# §668.41 Reporting and Disclosure of Information.  [Corrections made on March 17, 2016]

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# (h) Loan repayment rate.  For any fiscal year in which an institution’s loan repayment rate is less than zero, the institution must disclose information about that rate to enrolled and prospective students in the manner described in paragraphs (j), (k), (l), and (m) of this section.   

# (1) Methodology. For each fiscal year, the Secretary calculates the institution’s loan repayment rate for the cohort of borrowers whose Direct Loans entered repayment at any time during the fifth fiscal year prior to the most recently completed fiscal year by—

# (i) Determining the original principal balance of the loans for each of those borrowers;

# (ii) Determining the current principal balance of the loans for each of those borrowers; 

# (iii) Calculating the difference between the original and the current principal balance of the loans for each of those borrowers and expressing that difference as a percentage reduction of, or an increase in, the original principal balance;

# (iv) Using zero as the value for any defaulted loan where there is a percentage reduction of the original principal balance; and 

# (v) On a scale where percentage reductions in principal are positive values and percentage increases in principal are negative values, determining the median value.  The median value is the repayment rate for that fiscal year. 

# (2) Definition of terms and exclusions.  For the purpose of calculating the loan repayment rate under this section—

# (i) The term—

# (A) “Fiscal year” means a period of time beginning on October 1 and ending on the following September 30, identified by the calendar year in which it ends;

# (B) “Original principal balance” (OPB) means the amount of the outstanding balance, including capitalized interest, on the Direct Loans owed by a student for attendance at the institution on the date the loans first entered repayment.  The OPB does not include PLUS loans made to parent borrowers or TEACH Grant-related loans.  For consolidation loans, the OPB includes only those loans attributable to the borrower’s attendance at the institution; and

# (C) “Current principal balance” (CPB) means the amount of the outstanding balance, including capitalized interest, on the Direct Loans owed by the student at the end of the most recently completed fiscal year.

# (D) “Measurement period” refers to the period of time between the date that a borrower’s loan enters repayment and the end of the fiscal year for which the CPB of that loan is determined.

# (ii) The Secretary excludes a borrower from the calculation if—

# (A) One or more of the borrower’s loans were in a military-related deferment status during the last fiscal year of the measurement period;

# (B) One or more of the borrower's loans are either under consideration by the Secretary, or have been approved, for a discharge on the basis of the borrower's total and permanent disability, under 34 CFR 682.402 or 685.212;

# (C) The borrower was enrolled in another institution during the last fiscal year of the measurement period; or

# (D) The borrower died.

# (3) Secretary’s calculation of repayment rate. The Secretary determines the repayment rate as follows:

# (i) Creating the list of students. (A) The Secretary selects the students to be included on the list by Identifying the borrowers who entered repayment on FFEL or Direct Loans received for enrollment at the institution during the fifth fiscal year prior to the most recently completed fiscal year and the borrowers who are in default, the original principal balance of each borrower at the time the borrower entered repayment, the amount of the principal balance at the end of the most recently completed fiscal year, and the borrowers that would be removed from the list under paragraph (h)(2)(ii) of this section.

# (B) The Secretary provides the list to the school.

(ii) *Institutional corrections to the list.* (A) The Secretary presumes that the list of borrowers and the identity and loan information for those borrowers are correct unless the school provides evidence to the contrary that is satisfactory to the Secretary, in a format and process determined by the Secretary. The schools bears the burden of proof that the list is incorrect.

(B) No later than 45 days after the date the Secretary provides the list to the school, the school may— 

(1) Provide evidence showing that a borrower should be included on or removed from the list pursuant to paragraph (h)(3)(i)(A) of this section or otherwise; or

(2) Correct or update a borrower’s identity or loan information; 

(C) After the 45-day period expires, the school may no longer seek to correct the list of borrowers or revise the identity or loan information of the borrowers included on the list.

(D) The Secretary considers the evidence provided by the school and either accepts the correction or notifies the school of the reasons for not accepting the correction. If the Secretary accepts the correction, the Secretary uses the corrected information to create the final list. 

(iii) *Draft repayment rate; notice and institutional challenges*. (A) The Secretary notifies the school of the draft repayment rate, the borrowers who are included on the final list, and the loan data used to calculate the repayment rate.

(B) No later than 45 days after the Secretary notifies an institution of its draft loan repayment rate, the institution may challenge the accuracy of the information that the Secretary used to calculate the draft rate by submitting, in a form prescribed by the Secretary, evidence satisfactory to the Secretary demonstrating that the information was incorrect.

(C) The Secretary considers any evidence provided by the institution challenging the accuracy of the information the Secretary used to calculate the draft rate and notifies the institution whether the challenge is accepted or the reasons the challenge is not accepted.  If the Secretary accepts the challenge, the Secretary uses the corrected data to calculate the final loan repayment rate.

(D) An institution may challenge the Secretary's calculation of the loan repayment rate only once for a fiscal year.  An institution that does not timely challenge the draft rate waives any objection to the draft rate as stated in the notice.

(iv) *Final calculations.* (A) After expiration of the 45-day period, and subject to resolution of any challenge under paragraph (h)(3)(iii)(B) of this section, an institution’s draft repayment rate constitutes the final rate for the institution.

(B) The Secretary notifies the institution of its final repayment rate.

(4) *Privacy considerations.* An institution is not required to disclose a repayment rate if the repayment rate is based on fewer than 10 borrowers who have entered repayment in the fiscal year.

(i) *Letter of credit disclosure*. If an institution is required to submit an irrevocable letter of credit under 668.175(b), (c) or (f), the institution must disclose information about that requirement to enrolled and prospective students in the manner described in paragraphs (j), (k), and (l) of this section until the Secretary releases the institution from the letter of credit.

(j) *Form of notice to students*. (1) The disclosures that institutions must provide to current and prospective students must include warning language that the Secretary will publish in the Federal Register.

(2) The Secretary will conduct consumer testing to make the disclosure language as meaningful as possible. 

(k) *Delivery to enrolled students*. (1) An institution must provide the disclosures required by paragraphs (h) and (i) of this section by means of a notice in writing to each enrolled student no later than 30 days after being informed by the Secretary of its student loan repayment rate and/or a requirement to post an irrevocable letter of credit, as applicable, by— 

(i) Hand-delivering the disclosure notification as a separate document to the student individually or as part of a group presentation; or 

(ii) Sending the disclosure notification to the primary email address or other electronic communication method used by the institution for communicating with the student about the program.

(2) The institution must— 

(i) Ensure that the disclosure notification is the only substantive content in the message; 

(ii) Receive electronic or other written acknowledgement from the student that the student has received the message, except that written acknowledgment of hand-delivered disclosures is required only in connection with the disclosures described in paragraph (h) above; 

(iii) Send the disclosure(s) using a different address or method of delivery if the institution receives a response that the message could not be delivered; and 

(iv) Maintain records of its efforts to provide the required disclosure notification. 

(l) *Delivery to prospective students*. (1) An institution must provide the disclosure required by paragraphs (h) and (i) of this section to each prospective student at the first contact between the institution and the student by— 

(i) Hand-delivering the disclosure notification as a separate document to the prospective student individually, or as part of a group presentation; or

(ii) Sending the disclosure notification to the primary email address or other electronic communication method used by the institution for communicating with the prospective student. 

(2) The institution must—

(i) Ensure the disclosure notification is the only substantive content in the message; 

(ii) Receive electronic or other written acknowledgement from the prospective student that the student has received the message, except that written acknowledgment of hand-delivered disclosures is required only in connection with the disclosures described in paragraph (h) above; 

(iii) Send the disclosure notification using a different address or method of delivery if the institution receives a response that the email could not be delivered; and 

(iv) Maintain records of its efforts to provide the required disclosure notification.

(m) *Promotional materials.* (1) All promotional materials made available by or on behalf of an institution to prospective students that identify the institution by name must include—

(i) The disclosure of the repayment rate required in paragraph (h) in a prominent manner; or

(ii) Where space or airtime constraints would preclude the inclusion of the disclosure, the Web address (URL) of, or the direct link to, the disclosure, provided that the URL or link is prominent, readily accessible, clear, conspicuous, and direct.

(2) Promotional materials include, but are not limited to, an institution's catalogs, invitations, flyers, billboards, and advertising on or through radio, television, print media, the Internet, and social media.

(3) The institution must ensure that all promotional materials, including printed materials, about an institution are accurate and current at the time they are published, approved by a State agency, or broadcast.

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