balance greater 

than $2,085, as may be adjusted by the 

Secretary in accordance with paragraphs 

(c)(2)(viii)(C) and (D) of this section, that 

are 90 or more days delinquent as of the 

date of the credit report, or that have 

been placed in collection or charged off, 

as defined in paragraph (c)(1) of this 

section, during the two years preceding 

the date of the credit report; or 

(2) Has been the subject of a default 

determination, bankruptcy discharge, 

foreclosure, repossession, tax lien, wage 

garnishment, or write-off of a debt under 

title IV of the Act during the five years 

preceding the date of the credit report. 

(C) The Secretary increases the 

amount specified in paragraph 

(c)(2)(viii)(B)(1) of this section, or its 

inflation-adjusted equivalent, when the 

Secretary determines that an inflation 

adjustment to that amount would result 

in an increase of $100 or more. 

(D) In making the inflation adjustment 

described in paragraph (c)(2)(viii)(C) of 

this section, the Secretary: 

(1) Uses the annual average percent 

change of the All Items Consumer Price 

Index for All Urban Consumers (CPI–U), 

before seasonal adjustment, as the 

measurement of inflation; and 

(2) If the adjustment calculated under 

paragraph (c)(2)(viii)(D)(1) of this 

section is equal to or greater than $100, 

adding the adjustment to $2,085 

threshold amount, or its inflationadjusted equivalent, and rounding up to 

the nearest $5. 

(E) The Secretary will publish a notice 

in the Federal Register announcing any 

increase to the amount specified in 

paragraph (c)(2)(viii)(B)(1) of this 

section. 

(F) For purposes of this paragraph (c), 

the Secretary does not consider the 

absence of a credit history as an adverse 

credit history and does not deny a 

Direct PLUS loan on that basis. 

(G) For purposes of this paragraph (c), 

the Secretary may determine that 

extenuating circumstances exist based 

on documentation that may include, but 

is not limited to— 

(1) An updated credit report for the 

parent; or 

(2) A statement from the creditor that 

the parent has repaid or made 

satisfactory arrangements to repay a 

debt that was considered in determining 

that the parent has an adverse credit 

history. 

(3) For purposes of paragraph (c)(2) of 

this section, a ‘‘parent’’ includes the 

individuals described in the definition 

of ‘‘parent’’ in 34 CFR 668.2 and the 

spouse of a parent who remarried, if that 

spouse’s income and assets would have 

been taken into account when 

calculating a dependent student’s 

expected family contribution. 

* * * * * 

[FR Doc. 2014–25266 Filed 10–22–14; 8:45 am] 

BILLING CODE 4000–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2012–0542; FRL–9917–77– 

Region 9] 

Approval of Air Quality Implementation 

Plans; California; Imperial County; 

Ozone Precursor Emissions 

Inventories 

AGENCY: Environmental Protection 

Agency. 

ACTION: Direct final rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is approving revisions to 

California’s State Implementation Plan 

(SIP) for Imperial County that address 

Clean Air Act (CAA) requirements 

concerning ozone precursor emissions 

inventories of volatile organic 

compounds and oxides of nitrogen. 

These emissions inventories were 

submitted by California to meet CAA 

requirements for Imperial County, 

which was designated as a moderate 

nonattainment areas under the 1997 

8-hour ozone National Ambient Air 

Quality Standard. 

DATES: This action will be effective on 

December 22, 2014, without further 

notice, unless EPA receives adverse 

comments by November 24, 2014. If we 

receive such comments, we will publish 

a timely withdrawal in the Federal 

Register to notify the public that this 

rule will not take effect and that we will 

respond to submitted comments and 

take subsequent final action. 

ADDRESSES: Submit comments, 

identified by docket number EPA–R09– 

OAR–2012–0542, by one of the 

following methods: 

1. Federal eRulemaking Portal: 

www.regulations.gov. Follow the on-line 

instructions. 

2. Email: wamsley.jerry@epa.gov. 

3. Mail or delivery: Jerry Wamsley, Air 

Division (AIR–2), U.S. Environmental 

Protection Agency—Region 9, 75 

Hawthorne Street, San Francisco, CA 

94105. 

Instructions: All comments will be 

included in the public docket without 

change and may be made available 

online at www.regulations.gov, 

including any personal information 

provided, unless the comment includes 

Confidential Business Information (CBI) 

or other information whose disclosure is 

restricted by statute. Information that 

you consider CBI or otherwise protected 

should be clearly identified as such and 

should not be submitted through 

www.regulations.gov or email. 

www.regulations.gov is an ‘‘anonymous 

access’’ system, and EPA will not know 

your identity or contact information 

unless you provide it in the body of 

your comment. If you send email 

directly to EPA, your email address will 

be automatically captured and included 

as part of the public comment. If EPA 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EPA may not be 

able to consider your comment. 

Docket: The docket for this action is 

available electronically at 

www.regulations.gov and in hard copy 

at EPA Region IX, 75 Hawthorne Street, 

San Francisco, California. While all 

documents in the docket are listed in 

the index, some information may be 

publicly available only at the hard copy 

location (e.g., copyrighted material), and 

some may not be publicly available in 

either location (e.g., CBI). To inspect the 

hard copy materials, please schedule an 

appointment during normal business 

hours with the contact listed in the FOR

FURTHER INFORMATION CONTACT section 

below. 

FOR FURTHER INFORMATION CONTACT: Jerry 

Wamsley, Air Division, U.S. 

Environmental Protection Agency— 

Region 9, (415) 947–4111, or via email: 

wamsley.jerry@epa.gov. 

SUPPLEMENTARY INFORMATION: For the 

purpose of this document, we are giving 

meaning to certain words or 

abbreviations described here. The words 

or abbreviation ‘‘the Act’’ or ‘‘CAA’’ 

mean or refer to the Clean Air Act, 

unless the context indicates otherwise. 

The terms ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer 

to the United States Environmental 

Protection Agency. 

Table of Contents 

I. Background 

II. California’s Submittal 

III. Today’s Action 

A. Ozone Precursors Emissions Inventories 

IV. Final Action 

V. Statutory and Executive Order Reviews 

I. Background 

Ground-level ozone is formed when 

oxides of nitrogen (NOX) and volatile 

organic compounds (VOC) react in the 

presence of sunlight. Referred to as 


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