**Supporting Statement**

**Information Collection for the William D. Ford Federal Direct Loan Program Federal Direct Stafford/Ford Loan and Federal Direct Unsubsidized Stafford/Ford Loan Master**  **Promissory Note OMB No. 1845**  **- 0007**  **A. Justification 1.**  **Explain the c ircumstances that make the collection of information necessary. Identify any legal or**  **administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collec** **tion of information.** Section 455(i) of the Higher Education Act of 1965, as amended (the HEA) requires the U.S. Department of Education (the Department) to develop, print, and distribute a standard promissory note to schools that participate in the William D. Ford Federal Dire ct Loan (Direct Loan) Program. Since the 1999

- 2000 program year, the standard promissory note for Federal Direct Stafford/Ford (Direct Subsidized) Loans and Federal Direct Unsubsidized Stafford/Ford (Direct Unsubsidized) Loans has been the Master Promissory Note (MPN) that was developed by the Department in accordance with §432(m)(1)(D) of the HEA. The Direct Loan Program regulations require a borrower to complete an MPN before receiving a Direct Subsidized or Direct Unsubsidized loan ( see 34 CFR 685.201(a)(2)). The Department is requesting a revision of the currently approved collection. The proposed changes include the following:

 Updating information about the interest rate for Direct PLUS Loans to reflect recent changes made by the Bi partisan Student Loan Certainty Act of 2013.

 Adding information about the time limit on eligibility for Direct Subsidized Loans that was included as part of the Moving Ahead for Progress in the 21 st Century Act (Public Law 112

- 141).

 Adding information abou t the new Pay As You Earn repayment plan that was established by final regulations published on November 1, 2012 (77 FR 66088).

 Expanding the descriptions of the Income

- Based and Income

- Contingent repayment plans to provide more detailed information about these plans.

 Removing information about the no

- longer

- available up

-front interest rebate repayment incentive.

 Replacing the single “Repaying Your Loans Chart” at the end of the Borrower’s Rights and Responsibilities Statement that accompanies the MPN with four separate charts. The single chart in the currently approved forms covers only the Standard, Graduated, Extended , and Income
- Contingent repayment plans, and for the Extended plan it provides sample payment amounts only for the Extended

- Fixed payment option. The proposed revised MPN will include a single chart covering the Standard, Graduated, and Extended plans , with sample payment amounts for both the Extended

- Fixed and Extended

- Graduated payment options, plus three new charts that provide sample payme nt amounts for the Income

- Based, Pay As You Earn, and Income

- Contingent repayment plans.Page 2
– Supporting Statement for Direct Subsidized Loan/Direct Unsubsidized Loan MPN , OMB No. 1845
- 0007

 In various places, revising language to present information more clearly and concisely. **2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new**  **collection, indicate the actual use the agency has made of the information received from the current collection.**  The Department will continue to use the information collected on the MPN to process and service Direct Subsidized and Direct Unsubsidized lo ans made to student borrowers. The MPN serves as the borrower’s legally binding promise to repay all loan amounts disbursed under the MPN. **3. Describe whether, and to what extent, the collection of information involves the use of automated,**  **electronic, mechanical, or other technological collection techniques or forms of information technology, e.g. permitting electronic submission of responses, and the basis for the**  **decision of adopting this means of collection. Also describe any considerat ion given to using**  **technology to reduce burden.** The Department makes maximum use of available informati on technology to process MPNs. Schools electronically receive data provided by the student on the Free Application for Federal Student Aid (FAFSA) and cr eate loan records based on the FAFSA data and additiona l data provided by the school. This process allows most of the information requested in Section A of the MPN (Borrower Information) to be preprinted, thus reducing burden on borrowers. Beginning with l oans made during the 2001

- 2002 program year, the Department has offered borrowers the option of completing the MPN through an entirely electronic process, using a personal identification number (PI N) provided by the Department. The Department will continue to offer thi s option with the revised MPN. The electronic process uses an HTML (hypertext markup language) version of the paper MPN and stores the HTML version as the authoritative copy of the MPN. The text and data elements on the HTML version are identi cal to the text and data elements on the paper MPN. Since the introduction of the electronic MPN option, the percentage of MPNs that are completed electron ically has steadily increased. Currently, approximately 98% of Direct Loan MPNs are completed electro nically. **4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.**  Except as explained in Item 3, above, there is no informa tion available from other sources that can be used for the purposes described in Item 2. **5. If the collection of information impacts small businesses or other small entities (Item 8b of IC Data Part 2), describe any methods used to minimize burden.**  No sma ll businesses are affected by this information collection. **6. Describe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing bur** **den.** Without this collection of information, borrowers would not be able to receive Direct Subsidized or Direct Unsubsidized loans. The MPN minimizes the frequency of data collection by allowing a borrower who has completed an initial MPN to receive subseq uent loans for up to 10 years without signingPage 3
– Supporting Statement for Direct Subsidized Loan/Direct Unsubsidized Loan MPN , OMB No. 1845
- 0007 another MPN, if the borrower is attending a school that is authorized to make multiple loans under the MPN and chooses to do so. The MPN also reduces burden for borrowers attending schools that are not authoriz ed to use the multi

-year feature of the MPN (or that choose not to do so), since they may receive subsequent loans during the same academic year without having to sign a new MPN. **7. Explain any special circumstances that would cause an information collecti on to be conducted in a**  **manner:**

 **requiring respondents to report information to the agency more often than quarterly;**
 **requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it;** 
 **requiring res pondents to submit more than an original and two copies of any document;** 
 **requiring respondents to retain records, other than health, medical, government contract, grant** **- in**  **- aid, or tax records for more than three years;** 
 **in connection with a statistical surv ey, that is not designed to produce valid and reliable**  **results than can be generalized to the universe of study;**
 **requiring the use of a statistical data classification that has not been reviewed and approved by OMB;** 
 **that includes a pledge of confidentialit y that is not supported by authority established in**  **statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or that unnecessarily impedes sharing of data with other agencies**  **for compatible confidential use; or** 
 **requiring respondents to submit proprietary trade secrets, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the**  **information’s confidentiality to the extent permitted by la w.**  This information collection does not involve any of the conditions listed in 5 CFR 1320.5(d)(2). **8. If applicable, provide a copy and identify the date and page number of publication in the Federal**  **Register of the agency’s notice, required by 5 CFR 1320 .8(d), soliciting comments on the information**  **collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments. Specifically address**  **comments recei ved on cost and hour burden.**  **Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instruction and record keeping, disclosure, or reporting**  **format (if any), an d on the data elements to be recorded, disclosed, or reported.**  **Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 years**  **– even if the collection of informa**  **tion activity is the same as in prior periods. There may be circumstances that may preclude consultation**  **in a specific situation. These circumstances should be explained.** The Department consulted with schools and other members of the financial aid commun ity in developing the original MPN and improving the MPN. On August 22, 2013 a notice was published in the Federal Register (78 FR 52169) soliciting comments on the revised MPN. The Department received no public comments. However, we have made a number o f changes to the MPN in response to internal reviews of the MPN by the Department’s federal loanPage 4 – Supporting Statement for Direct Subsidized Loan/Direct Unsubsidized Loan MPN , OMB No. 1845
- 0007 servicers and other Department offices. These are minor changes to wording and formatting for greater clarity. We have made no substantive changes to the text of the MPN was posted for public comment during the 60

- day comment period, nor have we added any new data elements or modified existing data elements. **9. Explain any decision to provide any payment or gift to respondents, other than remuneration of**  **contrac tors or grantees.**  No payments or gifts will be provided to respondents. **10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy.**  The MPN includes a Privacy Act Notice th at (1) informs the borrower of the statutory authority for the information collection, (2) explains that disclosure of the information is voluntary, but is required in order to determine the borrower’s eligibility to receive a loan, and (3) identifies the third parties to whom the information may be disclosed, and explains the circumstances under which such disclosures may occur. **11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious be**  **liefs, and other matters that are commonly considered private. The justification should include the reasons why the agency considers the questions necessary, the**  **specific uses to be made of the information, the explanation to be given to persons from whom the**  **information is requested, and any steps to be taken to obtain their consent.** The MPN does not require a borrower to provide any information that would be considered sensitive. **12. Provide estimates of the hour burden of the collection of information.**  **The statement should :**

 **Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated. Unless directed to do so, agencies should**  **not conduct special surveys to obtain information on which to base hour burden**  **estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely because of**  **differences in activity, size, or complexity, show the range of esti mated hour burden, and**  **explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.** 
 **If this request for approval covers more than one form, provide separate hour burden estimates fo**  **r each form and aggregate the hour burdens in item 16 of IC Data Part 1.**
 **Provide estimates of annualized cost to respondents of the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost of**  **contractin g out or paying outside parties for information collection activities should not**  **be included here. Instead, this cost should be included in Item 14.** The Department estimates the total annual number of respondents for this information collection to be 5,20 7,137
. The estimated time required to complete an MPN is 0.5 hours (30 minutes). Based on one response per respondent, this equates to a total estimated annual reporting burden of 2,603,569 hours.Page 5 – Supporting Statement for Direct Subsidized Loan/Direct Unsubsidized Loan MPN , OMB No. 1845
- 0007 **13. Provide an estimate of the total annual cost burden t** **o respondents or record keepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12**  **and 14.)**

 **The cost estimate should be split into two components: (a) a total capital and start -**  **up cost component (an**  **nualized over its expected useful life); and (b) a total operation and maintenance and purchase of services component. The estimates should take into account**  **costs associated with generating, maintaining, and disclosing or providing the information. Incl**  **ude descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the**  **time period over which costs will be incurred. Capital and start -**  **up costs include, among other**  **items, preparations for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing equipment; and acquiring and maintaining record**  **storage facilities.**
 **If cost estimates are expected to vary widely, agencies should present ranges of cost burdens**  **and explain the reasons for the variance. The cost of contracting out information collection services should be a part of this cost burden estimate. In developing cost burden estimates,**  **agencie s may consult with a sample of respondents (fewer than 10), utilize the 60** **- day pre**  **** **OMB submission public comment process and use existing economic or regulatory impact analysis associated with the rulemaking containing the information collection, as approp**  **riate.**
 **Generally, estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with**  **requirements not associated with the information collection, (3) for reaso ns other than to**  **provide information or keep records for the government, or (4) as part of customary and usual business or private practices.**  **Total Annualized Capital/Startup Cost :**  **Total Annual Costs (O&M) :** 

**______ Total Annualized Costs Requested**  **:** There are no annual capital/startup costs to respondents, nor are there any annual costs to respondents associated with operating or maintaining systems or purchasing services. The total annual estimated cost burden for this collection is $ 47,906.00
. This estimate was calculated by multiplying the estimated number of respondents who do not complete an electronic MPN ( 104,143 ) by the cost of postage required to return the paper MPN ($0.4 6 ). Borrowers who complete the MPN electronicall y incur no postage costs. They may, however, incur minimal costs imposed by Internet providers for Internet access. The Department expects that in most cases , any Internet access fees charged to borrowers for the time required to complete an MPN electronically would be less than the cost of postage. **14. Provide estimates of annualized cost to the Federal government. Also, provide a description of**  **the method u sed to estimate cost, which should include quantification of hours, operational expenses**  **(such as equipment, overhead, printing, and support staff), and any other expense that would not have been incurred without this collection of information. Agencies a**  **lso may aggregate cost estimates from Items 12, 13, and 14 in a single table.** Page 6
– Supporting Statement for Direct Subsidized Loan/Direct Unsubsidized Loan MPN , OMB No. 1845
- 0007 The total estimated annual cost to the Federal government for this information collection is $ 28,172.00. This represents costs associated with printing and distributing the paper versions of the MPN. It is not possible to provide annualized costs associated with the implementation of the electronic version of the MPN
. The terms of the Department’s contract with the entity that is responsible for performing this function (and other functions) does not provide for itemization of costs associated with specific functions. **15. Explain the reasons for any program changes or adjustments to #16f of the IC Data Part 1 Form.** The Department is reporting a decrease of 15,970 hours due to a dec rease in the number of respondents since the previous submission. The previous submission for this collection reported an increase in the number of respondents as a result of the Health Care and Education Reconciliation Act of 2010 (Public Law 111

- 152), wh ich terminated the authority of lenders to make new FFEL Program loans effective July 1, 2010. As a result, all new subsidized/unsubsidized loan s made on or after July 1, 2010 have been made through the Direct Loan Program, and this resulted in an initial increase in the number of respondents completing the MPN
. However, because in general a b orrower only needs to complete an MPN once to receive Direct Subsidized Loans and Direct Unsubsidized Loans for up to 10 years, there has been a decrease in the number of respondents since the previous submission. **16. For collections of information whose results will be published, outline plans for tabulation and**  **publication. Address any complex analytical techniques that will be used. Provide the time schedule for th**  **e entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions.**  The results of this information collection will not be published. **17. If seeking approval to not display th**  **e expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.**  The Department is not seeking this approval. **18. Explain each exception to the certification statement identified in the Certificatio**  **n of Paperwork Reduction Act.**  The Department is not requesting any exceptions to the “Certification for Paperwork Reduction Act Submissions” of OMB Form 83

- I.