[Federal Register Volume 89, Number 16 (Wednesday, January 24, 2024)]
[Rules and Regulations]
[Pages 4553-4559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01227]


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DEPARTMENT OF EDUCATION

34 CFR Parts 668, 674, 682, and 685


Federal Student Aid Programs (Student Assistance General 
Provisions, Federal Perkins Loan Program, Federal Family Education Loan 
Program, and the Federal Direct Loan Program)

AGENCY:  Office of Postsecondary Education, Department of Education.

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

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SUMMARY: The Secretary is issuing updates of longstanding waivers and 
modifications of statutory and regulatory requirements governing the 
Federal student financial aid programs under the authority of the 
Higher Education Relief Opportunities for Students Act of 2003 (HEROES 
Act). The HEROES Act requires the Secretary to publish a document in 
the Federal Register providing notice of the waivers or modifications 
of statutory or regulatory requirements 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.

DATES: Effective January 24, 2024. The waivers and modifications in 
this document expire on January 24, 2029.

FOR FURTHER INFORMATION CONTACT: For provisions related to the Federal 
Perkins Loan Program, Federal Family Education Loan (FFEL) Program, and 
Federal Direct Loan (Direct Loan) Program: Brian Smith, Telephone: 
(202) 987-1327. Email: <a href="/cdn-cgi/l/email-protection#0f4d7d666e61215c62667b674f6a6b21686079"><span class="__cf_email__" data-cfemail="e3a1918a828dcdb08e8a978ba38687cd848c95">[email protected]</span></a>. For other provisions: Aaron 
Washington, Telephone: (202) 453-7241. Email: <a href="/cdn-cgi/l/email-protection#ecad8d9e8382c2bb8d9f8485828b988382ac8988c28b839a"><span class="__cf_email__" data-cfemail="f8b9998a9796d6af998b9091969f8c9796b89d9cd69f978e">[email protected]</span></a>. 
The mailing address for both individuals is U.S. Department of 
Education, Office of Postsecondary Education, 400 Maryland Ave. SW, 2nd 
Floor, Washington, DC 20202.
    If you are deaf, hard of hearing, or have a speech disability and 
wish to access telecommunications relay services, please dial 7-1-1.

SUPPLEMENTARY INFORMATION: The Secretary is issuing updated waivers and 
modifications of statutory and regulatory requirements governing the 
Federal student financial aid programs under the authority of the 
HEROES Act. As described below, these waivers and modifications 
primarily focus on servicemembers who are called for active duty. We 
note below where there is overlap between the waivers and modifications 
issued in this document and the waivers and modifications related to 
the Fresh Start Initiative, which is described below.
    In a document published in the Federal Register on December 12, 
2003 (68 FR 69312), the Secretary first exercised the authority under 
the HEROES Act (Pub. L. 108-76, 20 U.S.C. 1098bb(b)) and announced 
waivers and modifications of statutory and regulatory provisions 
designed to assist ``affected individuals.'' Under 20 U.S.C. 1098ee(2), 
the term ``affected individual'' means an individual who--
    <bullet> Is serving on active duty during a war or other military 
operation or national emergency;
    <bullet> Is performing qualifying National Guard duty during a war 
or other military operation or national emergency;
    <bullet> Resides or is employed in an area that is declared a 
disaster area by any Federal, State, or local official in connection 
with a national emergency; or
    <bullet> Suffered direct economic hardship as a direct result of a 
war or other military operation or national emergency, as determined by 
the Secretary.
    Please note that these waivers and modifications do not apply to an 
individual who resides or is employed in an area declared a disaster 
area by any Federal, State, or local official unless that declaration 
has been made in connection with a national emergency.
    In a document published in the Federal Register on September 29, 
2017 (82 FR 45465), the Secretary updated the waivers and modifications 
to reflect statutory and regulatory changes that had occurred since the 
most recent prior waiver and modification document was published. The 
2017 waivers and modifications expired on September 30, 2022.
    The Secretary is updating the waivers and modifications to reflect 
statutory

[[Page 4554]]

and regulatory changes that have occurred since publication of the 2017 
waivers and modifications. The waivers and modifications in this 
document will expire on January 24, 2029. With a few exceptions, the 
waivers and modifications in this document are the same as the 2017 
waivers and modifications. However, the 2017 waivers and modifications 
have been updated as follows:
    (1) The Secretary is not including in this document the 2017 waiver 
that allowed institutions to use the applicant's original Expected 
Family Contribution (EFC) (the EFC based on the income and tax 
information reported on the Free Application for Federal Student Aid 
(FAFSA[supreg])), the EFC based on the data from the first calendar 
year of the award year, or the EFC based on another annual income that 
more accurately reflects the family's current financial circumstances.
    A financial aid administrator has the authority to use professional 
judgment on a case-by-case basis for affected individuals. The 
Department believes that the authority provided through the 2017 waiver 
is already within the authority of the financial aid administrator. The 
Department has also issued Dear Colleague Letters GEN-21-02 and GEN-22-
15 further explaining the authority and responsibilities of the 
financial aid administrator in regard to professional judgment.
    (2) The Secretary is not including the 2017 waiver and modification 
that allowed institutions to exercise professional judgment to make 
adjustments to the cost of attendance or the items used in calculating 
the EFC on a broader basis than the case-by-case basis reflected in the 
HEA. Accordingly, an institution that exercises professional judgment 
must make those determinations on a case-by-case basis for affected 
individuals.
    (3) The Secretary is not including the 2017 waivers and 
modifications related to verification. The Secretary will announce any 
changes related to verification in a separate Federal Register notice, 
Dear Colleague letter, or electronic announcement.
    The Secretary is issuing these waivers and modifications under the 
authority of the HEROES Act, 20 U.S.C. 1098bb(a). In accordance with 
the HEROES Act, the Secretary is providing the waivers and 
modifications of statutory and regulatory requirements applicable to 
the student financial assistance programs under title IV of the HEA 
that the Secretary believes are appropriate to ensure that--
    <bullet> Affected individuals who are recipients of student 
financial assistance under title IV are not placed in a worse position 
financially in relation to that financial assistance because they are 
affected individuals;
    <bullet> Affected individuals who are recipients of student 
financial assistance are not unduly subject to administrative burden or 
inadvertent technical violations or defaults;
    <bullet> Affected individuals are not penalized when a 
determination of need for student financial assistance is calculated;
    <bullet> Affected individuals are not required to return or repay 
an overpayment of grant funds based on the HEA's Return of Title IV 
Funds provision; and
    <bullet> Entities that participate in the student financial 
assistance programs under title IV of the HEA and 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, receive temporary relief 
from administrative requirements.
    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.
    The following terms used in this document are defined in 20 U.S.C. 
1098ee: ``active duty,'' ``military operation,'' ``national 
emergency,'' ``qualifying National Guard duty during a war or other 
military operation or national emergency,'' and ``serving on active 
duty during a war or other military operation or national emergency.''
    The Department intends for each of the waivers and modifications 
described in this document to be severable. If any waiver or 
modification in this document or its application to any person, act, or 
practice is held invalid, the remainder of the waivers and 
modifications or the application of such waiver or modification to any 
person, act, or practice will not be affected thereby.
    The following waivers and modifications are grouped into three 
categories, according to the affected individuals to whom they apply.
    Category 1: The Secretary is waiving or modifying the following 
requirements of title IV of the HEA and the Department's regulations 
for ALL affected individuals.

Return of Title IV Funds--Grant Overpayments Owed by the Student

    Section 484B(b)(2) of the HEA and 34 CFR 668.22(h)(3)(ii) require a 
student to return or repay, as appropriate, unearned grant funds for 
which the student is responsible under the Return of Title IV Funds 
calculation. For a student who withdraws from an institution because of 
the student's status as an affected individual, the Secretary is 
waiving these statutory and regulatory requirements so that a student 
is not required to return or repay any overpayment of grant funds based 
on the Return of Title IV Funds provisions.
    For these students, the Secretary also waives 34 CFR 668.22(h)(4), 
which--
    <bullet> Requires an institution to notify a student of a grant 
overpayment and the actions the student must take to resolve the 
overpayment;
    <bullet> Denies eligibility to a student who owes a grant 
overpayment and does not take an action to resolve the overpayment; and
    <bullet> Requires an institution to refer a grant overpayment to 
the Secretary under certain conditions.
    Therefore, an institution is not required to contact the student, 
notify the National Student Loan Data System, or refer the overpayment 
to the Secretary. However, the institution must document in the 
student's file the amount of any overpayment as part of the 
documentation of the application of this waiver.
    The student is not required to return or repay an overpayment of 
grant funds based on the Return of Title IV Funds provision. Therefore, 
an institution must not apply any title IV credit balance to the grant 
overpayment prior to: using a credit balance to pay authorized charges; 
paying any amount of the title IV credit balance to the student or 
parent, in the case of a parent PLUS loan; or using the credit balance 
to reduce the student's title IV loan debt (with the student's 
authorization) as provided in Dear Colleague Letter GEN-04-03 (February 
2004; revised November 2004).
    Category 2: The Secretary is waiving or modifying requirements in 
the following provisions of title IV of the HEA and the Department's 
regulations for affected individuals who are serving on active duty or 
performing qualifying National Guard duty during a war or other 
military operation or national emergency, or who reside or are employed 
in a disaster area.

Return of Title IV Funds--Post-Withdrawal Disbursements of Loan Funds

    Under 34 CFR 668.22(a)(6)(iii)(A)(5) and (D), a student (or parent 
for a parent PLUS loan) must be provided a post-withdrawal disbursement 
of a title IV

[[Page 4555]]

loan if the student (or parent) responds to an institution's 
notification of the post-withdrawal disbursement within 14 days of the 
date that the institution sent the notice, or a later deadline set by 
the institution. If a student or parent submits a late response, an 
institution may, but is not required to, make the post-withdrawal 
disbursement.
    The Secretary is modifying this requirement so that, for a student 
who withdraws because of their status as an affected individual in this 
category and who is eligible for a post- withdrawal disbursement, the 
14-day time period in which the student (or parent) must normally 
respond to the offer of the post-withdrawal disbursement is extended to 
45 days, or to a later deadline set by the institution. If the student 
or parent submits a response after the designated period, the 
institution may, but is not required to, make the post-withdrawal 
disbursement. As required under the current regulations, if the student 
or parent submits the timely response instructing the institution to 
make all or a portion of the post-withdrawal disbursement, or the 
institution chooses to make a post-withdrawal disbursement based on 
receipt of a late response, the institution must disburse the funds 
within 180 days of the date of the institution's determination that the 
student withdrew.

Leaves of Absence

    Under 34 CFR 668.22(d)(3)(iii)(B), a student is required to provide 
a written, signed, and dated request, which includes the reason for 
that request, for an approved leave of absence prior to the leave of 
absence. However, if unforeseen circumstances prevent a student from 
providing a prior written request, the institution may grant the 
student's request for a leave of absence if the institution documents 
its decision and collects the written request at a later date. It may 
be appropriate in certain limited cases for an institution to provide 
an approved leave of absence to a student who must interrupt his or her 
enrollment because he or she is an affected individual in this 
category. Therefore, the Secretary is waiving the requirement that the 
student provide a written request for affected individuals who have 
difficulty providing a written request as a result of being an affected 
individual in this category. The institution's documentation of its 
decision to grant the leave of absence must include, in addition to the 
reason for the leave of absence, the reason for waiving the requirement 
that the leave of absence be requested in writing.

Treatment of Title IV Credit Balances When a Student Withdraws

    Under 34 CFR 668.164(h)(2), an institution must pay any title IV 
credit balance to the student, or parent in the case of a parent PLUS 
loan, as soon as possible, but no later than 14 days after the balance 
occurred if the balance occurred after the first day of class of a 
payment period, or 14 days after the first day of class of a payment 
period if the balance occurred on or before the first day of class of 
that payment period. If the student (or parent) has provided 
authorization, an institution may use a title IV credit balance to 
reduce the borrower's total title IV loan debt, not just the title IV 
loan debt for the period for which the Return of Title IV Funds 
calculation is performed.
    For students who withdraw because they are affected individuals in 
this category, the Secretary finds that the institution has met the 14-
day requirement under 34 CFR 668.164(h)(2) if, within that time frame, 
the institution attempts to contact the student (or parent) to suggest 
that the institution be authorized to return the credit balance to the 
loan program(s).
    Based upon the instructions of the student (or parent), the 
institution must promptly return the funds to the title IV loan 
programs or pay the credit balance to the student (or parent).
    In addition, if an institution chooses to attempt to contact the 
student (or parent) for authorization to apply the credit balance to 
reduce the student's title IV loan debt, it must allow the student (or 
parent) 45 days to respond. If there is no response within 45 days, the 
institution must promptly pay the credit balance to the student (or 
parent) or return the funds to the title IV programs if the student (or 
parent) cannot be located.
    Consistent with the guidance provided in Dear Colleague Letter GEN-
04-03 (February 2004; revised November 2004), the institution may also 
choose to pay the credit balance to the student (or parent) without 
first requesting permission to apply the credit balance to reduce the 
student's title IV loan debt.

Cash Management--Student or Parent Request for Loan or TEACH Grant 
Cancellation

    Under 34 CFR 668.165(a)(4)(ii), an institution must return loan or 
TEACH Grant proceeds, cancel the loan or TEACH Grant, or do both, if 
the institution receives a loan or TEACH Grant cancellation request 
from a student or parent--
    <bullet> By the later of the first day of a payment period or 14 
days after the date the institution notifies the student or parent of 
his or her right to cancel all or a portion of a loan or TEACH Grant if 
the institution obtains affirmative confirmation from the student under 
34 CFR 668.165(a)(6)(i); or
    <bullet> Within 30 days of the date the institution notifies the 
student or parent of their right to cancel all or a portion of a loan 
if the institution does not obtain affirmative confirmation from the 
student under 34 CFR 668.165(a)(6)(i).
    Under 34 CFR 668.165(a)(4)(iii), if an institution receives a loan 
cancellation request from a borrower after the period specified in 34 
CFR 668.165(a)(4)(ii), the institution may, but is not required to, 
comply with the request. The Secretary is modifying this requirement so 
that an institution must allow at least 60 days for the student or 
parent to request the cancellation of all or a portion of a loan or 
TEACH Grant for which proceeds have been credited to the account at the 
institution. If an institution receives a loan or TEACH Grant 
cancellation request after the 60-day period, the institution may, but 
is not required to, comply with the request.

Cash Management--Student and Parent Authorizations

    Under 34 CFR 668.165(b)(1), an institution must obtain a written 
authorization from a student or parent, as applicable, to--
    <bullet> Use title IV funds to pay for educationally related 
charges incurred by the student at the institution other than charges 
for tuition and fees and, as applicable, room and board; and
    <bullet> Hold on behalf of the student or parent any title IV funds 
that would otherwise be paid directly to the student or parent.
    The Secretary is modifying these requirements to permit an 
institution to accept an authorization provided by a student (or parent 
for a parent PLUS loan) orally, rather than in writing, if the student 
or parent is prevented from providing a written authorization because 
of his or her status as an affected individual in this category. The 
institution must document the oral consent or authorization.

Satisfactory Academic Progress

    In cases where a student failed to meet the institution's 
satisfactory academic progress standards as a direct result of being an 
affected individual in this category, institutions may apply the 
exception provision of ``other special circumstances'' in 34 CFR 
668.34(a)(9)(ii).

[[Page 4556]]

Borrowers in a Grace Period

    Sections 428(b)(7)(D) of the HEA and 34 CFR 685.207(b)(2)(ii) and 
(c)(2)(ii) exclude from a Direct Loan borrower's initial grace period 
any period during which a borrower who is a member of an Armed Forces 
reserve component is called or ordered to active duty for a period of 
more than 30 days. The statutory and regulatory provisions further 
require that any single excluded period may not exceed three years and 
must include the time necessary for the borrower to resume enrollment 
at the next available regular enrollment period. Lastly, any borrower 
who is in a grace period when called or ordered to active duty is 
entitled to another six or nine-month grace period, as applicable, upon 
completion of the excluded period of service.
    The Secretary is modifying these statutory and regulatory 
requirements to exclude from a title IV borrower's initial grace 
period, any period, not to exceed three years, during which a borrower 
is an affected individual in this category. Any excluded period must 
include the time necessary for an affected individual in this category 
to resume enrollment at the next available enrollment period.

Borrowers in an ``In-School'' Period

    A title IV borrower is considered to be in an ``in-school'' status 
and is not required to make payments on a title IV loan that has not 
entered repayment as long as the borrower is enrolled at an eligible 
institution on at least a half-time basis. Under sections 428(b)(7)(A) 
and 464(c)(1)(A) of the HEA and 34 CFR 674.31(b)(2), 682.209(a), and 
685.207(b), (c), and (e)(2) and (3), when a borrower of a loan under 
the Federal Family Education Loan (FFEL) Program, the Direct Loan 
Program, or the Federal Perkins Loan Program ceases to be enrolled at 
an eligible institution on at least a half-time basis, the borrower is 
obligated to begin repayment of the loan after a six or nine-month 
grace period, depending on the title IV loan program under which the 
loan was made and the terms of the borrower's promissory note. The 
Secretary is modifying the statutory and regulatory requirements that 
obligate an ``in-school'' borrower who has dropped below half-time 
status to begin repayment if the borrower is an affected individual in 
this category, by requiring the holder of the loan to maintain the loan 
in an ``in-school'' status for a period not to exceed three years, 
including the time necessary for the borrower to resume enrollment in 
the next regular enrollment period, if the borrower is planning to go 
back to school.

Borrowers in an In-School, Graduate Fellowship, or Rehabilitation 
Training Program Deferment

    Under HEA sections 427(a)(2)(C)(i), 428(b)(1)(M)(i), 428B(a)(2) and 
(d)(1), 428C(b)(4)(C), 455(f)(2)(A), and 464(c)(2)(A)(i) and 34 CFR 
674.34(b)(1), 682.210(b)(1)(i), (ii), and (iii), 682.210(s)(2), (3), 
and (4), 685.204(b), 685.204(c)(1), 685.204(d), and 685.204(e), a title 
IV borrower is eligible for a deferment on a loan during periods after 
the commencement or resumption of the repayment period on the loan when 
the borrower is enrolled and in attendance as a regular student on at 
least a half-time basis (or full-time, if required by the terms of the 
borrower's promissory note) at an eligible institution; enrolled and in 
attendance as a regular student in a course of study that is part of a 
graduate fellowship program; engaged in an eligible rehabilitation 
training program; or, for Federal Perkins Loan borrowers, engaged in 
graduate or post-graduate fellowship-supported study outside the United 
States. The borrower's deferment period ends when the borrower no 
longer meets one of the above conditions. Under 34 CFR 685.204(c)(2), a 
Direct parent PLUS Loan borrower is eligible for a deferment during the 
time when the student on whose behalf the loan was obtained is enrolled 
on at least a half-time basis.
    The Secretary is waiving the statutory and regulatory eligibility 
requirements for this deferment for title IV borrowers who were 
required to interrupt a graduate fellowship or rehabilitation training 
program deferment, or who were in an in-school deferment but who left 
school, because of their status as an affected individual in this 
category. The holder of the loan is required to maintain the loan in 
the graduate fellowship, rehabilitation training program, or in-school 
deferment status for a period not to exceed three years, during which 
the borrower (or, in the case of an in-school deferment on a parent 
PLUS loan, the student on whose behalf the loan was obtained) is an 
affected individual in this category. This period includes the time 
necessary for the borrower to resume the graduate fellowship program, 
resume a rehabilitation training program, or resume enrollment in the 
next regular enrollment period if the borrower (or in the case of a 
parent PLUS loan, the student) returns to school.

Forbearance

    Under section 464(e) of the HEA and 34 CFR 674.33(d)(2), there is a 
three-year cumulative limit on the length of forbearances that a 
Federal Perkins Loan borrower can receive. To assist Federal Perkins 
Loan borrowers who are affected individuals in this category, the 
Secretary is waiving these statutory and regulatory requirements so 
that any forbearance based on a borrower's status as an affected 
individual in this category is excluded from the three-year cumulative 
limit.
    Under section 464(e) of the HEA and 34 CFR 674.33(d)(2) and (3), a 
school must receive a request and supporting documentation from a 
Federal Perkins Loan borrower before granting the borrower a 
forbearance, the terms of which must be in the form of a written 
agreement. The Secretary is waiving these statutory and regulatory 
requirements to require an institution to grant forbearance based on 
the borrower's status as an affected individual in this category for a 
one-year period, including a three-month ``transition period'' 
immediately following, without supporting documentation or a written 
agreement, based on the written or oral request of the borrower, a 
member of the borrower's family, or another reliable source. The 
purpose of the three-month transition period is to assist borrowers so 
that they will not be required to reenter repayment immediately after 
they are no longer affected individuals in this category. To grant the 
borrower forbearance beyond the initial 12- to 15-month period, 
supporting documentation from the borrower, a member of the borrower's 
family, or another reliable source is required.
    Under 34 CFR 674.33(d)(2) and 682.211(i)(1), a Perkins or FFEL 
borrower who requests forbearance because of a military mobilization 
must provide the loan holder with documentation showing that he or she 
is subject to a military mobilization. The Secretary is waiving this 
requirement to allow a borrower who is not otherwise eligible for the 
military service deferment under 34 CFR 682.210(t), and 674.34(h) to 
receive forbearance at the request of the borrower, a member of the 
borrower's family, or another reliable source for a one-year period, 
including a three-month transition period that immediately follows, 
without providing the loan holder with documentation. To grant the 
borrower forbearance beyond this period, documentation supporting the 
borrower's military mobilization must be submitted to the loan holder.

[[Page 4557]]

    The Secretary will apply the forbearance waivers and modifications 
in this section to loans held by the Department.

Collection of Defaulted Loans

    In accordance with 34 CFR part 674, subpart C--Due Diligence, and 
682.410(b)(6), schools and guaranty agencies must attempt to recover 
amounts owed from defaulted Federal Perkins Loan and FFEL borrowers, 
respectively. The Secretary is waiving the regulatory provisions that 
require schools and guaranty agencies to attempt collection on 
defaulted loans for the time period during which the borrower is an 
affected individual in this category and for a three-month transition 
period. The school or guaranty agency may stop collection activities 
upon notification by the borrower, a member of the borrower's family, 
or another reliable source that the borrower is an affected individual 
in this category. The school or guaranty agency must resume collection 
activities after the borrower has notified the school or guaranty 
agency that the affected individual status no longer applies and that 
the three-month transition period has expired. Alternatively, the 
school or guaranty agency may rely upon evidence that the borrower is 
receiving Imminent Danger Pay or Hostile Fire Pay (IDP/HFP) to 
determine the time frame during which collection should be suspended; 
collection may be suspended while the borrower is receiving IDP/HFP and 
for three months after that special pay ends. The loan holder must 
document in the loan file why it has suspended collection activities on 
the loan, and the loan holder is not required to obtain evidence of the 
borrower's status while collection activities have been suspended. The 
Secretary will apply the waivers described in this paragraph to loans 
held by the Department.

Fresh Start Initiative

    In March 2021, the Department directed guaranty agencies to halt 
collection efforts on defaulted loans to be consistent with the 
treatment of Direct Loans. On April 6, 2022, the Department announced 
that it would provide borrowers who defaulted on their Federal student 
loans prior to the COVID-19 pandemic with additional opportunities to 
get their loans out of default. This initiative, called ``Fresh Start'' 
is described in the Department's Notice of updated waivers and 
modifications of statutory and regulatory provisions published on June 
16, 2023 (88 FR 39360). Borrowers who take advantage of this 
opportunity to get their loans out of default will, as a result, regain 
eligibility for title IV, HEA Federal student aid, including Federal 
Pell Grants and campus-based aid like Federal Work-Study. The Fresh 
Start opportunity will remain available to previously defaulted 
borrowers for one year after the end of the COVID-19 pandemic student 
loan payment pause. Borrowers eligible for Fresh Start will have one 
year to make payment arrangements before being treated as defaulting on 
their debt and before their loans will be subject to further collection 
efforts. Fresh Start applies to a broader group of individuals than 
outlined in this Federal Register notice so for additional information 
regarding implementation of the Fresh Start Initiative, refer to 
Electronic Announcement (General 22-58) Information About Restored Aid 
Eligibility Under Fresh Start Initiative and Dear Colleague Letter GEN-
22-13 Federal Student Aid Eligibility for Borrowers with Defaulted 
Loans.

Service-Based Loan Cancellation

    Depending on the loan program, borrowers may qualify for loan 
cancellation if they are employed full-time in specified occupations, 
such as teaching or in law enforcement, or providing eligible volunteer 
service pursuant to sections 428J, 460(b)(1), and 465(a)(2)(A)-(M) and 
(3) of the HEA, and 34 CFR 674.53, 674.55, 674.56, 674.57, 674.58, 
674.60, 682.216, and 685.217. Generally, to qualify for loan 
cancellation, borrowers must perform uninterrupted, otherwise 
qualifying service for a specified length of time (for example, one 
year) or for consecutive periods of time, such as five consecutive 
years.
    For borrowers who are affected individuals in this category, the 
Secretary is waiving the requirements that apply to the various loan 
cancellations that such periods of service be uninterrupted or 
consecutive, if the reason for the interruption is related to the 
borrower's status as an affected individual in this category. 
Therefore, the service period required for the borrower to receive or 
retain a loan cancellation for which he or she is otherwise eligible 
will not be considered interrupted by any period during which the 
borrower is an affected individual in this category, including the 
three-month transition period. The Secretary will apply the waivers 
described in this paragraph to loans held by the Department.

Rehabilitation of Defaulted Loans

    A borrower of a Direct Loan or a FFEL Loan must make nine voluntary 
on-time, monthly payments over 10 consecutive months to rehabilitate a 
defaulted loan in accordance with section 428F(a) of the HEA and 34 CFR 
682.405(a)(2)(i) and 685.211(f)(1). Federal Perkins Loan borrowers must 
make nine consecutive, on-time monthly payments to rehabilitate a 
defaulted Federal Perkins Loan in accordance with section 464(h)(1)(A) 
of the HEA and 34 CFR 674.39(a)(2). To assist title IV borrowers who 
are affected individuals in this category, the Secretary is waiving the 
statutory and regulatory requirements that payments made to 
rehabilitate a loan must be consecutive or made over no more than 10 
consecutive months. Loan holders should not treat any payment missed 
during the time that a borrower is an affected individual in this 
category, or during the three-month transition period, as an 
interruption in the number of monthly, on-time payments required to be 
made consecutively, or the number of consecutive months in which 
payment is required to be made, for loan rehabilitation. 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 in the required series of 
payments. When the borrower is no longer an affected individual in this 
category, and the three-month transition period has expired, the 
required sequence of qualifying payments may resume at the point they 
were discontinued as a result of the borrower's status. The Secretary 
will apply the waivers described in this paragraph to loans held by the 
Department.

Reinstatement of Title IV Eligibility

    Under sections 428F(b) and 464(h)(2) of the HEA and under the 
definition of ``satisfactory repayment arrangement'' in 34 CFR 
668.35(a)(2), 674.2(b), 682.200(b), and 685.102(b), a defaulted title 
IV borrower may make six consecutive, on-time, voluntary, full, monthly 
payments to reestablish eligibility for title IV Federal student 
financial assistance. To assist title IV borrowers who are affected 
individuals in this category, the Secretary is waiving statutory and 
regulatory provisions that require the borrower to make consecutive 
payments to reestablish eligibility for title IV Federal student 
financial assistance. Loan holders should not 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

[[Page 4558]]

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 in the required series of payments. When the borrower is no 
longer an affected individual or in the three-month transition period 
for purposes of this document, the required sequence of qualifying 
payments may resume at the point they were discontinued as a result of 
the borrower's status. The Secretary will apply the waivers described 
in this paragraph to loans held by the Department.

Consolidation of Defaulted Loans

    Under the definition of ``satisfactory repayment arrangement'' in 
34 CFR 685.102(b), a borrower with a defaulted FFEL or Direct Loan may 
consolidate the defaulted loan into a Direct Consolidation Loan by 
making three consecutive, voluntary, on-time, monthly, full payments on 
the loan. The Secretary is waiving the regulatory requirement that such 
payments be consecutive. FFEL loan holders should not treat any payment 
missed during the time that a borrower is an affected individual in 
this category as an interruption in the three consecutive, voluntary, 
monthly, full, on-time payments required for establishing eligibility 
to consolidate a defaulted loan in the Direct Consolidation Loan 
Program. 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 
in the required series of payments. When the borrower is no longer an 
affected individual in this category or in the three-month transition 
period, the required sequence of qualifying payments may resume at the 
point they were discontinued as a result 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.

Annual Income Documentation Requirements for Direct Loan and FFEL 
Borrowers Under the Income-Based Repayment (IBR), Pay as You Earn 
(PAYE), Saving on a Valuable Education (SAVE), Formerly Known as 
Revised Pay as You Earn (REPAYE), and Income-Contingent Repayment (ICR) 
Plans

    Section 493C(c) of the HEA requires the Secretary to establish 
procedures for annually determining a borrower's eligibility for the 
IBR plan, including verification of a borrower's annual income and the 
annual amount due on the total amount of the borrower's loans. Section 
455(e)(1) of the HEA provides that the Secretary may obtain such 
information as is reasonably necessary regarding the income of a 
borrower for the purpose of determining the annual repayment obligation 
of the borrower under an ICR plan. Under current 34 CFR 682.215(e); 
685.209(a)(5), (b)(3)(vi), and (c)(4); and 685.221(e), borrowers 
repaying under the IBR, PAYE, SAVE, formerly known as REPAYE, or ICR 
plans must annually provide their loan holder with documentation of 
their income and family size so that the loan holder may, if necessary, 
adjust the borrower's monthly payment amount based on changes in the 
borrower's income or family size. Please note that, as of July 1, 2024, 
the application and annual recertification procedures for the IBR, 
PAYE, and SAVE plans will be located in Sec. Sec.  685.209(l) and 
682.215(e). Borrowers are required to provide information about their 
annual income and family size to the loan holder each year by a 
deadline specified by the holder. If a borrower who is repaying his or 
her loans under the IBR, PAYE, SAVE (formerly known as REPAYE), or ICR 
plans fails to provide the required information by the specified 
deadline, the borrower's monthly payment amount is adjusted and is no 
longer based on the borrower's income. This adjusted monthly payment 
amount is generally higher than the payment amount that was based on 
the borrower's income.
    The Secretary is waiving these statutory and regulatory provisions 
to require loan holders to maintain an affected borrower's payment at 
the most recently calculated IBR, PAYE, SAVE (formerly known as 
REPAYE), or ICR monthly payment amount for up to a three-year period, 
including a three-month transition period immediately following the 
three-year period, if the borrower's status as an affected individual 
in this category has prevented the borrower from providing 
documentation of updated income and family size by the specified 
deadline.
    Category 3: The Secretary is waiving or modifying the following 
provisions of title IV of the HEA and the Department's regulations for 
affected individuals who are serving on active duty or performing 
qualifying National Guard duty during a war or other military operation 
or national emergency.

Institutional Charges and Refunds

    The HEROES Act encourages institutions to provide a full refund of 
tuition, fees, and other institutional charges for the portion of a 
period of instruction that a student was unable to complete, or for 
which the student did not receive academic credit, because he or she 
was called up for active duty or for qualifying National Guard duty 
during a war or other military operation or national emergency. 
Alternatively, the Secretary encourages institutions to provide a 
credit in a comparable amount against future charges.
    The HEROES Act also recommends that institutions consider providing 
easy and flexible reenrollment options to students who are affected 
individuals in this category. At a minimum, an institution must comply 
with the requirements of 34 CFR 668.18, which addresses the readmission 
requirements for service members serving for a period of more than 30 
consecutive days under certain conditions. Some institutions must also 
provide protections to service members who are absent for shorter 
periods of service, under the Principles of Excellence (Executive Order 
13607, issued April 27, 2012). More information is available at: 
https://www.va.gov/education/choosing-a-school/principles-of-excellence/.
    Of course, an institution may provide such treatment to affected 
individuals other than those who are called up to active duty or for 
qualifying National Guard duty during a war or other military operation 
or national emergency. Before an institution makes a refund of 
institutional charges, it must perform the required Return of Title IV 
Funds calculations based upon the originally assessed institutional 
charges. After determining the amount that the institution must return 
to the title IV Federal student aid programs, any reduction of 
institutional charges may consider the funds that the institution is 
required to return. In other words, we do not expect that an 
institution would both return funds to the Federal programs and also 
provide a refund of those same funds to the student.
    Accessible Format: On request to one of the program contact persons 
listed under FOR FURTHER INFORMATION CONTACT, individuals with 
disabilities can obtain this document in an accessible format. The 
Department will provide the requestor with an accessible format that 
may include Rich Text Format (RTF) or text format (TXT), a thumb drive, 
an MP3 file, braille, large print, audiotape, or compact disc or other 
accessible format.
    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

[[Page 4559]]

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, 1098aa.

Miguel A. Cardona,
Secretary of Education.
[FR Doc. 2024-01227 Filed 1-23-24; 8:45 am]
BILLING CODE 4000-01-P


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