1

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12 **SUPPORTING STATEMENT**

**FOR PAPERWORK REDUCTION ACT SUBMISSION FEDERAL**  **DIRECT LOAN PROGRAM**  **REGULATIONS for FORBEARANCE AND LOAN REHABILITATION**  **A. Justification** 1. Explain the circumstances that make the collection of information necessary . Identify any legal or administrative requirements that necessitate the collection. Attach a hard cop y of the appropriate section of each statute and regulation mandating or authorizing the collection of information , or you may provide a valid URL link or paste the applicable section 1 . Specify the review t ype of the collection (new, revision, extension, reinstatement with change, reinstatement without change) . If revised, brie fl y specify the changes. If a rulemaking is involved, make note of the sections or changed sections, if applicable. The Department is requesting a new information collection. The proposed Direct Loan (DL) Program regulations revise the current regulatio ns for program administration as described below. The proposed regulations make changes in the provisions related to forbearance, reasonable and affordable loans rehabilitation and administrative wage garnishment along with the associated changes in burde n. These changes are a result of the Student Aid and Fiscal Responsibility (SAFRA) Act that was included in the Health Care and Reconciliation Act of 2010 (HCERA), which as of July 1, 2010 and require a change in the current burden hours. 2. I ndicate ho w, b y 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. These change s to the regulations expand the collection of information i n the Direct Loan P rogram . The proposed regulations provide for requests from a borrower for forbearance by exercising an option to orally acknowledge their Direct Loan debt and agree to repay that debt. I n addition, under the proposed reasonable and affordable provisions, when the amount of the monthly

repay ment amount is established the borrower may object to that amount and may

subsequently

have to provide documentation that supports their objection. Borrowers who have a change in financial circumstances would be able to provide documentation that supports their change in financial condition to the Department. 3. Describe whether, and to what extent, the collection of information involves the use of automated, electro nic, mechanical, or other technological collection techniques or forms of information technology , e.g. permitting electronic submission of responses, and the basis for the

1 Please limit pasted text to no longer than 3 paragraphs.2

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12 decision of adopting this means of collection. Also describe an y consideration give n to using technology

to reduce burden. Under the proposed regulations, these processes would be available via telecommunications devices and entail the submission of documents that support the objection or changing financial circumstances of the borrower . These provisions do not exclude the use of Web

- based transmission of data, however most borrowers are making copies of supporting documents and mailing them to the Department. 4. Describe efforts to identify duplication. Show specificall y wh y an y similar information alread y available cannot be used or modified for use for the purposes described in I tem 2 above. The current requirements are minimal and avoid duplication. There is no similar information available that can be used or modified for this purpose at this time. 5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden. A small entit y may be (1) a small business which is deemed to be one that is independently owned and operated and that is not dominant in its field of operation; (2) a small organization that is any not - for

- profit enterprise that is independently owned and operated and is not dominant in its field; or (3) a small government jurisdiction, which i s a government of a city , count y, town, township, school district, or special district with a population of less than 50,000. No small businesses are affected b y this information collection. 6. Describe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequentl y, as well as an y technical or legal obstacles to reducing burden. These proposed Direct Loan regulatory changes provide for added flexibility for borrowers. Without these changes borrowers would not have access to a statutory benefit. 7. Explain any

special circumstances that would cause an information collection to be conducted in a manner:

 requiring respondents to report information to the agency more often than quarterl y;  requiring respondents to prepare a written response to a collection of information in fewer than 30 day s after receipt of it;
 requiring respondents 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 y ears;  in connection with a statistical survey , that is not designed to produce valid and reliable results than can be generalized to the universe of study ;  requiri ng the use of a statistical data classification that has not been reviewed and approved b y OMB;3

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12

 that includes a pledge of confidentiality 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 unnecessaril y i mpedes 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 law. The collection of this information will continue to be conducted in a manner that is consistent with the guidelines in 5 CFR 1320.6. 8. As applicable, state that the Department has published the 60 and 30 Federal Register notices as required b y 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments receive d in response to that notice and describe actions taken b y the agency in response to these comments. Specifically address comments received 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 an y), and on the data elements to be recorded, disclosed, or reported. Consultation with representatives of those from whom i nformation is to be obtained or those who must compile records should occur at least once every 3 y ears
– even if the collection of information activity

is the same as in prior periods. There may be circumstances that may preclude consultation in a specif ic situation. These circumstances should be explained. Th e se proposed regulations were developed through the Negotiated Rulemaking process where the public provided its input and in consultation with schools, and a variet y of professional associations an d other interested parties
. The comment period for the burden associated with these proposed regulations will run concurrently with the comment period for the proposed regulations. Although OMB has up to 60 day s to approve the IC R, it is recommended that the public comment on the ICR within the 30 day s of the regulations publication. 9. Explain any

decision to provide any

pay ment or gift to respondents, other than remuneration of contractors or grantees with meaningful justification
. No pay ments or gifts will be provided to the respondents. 10. Describe an y assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy . If personally

identifiable information (PII) is being collected, a P rivacy Act statement should be included on the instrument. Please provide a citation for the Sy stems of Record Notice and the date a Privacy I mpact Assessment was completed as indicated on the I C Data Form . A confidentiality statement with a legal citation that4

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12 authorizes the pledge of confidentiality should be provided. 2 If the collection is subject to the Privacy Act, the Privacy

Act statement is deemed sufficient with respect to confidentiality
. If there is no expectation of confidentiality , simply sta te that the Department make s no pledge about the confidentiall y of the data. T he Department makes no pledge about the confidentially of the data. 11. Provide additional justification for an y questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. The justification should include the reasons wh y t he agency considers the questions necessary , the specific uses to be made of the information, the explanation to be giv en to persons from whom the information is requested, and an y steps to be taken to obtain their consent. The Department is not requesting an y s ensitive data. 12. Provide estimates of the hour burden of the collection of information. The statement should :

 Indicate the number of respondents by affected public ty

pe (federal government, individuals or households, private sector

– businesses or other for

- profit, private sector

– not - for

- profit institutions, farms, state, local or tribal governments), frequen cy of response, annual hour burden, and an explanation of how the burden was estimated, including identification of burden t ype: recordkeeping, reporting or third party disclosure. All narrative should be included in item 12. Unless directed to do so, age ncies should not conduct special survey s 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 widel y because of differences in activity , size, or complexity , show the range of estimated hour burden, and explain the reasons for the variance. Generall y, estimates should not include burden hours for customary and usual business practices.

 If this request for appro val covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in the ROCI S IC Burden Analy sis Table. (The table should at minimum include Respondent types, IC activity , Respondent and Responses, Hours/Response, and Total Hours)

 Provide estimates of annualized cost to respondents of the hour burdens for collections of information, identify ing and using appropriate wage rate categori es. The cost of contracting out or pay ing outside parties for information collection activities should not be included here. Instead, this cost should be included in I tem 14.

2 Requests for this information are in accordance with the follow ing ED and OMB policies: Privacy Act of 1974, OMB Circular A

- 108

– Privacy Act Implementation

– Guidelines and Responsibilities, OMB Circular A

- 130 Appendix I

– F ederal Agency Responsibilities for Maintaining Records About Individuals, OMB M

- 03
- 22

– OMB Guidance for Implementing the Privacy Provisions of the E

- Government Act of 2002, OMB M

- 06
- 15

– Safeguarding Personally Identifiable Information, OM:6

- 104

– Privacy Act of 1974 (Collection, Use and Protection of Personally Identifiable Information)5

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12

Section 685.205

– Forbearance : The proposed regulations amend the current Direct Loan regulations to authorize the Secretary

to grant forbearance to a borrower or endorser who is in default on a loan, but prior to the loan being transferred to collections, based on the borrower’s or end orser’s oral request. The proposed regulations provide that a forbearance agreement in this situation must include a new agreement to repay the debt signed b y t he borrower or endorser (as required under the current regulations), or a written or oral affir mation of the borrower’s or endorser’s obligation to repay the debt. The proposed regulations define “affirmation” for this purpose to be an acknowledgment of the loan by the borrower or endorser in a legally binding manner that can take the form of: 1) a new signed repay

ment agreement or schedule, or another form of signed agreement to repay the debt (as under current regulations), or 2) an oral acknowledgment and agreement to repay the debt that is documented by the Secretary in the borrower’s or endors er’s file and confirmed b y the Secretary in a notice to the borrower; or 3) a pay ment made on the loan by the borrower or endorser. The proposed regulations also specify that if a forbearance in this situation is based on the borrower’s or endorser’s oral request and affirmation, the Secretary must orall y review with the borrower the terms and conditions of the forbearance, and that the Secretary must send the borrower or endorser a notice that confirms the terms of the forbearance and the borrower’s or en dorser’s affirmation of the obligation to repay

the debt within 30 day s of that agreement. The proposed regulations require the Secretary

to retain a record of the terms and conditions of the forbearance and affirmation in the borrower’s or endorser’s fil e. For the 2011 calendar ye ar, 62,905 Direct Loan borrowers requested forbearance after defaulting on a loan. Of that number, we estimate that 25 percent (15,726 borrowers) would have exercised an option to orally acknowledge the debt and agree to repa y the debt. On average, we estimate that it would take a borrower 0.17 hours (10 minutes) per oral acknowledgment to listen to the list of terms and conditions of the forbearance as they

are reviewed with the borrower. The burden associated with the comp letion of the General Forbearance Request form, OMB 1845

- 0031, is estimated to average 0.2 hours (12 minutes). Therefore, the net reduction in burden to provide an oral acknowledgement rather than complete the form is the difference of the two or 0.03 hours (0.20 hours minus 0.17 hours or 2 minutes) per oral forbearance. We estimate that burden would decrease b y 472 hours (15,726 borrowers multiplied by

0.03 hours per oral forbearance) under OMB Control Number 1845

- NEW2. Section 685.205

– New Burden : # of Respondents # of Responses Hours/Response Burden Hours 15,726 15,726
. 03
- 4726

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12 Section 685.211(f)(3)

– Reasonable and affordable loan rehabilitation : The proposed regulations would add new §685.211(f)( 3 ) requiring the Secretary to base determinations of reasonable and affordable rehabilitation pay ment amounts of defaulted loans on information provided on an OMB

- approved form, and, if requested, supporting documentation. We estimate that 11,144 Direct Loan borrowers will raise an objection to the initial amount of the reasonable and affordable loan rehabilitation amount. We estimate that each objection will entail a phone conversation or e

- mail that would span on average .17 hours (10 minutes). This woul d increase burden to the borrowers for a total of 1,894 hours (11,144 borrowers objecting to the initial reasonable and affordable amount multiplied by

.17 hours per loan rehabilitation request) under OMB Control Number 1845
- NEW2
. Section 685.211(f)(3)

– New Burden : # of Respondents # of Responses Hours/Response Burden Hours 11,144 11,144 .17 1,894 Section 685.211(f)(5)

– Reasonable and affordable loan rehabilitation: Proposed §685.211(f)(5) would require a borrower w ho objects to the monthly repay ment amount contained in the written repayment agreement to provide the Secretary the documentation needed to calculate a monthl y pay ment amount under the income

based repay

ment plan formula. If the borrower does not provide this information to the Secretary , no rehabilitation agreement would exist with the borrower, and the Secretary would not proceed with the rehabilitation. Of the 92,870 Direct Loan borrowers in calendar year 2011 that requested loan rehabilitation of their default loans, we estimate that 12 percent or 11,144 borrowers would need to submit documentation for a monthly pay ment plan under the income

- based repay ment plan formula to be calculated. We estimate that on average each borrower would take .33 hour s (20 minutes) to collect, copy , and submit the required documentation. We estimate that burden would increase b y 3,678 hours (11,144 borrowers required to submit documentation multiplied by .33 hours per loan rehabilitation request) under OMB Control Number 1845

- NEW2
. Section 685.211(f)(5)

– New Burden : # of Respondents # of Responses Hours/Response Burden Hours 11,144 11,144 .33 3,678 Section 685.211(f)(7)

– Reasonable and affordable :7

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12

Proposed §685.211(f)(7) would require the Secretary to, upon request of a borrower, adjust the borrower’s monthl y rehabilitation payment due to a change in the borrower’s financial circumstances. The borrower would be required to provide documentation supporting the request. We estimate that 10 percent of Direct L oan borrowers who are rehabilitating their default loans (9,287 Direct L oan borrowers) would have a change in their financial circumstances in the initial y ear the proposed regulation is implemented. We estimate that on average each borrower would take .33 hours (20 minutes) to collect, copy , and submit the required documentation. We estimate that burden would increase by 3,065 hours (9,287 borrowers with changes in financial circumstances multiplied by 0.33 hours per loan rehabilitation request equals 3,065 hours) under OMB Control Number 1845

- NEW2
. Section 685.211(f)(7)

– New Burden : # of Respondents # of Responses Hours/Response Burden Hours 9,287 9,287 .33 3,065 Total Current Inventory : # of Respondents # of Responses Burden Hours

- 0
- - 0
- - 0
- Revised Inventory : # of Respondents # of Responses Burden Hours 47,301 47,301 8 , 165 13
. Provide an estimate of the total annual cost burden to respondents or record keepers resulting from the collection of information. (Do not include the cost of any hour burden shown in I tems 12 and 14.)

 The cost estimate should be split into two components: (a) a total capital and start

- up cost component (annualized 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. I nclude descriptions of methods used to estimate major cost factors including s ys tem 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 estima tes are expected to vary widel y, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of contracting out information8

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12 collection services should be a part of this cost burden estimate. In developing cost burden estimates, agencies 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 anal ys is associated with the rulemaking containing the information co llection, as appropriate.

 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 reasons othe r than to provide information or keep records for the government or (4) as part of customary and usual business or private practices. Also, these estimates should not include the hourly costs (i.e., the monetization of the hours) captured above in Item 12 Total Annualized Capital/Startup Cost : Total Annual Costs (O&M) :

____________________ Total Annualized Costs Requested : There are no capital/startup costs to respondents, nor are there any annual costs to respondents associated with operating or maintaining s ys tems or purchasing s ervices. 14. Provide estimates of annualized cost to the Federal government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing, and s upport staff), and any other expense that would not have been incurred without this collection of information. Agencies also may aggregate cost estimates from I tems 12, 13, and 14 in a single table. The cost to the federal government is minimal
. This mi nimal cost estimate is in part due to the fact that current servicer contracts include phone counseling to borrowers, therefore the addition of oral affirmation of a debt does not represent a substantive increase in cost. 15. Explain the reasons for an y p rogram changes or adjustments. Generally , adjustments in burden result from re

- estimating burden and/or from economic phenomenon outside of an agency ’s control (e.g., correcting a burden estimate or an organic increase in the size of the reporting universe ). Program changes result from a deliberate action that materiall y changes a collection of information and generally are result of new statute or an agency action (e.g., changing a form, revising regulations, redefining the respondent universe, etc.). Burd en changes should be disaggregated by t ype of change (i.e., adjustment, program change due to new statute, and/or program change due to agency discretion), ty

pe of collection (new, revision, extension, reinstatement with change, reinstatement without chang e) and include totals for changes in burden hours , responses and cost s (if applicable)
. The Department is requesting approval of this Direct Loan information collection under OMB 1845
- NEW2 to reflect the program changes in the proposed regulatory changes
. These changes provide additional flexibilities f or Direct Loan borrowers and permit oral9

ICRAS and OMB Number : ( 1980.01 ) 1845

- NEW2. v .1 Revised: 0 7 / 10 /201 3 RIN Number: 1840
- AD 12 requests for forbearance, as well as allow a borrower to object to the initially established reasonable and affordable loan repay ment amount. In addition, if a bor rower incurs changes to his or her financial circumstances, the borrower can provide supporting documentation to change the amount of the reasonable and affordable loan monthly repay ment amount
. 16. For collections of information whose results will be pub lished, outline plans for tabulation and publication. Address any complex analy

tical techniques that will be used. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of repo rt, publication dates, and other actions. The results of this collection of information will not be published. 17. If seeking approval to not display the 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 Certification of Paperwork Reduction Act. The Department is not requesting an y exceptions to the “Certificat ion for Paperwork Reduction Act Submissions” of OMB Form 83

- 1.