[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Rules and Regulations]
[Pages 79856-79863]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27042]


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DEPARTMENT OF EDUCATION

34 CFR parts 600, 602, 668, 673, 674, 682, and 685


Federal Student Aid Programs (Student Assistance General 
Provisions, Federal Perkins Loan Program, William D. Ford Federal 
Direct Loan Program, and Federal-Work Study Programs)

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Updated waivers and modifications of statutory and regulatory 
provisions.

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SUMMARY: The Secretary is issuing updated waivers and modifications of 
statutory and regulatory provisions governing the Federal student 
financial aid programs under the authority of the Higher Education 
Relief Opportunities for Students Act of 2003 (HEROES Act or Act). The 
HEROES Act requires the Secretary to publish, in a document in the 
Federal Register, the waivers or modifications of statutory or 
regulatory provisions applicable to the student financial assistance 
programs under title IV of the Higher Education Act of 1965, as amended 
(HEA), to assist individuals who are performing qualifying military 
service, and individuals who are affected by a disaster, war, or other 
military operation or national emergency, as described in the 
SUPPLEMENTARY INFORMATION section of this document. On March 13, 2020, 
President Trump declared a national emergency based on the COVID-19 
outbreak. (Proclamation on Declaring a National Emergency Concerning 
the Novel Coronavirus Disease (COVID-19) Outbreak, available at https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19- 
outbreak/).

DATES: Effective December 11, 2020. The waivers and modifications in 
this document expire as noted within each of the provisions below, 
unless extended by the Secretary in a document published in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Barbara Hoblitzell, by telephone: 
(202) 453-7583 or by email: <a href="/cdn-cgi/l/email-protection#a9ebc8dbcbc8dbc887e1c6cbc5c0ddd3ccc5c5e9cccd87cec6df"><span class="__cf_email__" data-cfemail="eba98a99898a998ac5a3848987829f918e8787ab8e8fc58c849d">[email protected]</span></a>, or Gregory 
Martin, by telephone: (202) 453-7535 or by email: 
<a href="/cdn-cgi/l/email-protection#23645146444c515a0d6e4251574a4d6346470d444c55"><span class="__cf_email__" data-cfemail="53142136343c212a7d1e3221273a3d1336377d343c25">[email protected]</span></a>.
    If you use a telecommunications device for the deaf (TDD) or text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION: 
    The Secretary is issuing these waivers and modifications under the 
authority of the HEROES Act, as codified at 20 U.S.C. 1098bb(a)(2), 
which authorizes the Secretary to waive or modify any statutory or 
regulatory provision applicable to the Federal student financial 
assistance programs under title IV of the HEA, 20 U.S.C. 1070 et seq., 
as the Secretary deems necessary in connection with a war or other 
military operation or national emergency to affected individuals who 
are recipients of Federal student financial assistance under title IV 
of the HEA, institutions of higher education (IHEs), eligible lenders, 
guaranty agencies, and other entities participating in the Federal 
student assistance programs under title IV of the HEA that are located 
in areas that are declared disaster areas by any Federal, State, or 
local official in connection with a national emergency, or whose 
operations are significantly affected by such a disaster. These 
entities may be granted temporary relief from requirements that are 
rendered infeasible or unreasonable by a national emergency, including 
due diligence requirements and reporting deadlines.
    In 20 U.S.C. 1098bb(b)(1), the HEROES Act further provides that 
section 437 of the General Education Provisions Act (20 U.S.C. 1232) 
and section 553 of the Administrative Procedure Act (5 U.S.C. 553) do 
not apply to the contents of this document.

[[Page 79857]]

    The terms ``institution of higher education'' and ``institution of 
higher education for purposes of title IV programs'' (IHE) used in this 
document are defined in sections 101 and 102 of the HEA.
    In 20 U.S.C. 1098ee, the HEROES Act provides definitions critical 
to determining whether a person is an ``affected individual'' under the 
Act and, if so, which waivers and modifications apply to the affected 
individual. However, because these definitions do not include the 
specific circumstances under which these waivers and modifications are 
provided under the HEROES Act, we provide these definitions below.
    For purposes of this document, ``affected individual'' means a 
student enrolled in a postsecondary institution. An ``affected 
borrower'' is one whose Federal student loans provided under title IV 
are in repayment. These definitions are in keeping with 20 U.S.C. 
1098bb(a)(2) that establishes that statutory and regulatory provisions 
can be waived or modified ``as necessary to ensure that recipients of 
student financial assistance under title IV of the [HEA{time}  who are 
affected individuals are not placed in a worse position financially in 
relation to that financial assistance because of their status as 
affected individuals''. The statute also provides that administrative 
requirements placed on affected individuals who are recipients of 
student financial assistance are minimized, to the extent possible 
without impairing the integrity of the student financial assistance 
programs, to ease the burden on such students and avoid inadvertent, 
technical violations, or defaults.
    In accordance with the HEROES Act, the Secretary is providing the 
following waivers and modifications of statutory and regulatory 
provisions applicable to the student assistance general provisions and 
student financial assistance programs under title IV of the HEA that 
the Secretary believes are necessary to ensure that, during and in 
response to the COVID-19 pandemic--
    <bullet> Accrediting agencies and associations are permitted to 
conduct virtual site visits of institutions or programs currently under 
review, scheduled for initial or renewal of accreditation, or in a 
show-cause or probationary status;
    <bullet> IHEs may ensure continuity of instruction and learning by 
employing distance education to protect the health of their students, 
faculty, and staff;
    <bullet> IHEs that are undergoing a change of ownership are 
provided additional time to gather the records, data, financial 
information, and approvals necessary to support their change of 
ownership application, and their temporary program participation 
agreements are extended while the application is pending;
    <bullet> Foreign graduate medical schools that participate in the 
Federal Direct Loan Program are not required to obtain and report test 
results from the Medical College Admission Test (MCAT) from applicants 
during admission years in which the COVID-19 national emergency is in 
effect;
    <bullet> Entities not submitting single audits in accordance with 
the audit requirements of 2 CFR 200, subpart F, are provided an 
additional six months to submit their annual compliance and financial 
statement audits;
    <bullet> IHEs that resume offering educational programs after 
temporarily closing or suspending their educational programs due to 
COVID-19 are not considered to have ended their participation in the 
title IV, HEA programs;
    <bullet> IHEs that offer existing short-term programs that qualify 
for Federal Direct Loans, or began offering a short-term program prior 
to the COVID emergency, are given some flexibility for programs 
affected by COVID-19;
    <bullet> IHEs are provided additional flexibility to approve leaves 
of absence for students whose coursework is suspended due to the COVID-
19 pandemic;
    <bullet> IHEs are provided additional time to comply with deadlines 
for campus security, fire safety, and equity in athletics disclosures;
    <bullet> IHEs are permitted to waive the requirement for a parental 
signature in the event that it cannot be obtained, or accept a document 
signed and photographed and sent by email or text message attachment, 
on any verification documentation required to validate a student's 
title IV eligibility;
    <bullet> IHEs that participate in the Federal student financial aid 
programs under the heightened cash monitoring one (HCM1) status are 
provided flexibility to pay student credit balances after drawing down 
title IV funds;
    <bullet> IHEs are provided alternative methods for disbursing title 
IV, HEA credit balance funds to students;
    <bullet> IHEs that were experiencing challenges accessing data and 
preparing their cohort default rate (CDR) appeals during the national 
emergency were permitted to submit appeals to the draft fiscal year 
(FY) 2017 CDRs on or before June 30, 2020;
    <bullet> IHEs are provided additional time to complete and submit 
their Fiscal Operations Report and Application to Participate (FISAP);
    <bullet> IHEs that participate in the Federal Work-Study (FWS) 
programs are not subject to the FWS community service requirements 
during the national emergency;
    <bullet> Perkins Loan and HEAL borrowers whose loans are held by 
the Department of Education (Department) are afforded the same benefits 
extended to Direct Loan borrowers in the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act; \1\
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    \1\ https://www.congress.gov/bill/116th-congress/house-bill/748/text.
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    <bullet> Borrowers with loans under the Federal Family Education 
Loan (FFEL), Federal Perkins Loan, HEAL, and Direct Loan programs that 
are held by the Department, did not accrue interest on those loans from 
March 13, 2020 to March 27, 2020. Borrowers were also permitted to 
suspend payment on their loans without any penalties during this 
period. The automatic suspension of payment and the application of a 
zero percent interest rate on loans held by the Department was extended 
to October 1, 2020, under the CARES Act. Those benefits were further 
extended through December 31, 2020, by the President through the 
Presidential Memorandum issued on August 8, 2020; \2\
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    \2\ https://www.whitehouse.gov/presidential-actions/memorandum-continued-student-loan-payment-relief-covid-19-pandemic/.
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    <bullet> Borrowers who, prior to July 1, 2020, submitted an 
application for borrower defense to repayment (BD) relief that included 
a FFEL or Perkins loan and who would need to consolidate those loans 
into a Direct Consolidation Loan (DCL) to receive BD relief will have 
their eligibility for relief be adjudicated under the standards for 
Direct Loans disbursed between July 1, 2017, and July 1, 2020.
    <bullet> Borrowers participating in income-driven repayment plans 
are not required to recertify their income or family size until after 
the administrative forbearance period extended by the August 8, 2020, 
Presidential Memorandum expires, and will be notified of a new 
certification deadline thereafter;
    <bullet> Borrowers participating in income-contingent repayment 
plans who do not make payments during the COVID-19 emergency will 
generally not have any interest capitalized upon the conclusion of the 
COVID-19-related administrative forbearance period; and
    <bullet> IHEs are provided academic calendar flexibility to address 
scheduling complications that have

[[Page 79858]]

arisen as a result of the COVID-19 national emergency.
    Prior waivers granted by the Secretary under this Act remain in 
effect for affected individuals, as defined in those waivers.

Statutory Waiver Granted Under the Heroes Act in Response to the Covid-
19 Pandemic

Recognition of Accrediting Agency or Association (HEA Sec.  496, 20 
U.S.C. 1099b)

    HEA Sec.  496(c)(1) (20 U.S.C. 1099b(c)(1)) provides that a 
recognized accrediting agency or association must perform, at regularly 
established intervals, on-site inspections and reviews of IHEs (which 
may include unannounced site visits) with particular focus on 
educational quality and program effectiveness, and ensures that 
accreditation team members are well-trained and knowledgeable with 
respect to their responsibilities, including those regarding distance 
education.
    HEA Sec.  496(c)(1) (20 U.S.C. 1099b(c)(5)) provides that an 
accrediting agency or association must agree to conduct, as soon as 
practicable, but within a period of not more than six months of the 
establishment of a new branch campus or a change of ownership of an 
IHE, an on-site visit of that branch campus or of the institution after 
a change of ownership.
    The Secretary is waiving these requirements, for the duration of 
the national emergency declaration and 180 days following the date on 
which the COVID-19 national emergency declaration is rescinded, to 
provide accrediting agencies and associations the flexibility to 
develop, adopt, modify, and implement temporary virtual site visit 
policies. Virtual site visits should rely on an engaged, interactive 
format (e.g., telephonic meetings, video conference calls), rather than 
solely relying upon document reviews or exchanges of emails.
    However, if a site visit within six months after a change of 
ownership is conducted virtually, a follow up in-person visit must be 
conducted within 90 days following the date on which the COVID-19 
national emergency declaration is rescinded.

Regulatory Waivers Granted Under the Heroes Act in Response to the 
Covid-19 Pandemic Distance Education (34 CFR 600.9, 602.16, 602.18, 
602.19, and 602.27)

    Section 600.9(c) requires IHEs to obtain State authorization to 
provide postsecondary educational programs through distance education. 
The Secretary is waiving this requirement for payment periods that 
overlap March 5, 2020, or begin after March 5, 2020, through the end of 
the payment period that begins after the date on which the Federally-
declared national emergency related to COVID-19 is rescinded.
    This waiver applies only to the Department's requirements; IHEs 
will need to determine whether the distance education being provided 
meets the applicable State requirements.
    The Secretary is providing this waiver so that IHEs may provide 
programs using distance education to accommodate students without 
requiring such institutions to obtain Department approval to provide 
the program through distance education. If an IHE chooses to continue 
offering a program or use distance education in a manner requiring the 
Department's approval after the waiver period ends, it must obtain 
approval under the Department's normal process.
    Section 602.16 provides that an accrediting agency or association 
that has within its scope of recognition the evaluation of the quality 
of institutions or programs offering distance education, correspondence 
courses, or direct assessment education, must have standards that 
effectively address the quality of an institution's distance education, 
correspondence courses, or direct assessment education. The Secretary 
is waiving, for the duration of the national emergency declaration and 
180 days following the date on which the COVID-19 national emergency 
declaration is rescinded, this requirement so that accreditors may 
waive their distance education review requirements for institutions 
working to accommodate students whose enrollment is otherwise 
interrupted as a result of COVID-19. This waiver is limited to distance 
learning opportunities developed specifically for the purpose of 
serving students who were already in attendance, and whose attendance 
was interrupted by COVID-19.
    Section 602.16(a)(2)(ii) limits to five years the duration of 
preaccreditation status that can be granted by an accrediting agency 
before a final determination can be made. The Secretary is waiving, for 
the duration of the national emergency declaration and 180 days 
following the date on which the COVID-19 national emergency declaration 
is rescinded, this requirement to enable accrediting agencies 
sufficient opportunity to complete their assessment of a preaccredited 
institution for a final accreditation determination.
    Section 602.19(a) requires accrediting agencies to reevaluate, at 
regularly established intervals, the institutions or programs it has 
accredited or preaccredited. The Secretary is waiving this requirement, 
for the duration of the national emergency declaration and 180 days 
following the date on which the COVID-19 national emergency declaration 
is rescinded, to provide accrediting agencies the flexibility to 
develop, adopt, modify, and implement temporary virtual site visit 
policies. With the approval of the accrediting agency's board, or other 
decision-making body, during a telephonic or video conference meeting, 
accrediting agencies may adopt or modify temporary virtual site visit 
policies without a public comment period. Because these policies would 
be temporary and arise from the unique set of circumstances and 
challenges presented by the COVID-19 pandemic, this approval would not 
require a vote of the full membership of the accrediting agency. Should 
an accrediting agency desire to make a temporary virtual site visit 
policy or policy modification permanent after the COVID-19 national 
emergency declaration is rescinded, it must adhere to applicable 
statutory and regulatory requirements.
    The Secretary is also waiving the requirements under Sec.  
602.21(c), for the duration of the national emergency declaration and 
180 days following the date on which the COVID-19 national emergency 
declaration is rescinded, to enable accrediting agencies to expedite 
the development of temporary standards to approve distance learning 
programs or courses, including agencies that did not previously have 
distance learning in their scope and for institutions that did not 
previously offer distance learning opportunities. However, in 
accrediting clock-hour programs for which licensure boards approved the 
use of distance learning to meet the ``clock-hour of instruction'' 
requirements, agencies must continue to meet the requirements under 
Sec.  602.21(c).
    On September 2, 2020, the Secretary amended the Department's 
regulations to permanently permit the use of synchronous and 
asynchronous distance learning in the delivery of clock-hour programs 
by distance learning if the relevant licensure body will accept 
distance learning hours to meet licensure requirements. Institutions 
are permitted to implement this new regulation immediately; otherwise, 
the new regulation goes into effect on July 1, 2021.
    The Secretary is also waiving the requirement in Sec.  602.27(a)(4) 
that an

[[Page 79859]]

accrediting agency must expand its scope of recognition by notifying 
the Secretary prior to accrediting programs and institutions that 
provide education through distance learning. During the COVID-19 
national emergency, an accrediting agency need not expand its scope of 
recognition to include distance learning in order to approve its member 
programs or institutions to offer distance learning.

Notice and Application Procedures for Establishing, Reestablishing, 
Maintaining, or Expanding Institutional Eligibility and Certification 
(34 CFR 600.20)

    Section 600.20(h)(3)(iii) provides that the Secretary will extend 
an institution's provisional Program Participation Agreement (PPA) on a 
month-to-month basis after the expiration date if, prior to that 
expiration date, the institution provides the Secretary with approval 
of the change of ownership from the institution's accrediting agency.
    In keeping with the waivers provided in Sec.  600.31, the Secretary 
is waiving, through the end of the payment period that begins after the 
date on which the Federally-declared national emergency related to 
COVID-19 is rescinded, the requirement to provide approval of the 
change of ownership from the institution's accrediting agency within 
the time period set forth in 600.20(h)(3)(iii).

Institutional Eligibility--Change of Ownership (34 CFR 600.31)

    The Secretary is waiving Sec.  600.31(a)(2) and providing an 
additional six months for IHEs to provide the approvals from the 
institution's accrediting agency and State, and the same-day balance 
sheet or statement of financial position prepared under required 
financial standards pursuant to Sec.  600.20(h)(3), that is ordinarily 
due by the end of the month following the change of ownership. The 
Secretary will accept unaudited financial statements for the IHE's and 
new owner's most recently completed fiscal year within the time frame 
established under Sec.  600.20(g)(1), provided that the submission 
includes the engagement letters for the audited financial statements 
under Sec.  600.20(g)(2) to be completed for submission to the 
Department the earlier of six months after the change in ownership or 
30 days after the date of the auditor's report with the financial 
statements. This waiver is in effect for the duration of the national 
emergency declaration and 180 days following the date on which the 
COVID-19 national emergency declaration is rescinded.

Medical College Admissions Test (MCAT) (34 CFR 600.55)

    Section 600.55(c) requires a foreign graduate medical school having 
a post-baccalaureate or equivalent medical program that participates in 
the Federal Direct Loan program to require students accepted for 
admission who are U.S. citizens, nationals, or permanent residents to 
have taken the MCAT and to have reported their scores to the foreign 
graduate medical school.
    The Secretary is waiving, for the duration of admissions years in 
which the COVID-19 national emergency declaration is in effect, the 
requirement that to participate in the Federal Direct Loan program, a 
foreign medical school must require students to take the MCAT.

Application of Standards in Reaching an Accrediting Decision (34 CFR 
602.17)

    As a result of travel restrictions, State-mandated campus closures, 
and administrative decisions to move instruction to distance learning, 
accrediting agencies may need to perform required site visits 
virtually. Therefore, beginning on March 13, 2020, for the duration of 
the national emergency declaration and 180 days following the date on 
which the COVID-19 national emergency declaration is rescinded, the 
Secretary is waiving the provisions of Sec.  602.17(c) that require 
accrediting agencies to conduct at least one on-site review of the 
institution or program during which it obtains sufficient information 
to determine if the institution or program complies with the agency's 
standards. Accrediting agencies may conduct required site visits for 
monitoring performance virtually at regularly scheduled intervals or 
renewal of accreditation.
    The Secretary continues to require that in the case such a site 
visit is associated with making an award of accreditation or 
preaccreditation, the agency must perform a limited in-person site 
visit as soon as practicable. This limited in-person site visit need 
not replicate the virtual visit, or elements thereof, and need not 
include the full team that participated in the virtual site visit, but 
could be conducted through a limited visit performed by agency staff or 
a single site visitor.
    Virtual site visits should rely on an engaged, interactive format 
(e.g., telephonic meetings, video conference calls), rather than solely 
relying upon document reviews or exchanges of emails.

Substantive Changes and Other Reporting Requirements (34 CFR 602.22)

    Section 602.22(d) requires accrediting agencies to have an 
effective mechanism for conducting, at reasonable intervals, visits to 
a representative sample of additional locations they have approved.
    Section 602.22(f)(1) requires an accrediting agency to conduct a 
site visit, within six months, to each additional location an 
institution establishes (when the total number of additional locations, 
where at least 50 percent of an educational program is offered, is 
three or fewer and the locations are not considered to be branch 
campuses).
    Section 602.22(f)(2) requires an accrediting agency to have a 
mechanism for conducting, at reasonable intervals, visits to a 
representative sample of additional locations an institution 
establishes (when the total number of additional locations, where at 
least 50 percent of an educational program is offered, is more than 
three and the locations are not considered to be branch campuses).
    The Secretary is waiving these requirements for the duration of the 
national emergency declaration and 180 days following the date on which 
the COVID-19 national emergency declaration is rescinded and permitting 
accrediting agencies to conduct these visits virtually. Virtual site 
visits should rely on an engaged, interactive format (e.g., telephonic 
meetings, video conference calls), rather than solely relying upon 
document reviews or exchanges of emails.

Additional Procedures Certain Institutional Agencies Must Have (34 CFR 
602.24)

    Section 602.24(b) provides that an accrediting agency must 
undertake a site visit to a new branch campus, or following a change of 
ownership or control, as soon as practicable, but no later than six 
months, after the establishment of that campus or the change of 
ownership or control.
    The Secretary is waiving these requirements, for the duration of 
the national emergency declaration and 180 days following the date on 
which the COVID-19 national emergency declaration is rescinded, to 
permit accrediting agencies to conduct these visits virtually. Virtual 
site visits should rely on an engaged, interactive format (e.g., 
telephonic meetings, video conference calls), rather than solely 
relying upon document reviews or exchanges of emails.
    However, if a site visit within six months after a change of 
ownership is

[[Page 79860]]

conducted virtually, a follow up in-person visit must be conducted 
within 90 days following the date on which the COVID-19 national 
emergency declaration is rescinded.

Program Eligibility (34 CFR 668.8)

Short-Term Programs
    Sections 668.8(d)(3) and (e) provide that proprietary IHEs and 
postsecondary vocational institutions that offer short-term programs 
must demonstrate in their annual compliance audits that students 
enrolled in the programs had completion and job placement rates of at 
least 70 percent before those programs qualify, or continue to qualify, 
as eligible programs for Federal Direct Loans (the ``70/70 qualifying 
requirements'').
    The Secretary waives the 70/70 qualifying requirements for any 
award year in which the COVID-19 national emergency declaration was in 
place for at least one day during the award year. Institutions must 
continue to report completion and placement rates for short-term 
programs for such award years in compliance audits, but the programs 
will remain eligible even if they do not meet the 70/70 requirements. 
Short-term programs will once again be required to meet the 70/70 
qualifying requirements for any future award year in which the COVID-19 
national emergency declaration is not in effect.
New Distance Education Programs
    Section 668.8(m) provides that an otherwise eligible program that 
is offered in whole or in part through telecommunications is eligible 
for title IV, HEA program purposes if the program is offered by an 
institution, other than a foreign institution, that has been evaluated 
and is accredited for its effective delivery of distance education 
programs by an accrediting agency or association that is recognized by 
the Secretary under subpart 2 of part H of the HEA, and has 
accreditation of distance education within the scope of its 
recognition.
    In recognition that many postsecondary institutions needed to 
implement distance learning solutions to continue educating students in 
response to campus interruptions or the unexpected return of students 
from travel abroad experiences, the Secretary is waiving, through the 
end of the payment period that begins after the date on which the 
Federally-declared national emergency related to COVID-19 is rescinded, 
the requirement that these IHEs must have obtained accreditation to 
offer distance education programs.

Approved Leaves of Absence (34 CFR 668.22)

    Under Sec.  668.22(d), an IHE is not permitted to place students on 
a leave of absence during the suspension of coursework, including 
clinicals or internships/externships. However, if the coursework 
suspension results from a COVID-19 related circumstance, IHEs may grant 
an approved leave of absence to affected students. Approved leaves of 
absence granted due to COVID-19-related concerns or limitations are 
considered to fall under the exception provided in Sec.  
668.22(d)(3)(iii)(B) permitting, in the case of unforeseen 
circumstances, an IHE to grant such leave prior to the student's 
request. A written request for leave of absence for that period must 
subsequently be obtained from the student. These flexibilities apply to 
all leaves of absence granted through the end of the payment period 
that begins after the date on which the Federally-declared national 
emergency related to COVID-19 is rescinded.
    Section 668.22(d)(1)(vi) provides that the maximum number of days 
in an approved leave of absence, when added to the number of days in 
all other approved leaves of absence, may not exceed 180 in any 12-
month period. The Secretary modifies this requirement and extends the 
maximum number of days from 180 (in any 12-month period) to allow a 
leave of absence to be extended to December 31, 2020.

Treatment of Direct Loan Funds if a Student Does Not Begin Attendance 
(34 CFR 668.21(a)(2)(ii))

    The Secretary is waiving the requirement in Sec.  668.21(a)(2)(ii) 
that an institution notify the Direct Loan Servicer when a borrower who 
has received a credit balance payment composed of Federal Direct Loan 
funds will not or has not begun attendance, so that the servicer will 
issue a final demand letter. Under this waiver, in such circumstances, 
the institution should not notify the servicer. The amount of the 
Direct Loan credit balance will be the borrower's responsibility to 
repay under the terms of the promissory note. This waiver expires at 
the end of the payment period that begins after the date on which the 
Federally-declared national emergency related to COVID-19 is rescinded.

Annual Compliance and Financial Statement Audit Submission Deadlines 
(34 CFR 668.23)

    For IHEs and other entities subject to the Single Audit Act and the 
implementing regulations at 2 CFR Subpart F that submit an audit under 
the Single Audit Act, the Department will consider the audit submission 
of the IHE or other entity timely if it is submitted to the Department 
through eZ-Audit or as directed by the Department at the same time it 
is timely submitted to the Federal Audit Clearing House under Office of 
Management and Budget guidance M 20-26 for COVID-19 audit submissions 
and any future extensions provided by the Office of Management and 
Budget.
    IHEs and other entities that do not submit audits under the Single 
Audit Act are required under Sec.  668.23 to submit their annual 
compliance audit and financial statements no later than six months 
after the last day of their fiscal year. For any such audits that are 
due to be submitted to the Department no later than March 1, 2020, 
through December 31, 2020, or other periods specified by the Secretary, 
the Secretary is extending the submission deadline up to an additional 
six months t and other entities to provide more time for the IHE 
auditors to complete those audits. For IHEs and other entities choosing 
to submit their audits after the normal due date, the Department will 
consider the audits to be submitted timely if they are submitted to eZ-
audit or as directed by the Department no later than 30 calendar days 
after the date of the audit report. If date of the audit report is 
prior to the date of this notice, IHEs and other entities have 30 
calendar days from the date of this notice to submit their required 
audits.

End of an Institution's Participation in the Title IV, HEA Programs (34 
CFR 668.26(a)(1) and (2))

    Section 668.26 provides that an IHE's participation in a title IV, 
HEA program ends on the date that the IHE closes or stops providing 
educational programs for a reason other than a normal vacation period 
or a natural disaster that directly affects the IHE or the IHE's 
students, or on the date it loses its institutional eligibility under 
part 600. The Secretary is waiving this requirement in recognition that 
some IHEs are unable to convert their programs to an alternative 
instructional modality during the COVID-19 pandemic. IHEs that have 
interrupted their on-campus instruction without converting to an 
alternative instructional modality, either on-ground

[[Page 79861]]

or online, must resume instruction by the start of the institution's 
scheduled payment period, as published in the institution's academic 
calendar, one payment period after the payment period in which the 
COVID-19 national emergency is lifted to continue their participation 
in the title IV, HEA programs.
    The Department retains the discretion to determine that an 
institution has closed based on its assessment of the institution's 
capacity to reopen at the end of the COVID-19 national emergency.

Campus Security, Fire Safety, and Equity in Athletics Disclosures (34 
CFR 668.41)

    The Secretary extends the October 1 deadline in Sec.  668.41(e)(1) 
for IHEs to distribute their Annual Security Reports and Annual Fire 
Safety Reports (required under Sec.  668.46(b) and Sec.  668.49(b), 
respectively) to required recipients to December 31, 2020. Likewise, 
the October 15 deadline established in Sec.  668.41(g)(1) for IHEs to 
distribute their annual Equity in Athletics Disclosure Act (EADA) 
disclosures (required under Sec.  668.47(c)) to required recipients is 
extended to December 31, 2020.

Acceptable Documentation (34 CFR 668.57(b), (c), and (d))

    Sections 668.57(b) and (c) require a statement signed by both the 
applicant and one of the applicant's parents if the applicant is a 
dependent student, or only the applicant if the applicant is an 
independent student, to verify the number of family members in the 
household and the number of family members enrolled in IHEs. Pursuant 
to Sec.  668.57(d), an applicant may also be required to verify other 
information specified in the annual Federal Register document that 
announces the Free Application for Federal Student Aid (FAFSA) 
information as well as the acceptable documentation for verifying that 
FAFSA information. IHEs are permitted to waive the requirement for a 
parental signature in the event that it cannot be obtained, or accept a 
document signed and photographed and sent by email or text message 
attachment, on any verification documentation required to validate a 
student's title IV eligibility;. This waiver expires at the end of the 
payment period that begins after the date on which the Federally-
declared national emergency related to COVID-19 is rescinded.

Cash Management Regulations (34 CFR 668.161 and 162)

Payment Methods
    Under Sec.  668.161(a)(2)(iv), an IHE may disburse title IV, HEA 
program funds by electronic funds transfer (EFT) if the EFT is an 
automated clearing house transaction, meaning that the EFT must be a 
direct deposit transaction. The Secretary waives the requirement that 
the EFT be a direct deposit transaction to allow IHEs and third-party 
servicers to use any type of EFT under the Treasury Department 
regulations in 31 CFR 208.2, including person-to-person payment methods 
such as Zelle and PayPal, or to enable an IHE to use a student's debit 
card number to transfer a title IV credit balance to the student's 
checking account using an original credit transaction. This waiver 
expires at the end of the payment period that begins after the date on 
which the Federally-declared national emergency related to COVID-19 is 
rescinded.
    An IHE or third-party servicer must ensure that any payment method 
used complies with the disbursement requirements in the Cash Management 
regulations, and that the institution notifies its auditor of the 
alternative method used as part of its annual compliance audit for any 
fiscal year that alternative is used. We note that regardless of 
whether any audit deficiencies are identified, the IHE or servicer must 
disclose in the compliance audit the alternative method used and how it 
was used to make title IV disbursements.
Credit Balances
    For IHEs that are on HCM1 under Sec.  668.162(d)(1), the Secretary 
is temporarily modifying the cash management requirements to permit 
those institutions to submit a request for funds without first paying 
the credit balances due to the students for whom those funds were 
requested. For requests submitted between March 2020 and the end of the 
payment period that begins after the date on which the Federally-
declared national emergency related to COVID-19 is rescinded, IHEs must 
pay the credit balances no later than three calendar days after 
receiving the funds for those students.

Cohort Default Rate (CDR) Appeals (34 CFR 668.204)

    Section 668.204(b) provides that an IHE may challenge the accuracy 
of the data included on the loan record detail report by sending a 
challenge to the relevant data manager, or data managers, within 45 
days after receiving the data.
    On February 24, 2020, the Department posted an Electronic 
Announcement that draft CDRs for FY 2017 had been distributed to 
institutions and that included information about the process for 
appealing those draft rates.
    In recognition that IHEs have encountered many difficulties and 
interruptions in day-to-day operations during the COVID-19 pandemic, 
the Secretary extended to June 30, 2020, the deadline for IHEs to 
appeal the draft CDRs that were distributed on or about February 24, 
2020.

Deadline for Submission of Fiscal Operations Report and Application To 
Participate (34 CFR 673.7)

    The Secretary extended until November 1, 2020, the October 1, 2020, 
deadline established in the Federal Register on January 3, 2020 (85 FR 
303) for submission of the 2020-2021 Fiscal Operations Report and 
Application to Participate (FISAP).

Federal Work-Study (34 CFR 673.7)

    The Secretary is waiving the Federal Work-Study (FWS) community 
service requirements in Sec.  675.18(g) for all FWS-participating 
schools for at least the 2019-20 and 2020-21 award years. Schools do 
not need to apply for the waiver for either award year. The Department 
will administratively grant waivers to all schools. This waiver expires 
at the end of the award year that begins after the date on which the 
Federally-declared national emergency related to COVID-19 is rescinded.

Perkins Loans (34 CFR 674.2(b))

    Under sections 428F(b) and 464(h)(2) of the HEA and under the 
definition of ``satisfactory repayment arrangement'', a defaulted 
Perkins Loan borrower may make six consecutive, on-time, voluntary, 
full, monthly payments to reestablish eligibility for title IV Federal 
student financial assistance. To assist Perkins Loan borrowers who are 
affected by the COVID-19 pandemic, the Secretary is waiving, through 
December 31, 2020, the statutory and regulatory provisions that require 
the borrower to make consecutive payments to reestablish eligibility. 
Loan holders are encouraged not to treat any payment missed during the 
time that a borrower is an affected individual in this category as an 
interruption in the six consecutive, on-time, voluntary, full, monthly 
payments required for reestablishing title IV eligibility. If there is 
an arrangement or agreement in place between the borrower and loan 
holder and the borrower makes a payment during this period, the loan 
holder must treat the payment as an eligible payment

[[Page 79862]]

in the required series of payments even if the borrower did not make 
additional payments during this period. At the conclusion of this 
waiver period, the required sequence of qualifying payments may resume 
at the point they were discontinued because of the borrower's status as 
an affected individual. The Secretary will apply the waivers described 
in this paragraph to loans held by the Department.

Loan Rehabilitation (34 CFR 674.39)

    Federal Perkins Loan borrowers must make nine consecutive, on-time 
monthly payments to rehabilitate a defaulted Federal Perkins Loan in 
accordance with Sec.  464(h)(1)(A) of the HEA and Sec.  674.39. To 
assist title IV borrowers who are affected by the COVID-19 pandemic, 
the Secretary is waiving, through December 31, 2020, the statutory and 
regulatory loan rehabilitation requirements that eligible payments must 
be made over no more than 10 consecutive months, as follows. Loan 
holders other than the Department are encouraged to treat any payment 
missed during the time that a borrower is an affected individual in 
this category as a payment that counts toward a rehabilitation 
agreement. If there is an arrangement or agreement in place between the 
borrower and loan holder and the borrower makes a payment or payments 
during this period, the loan holder must treat the payment as an 
eligible payment in the required series of payments. When the borrower 
is no longer an affected individual in this category, the required 
sequence of qualifying payments may resume at the point they were 
discontinued because of the borrower's status as an affected individual 
to successfully rehabilitate a Perkins Loan. The Department will apply 
the waivers described in this paragraph to loans held by the 
Department.

Repayment of a Loan (34 CFR 682.209)

    Section 682.209 provides that interest accrues on an FFEL loan 
during the interval between scheduled payments. On March 13, 2020, the 
President announced \3\ that the interest on all FFEL loans held by the 
Department and on all Direct Loans would be waived amid the coronavirus 
outbreak. On March 20, 2020, the Secretary announced \4\ that interest 
rates for such loans would be set to zero percent (0%) for a period of 
at least 60 days, during which time borrowers would have the option to 
suspend their monthly loan payments. On March 27th, 2020, the CARES Act 
was signed into law and provided that interest would not be charged on 
Perkins, HEAL, FFEL, or Direct Loans held by the Department through 
September 30, 2020. Following the President's Memorandum of August 8, 
2020, the Secretary is further extending until December 31, 2020, in 
accordance with the prior announcement, the waivers of the regulatory 
provisions in Sec. Sec.  682.202 and 682.209 that require that interest 
be charged on FFEL loans held by the Department from March 13, 2020, 
through March 27, 2020, and from October 1, 2020 through December 31, 
2020. The affected loans include FFEL Program Loans that the Department 
acquired pursuant to the Ensuring Continued Access to Student Loans Act 
of 2008 (ECASLA), through the assignment of defaulted loans under Sec.  
682.409, and rehabilitated loans for which a guaranty agency could not 
secure a purchaser and assigned to the Department under Sec.  
682.405(a)(2)(ii). This does not apply to defaulted FFEL Program Loans 
for which a guaranty agency has paid a claim to the FFEL Program lender 
and on which the guaranty agency is pursuing the borrower for 
collection. However, the guaranty agencies may voluntarily provide 
interest or payment waivers, for the duration of the COVID-19 national 
emergency, to borrowers of loans on which collection activity 
continues.
---------------------------------------------------------------------------

    \3\ /www.whitehouse.gov/presidential-actions/memorandum-
continued-student-loan-payment-relief-covid-19-pandemic/.
    \4\ www.ed.gov/news/press-releases/delivering-president-trumps-promise-secretary-devos-suspends-federal-student-loan-payments-waives-interest-during-national-emergency.
---------------------------------------------------------------------------

Obligation To Repay (34 CFR 685.207)

    Section 685.207 provides that a borrower is required to pay any 
interest not subsidized by the Secretary unless the borrower is 
relieved of the obligation to repay. On March 13, 2020, the President 
announced that the interest on all student loans held by the Department 
would be waived amid the coronavirus outbreak. On March 20, 2020, the 
Secretary announced that interest rates for such loans would be set to 
zero percent for a period of at least 60 days, during which time 
borrowers would have the option to suspend their monthly loan payments. 
On March 27th, 2020, the CARES Act was signed into law and extended 
this same benefit through September 30, 2020. The period of this 
benefit was further extended to December 31, 2020 by the President's 
Memorandum of August 8, 2020. Accordingly, Direct Loans are 
automatically placed in an administrative forbearance status that is 
currently scheduled to be in effect from March 13, 2020, through 
December 31, 2020.

Borrower Defense to Repayment (34 CFR 685.206 & 685.222)

    When the Department expanded the utilization of the Borrower 
Defense to Repayment (BD) provision to provide potential loan 
forgiveness to borrowers who had enrolled in certain programs, during 
certain periods of time, it offered to review BD applications submitted 
by students who had FFEL or Perkins loans, and other loans that were 
not Direct Loans (non-Direct Loans), and notify the borrower of their 
eligibility for full or partial loan relief in the event that such 
students elected to consolidate those loans into a Direct Consolidation 
Loan. If the Department determined that the borrower had successfully 
established a defense to repayment, the borrower could apply for a 
Direct Consolidation Loan to receive the discharge. On July 1, 2020, 
new regulations regarding BD went into effect. In the months prior to 
July 1, 2020, BD applicants were not specifically notified that they 
would need to take action to consolidate the non-Direct loans included 
in their borrower defense applications into a Direct Consolidation Loan 
prior to July 1, 2020, to ensure that the Direct Consolidation Loan 
would be adjudicated under the 2016 BD regulations, which includes the 
standards under which the Department would make the determination of 
eligibility for BD relief on FFEL or Perkins loans, or other non-Direct 
Loans, in the event that the borrower chose to consolidate his or her 
eligible loans into a Direct Consolidation Loan. Applications for 
relief on Direct Consolidation Loans that include FFEL or Perkins loans 
originally included in BD applications received by the Department prior 
to July 1, 2020, will therefore be adjudicated under the standards for 
Direct Loans, including Direct Consolidation loans, disbursed between 
July 1, 2017, and July 1, 2020.

Recertification of Income-Driven Repayment Plans (34 CFR 685.209 & 
685.221)

    Sections 685.209 and 685.221 provide that a borrower participating 
in an income-driven repayment plan is required to provide 
documentation, acceptable to the Secretary, that enables the annual 
calculation of the borrower's payment amount for each year that the 
borrower remains on the plan. The Secretary is waiving Sec. Sec.  
685.209(a)(5)(i) and 685.221(e)(1) for one calendar year from the date 
on which a borrower would have been required to provide

[[Page 79863]]

recertification documentation in 2020. Borrowers will be notified by 
their loan servicer of their new recertification date, in advance of 
the deadline on which such documentation is required.

Capitalization of Interest Under the Income-Contingent Repayment Plan 
(34 CFR 685.209)

    Section 685.209(a)(2)(iv)(A) provides that interest is capitalized 
on a borrower's loans that are being repaid under the income-contingent 
repayment plan when a borrower is determined to no longer have a 
partial financial hardship or at the time a borrower chooses to leave 
the Pay As You Earn repayment plan. As noted above, all Direct Loans in 
repayment or default have been placed in an administrative forbearance 
status and interest has been suspended. If the borrower's loan payments 
were current before the administrative forbearance period began, 
interest accrued prior to March 13, 2020, will not capitalize at the 
end of the coronavirus-related administrative forbearance period.
    However, if the borrower's loans were in the type of deferment or 
forbearance in which interest would normally capitalize before the 
coronavirus-related administrative forbearance period began, interest 
accrued prior to March 13, 2020, will capitalize when the borrower's 
original deferment or forbearance ends, or on January 1, 2021, 
whichever is later.
    For borrowers whose loans were in a grace period before the 
coronavirus-related administrative forbearance period began, any 
outstanding or unpaid interest on a borrower's account will capitalize 
as it usually does when the loan(s) enter repayment.
    This waiver expires on December 31, 2020.

Academic Calendar Flexibility (34 CFR 690.63)

    Section 690.63(a)(3) requires, as a condition of calculating Pell 
grant eligibility under Formula 1,\5\ that students not be allowed ``to 
be enrolled simultaneously in overlapping terms . . .''. The Secretary 
is waiving this requirement for academic years that include the latter 
of December 31, 2020, or the last date of the COVID-19 national 
emergency. All standard terms will be permitted to overlap with an 
adjacent term without the program being considered non-term. 
Additionally, a standard semester or trimester may consist of as few as 
13 weeks of instructional time and a standard quarter as few as nine 
weeks of instructional time without the program being considered a non-
standard term program.
---------------------------------------------------------------------------

    \5\ https://ifap.ed.gov/sites/default/files/attachments/2019-09/1920FSAHbkVol3Master.pdf.
---------------------------------------------------------------------------

    The Secretary is waiving the provisions of Sec.  
690.63(a)(1)(ii)(B)(3) and permitting IHEs to treat as standard term 
any academic calendar comprised of semesters, trimesters, or quarters 
that overlap. For all academic years that include the later of December 
31, 2020, or the end date for the COVID-19 Federally declared 
emergency, the existence of overlapping standard terms will not result 
in a program being considered non-term.

Section 3513 of the CARES Act

    Section 3513 of the CARES Act directs the Secretary to: (1) Suspend 
all payments due, (2) cease interest accrual, and (3) suspend 
involuntary collections for loans made under part D and part B (that 
are held by the Department) of title IV of the HEA through September 
30, 2020. The section also directs the Secretary to deem each month for 
which a loan payment was suspended as if the borrower of the loan had 
made a payment for the purpose of any loan forgiveness program or loan 
rehabilitation program authorized under part D or B for which the 
borrower would have otherwise qualified. Lastly, this section directs 
the Secretary to ensure that, for the purpose of reporting information 
about the loan to a consumer reporting agency, any payment that has 
been suspended is treated as if it were a regularly scheduled payment 
made by a borrower.
    On August 8, 2020, the President issued a memorandum directing the 
Secretary to continue to waive interest and payments on such loans 
until December 31, 2020. Therefore, in accordance with the prior 
announcement, the Secretary is using her authority under the HEROES Act 
to modify the terms of the benefits provided under section 3513 of the 
CARES Act such that they will continue to be provided to borrowers 
until December 31, 2020.
    Accessible Format: On request to Mr. Jean-Didier Gaina, by 
telephone: (202) 502-7526 or by email: <a href="/cdn-cgi/l/email-protection#b7fdd2d6d99af3ded3ded2c599f0d6ded9d6f7d2d399d0d8c1"><span class="__cf_email__" data-cfemail="79331c1817543d101d101c0b573e18101718391c1d571e160f">[email protected]</span></a>, 
individuals with disabilities can obtain this document in an accessible 
format (such as braille, large print, audiotape, or compact disc), to 
the extent reasonably practicable.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. 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 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 Numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant Program; 84.032 Federal 
Family Education Loan Program; 84.032 Federal PLUS Program; 84.033 
Federal Work-Study Program; 84.038 Federal Perkins Loan Program; 
84.063 Federal Pell Grant Program; and 84.268 William D. Ford 
Federal Direct Loan Program.)

    Program Authority: 20 U.S.C. 1071, 1082, 1087a, 1087aa, Part F-
1.


Robert King,
Assistant Secretary for Postsecondary Education.
[FR Doc. 2020-27042 Filed 12-10-20; 8:45 am]
BILLING CODE 4000-01-P


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