65632 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

DEPARTMENT OF EDUCATION

34 CFR Parts 668, 682, 685, and 690

RIN 1845–AA17

Student Assistance General

Provisions, Federal Family Education

Loan Program, William D. Ford Federal

Direct Loan Program, and Federal Pell

Grant Program

AGENCY: Office of Postsecondary

Education, Department of Education.

ACTION: Final regulations.

SUMMARY: The Secretary amends the

Student Assistance General Provisions,

Federal Family Education Loan (FFEL)

Program, William D. Ford Federal Direct

Loan (Direct Loan) Program, and Federal

Pell Grant Program regulations. In these

final regulations, the requirements for

the loan default reduction and

prevention measures are moved to a

new subpart and revised for clarity and

consistency. The Secretary also makes

various substantive changes to these

requirements.

DATES: These regulations are effective

July 1, 2001.

FOR FURTHER INFORMATION CONTACT:

Kenneth Smith, U.S. Department of

Education, 400 Maryland Avenue, SW.,

ROB–3, room 3045, Washington, DC

20202–5447. Telephone: (202) 708–

8242. If you use a telecommunications

device for the deaf (TDD), you may call

the Federal Information Relay Service

(FIRS) at 1–800–877–8339.

Individuals with disabilities may

obtain this document in an alternative

format (e.g., Braille, large print,

audiotape, or computer diskette) on

request to the contact person listed in

the preceding paragraph.

SUPPLEMENTARY INFORMATION: On August

2, 2000, we published a notice of

proposed rulemaking (NPRM) for the

Student Assistance General Provisions,

FFEL Program, Direct Loan Program,

and Federal Pell Grant Program in the

Federal Register (65 FR 47590). In the

preamble to the NPRM, we discussed on

pages 47591 through 47601 the major

changes proposed in that document.

That discussion will not be repeated

here. To fully understand the changes,

we strongly encourage a review of the

preamble of the NPRM. The following

list summarizes those major changes:

• Moving the regulations governing

the calculation of cohort default rates

and challenges to those rates that were

in previous § 668.17 to a new subpart M

of part 668, revising the regulations for

clarity and consistency, and removing

Appendix D to part 668.

• In § 668.184, providing detailed

regulations for determining an

institution’s cohort default rate after

certain types of institutional

restructuring.

• In §§ 668.185(c) and 668.195,

amending certain regulations for a

participation rate index challenge or

appeal.

• In § 668.187(a)(1), imposing a loss

of participation from the FFEL and

Direct Loan programs against an

institution having a cohort default rate

greater than 40 percent, without

requiring the use of a proceeding under

subpart G of part 668.

• In § 668.187(a)(2), imposing a loss

of participation in the FFEL Program

against an institution with three

consecutive cohort default rates of 25

percent or greater, even if Direct Loans

are included in those cohort default

rates, without the use of a proceeding

under subpart G of part 668.

• In § 668.188, providing for the

application of an institution’s loss of

eligibility to a related or successor

institution when certain criteria are met,

to prevent an institution from evading

the consequences of cohort default rates.

• In § 668.192, allowing an institution

that is provisionally certified under

§ 668.16(m) to submit an erroneous data

appeal.

• In § 668.193, allowing all

institutions to appeal their most recent

cohort default rates on the basis of

improper loan servicing or collection.

• In § 668.194, restoring certain

eligibility criteria, inadvertently omitted

in previous regulations, and revising

submission requirements for an

economically disadvantaged appeal.

• In § 668.196, providing for the

submission of an average rates appeal by

an institution that is subject to loss of

participation based on a cohort default

rate greater than 40 percent.

• In § 668.197, providing for the

submission of a thirty-or-fewer

borrowers appeal by an institution that

is subject to loss of participation based

on a cohort default rate greater than 40

percent.

• In § 668.198, exempting a special

institution that is in compliance with

this section from a loss of eligibility

based on a cohort default rate greater

than 40 percent.

These final regulations contain

several significant changes from the

NPRM. We fully explain these changes

in the Analysis of Comments and

Changes elsewhere in this preamble.

Effect of Regulations on Rights or

Obligations

These final regulations will be a new

subpart M of part 668 of the

Department’s regulations. This new

subpart is a reorganization of provisions

governing the cohort default rate

calculation and challenge process,

which are currently in 34 CFR 668.17.

As discussed elsewhere in this

preamble, a few of these provisions have

also been revised. Generally, these

changes do not affect procedural or

substantive rights of any party.

However, there are a few instances in

which those rights have been modified.

To the extent that an institution has or

had a right or obligation under § 668.17

before the effective date of these

regulations, the institution’s exercise or

failure to exercise that right or meet that

obligation is binding after the effective

date of these regulations. These final

regulations govern all rights and

obligations that may apply to an

institution or other party after their

effective date.

Analysis of Comments and Changes

The regulations in this document

were developed through the use of

negotiated rulemaking. Section 492 of

the Higher Education Act of 1965, as

amended (HEA) requires that, before

publishing any proposed regulations to

implement programs under Title IV of

the HEA, the Secretary obtain public

involvement in the development of the

proposed regulations. After obtaining

advice and recommendations, the

Secretary must conduct a negotiated

rulemaking process to develop the

proposed regulations.

These regulations were published in

proposed form on August 2, 2000,

following the completion of the

negotiated rulemaking process. The

Secretary invited comments on the

proposed regulations by September 18,

2000, and 17 comments were received.

An analysis of the comments and of the

changes in the regulations since

publication of the NPRM follows.

We discuss substantive issues under

the sections of the regulations to which

they pertain. Generally, we do not

address technical and other minor

changes and suggested changes the law

does not authorize the Secretary to

make.

General

Comments: In general, the

commenters supported the proposed

regulations and commended us for our

efforts to make the requirements for

cohort default rates clearer and more

consistent. One commenter specifically

supported the removal of the previous

Appendix D to part 668, stating that it

is important to give institutions the

flexibility they need to manage cohort

default rates.

Discussion: We appreciate the

commenters’ support for the proposed

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65633

regulations and the work of the

members of the negotiated rulemaking

committee that resulted in the proposed

regulations.

Changes: None.

Provisional Certification

(§ 668.16(m)(2)(i))

Comments: None.

Discussion: As we stated in the

preamble to the NPRM (65 FR 47599),

during negotiated rulemaking we agreed

to change the regulations to allow

institutions to submit erroneous data

appeals to contest provisional

certification under § 668.16(m). We have

subsequently reviewed the processes for

implementing this new appeal and have

determined that there is no need to

provisionally certify every institution

that has one cohort default rate that falls

between 25 percent and 40 percent. In

some cases, it may be just as effective to

apply other current safeguards to

address this issue at the institution and

to protect the Federal Government’s

interest. Improved reporting practices, a

holistic case management approach, the

availability of technical assistance, and

other current safeguards may be

adequate to address, in some cases,

issues associated with an excessive

cohort default rate.

Changes: We have revised

§ 668.16(m)(2)(i) to provide for the

Secretary’s discretion in provisionally

certifying an institution under that

paragraph.

Submission Deadlines (§ 668.182(c))

Comments: Three commenters agreed

with our use of a consistent definition

for ‘‘days’’ throughout these regulations,

instead of using ‘‘calendar days’’ as a

measure for some requirements and

‘‘working days’’ as a measure for other

requirements. One commenter agreed

with our proposal to define ‘‘days’’ as

‘‘calendar days’’ because ‘‘calendar

days’’ is easier to understand, while the

concept of a ‘‘working day’’ may lend

itself to different interpretations and is

more difficult to monitor.

However, one commenter questioned

whether the change from calendar days

to working days would allow

institutions less time to comply with the

regulations. Another commenter

recommended that the regulations

define ‘‘days’’ as ‘‘working days’’

because it would allow institutions

more time to submit requests and

appeals during the cohort default rate

process. This commenter stated that

requiring an institution to submit a

completed appeal within 30 calendar

days may place an undue burden on

institutions that are also trying to

perform the other administrative

functions required for participation in

the Title IV, HEA programs.

Discussion: In general, these

regulations allow institutions the same

amount of time, or more, to submit

challenges, requests for adjustments, or

appeals, when compared to previous

regulations. The only exception is if an

institution has to pay a fee to a data

manager during a loan servicing appeal,

under § 668.193(c)(5). Previously, an

institution had 15 working days to pay

this fee; under the new regulations, an

institution has 15 calendar days to pay

this fee.

We do not agree that the term ‘‘days’’

should mean ‘‘working days’’ in subpart

M of part 668. We also do not agree that

it is unreasonable to require an

institution to submit a completed appeal

within 30 calendar days. In fact, it is our

experience that almost every institution

meets the deadline.

Changes: None.

Entering Repayment on Federal

Supplemental Loans for Students (SLS)

Program Loans (§ 668.182(f)(2))

Comments: One commenter stated

that there were inaccuracies in proposed

§ 668.182(f)(2) in the definition of the

date that a Federal SLS loan enters

repayment for the purposes of

calculating a cohort default rate.

Proposed § 668.182(f)(2)(i) stated that

a Federal SLS loan is considered to

enter repayment at the same time as the

borrower’s Federal Stafford loan enters

repayment, if the borrower received a

Federal Stafford loan for the same loan

period. The commenter noted that 34

CFR 682.200 and 682.209(a)(2)(iii) do

not require that the borrower receive the

Federal SLS and Federal Stafford loans

for the same loan period. Instead, under

those sections, the Federal SLS and

Federal Stafford loans must be obtained

during the same period of continuous

enrollment, which may include one or

more loan periods, for the Federal SLS

loan to enter repayment at the same

time as the Federal Stafford loan.

In addition, under proposed

§ 668.182(f)(2)(ii), for all other purposes,

a Federal SLS loan would be considered

to enter repayment on the day after the

student ceased to be enrolled at the

institution on at least a half-time basis

in an educational program leading to a

degree, certificate, or other recognized

educational credential. The commenter

stated that loans do not enter repayment

because a student ceases to be enrolled

at least half-time at a particular

institution; they enter repayment

because the student ceases to be

enrolled at least half-time. A student

might continue his or her studies at

another institution, and the loans would

not enter repayment until the student

ceased to be enrolled at least half-time

at that second institution.

Discussion: We agree with the

commenter.

Changes: We have revised

§ 668.182(f)(2) to correct the errors the

commenter described.

Entering Repayment on Consolidation

Loans (§ 668.183(b))

Comments: None.

Discussion: After further review, we

have concluded that the language in

proposed §§ 668.182(f)(3)(ii) and

668.183(b)(2), which describes the

inclusion of loans made under the

Federal Consolidation Loan Program

and the Federal Direct Consolidation

Loan Program in the calculation of

cohort default rates, is unnecessarily

complex.

Changes: We have removed proposed

§§ 668.182(f)(3)(ii) and 668.183(b)(2)

and revised § 668.183(b)(1) to clarify the

inclusion of consolidation loans in the

calculation of a cohort default rate.

Calculation of Cohort Default Rates for

Proprietary, Non-degree-granting

Institutions (§ 668.183(c)(1)(iii))

Comments: Under § 668.183(c)(1)(iii),

certain loans that are repaid under the

Direct Loan Program’s income

contingent repayment plan are

considered to be in default for the

purpose of calculating a non-degreegranting proprietary institution’s cohort

default rate. As noted in the preamble

to the NPRM (65 FR 47591), this

provision does not make any change to

current regulations and was presented

to the negotiating committee only as

part of the overall restructuring of the

regulations.

One commenter agreed that these

regulations are appropriate and stated

that degree-granting institutions with

historically low default rates should not

be subject to this regulatory provision.

Seven commenters argued that these

regulations are inappropriate. They

claimed that these regulations unfairly

target non-degree-granting proprietary

institutions. Several commenters argued

that if these requirements are

appropriate for non-degree-granting

proprietary institutions, then they

should be appropriate for, and applied

to, all types of institutions.

The commenters believed that there is

not a significant risk that an institution

could have a low cohort default rate

even though a large proportion of its

former students are making only

minimal or no payments under the

income contingent repayment plan.

They did not believe that this risk is an

adequate reason for the special

65634 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

treatment of loans being repaid through

income contingent repayment included

in the proposed regulations. They noted

that, since this requirement applies only

to borrowers who are repaying Direct

Loans, it may make some institutions

reluctant to participate in the Direct

Loan Program or to counsel borrowers to

apply for Direct Consolidation Loans.

The commenters also argued that this

provision is contrary to the purpose of

the Direct Loan Program’s income

contingent repayment plan. They

contended that this repayment plan was

designed to help students repay their

loans, even if the students are starting

new careers or are unable to work full

time, and that this repayment plan is a

legitimate option for all eligible

borrowers.

Discussion: We appreciate the

commenters’ concerns, but continue to

believe that this is a potential area for

abuse. Without this provision, an

institution could have a low cohort

default rate, even though a large

proportion of its former students are

making only minimal or no payments

on their loans. Though an institution

cannot require all its borrowers to

choose one repayment plan, it can,

through its counseling, increase the

likelihood of a borrower’s choosing to

repay under the Direct Loan Program’s

income contingent repayment plan.

We also continue to believe that this

provision should apply only to nondegree-granting proprietary institutions.

As we stated in the preamble to the

NPRM, our experience and data show

that student borrowers at non-degreegranting proprietary institutions are at a

higher risk of default than other student

borrowers. The cohort default rates of

non-degree-granting proprietary

institutions are, on average, consistently

higher than those of other institutions.

Since non-degree-granting proprietary

institutions provide students with

education or training needed to secure

employment, a borrower’s ability to

make substantial payments on a loan

reflects the value of the education or

training provided by the institution in

the marketplace.

Changes: None.

Reinsurance and Default

(§ 668.183(c)(2)(ii))

Comments: None.

Discussion: Proposed

§ 668.183(c)(2)(ii) stated that a borrower

is not considered to be in default based

on a loan that is no longer reinsured by

us. This statement is not correct. A loan

that is no longer reinsured by us is

removed from the cohort completely:

the borrower is neither counted in the

cohort nor considered to be a defaulter.

However, this is not the situation that

we intended to address in this

paragraph, and since it is inherent in the

cohort default rate process that a loan

must be reinsured by us to be included

in the calculation, it does not need to be

stated explicitly in regulations.

We had intended for

§ 668.183(c)(2)(ii) to address situations

in which a lender repurchases a loan,

before the end of the fiscal year

immediately following the fiscal year in

which it entered repayment, having

recognized that the lender’s claim for

insurance on the loan was submitted or

paid in error. In those situations, the

loan is not considered to be in default.

Changes: We have revised

§ 668.183(c)(2)(ii) to provide that, for the

purposes of calculating a cohort default

rate, a borrower is not considered to be

in default on certain repurchased loans.

Change in Status and Change in

Institutional Structure or Identity

(§ 668.184(a)(3))

Comments: None.

Discussion: Section 668.184 describes

how an institution’s cohort default rate

is determined after certain changes in

institutional structure or identity. Under

§ 668.188, a loss of eligibility imposed

against one institution is also applied to

one or more other institutions, in certain

circumstances, following a change in

institutional structure or identity.

Because these separate provisions both

deal with changes in institutional

structure or identity, we believe that,

without clarification, there may be

confusion about whether both

provisions could apply to the same

institution based on the same

circumstance.

The application of one of these

sections to an institution does not

preclude the application of the other

section to that same institution based on

the same circumstance. The sections are

separate requirements. A determination

of an institution’s cohort default rate

under § 668.184 does not preclude the

application of a loss of eligibility under

§ 668.188, and the application of a loss

of eligibility under § 668.188 does not

preclude the determination of an

institution’s cohort default rate under

§ 668.184.

Changes: We have renumbered

proposed § 668.184(a)(3) as

§ 668.184(a)(4) and added a new

§ 668.184(a)(3) to clarify that a change of

status that affects the calculation of an

institution’s cohort default rate under

§ 668.184 may also affect that

institution’s eligibility to participate in

Title IV, HEA programs under § 668.187

or § 668.188.

Data Manager’s Ability To Deny a

Challenge, Request for Adjustment, or

Appeal (§§ 668.185(a)(4) and

668.189(c))

Comments: Three commenters noted

that proposed §§ 668.185(a)(4) and

668.189(c) state that the Department

may deny a school’s challenge, request

for adjustment, or appeal if an

institution does not comply with the

requirements in the Cohort Default Rate

Guide. The commenters suggested that

guarantors, as data managers, should

have the same latitude to deny noncompliant challenges and appeals as the

Department.

Discussion: Only the Secretary may

deny an institution’s challenge, request

for adjustment, or appeal. Data

managers do not have the authority to

make this determination. If a data

manager receives an institution’s

request for information during the

cohort default rate process but is unable

to respond because the request lacks

necessary information or is not in the

required format, then the data manager

must ask the institution to submit the

missing information or to submit the

request in the required format. However,

there is no change to the timeframe for

the institution’s submission; the

institution must send its corrected

request for information to the data

manager within the original timeframe.

Changes: None.

Request for Loan Record Detail Report

(§ 668.186(c)(1))

Comments: None.

Discussion: In proposed

§ 668.186(c)(1), awkward language

could have been read to mean that an

institution could not request less than

two loan record detail reports at a time.

Most institutions will only need to

request one loan record detail report at

a time.

Changes: We have revised

§ 668.186(c)(1) to clarify that an

institution may request any loan record

detail report that lists loans included in

its cohort default rate calculation.

Loss of Participation for Institutions

With Cohort Default Rates Exceeding 40

Percent (§ 668.187(a)(1))

Comments: One commenter

supported changes in § 668.187(a)(1),

stating that the new regulations would

provide institutions that have one

cohort default rate over 40 percent with

the same opportunities to challenge,

request an adjustment, or appeal as

those afforded to institutions with three

consecutive cohort default rates of 25

percent or more. The commenter stated

that the new regulations provide a more

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equitable process for schools with one

cohort rate over 40 percent.

Discussion: We agree with the

commenter.

Changes: None.

Preventing Evasion of the Consequences

of Cohort Default Rates (§ 668.188(a)(2))

Comments: In the preamble to the

NPRM (65 FR 47597), we stated that, in

general, an institution is offering an

educational program at ‘‘substantially

the same address’’ as an ineligible

institution if its site is the same as the

ineligible institution’s site or is

physically located close enough to the

ineligible institution’s site to

demonstrate that the educational

programs it provides are intended to

serve the same population.

Four commenters felt that this

statement was an overly broad

interpretation of the regulatory criterion,

and they asked us to revise our

interpretation in this preamble. Some

commenters contended that this

interpretation would be impossible to

apply consistently, because it would

require an extensive analysis of the

population served by the institutions.

The commenters also noted that the

statement in the preamble to the NPRM

could be read to suggest that we will

treat institutions that are located miles

apart as being located at ‘‘substantially

the same address.’’ Three commenters

stated that, as distance learning becomes

more accepted for all or parts of a

program, any school that uses

computerized instruction over the

internet could be considered to be

serving the same population.

The commenters argued that

‘‘substantially the same address’’ should

refer to the same building, an adjacent

building, the same block, across the

street, etc. They stated that these were

the examples offered during negotiated

rulemaking, to gain consensus for this

requirement, and that the consensus

achieved during negotiated rulemaking

did not include the broad interpretation

they believed was reflected in the

preamble to the NPRM.

Discussion: The purpose of § 668.188

is to keep institutions from evading the

consequences of their cohort default

rates through the use of measures such

as branching, consolidation, change of

ownership or control, or any similar

devices. Limiting the interpretation of

‘‘substantially the same address’’ to the

specific locations the commenters

suggest would not be appropriate for

many circumstances. An institution that

was able to relocate outside those

specific parameters while continuing to

serve the same population of students

could, in effect, continue to function as

the same institution and evade the

consequences of its cohort default rates.

For example, after Institution A

becomes ineligible to participate in the

FFEL and Direct Loan programs, its

owner changes Institution A’s name to

Institution B and moves it 10 blocks

away from Institution A’s site.

Institutions A and B are located in a

small city, where no other institutions

provide the same type of educational

programs, and they serve the same

population of students. One week after

Institution A becomes ineligible,

Institution B opens for business with the

same owner and staff. Under the

interpretation that the commenters

suggest, Institution A’s prior loss of

eligibility would not be applied to

Institution B because their sites are

located 10 blocks apart rather than in

adjacent buildings, on the same block,

across the street, etc.

This result does not serve the goals of

section 435(m)(3) of the HEA, which

these regulations are intended to

implement. In the example, Institution

B was created from Institution A merely

by changing the name and location. The

institutions are owned by the same

person, and since they are located in a

small city, they provided the same

educational programs to the same

population of students. It is clear that

the change in status was instituted in

order to evade the consequences of

Institution A’s cohort default rates, and

also that Institution A is continuing to

function as Institution B. In this case,

limiting the interpretation of

‘‘substantially the same address’’ to the

specific locations the commenters

mention would only prompt the owner

to locate Institution B at least one

building beyond that narrowly-defined

area. It would not prevent Institution B

from evading the consequences of

Institution A’s cohort default rates.

During the negotiated rulemaking

discussions, we did not intend to limit

the interpretation of this provision to a

specific geographical area. If we had

intended to create a narrowly-defined

rule, we would have defined that

geographical area specifically in the

regulatory language, rather than using

the more general term, ‘‘substantially

the same address.’’ The statement

included in the preamble to the NPRM

was intended to provide an explanation

of the circumstances under which that

term could extend further than a

narrowly-defined geographical area.

We recognize that this approach may

result in some uncertainty among

institutions contemplating various

changes in status. For this reason, a

procedure is included in these

regulations for institutions to make

inquiries to us. If an institution is

undergoing a change in institutional

structure or identity and is unsure

whether its site is located at

‘‘substantially the same address’’ as

another institution’s site, it may contact

us for an initial determination under

§ 668.188(d).

Changes: None.

Initial Determination of the Effect of an

Anticipated Change on an Institution’s

Eligibility (§ 668.188(d))

Comments: None.

Discussion: Proposed § 668.188(d)

encourages an institution to contact us

for an initial determination of the effect

of an anticipated change on the

institution’s eligibility. As written, the

proposed regulations did not specify the

format for the institution’s request or for

our response. To ensure that an initial

determination is adequately

documented, both the institution’s

request for the initial determination and

our response need to be in writing.

Changes: We have revised

§ 668.188(d) to require institutions’

requests for initial determinations and

our responses to be in writing.

Requirements for Data Managers’

Responses (§ 668.189(e)(2))

Comments: None.

Discussion: Proposed § 668.189(e)(2)

stated that correspondence sent to us by

a data manager as part of the cohort

default rate process ‘‘should’’ be in a

format acceptable to us. On further

consideration, however, we have

determined that the use of the word

‘‘should’’ created an ambiguity. The

paragraph did not specify whether it

required or merely encouraged data

managers to send us correspondence in

a format acceptable to us. This

ambiguity needs to be resolved.

The word ‘‘should’’ was added to

§ 668.189(e)(2) during negotiations.

Non-Federal negotiators asked us to

change proposed language, which

provided that the data ‘‘must be in a

format acceptable to us,’’ to ‘‘should be

in a format acceptable to us.’’ They

made this request so the requirement for

data managers would be less rigid and

more similar to requirements for

institutions, under § 668.189(c), which

state that we ‘‘may’’ (instead of ‘‘will’’)

deny an institution’s request for

adjustment or appeal if it does not meet

certain requirements.

On further consideration, however,

we have determined that changing the

language did not make the provisions

similar, since an institution risks the

denial of its appeal if its request is not

in an acceptable format. In contrast, a

guaranty agency would not be subject to

65636 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

any consequence for not providing data

in an acceptable format.

Changes: We have revised

§ 668.189(e)(2) to clarify the

requirement for data managers by

making it more similar to the

corresponding requirement for

institutions, under § 668.189(c). The

revised regulations allow guaranty

agencies some flexibility, but they also

allow the Secretary to require a guaranty

agency to provide data in a specified

format.

Submission of Erroneous Data Appeals

(§ 668.192(a)(2))

Comments: None.

Discussion: Proposed § 668.192(a)(2)

did not fully explain the circumstances

under which an institution may submit

an erroneous data appeal. The proposed

regulations stated that an institution

may submit an erroneous data appeal if

a comparison of its loan record detail

reports, for the draft and official cohort

default rates, shows that certain data

have been newly included, excluded, or

otherwise changed. However, in order

for an institution to submit an erroneous

data appeal for that new data, it must

also dispute the data’s accuracy. Though

this requirement is included in

§ 668.192(c), as it relates to our

determination on an erroneous data

appeal, it also needs to be clearly stated

for institutions in § 668.192(a)(2).

Changes: We have revised

§ 668.192(a)(2) to more clearly reflect

the criteria for an erroneous data appeal.

Requirements for Submitting Loan

Servicing Appeals (§ 668.193(c)(2))

Comments: None.

Discussion: Under proposed

§ 668.193(c)(2), an institution that is

requesting loan servicing records would

send the data manager the ‘‘list of

students that we provided to you.’’ This

phrase refers to the ‘‘loan record detail

report,’’ which is defined in

§ 668.182(h). To avoid confusion, we

have decided to use the term ‘‘loan

record detail report’’ in § 668.193(c)(2).

Changes: In § 668.193(c)(2), we have

changed ‘‘list of students that we

provided to you’’ to ‘‘loan record detail

report.’’

Summaries of Eligibility and

Submission Requirements for

Challenges, Adjustments, and Appeals

(Appendix A to Subpart M of Part 668)

Comments: After the NPRM was

published, we sent a formatted copy of

the proposed Appendix A to a focus

group comprised of eight

representatives of the financial aid

community. We asked for their

comments on the usefulness and

understandability of the tables in

Appendix A. Three commenters

responded to our request. Although the

commenters appeared to generally

understand the tables, their responses

identified certain areas in which the

tables and their introductions need to be

improved.

Discussion: We appreciate the

commenters’ help and have accepted

most of their suggestions.

Changes: We have revised the first

table, under ‘‘I. Summary of Submission

Eligibility,’’ so that it contains a ‘‘Yes’’

or a ‘‘No’’ in each cell, and we have

reformatted the table so that its

information is arranged and identified

more consistently. In the second table,

under ‘‘II. Summary of Submission

Deadlines,’’ we have made several

minor formatting and text changes and

have rewritten the introductory

language to more clearly specify the

starting date for each timeframe

described in the table, including the

starting dates for timeframes when an

action is not always required (identified

in the table by a dotted border).

However, we did not make all of the

changes that the commenters suggested:

• Instead of removing the information

associated with the draft cohort default

rate process from the first table and

adding a separate table for that

information, we have specified within

the first table that sanctions are never

based on draft cohort default rates.

• We have not included page

numbers with citations. It would be

impossible to keep the page numbers

updated so that they would always

identify the text as it is first printed in

the Federal Register and subsequently

printed in each year’s version of the

Code of Federal Regulations.

• We have not re-ordered the

columns in the second table so that

challenges, adjustments, and appeals are

presented in the order of their

appearance in the regulations. When

printed in the Code of Federal

Regulations, this table will be divided in

half and printed on facing pages. If the

columns were arranged in the order of

the requirements’ appearance in the

regulations, the columns for §§ 668.191

and 668.192 would be printed on

different pages, and it would not be

possible to note their common

submission requirements.

• We have not included definitions of

the terms ‘‘you’’, ‘‘we’’, and ‘‘data

manager’’ in Appendix A. This

appendix will be published in the Code

of Federal Regulations as part of subpart

M of part 668. It will not be separated

from this subpart by other regulations or

appendices, so there is no need to repeat

these definitions.

• Instead of explaining in the second

table the reason that a school would not

receive a loan record detail report with

its cohort default rate, we have included

this information as an example in the

introductory language for the table.

There is no space in the table to insert

this explanation.

Executive Order 12866

We have reviewed these final

regulations in accordance with

Executive Order 12866. Under the terms

of the order we have assessed the

potential costs and benefits of this

regulatory action.

The potential costs associated with

the final regulations are those resulting

from statutory requirements and those

we have determined to be necessary for

administering these programs effectively

and efficiently.

In assessing the potential costs and

benefits—both quantitative and

qualitative—of these final regulations,

we have determined that the benefits of

the regulations justify the costs.

We have also determined that this

regulatory action does not unduly

interfere with State, local, and tribal

governments in the exercise of their

governmental functions.

We summarized the potential costs

and benefits of these final regulations in

the preamble to the NPRM (65 FR

47590).

Paperwork Reduction Act of 1995

The Paperwork Reduction Act of 1995

does not require you to respond to a

collection of information unless it

displays a valid Office of Management

and Budget (OMB) control number. We

display the valid OMB control number

assigned to the collection of information

in these final regulations at the end of

the affected sections of the regulations.

Intergovernmental Review

The Federal Supplemental

Educational Opportunity Grant Program

and the Leveraging Educational

Assistance Partnership are subject to

Executive Order 12372 and the

regulations in 34 CFR part 79. One of

the objectives of the Executive order is

to foster an intergovernmental

partnership and a strengthened

federalism by relying on processes

developed by State and local

governments for coordination and

review of proposed Federal financial

assistance.

In accordance with the order, we

intend this document to provide early

notification of our specific plans and

actions for these programs.

The Federal Family Education Loan,

Federal Supplemental Loans for

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65637

Students, Federal Work-Study, Federal

Perkins Loan, Federal Pell Grant, and

William D. Ford Federal Direct Loan

programs are not subject to Executive

Order 12372 and the regulations in 34

CFR part 79.

Assessment of Educational Impact

In the NPRM we requested comments

on whether the proposed regulations

would require transmission of

information that any other agency or

authority of the United States gathers or

makes available.

Based on the response to the NPRM

and on our review, we have determined

that these final regulations do not

require transmission of information that

any other agency or authority of the

United States gathers or makes

available.

Electronic Access to This Document

You may view this document in text

or Adobe Portable Document Format

(PDF) on the Internet at the following

sites:

http://ocfo.ed.gov/fedreg.htm

http://ifap.ed.gov/dev_csb/new/

home.nsf

To use PDF you must have Adobe

Acrobat Reader, which is available free

at the first of the previous sites. If you

have questions about using PDF, call the

U.S. Government Printing Office (GPO),

toll free, at 1–888–293–6498; or in the

Washington, DC, area at (202) 512–1530.

Note: The official version of this document

is the document published in the Federal

Register. Free Internet access to the official

edition of the Federal Register and the Code

of Federal Regulations is available on GPO

Access at: http://www.access.gpo.gov/nara/

index.html.

(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;

84.032 Federal Supplemental Loans for

Students Program; 84.033 Federal WorkStudy Program; 84.038 Federal Perkins Loan

Program; 84.063 Federal Pell Grant Program;

84.069 Leveraging Educational Assistance

Partnership; and 84.268 William D. Ford

Federal Direct Loan Program)

List of Subjects

34 CFR Part 668

Administrative practice and

procedure, Colleges and universities,

Consumer protection, Education, Grant

programs—education, Loan programs—

education, Reporting and recordkeeping

requirements, Student aid, Vocational

education.

34 CFR Parts 682 and 685

Administrative practice and

procedure, Colleges and universities,

Loan programs—education, Reporting

and recordkeeping requirements,

Student aid, Vocational education.

34 CFR Part 690

Colleges and universities, Education

of disadvantaged, Grant programs—

education, Reporting and recordkeeping

requirements, Student aid.

Dated: October 24, 2000.

Richard W. Riley,

Secretary of Education.

For the reasons discussed in the

preamble, the Secretary amends parts

668, 682, 685, and 690 of title 34 of the

Code of Federal Regulations as follows:

PART 668—STUDENT ASSISTANCE

GENERAL PROVISIONS

1. The authority citation for Part 668

is amended to read as follows:

Authority: 20 U.S.C. 1001, 1002, 1003,

1085, 1088, 1091, 1092, 1094, 1099c, and

1099c–1, unless otherwise noted.

§ 668.14 [Amended]

2. In § 668.14, paragraph (b)(15)(iii) is

removed.

3. Section 668.16 is amended—

A. In paragraph (m)(1), by removing

‘‘an FFEL Program cohort default rate, a

Direct Loan cohort rate, or where

applicable, a weighted average cohort

rate’’ and adding, in its place, ‘‘a cohort

default rate’’.

B. In paragraph (m)(1)(i), by removing

‘‘As defined in § 668.17’’ and adding, in

its place, ‘‘Calculated under subpart M

of this part’’.

C. By revising paragraph (m)(2).

§ 668.16 Standards of administrative

capability.

* * * * *

(m) * * *

(2)(i) However, if the Secretary

determines that an institution’s

administrative capability is impaired

solely because the institution fails to

comply with paragraph (m)(1) of this

section, the Secretary allows the

institution to continue to participate in

the Title IV, HEA programs but may

provisionally certify the institution in

accordance with § 668.13(c); and

(ii) The institution may appeal the

loss of full participation in a Title IV,

HEA program under paragraph (m)(1) of

this section by submitting an erroneous

data appeal in writing to the Secretary

in accordance with and on the grounds

specified in subpart M of this part;

* * * * *

§ 668.17 [Removed and reserved]

4. Section 668.17 is removed and

reserved.

§ 668.26 [Amended]

5. In § 668.26, paragraph (a)(6) is

amended by removing ‘‘§ 668.17(c)’’ and

adding, in its place, ‘‘subpart M of this

part’’.

§ 668.46 [Amended]

6. In § 668.46, paragraph (c)(7) is

amended by removing ‘‘Appendix E to

this part’’, and adding, in its place,

‘‘appendix A to this subpart’’.

7. Section 668.85 is amended—

A. By revising paragraph (b)(1)(ii).

B. In paragraph (b)(3), by removing

the third sentence.

§ 668.85 Suspension proceedings.

* * * * *

(b) * * *

(1) * * *

(ii) Specifies the proposed effective

date of the suspension, which is at least

20 days after the date of mailing of the

notice of intent;

* * * * *

8. Section 668.86 is amended—

A. By revising paragraph (b)(1)(ii).

B. In paragraph (b)(3), by removing

the third sentence.

§ 668.86 Limitation or termination

proceedings.

* * * * *

(b) * * *

(1) * * *

(ii) Specifies the proposed effective

date of the limitation or termination,

which is at least 20 days after the date

of mailing of the notice of intent;

* * * * *

§ 668.90 [Amended]

9. In § 668.90, paragraphs (a)(1)(iii)(D)

and (a)(3)(iv) are removed; and

paragraphs (a)(3)(v), (a)(3)(vi), and

(a)(3)(vii) are redesignated as paragraphs

(a)(3)(iv), (a)(3)(v), and (a)(3)(vi),

respectively.

§ 668.171 [Amended]

10. In § 668.171, paragraph (b)(1) is

amended by removing ‘‘appendices F

and G’’ and adding, in its place,

‘‘appendices A and B to this subpart’’.

§ 668.172 [Amended]

11. Section 668.172 is amended—

A. In the heading for paragraph (a), by

removing ‘‘Appendices F and G’’, and

adding, in its place, ‘‘Appendices A and

B’’.

B. In paragraph (a), by removing

‘‘appendices F and G to this part’’ and

adding, in its place, ‘‘appendices A and

B to this subpart’’.

C. In paragraph (b), by removing

‘‘appendix F’’ and adding, in its place,

‘‘appendix A’’; and by removing

65638 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

‘‘appendix G’’ and adding, in its place,

‘‘appendix B’’.

12. A new subpart M is added to Part

668 to read as follows:

Subpart M—Cohort Default Rates

Sec.

668.181 Purpose of this subpart.

668.182 Definitions of terms used in this

subpart.

668.183 Calculating and applying cohort

default rates.

668.184 Determining cohort default rates

for institutions that have undergone a

change in status.

668.185 Draft cohort default rates and your

ability to challenge before official cohort

default rates are issued.

668.186 Notice of your official cohort

default rate.

668.187 Consequences of cohort default

rates on your ability to participate in

Title IV, HEA programs.

668.188 Preventing evasion of the

consequences of cohort default rates.

668.189 General requirements for adjusting

official cohort default rates and for

appealing their consequences.

668.190 Uncorrected data adjustments.

668.191 New data adjustments.

668.192 Erroneous data appeals.

668.193 Loan servicing appeals.

668.194 Economically disadvantaged

appeals.

668.195 Participation rate index appeals.

668.196 Average rates appeals.

668.197 Thirty-or-fewer borrowers appeals.

668.198 Relief from the consequences of

cohort default rates for special

institutions.

Appendix A to Subpart M of Part 668—

Summaries of eligibility and submission

requirements for challenges, adjustments,

and appeals.

Appendix B to Subpart M of Part 668—

Sample default management plan for

special institutions to use when complying

with § 668.198.

§ 668.181 Purpose of this subpart.

Your cohort default rate is a measure

we use to determine your eligibility to

participate in various Title IV, HEA

programs. We may also use it for

determining your eligibility for

exemptions, such as those for certain

disbursement requirements under the

FFEL and Direct Loan Programs. This

subpart describes how cohort default

rates are calculated, some of the

consequences of cohort default rates,

and how you may request changes to

your cohort default rates or appeal their

consequences. Under this subpart, you

submit a ‘‘challenge’’ after you receive

your draft cohort default rate, and you

request an ‘‘adjustment’’ or ‘‘appeal’’

after your official cohort default rate is

published.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.182 Definitions of terms used in this

subpart.

We use the following definitions in

this subpart:

(a) Cohort. Your cohort is a group of

borrowers used to determine your

cohort default rate. The method for

identifying the borrowers in a cohort is

provided in § 668.183(b).

(b) Data manager. (1) For FFELP loans

held by a guaranty agency or lender, the

guaranty agency is the data manager.

(2) For FFELP loans that we hold, we

are the data manager.

(3) For Direct Loan Program loans, the

Direct Loan Servicer, as defined in 34

CFR 685.102, is the data manager.

(c) Days. In this subpart, ‘‘days’’

means calendar days.

(d) Default. A borrower is considered

to be in default for cohort default rate

purposes under the rules in

§ 668.183(c).

(e) Draft cohort default rate. Your

draft cohort default rate is a rate we

issue, for your review, before we issue

your official cohort default rate. A draft

cohort default rate is used only for the

purposes described in § 668.185.

(f) Entering repayment. (1) Except as

provided in paragraphs (f)(2) and (f)(3)

of this section, loans are considered to

enter repayment on the dates described

in 34 CFR 682.200 (under the definition

of ‘‘repayment period’’) and in 34 CFR

685.207.

(2) A Federal SLS loan is considered

to enter repayment—

(i) At the same time the borrower’s

Federal Stafford loan enters repayment,

if the borrower received the Federal SLS

loan and the Federal Stafford loan

during the same period of continuous

enrollment; or

(ii) In all other cases, on the day after

the student ceases to be enrolled at an

institution on at least a half-time basis

in an educational program leading to a

degree, certificate, or other recognized

educational credential.

(3) For the purposes of this subpart,

a loan is considered to enter repayment

on the date that a borrower repays it in

full, if the loan is paid in full before the

loan enters repayment under paragraphs

(f)(1) or (f)(2) of this section.

(g) Fiscal year. A fiscal year begins on

October 1 and ends on the following

September 30. A fiscal year is identified

by the calendar year in which it ends.

(h) Loan record detail report. The loan

record detail report is a report that we

produce. It contains the data used to

calculate your draft or official cohort

default rate.

(i) Official cohort default rate. Your

official cohort default rate is the cohort

default rate that we publish for you

under § 668.186. Cohort default rates

calculated under this subpart are not

related in any way to cohort default

rates that are calculated for the Federal

Perkins Loan Program.

(j) We. We are the Department, the

Secretary, or the Secretary’s designee.

(k) You. You are an institution.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.183 Calculating and applying cohort

default rates.

(a) General. This section describes the

four steps that we follow to calculate

and apply your cohort default rate for a

fiscal year:

(1) First, under paragraph (b) of this

section, we identify the borrowers in

your cohort for the fiscal year. If the

total number of borrowers in that cohort

is fewer than 30, we also identify the

borrowers in your cohorts for the 2 most

recent prior fiscal years.

(2) Second, under paragraph (c) of this

section, we identify the borrowers in the

cohort (or cohorts) who are considered

to be in default. If more than one cohort

will be used to calculate your cohort

default rate, we identify defaulted

borrowers separately for each cohort.

(3) Third, under paragraph (d) of this

section, we calculate your cohort default

rate.

(4) Fourth, we apply your cohort

default rate to all of your locations—

(i) As you exist on the date you

receive the notice of your official cohort

default rate; and

(ii) From the date on which you

receive the notice of your official cohort

default rate until you receive our notice

that the cohort default rate no longer

applies.

(b) Identify the borrowers in a cohort.

(1) Your cohort for a fiscal year consists

of all of your current and former

students who, during that fiscal year,

entered repayment on any Federal

Stafford loan, Federal SLS loan, Direct

Subsidized loan, or Direct Unsubsidized

loan that they received to attend your

institution, or on the portion of a loan

made under the Federal Consolidation

Loan Program or the Federal Direct

Consolidation Loan Program (as defined

in 34 CFR 685.102) that is used to repay

those loans.

(2) A borrower may be included in

more than one of your cohorts and may

be included in the cohorts of more than

one institution in the same fiscal year.

(c) Identify the borrowers in a cohort

who are in default. (1) Except as

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65639

provided in paragraph (c)(2) of this

section, for the purposes of this subpart

a borrower in a cohort for a fiscal year

is considered to be in default if—

(i) Before the end of the following

fiscal year, the borrower defaults on any

FFELP loan that was used to include the

borrower in the cohort or on any Federal

Consolidation Loan Program loan that

repaid a loan that was used to include

the borrower in the cohort (however, a

borrower is not considered to be in

default unless a claim for insurance has

been paid on the loan by a guaranty

agency or by us);

(ii) Before the end of the following

fiscal year, the borrower fails to make an

installment payment, when due, on any

Direct Loan Program loan that was used

to include the borrower in the cohort or

on any Federal Direct Consolidation

Loan Program loan that repaid a loan

that was used to include the borrower

in the cohort, and the borrower’s failure

persists for 360 days (or for 270 days, if

the borrower’s first day of delinquency

was before October 7, 1998);

(iii) You are a proprietary, nondegree-granting institution, and before

the end of the following fiscal year, the

borrower has been in repayment for 360

days, under the Direct Loan Program’s

income contingent repayment plan, on a

loan used to include the borrower in

your cohort (or that repaid a loan that

was used to include the borrower in

your cohort), with scheduled payments

that are less than 15 dollars per month

and are less than the amount of interest

accruing on the loan; or

(iv) Before the end of the following

fiscal year, you or your owner, agent,

contractor, employee, or any other

affiliated entity or individual make a

payment to prevent a borrower’s default

on a loan that is used to include the

borrower in that cohort.

(2) A borrower is not considered to be

in default based on a loan that is, before

the end of the fiscal year immediately

following the fiscal year in which it

entered repayment—

(i) Rehabilitated under 34 CFR

682.405 or 34 CFR 685.211(e); or

(ii) Repurchased by a lender because

the claim for insurance was submitted

or paid in error.

(d) Calculate the cohort default rate.

Except as provided in § 668.184, if there

are—

(1) Thirty or more borrowers in your

cohort for a fiscal year, your cohort

default rate is the percentage that is

derived by dividing—

(i) The number of borrowers in the

cohort who are in default, as determined

under paragraph (c) of this section; by

(ii) The number of borrowers in the

cohort, as determined under paragraph

(b) of this section.

(2) Fewer than 30 borrowers in your

cohort for a fiscal year, your cohort

default rate is the percentage that is

derived by dividing—

(i) The total number of borrowers in

that cohort and in the two most recent

prior cohorts who are in default, as

determined for each cohort under

paragraph (c) of this section; by

(ii) The total number of borrowers in

that cohort and the two most recent

prior cohorts, as determined for each

cohort under paragraph (b) of this

section.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.184 Determining cohort default rates

for institutions that have undergone a

change in status.

(a) General. (1) If you undergo a

change in status identified in this

section, your cohort default rate is

determined under this section.

(2) In determining cohort default rates

under this section, the date of a merger,

acquisition, or other change in status is

the date the change occurs.

(3) A change in status may affect your

eligibility to participate in Title IV, HEA

programs under § 668.187 or § 668.188.

(4) If another institution’s cohort

default rate is applicable to you under

this section, you may challenge, request

an adjustment, or submit an appeal for

the cohort default rate under the same

requirements that would be applicable

to the other institution under §§ 668.185

and 668.189.

(b) Acquisition or merger of

institutions. If your institution acquires,

or was created by the merger of, one or

more institutions that participated

independently in the Title IV, HEA

programs immediately before the

acquisition or merger—

(1) For the cohort default rates

published before the date of the

acquisition or merger, your cohort

default rates are the same as those of

your predecessor that had the highest

total number of borrowers entering

repayment in the two most recent

cohorts used to calculate those cohort

default rates; and

(2) Beginning with the first cohort

default rate published after the date of

the acquisition or merger, your cohort

default rates are determined by

including the applicable borrowers from

each institution involved in the

acquisition or merger in the calculation

under § 668.183.

(c) Acquisition of branches or

locations. If you acquire a branch or a

location from another institution

participating in the Title IV, HEA

programs—

(1) The cohort default rates published

for you before the date of the change

apply to you and to the newly acquired

branch or location;

(2) Beginning with the first cohort

default rate published after the date of

the change, your cohort default rates for

the next 3 fiscal years are determined by

including the applicable borrowers from

your institution and the other

institution (including all of its locations)

in the calculation under § 668.183;

(3) After the period described in

paragraph (c)(2) of this section, your

cohort default rates do not include

borrowers from the other institution in

the calculation under § 668.183; and

(4) At all times, the cohort default rate

for the institution from which you

acquired the branch or location is not

affected by this change in status.

(d) Branches or locations becoming

institutions. If you are a branch or

location of an institution that is

participating in the Title IV, HEA

programs, and you become a separate,

new institution for the purposes of

participating in those programs—

(1) The cohort default rates published

before the date of the change for your

former parent institution are also

applicable to you;

(2) Beginning with the first cohort

default rate published after the date of

the change, your cohort default rates for

the next 3 fiscal years are determined by

including the applicable borrowers from

your institution and your former parent

institution (including all of its locations)

in the calculation under § 668.183; and

(3) After the period described in

paragraph (d)(2) of this section, your

cohort default rates do not include

borrowers from your former parent

institution in the calculation under

§ 668.183.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.185 Draft cohort default rates and

your ability to challenge before official

cohort default rates are issued.

(a) General. (1) We notify you of your

draft cohort default rate before your

official cohort default rate is calculated.

Our notice includes the loan record

detail report for the draft cohort default

rate.

(2) Regardless of the number of

borrowers included in your cohort, your

65640 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

draft cohort default rate is always

calculated using data for that fiscal year

alone, using the method described in

§ 668.183(d)(1).

(3) Your draft cohort default rate and

the loan record detail report are not

considered public information and may

not be otherwise voluntarily released by

a data manager.

(4) Any challenge you submit under

this section and any response provided

by a data manager must be in a format

acceptable to us. This acceptable format

is described in the ‘‘Cohort Default Rate

Guide’’ that we provide to you. If your

challenge does not comply with the

requirements in the ‘‘Cohort Default

Rate Guide,’’ we may deny your

challenge.

(b) Incorrect data challenges. (1) You

may challenge the accuracy of the data

included on the loan record detail

report by sending a challenge to the

relevant data manager, or data

managers, within 45 days after you

receive the data. Your challenge must

include—

(i) A description of the information in

the loan record detail report that you

believe is incorrect; and

(ii) Documentation that supports your

contention that the data are incorrect.

(2) Within 30 days after receiving

your challenge, the data manager must

send you and us a response that—

(i) Addresses each of your allegations

of error; and

(ii) Includes the documentation that

supports the data manager’s position.

(3) If your data manager concludes

that draft data in the loan record detail

report are incorrect, and we agree, we

use the corrected data to calculate your

cohort default rate.

(4) If you fail to challenge the

accuracy of data under this section, you

cannot contest the accuracy of those

data in an uncorrected data adjustment,

under § 668.190, or in an erroneous data

appeal, under § 668.192.

(c) Participation rate index

challenges. (1)(i) You may challenge an

anticipated loss of eligibility under

§ 668.187(a)(1), based on one cohort

default rate over 40 percent, if your

participation rate index for that cohort’s

fiscal year is equal to or less than

0.06015.

(ii) You may challenge an anticipated

loss of eligibility under § 668.187(a)(2),

based on three cohort default rates of 25

percent or greater, if your participation

rate index is equal to or less than 0.0375

for any of those three cohorts’ fiscal

years.

(2) For a participation rate index

challenge, your participation rate index

is calculated as described in

§ 668.195(b), except that—

(i) The draft cohort default rate is

considered to be your most recent

cohort default rate; and

(ii) If the cohort used to calculate your

draft cohort default rate included fewer

than 30 borrowers, you may calculate

your participation rate index for that

fiscal year using either your most recent

draft cohort default rate or the average

rate that would be calculated for that

fiscal year, using the method described

in § 668.183(d)(2).

(3) You must send your participation

rate index challenge, including all

supporting documentation, to us within

45 days after you receive your draft

cohort default rate.

(4) We notify you of our

determination on your participation rate

index challenge before your official

cohort default rate is published.

(5) If we determine that you qualify

for continued eligibility based on your

participation rate index challenge, you

will not lose eligibility under § 668.187

when your next official cohort default

rate is published. A successful challenge

that is based on your draft cohort

default rate does not excuse you from

any other loss of eligibility. However, if

your successful challenge of a loss of

eligibility under paragraph (c)(1)(ii) of

this section is based on a prior, official

cohort default rate, and not on your

draft cohort default rate, we also excuse

you from any subsequent loss of

eligibility, under § 668.187(a)(2), that

would be based on that official cohort

default rate.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.186 Notice of your official cohort

default rate.

(a) We notify you of your cohort

default rate after we calculate it. After

we send our notice to you, we publish

a list of cohort default rates for all

institutions.

(b) If your cohort default rate is 10

percent or more, we include a copy of

the loan record detail report with the

notice.

(c) If your cohort default rate is less

than 10 percent—

(1) You may request a copy of any

loan record detail report that lists loans

included in your cohort default rate

calculation; and

(2) If you are requesting an adjustment

or appealing under this subpart, your

request for a copy of the loan record

detail report or reports must be sent to

us within 15 days after you receive the

notice of your cohort default rate.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.187 Consequences of cohort default

rates on your ability to participate in Title

IV, HEA programs.

(a) End of participation. (1) Except as

provided in paragraph (f) of this section,

you lose your eligibility to participate in

the FFEL and Direct Loan programs 30

days after you receive our notice that

your most recent cohort default rate is

greater than 40 percent.

(2) Except as provided in paragraphs

(e) and (f) of this section, you lose your

eligibility to participate in the FFEL,

Direct Loan, and Federal Pell Grant

programs 30 days after you receive our

notice that your three most recent

cohort default rates are each 25 percent

or greater.

(b) Length of period of ineligibility.

Your loss of eligibility under this

section continues—

(1) For the remainder of the fiscal year

in which we notify you that you are

subject to a loss of eligibility; and

(2) For the next 2 fiscal years.

(c) Using a cohort default rate more

than once. The use of a cohort default

rate as a basis for a loss of eligibility

under this section does not preclude its

use as a basis for—

(1) Any concurrent or subsequent loss

of eligibility under this section; or

(2) Any other action by us.

(d) Special institutions. If you are a

special institution that satisfies the

requirements for continued eligibility

under § 668.198, you are not subject to

any loss of eligibility under this section

or to provisional certification under

§ 668.16(m).

(e) Continuing participation in Pell. If

you are subject to a loss of eligibility

under paragraph (a)(2) of this section,

based on three cohort default rates of 25

percent or greater, you may continue to

participate in the Federal Pell Grant

Program if we determine that you—

(1) Were ineligible to participate in

the FFEL and Direct Loan programs

before October 7, 1998, and your

eligibility was not reinstated;

(2) Requested in writing, before

October 7, 1998, to withdraw your

participation in the FFEL and Direct

Loan programs, and you were not later

reinstated; or

(3) Have not certified an FFELP loan

or originated a Direct Loan Program loan

on or after July 7, 1998.

(f) Requests for adjustments and

appeals. (1) A loss of eligibility under

this section does not take effect while

your request for adjustment or appeal,

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65641

as listed in § 668.189(a), is pending,

provided your request for adjustment or

appeal is complete, timely, accurate,

and in the required format.

(2) Eligibility continued under

paragraph (f)(1) of this section ends if

we determine that none of the requests

for adjustments and appeals you have

submitted qualify you for continued

eligibility under § 668.189. Loss of

eligibility takes effect on the date that

you receive notice of our determination

on your last pending request for

adjustment or appeal.

(3) You do not lose eligibility under

this section if we determine that your

request for adjustment or appeal meets

all requirements of this subpart and

qualifies you for continued eligibility

under § 668.189.

(4) To avoid liabilities you might

otherwise incur under paragraph (g) of

this section, you may choose to suspend

your participation in the FFEL and

Direct Loan programs during the

adjustment or appeal process.

(g) Liabilities during the adjustment or

appeal process. If you continued to

participate in the FFEL or Direct Loan

Program under paragraph (f)(1) of this

section, and we determine that none of

your requests for adjustments or appeals

qualify you for continued eligibility—

(1) For any FFEL or Direct Loan

Program loan that you certified and

delivered or originated and disbursed

more than 30 days after you received the

notice of your cohort default rate, we

estimate the amount of interest, special

allowance, reinsurance, and any related

or similar payments we make or are

obligated to make on those loans;

(2) We exclude from this estimate any

amount attributable to funds that you

delivered or disbursed more than 45

days after you submitted your

completed appeal to us;

(3) We notify you of the estimated

amount; and

(4) Within 45 days after you receive

our notice of the estimated amount, you

must pay us that amount, unless—

(i) You file an appeal under the

procedures established in subpart H of

this part (for the purposes of subpart H

of this part, our notice of the estimate

is considered to be a final program

review determination); or

(ii) We permit a longer repayment

period.

(h) Regaining eligibility. If you lose

your eligibility to participate in a

program under this section, you may not

participate in that program until—

(1) The period described in paragraph

(b) of this section has ended;

(2) You pay any amount owed to us

under this section or are meeting that

obligation under an agreement

acceptable to us;

(3) You submit a new application for

participation in the program;

(4) We determine that you meet all of

the participation requirements in effect

at the time of your application; and

(5) You and we enter into a new

program participation agreement.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.188 Preventing evasion of the

consequences of cohort default rates.

(a) General. Unless you are a special

institution complying with § 668.198,

you are subject to a loss of eligibility

that has already been imposed against

another institution under § 668.187 if—

(1) You and the ineligible institution

are both parties to a transaction that

results in a change of ownership, a

change in control, a merger, a

consolidation, an acquisition, a change

of name, a change of address, any

change that results in a location

becoming a freestanding institution, a

purchase or sale, a transfer of assets, an

assignment, a change of identification

number, a contract for services, an

addition or closure of one or more

locations or branches or educational

programs, or any other change in whole

or in part in institutional structure or

identity;

(2) Following the change described in

paragraph (a)(1) of this section, you offer

an educational program at substantially

the same address at which the ineligible

institution had offered an educational

program before the change; and

(3) There is a commonality of

ownership or management between you

and the ineligible institution, as the

ineligible institution existed before the

change.

(b) Commonality of ownership or

management. For the purposes of this

section, a commonality of ownership or

management exists if, at each

institution, the same person (as defined

in 34 CFR 600.31) or members of that

person’s family, directly or indirectly—

(1) Holds or held a managerial role; or

(2) Has or had the ability to affect

substantially the institution’s actions,

within the meaning of 34 CFR 600.21.

(c) Teach-outs. Notwithstanding

paragraph (b)(1) of this section, a

commonality of management does not

exist if you are conducting a teach-out

under a teach-out agreement as defined

in 34 CFR 602.3 and administered in

accordance with 34 CFR 602.24(c),

and—

(1)(i) Within 60 days after the change

described in this section, you send us

the names of the managers for each

facility undergoing the teach-out as it

existed before the change and for each

facility as it exists after you believe that

the commonality of management has

ended; and

(ii) We determine that the

commonality of management, as

described in paragraph (b)(1) of this

section, has ended; or

(2)(i) Within 30 days after you receive

our notice that we have denied your

submission under paragraph (c)(1)(i) of

this section, you make the management

changes we request and send us a list of

the names of the managers for each

facility undergoing the teach-out as it

exists after you make those changes; and

(ii) We determine that the

commonality of management, as

described in paragraph (b)(1) of this

section, has ended.

(d) Initial determination. We

encourage you to contact us before

undergoing a change described in this

section. If you write to us, providing the

information we request, we will provide

a written initial determination of the

anticipated change’s effect on your

eligibility.

(e) Notice of accountability. (1) We

notify you in writing if, in response to

your notice or application filed under

34 CFR 600.20 or 600.21, we determine

that you are subject to a loss of

eligibility, under paragraph (a) of this

section, that has been imposed against

another institution.

(2) Our notice also advises you of the

scope and duration of your loss of

eligibility. The loss of eligibility applies

to all of your locations from the date

you receive our notice until the

expiration of the period of ineligibility

applicable to the other institution.

(3) If you are subject to a loss of

eligibility under this section that has

already been imposed against another

institution, you may only request an

adjustment or submit an appeal for the

loss of eligibility under the same

requirements that would be applicable

to the other institution under § 668.189.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.189 General requirements for

adjusting official cohort default rates and

for appealing their consequences.

(a) Remaining eligible. You do not

lose eligibility under § 668.187 if—

(1) We recalculate your cohort default

rate, and it is below the percentage

65642 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

threshold for the loss of eligibility as the

result of—

(i) An uncorrected data adjustment

submitted under this section and

§ 668.190;

(ii) A new data adjustment submitted

under this section and § 668.191;

(iii) An erroneous data appeal

submitted under this section and

§ 668.192; or

(iv) A loan servicing appeal submitted

under this section and § 668.193; or

(2) You meet the requirements for—

(i) An economically disadvantaged

appeal submitted under this section and

§ 668.194;

(ii) A participation rate index appeal

submitted under this section and

§ 668.195;

(iii) An average rates appeal

submitted under this section and

§ 668.196; or

(iv) A thirty-or-fewer borrowers

appeal submitted under this section and

§ 668.197.

(b) Limitations on your ability to

dispute your cohort default rate. (1) You

may not dispute the calculation of a

cohort default rate except as described

in this subpart.

(2) You may not request an

adjustment or appeal a cohort default

rate, under § 668.190, § 668.191,

§ 668.192, or § 668.193, more than once.

(3) You may not request an

adjustment or appeal a cohort default

rate, under § 668.190, § 668.191,

§ 668.192, or § 668.193, if you

previously lost your eligibility to

participate in a Title IV, HEA program,

under § 668.187, based entirely or

partially on that cohort default rate.

(c) Content and format of requests for

adjustments and appeals. We may deny

your request for adjustment or appeal if

it does not meet the following

requirements:

(1) All appeals, notices, requests,

independent auditor’s opinions,

management’s written assertions, and

other correspondence that you are

required to send under this subpart

must be complete, timely, accurate, and

in a format acceptable to us. This

acceptable format is described in the

‘‘Cohort Default Rate Guide’’ that we

provide to you.

(2) Your completed request for

adjustment or appeal must include—

(i) All of the information necessary to

substantiate your request for adjustment

or appeal; and

(ii) A certification by your chief

executive officer, under penalty of

perjury, that all the information you

provide is true and correct.

(d) Our copies of your

correspondence. Whenever you are

required by this subpart to correspond

with a party other than us, you must

send us a copy of your correspondence

within the same time deadlines.

However, you are not required to send

us copies of documents that you

received from us originally.

(e) Requirements for data managers’

responses. (1) Except as otherwise

provided in this subpart, if this subpart

requires a data manager to correspond

with any party other than us, the data

manager must send us a copy of the

correspondence within the same time

deadlines.

(2) If a data manager sends us

correspondence under this subpart that

is not in a format acceptable to us, we

may require the data manager to revise

that correspondence’s format, and we

may prescribe a format for that data

manager’s subsequent correspondence

with us.

(f) Our decision on your request for

adjustment or appeal. (1) We determine

whether your request for an adjustment

or appeal is in compliance with this

subpart.

(2) In making our decision for an

adjustment, under § 668.190 or

§ 668.191, or an appeal, under § 668.192

or § 668.193—

(i) We presume that the information

provided to you by a data manager is

correct unless you provide substantial

evidence that shows the information is

not correct; and

(ii) If we determine that a data

manager did not provide the necessary

clarifying information or legible records

in meeting the requirements of this

subpart, we presume that the evidence

that you provide to us is correct unless

it is contradicted or otherwise proven to

be incorrect by information we

maintain.

(3) Our decision is based on the

materials you submit under this subpart.

We do not provide an oral hearing.

(4) We notify you of our decision—

(i) If you request an adjustment or

appeal because you are subject to a loss

of eligibility under § 668.187, within 45

days after we receive your completed

request for an adjustment or appeal; or

(ii) In all other cases, except for

appeals submitted under § 668.192(a) to

avoid provisional certification, before

we notify you of your next official

cohort default rate.

(5) You may not seek judicial review

of our determination of a cohort default

rate until we issue our decision on all

pending requests for adjustments or

appeals for that cohort default rate.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.190 Uncorrected data adjustments.

(a) Eligibility. You may request an

uncorrected data adjustment for your

most recent cohort of borrowers, used to

calculate your most recent official

cohort default rate, if in response to

your challenge under § 668.185(b), a

data manager agreed correctly to change

the data, but the changes are not

reflected in your official cohort default

rate.

(b) Deadlines for requesting an

uncorrected data adjustment. (1) If the

loan record detail report was not

included with your official cohort

default rate notice, you must request it

within 15 days after you receive the

notice of your official cohort default

rate.

(2) You must send us a request for an

uncorrected data adjustment, including

all supporting documentation, within 30

days after you receive your loan record

detail report from us.

(c) Determination. We recalculate

your cohort default rate, based on the

corrected data, if we determine that—

(1) In response to your challenge

under § 668.185(b), a data manager

agreed to change the data;

(2) The changes described in

paragraph (c)(1) of this section are not

reflected in your official cohort default

rate; and

(3) We agree that the data are

incorrect.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.191 New data adjustments.

(a) Eligibility. You may request a new

data adjustment for your most recent

cohort of borrowers, used to calculate

your most recent official cohort default

rate, if—

(1) A comparison of the loan record

detail reports that we provide to you for

the draft and official cohort default rates

shows that the data have been newly

included, excluded, or otherwise

changed; and

(2) You identify errors in the data

described in paragraph (a)(1) of this

section that are confirmed by the data

manager.

(b) Deadlines for requesting a new

data adjustment. (1) If the loan record

detail report was not included with your

official cohort default rate notice, you

must request it within 15 days after you

receive the notice of your official cohort

default rate.

(2) You must send the relevant data

manager, or data managers, and us a

request for a new data adjustment,

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65643

including all supporting documentation,

within 15 days after you receive your

loan record detail report from us.

(3) Within 20 days after receiving

your request for a new data adjustment,

the data manager must send you and us

a response that—

(i) Addresses each of your allegations

of error; and

(ii) Includes the documentation used

to support the data manager’s position.

(4) Within 15 days after receiving a

guaranty agency’s notice that we hold

an FFELP loan about which you are

inquiring, you must send us your

request for a new data adjustment for

that loan. We respond to your request

under paragraph (b)(3) of this section.

(5) Within 15 days after receiving

incomplete or illegible records or data

from a data manager, you must send a

request for replacement records or

clarification of data to the data manager

and us.

(6) Within 20 days after receiving

your request for replacement records or

clarification of data, the data manager

must—

(i) Replace the missing or illegible

records;

(ii) Provide clarifying information; or

(iii) Notify you and us that no

clarifying information or additional or

improved records are available.

(7) You must send us your completed

request for a new data adjustment,

including all supporting

documentation—

(i) Within 30 days after you receive

the final data manager’s response to

your request or requests; or

(ii) If you are also filing an erroneous

data appeal or a loan servicing appeal,

by the latest of the filing dates required

in paragraph (b)(7)(i) of this section or

in § 668.192(b)(6)(i) or

§ 668.193(c)(10)(i).

(c) Determination. If we determine

that incorrect data were used to

calculate your cohort default rate, we

recalculate your cohort default rate

based on the correct data.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.192 Erroneous data appeals.

(a) Eligibility. Except as provided in

§ 668.189(b), you may appeal the

calculation of a cohort default rate upon

which a loss of eligibility, under

§ 668.187, or provisional certification,

under § 668.16(m), is based if—

(1) You dispute the accuracy of data

that you previously challenged on the

basis of incorrect data, under

§ 668.185(b); or

(2) A comparison of the loan record

detail reports that we provide to you for

the draft and official cohort default rates

shows that the data have been newly

included, excluded, or otherwise

changed, and you dispute the accuracy

of that data.

(b) Deadlines for submitting an

appeal. (1) You must send a request for

verification of data errors to the relevant

data manager, or data managers, and to

us within 15 days after you receive the

notice of your loss of eligibility or

provisional certification. Your request

must include a description of the

information in the cohort default rate

data that you believe is incorrect and all

supporting documentation that

demonstrates the error.

(2) Within 20 days after receiving

your request for verification of data

errors, the data manager must send you

and us a response that—

(i) Addresses each of your allegations

of error; and

(ii) Includes the documentation used

to support the data manager’s position.

(3) Within 15 days after receiving a

guaranty agency’s notice that we hold

an FFELP loan about which you are

inquiring, you must send us your

request for verification of that loan’s

data errors. Your request must include

a description of the information in the

cohort default rate data that you believe

is incorrect and all supporting

documentation that demonstrates the

error. We respond to your request under

paragraph (b)(2) of this section.

(4) Within 15 days after receiving

incomplete or illegible records or data,

you must send a request for replacement

records or clarification of data to the

data manager and us.

(5) Within 20 days after receiving

your request for replacement records or

clarification of data, the data manager

must—

(i) Replace the missing or illegible

records;

(ii) Provide clarifying information; or

(iii) Notify you and us that no

clarifying information or additional or

improved records are available.

(6) You must send your completed

appeal to us, including all supporting

documentation—

(i) Within 30 days after you receive

the final data manager’s response to

your request; or

(ii) If you are also requesting a new

data adjustment or filing a loan

servicing appeal, by the latest of the

filing dates required in paragraph

(b)(6)(i) of this section or in

§ 668.191(b)(7)(i) or § 668.193(c)(10)(i).

(c) Determination. If we determine

that incorrect data were used to

calculate your cohort default rate, we

recalculate your cohort default rate

based on the correct data.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.193 Loan servicing appeals.

(a) Eligibility. Except as provided in

§ 668.189(b), you may appeal, on the

basis of improper loan servicing or

collection, the calculation of—

(1) Your most recent cohort default

rate; or

(2) Any cohort default rate upon

which a loss of eligibility under

§ 668.187 is based.

(b) Improper loan servicing. For the

purposes of this section, a default is

considered to have been due to

improper loan servicing or collection

only if the borrower did not make a

payment on the loan and you prove that

the FFEL Program lender or the Direct

Loan Servicer, as defined in 34 CFR

685.102, failed to perform one or more

of the following activities, if that

activity applies to the loan:

(1) Send at least one letter (other than

the final demand letter) urging the

borrower to make payments on the loan;

(2) Attempt at least one phone call to

the borrower;

(3) Send a final demand letter to the

borrower;

(4) For a Direct Loan Program loan

only, document that skip tracing was

performed if the Direct Loan Servicer

determined that it did not have the

borrower’s current address; and

(5) For an FFELP loan only—

(i) Submit a request for preclaims or

default aversion assistance to the

guaranty agency; and

(ii) Submit a certification or other

documentation that skip tracing was

performed to the guaranty agency.

(c) Deadlines for submitting an

appeal. (1) If the loan record detail

report was not included with your

official cohort default rate notice, you

must request it within 15 days after you

receive the notice of your official cohort

default rate.

(2) You must send a request for loan

servicing records to the relevant data

manager, or data managers, and to us

within 15 days after you receive your

loan record detail report from us. If the

data manager is a guaranty agency, your

request must include a copy of the loan

record detail report.

(3) Within 20 days after receiving

your request for loan servicing records,

the data manager must—

(i) Send you and us a list of the

borrowers in your representative

65644 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

sample, as described in paragraph (d) of

this section (the list must be in social

security number order, and it must

include the number of defaulted loans

included in the cohort for each listed

borrower);

(ii) Send you and us a description of

how your representative sample was

chosen; and

(iii) Either send you copies of the loan

servicing records for the borrowers in

your representative sample and send us

a copy of its cover letter indicating that

the records were sent, or send you and

us a notice of the amount of its fee for

providing copies of the loan servicing

records.

(4) The data manager may charge you

a reasonable fee for providing copies of

loan servicing records, but it may not

charge more than $10 per borrower file.

If a data manager charges a fee, it is not

required to send the documents to you

until it receives your payment of the fee.

(5) If the data manager charges a fee

for providing copies of loan servicing

records, you must send payment in full

to the data manager within 15 days after

you receive the notice of the fee.

(6) If the data manager charges a fee

for providing copies of loan servicing

records, and—

(i) You pay the fee in full and on time,

the data manager must send you, within

20 days after it receives your payment,

a copy of all loan servicing records for

each loan in your representative sample

(the copies are provided to you in hard

copy format unless the data manager

and you agree that another format may

be used), and it must send us a copy of

its cover letter indicating that the

records were sent; or

(ii) You do not pay the fee in full and

on time, the data manager must notify

you and us of your failure to pay the fee

and that you have waived your right to

challenge the calculation of your cohort

default rate based on the data manager’s

records. We accept that determination

unless you prove that it is incorrect.

(7) Within 15 days after receiving a

guaranty agency’s notice that we hold

an FFELP loan about which you are

inquiring, you must send us your

request for the loan servicing records for

that loan. We respond to your request

under paragraph (c)(3) of this section.

(8) Within 15 days after receiving

incomplete or illegible records, you

must send a request for replacement

records to the data manager and us.

(9) Within 20 days after receiving

your request for replacement records,

the data manager must either—

(i) Replace the missing or illegible

records; or

(ii) Notify you and us that no

additional or improved copies are

available.

(10) You must send your appeal to us,

including all supporting

documentation—

(i) Within 30 days after you receive

the final data manager’s response to

your request for loan servicing records;

or

(ii) If you are also requesting a new

data adjustment or filing an erroneous

data appeal, by the latest of the filing

dates required in paragraph (c)(10)(i) of

this section or in § 668.191(b)(7)(i) or

§ 668.192(b)(6)(i).

(d) Representative sample of records.

(1) To select a representative sample of

records, the data manager first identifies

all of the borrowers for whom it is

responsible and who had loans that

were considered to be in default in the

calculation of the cohort default rate

you are appealing. However, for the

purposes of this paragraph, the data

manager does not identify a borrower as

defaulted due to repayment under the

Direct Loan Program’s income

contingent repayment plan, under

§ 668.183(c)(1)(iii).

(2) From the group of borrowers

identified under paragraph (d)(1) of this

section, the data manager identifies a

sample that is large enough to derive an

estimate, acceptable at a 95 percent

confidence level with a plus or minus

5 percent confidence interval, for use in

determining the number of borrowers

who should be excluded from the

calculation of the cohort default rate

due to improper loan servicing or

collection.

(e) Loan servicing records. Loan

servicing records are the collection and

payment history records—

(1) Provided to the guaranty agency by

the lender and used by the guaranty

agency in determining whether to pay a

claim on a defaulted loan; or

(2) Maintained by our Direct Loan

Servicer that are used in determining

your cohort default rate.

(f) Determination. (1) We determine

the number of loans, included in your

representative sample of loan servicing

records, that defaulted due to improper

loan servicing or collection, as

described in paragraph (b) of this

section.

(2) Based on our determination, we

use a statistically valid methodology to

exclude the corresponding percentage of

borrowers from both the numerator and

denominator of the calculation of your

cohort default rate.

(3) Our recalculation of your cohort

default rate does not affect the number

of borrowers who are considered to be

in default due to payments made under

the Direct Loan Program’s income

contingent repayment plan, under the

criteria in § 668.183(c)(1)(iii).

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.194 Economically disadvantaged

appeals.

(a) Eligibility. As described in this

section, you may appeal a notice of a

loss of eligibility under § 668.187 if an

independent auditor’s opinion certifies

that your low income rate is two-thirds

or more and—

(1) You offer an associate,

baccalaureate, graduate, or professional

degree, and your completion rate is 70

percent or more; or

(2) You do not offer an associate,

baccalaureate, graduate, or professional

degree, and your placement rate is 44

percent or more.

(b) Low income rate. (1) Your low

income rate is the percentage of your

students, as described in paragraph

(b)(2) of this section, who—

(i) For an award year that overlaps the

12-month period selected under

paragraph (b)(2) of this section, have an

expected family contribution, as defined

in 34 CFR 690.2, that is equal to or less

than the largest expected family

contribution that would allow a student

to receive one-half of the maximum

Federal Pell Grant award, regardless of

the student’s enrollment status or cost of

attendance; or

(ii) For a calendar year that overlaps

the 12-month period selected under

paragraph (b)(2) of this section, have an

adjusted gross income that, when added

to the adjusted gross income of the

student’s parents (if the student is a

dependent student) or spouse (if the

student is a married independent

student), is less than the amount listed

in the Department of Health and Human

Services poverty guidelines for the size

of the student’s family unit.

(2) The students who are used to

determine your low income rate include

only students who were enrolled on at

least a half-time basis in an eligible

program at your institution during any

part of a 12-month period that ended

during the 6 months immediately

preceding the cohort’s fiscal year.

(c) Completion rate. (1) Your

completion rate is the percentage of

your students, as described in paragraph

(c)(2) of this section, who—

(i) Completed the educational

programs in which they were enrolled;

(ii) Transferred from your institution

to a higher level educational program;

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65645

(iii) Remained enrolled and are

making satisfactory progress toward

completion of their educational

programs at the end of the same 12-

month period used to calculate the low

income rate; or

(iv) Entered active duty in the Armed

Forces of the United States within 1

year after their last date of attendance at

your institution.

(2) The students who are used to

determine your completion rate include

only regular students who were—

(i) Initially enrolled on a full-time

basis in an eligible program; and

(ii) Originally scheduled to complete

their programs during the same 12-

month period used to calculate the low

income rate.

(d) Placement rate. (1) Except as

provided in paragraph (d)(2) of this

section, your placement rate is the

percentage of your students, as

described in paragraphs (d)(3) and (d)(4)

of this section, who—

(i) Are employed, in an occupation for

which you provided training, on the

date following 1 year after their last date

of attendance at your institution;

(ii) Were employed for at least 13

weeks, in an occupation for which you

provided training, between the date they

enrolled at your institution and the first

date that is more than a year after their

last date of attendance at your

institution; or

(iii) Entered active duty in the Armed

Forces of the United States within 1

year after their last date of attendance at

your institution.

(2) For the purposes of this section, a

former student is not considered to have

been employed based on any

employment by your institution.

(3) The students who are used to

determine your placement rate include

only former students who—

(i) Were initially enrolled in an

eligible program on at least a half-time

basis;

(ii) Were originally scheduled, at the

time of enrollment, to complete their

educational programs during the same

12-month period used to calculate the

low income rate; and

(iii) Remained in the program beyond

the point at which a student would have

received a 100 percent tuition refund

from you.

(4) A student is not included in the

calculation of your placement rate if

that student, on the date that is 1 year

after the student’s originally scheduled

completion date, remains enrolled in

the same program and is making

satisfactory progress.

(e) Scheduled to complete. In

calculating a completion or placement

rate under this section, the date on

which a student is originally scheduled

to complete a program is based on—

(1) For a student who is initially

enrolled full-time, the amount of time

specified in your enrollment contract,

catalog, or other materials for

completion of the program by a full-time

student; or

(2) For a student who is initially

enrolled less than full-time, the amount

of time that it would take the student to

complete the program if the student

remained at that level of enrollment

throughout the program.

(f) Deadline for submitting an appeal.

(1) Within 30 days after you receive the

notice of your loss of eligibility, you

must send us your management’s

written assertion, as described in the

Cohort Default Rate Guide.

(2) Within 60 days after you receive

the notice of your loss of eligibility, you

must send us the independent auditor’s

opinion described in paragraph (g) of

this section.

(g) Independent auditor’s opinion. (1)

The independent auditor’s opinion must

state whether your management’s

written assertion, as you provided it to

the auditor and to us, meets the

requirements for an economically

disadvantaged appeal and is fairly

stated in all material respects.

(2) The engagement that forms the

basis of the independent auditor’s

opinion must be an examination-level

compliance attestation engagement

performed in accordance with—

(i) The American Institute of Certified

Public Accountant’s (AICPA) Statement

on Standards for Attestation

Engagements, Compliance Attestation

(AICPA, Professional Standards, vol. 1,

AT sec. 500), as amended (these

standards may be obtained by calling

the AICPA’s order department, at 1–

888–777–7077); and

(ii) Government Auditing Standards

issued by the Comptroller General of the

United States.

(h) Determination. You do not lose

eligibility under § 668.187 if—

(1) Your independent auditor’s

opinion agrees that you meet the

requirements for an economically

disadvantaged appeal; and

(2) We determine that the

independent auditor’s opinion and your

management’s written assertion—

(i) Meet the requirements for an

economically disadvantaged appeal; and

(ii) Are not contradicted or otherwise

proven to be incorrect by information

we maintain, to an extent that would

render the independent auditor’s

opinion unacceptable.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.195 Participation rate index appeals.

(a) Eligibility. (1) You may appeal a

notice of a loss of eligibility under

§ 668.187(a)(1), based on one cohort

default rate over 40 percent, if your

participation rate index for that cohort’s

fiscal year is equal to or less than

0.06015.

(2) You may appeal a notice of a loss

of eligibility under § 668.187(a)(2),

based on three cohort default rates of 25

percent or greater, if your participation

rate index is equal to or less than 0.0375

for any of those three cohorts’ fiscal

years.

(b) Calculating your participation rate

index. (1) Except as provided in

paragraph (b)(2) of this section, your

participation rate index for a fiscal year

is determined by multiplying your

cohort default rate for that fiscal year by

the percentage that is derived by

dividing—

(i) The number of students who

received an FFELP or a Direct Loan

Program loan to attend your institution

during a period of enrollment, as

defined in 34 CFR 682.200 or 685.102,

that overlaps any part of a 12-month

period that ended during the 6 months

immediately preceding the cohort’s

fiscal year, by

(ii) The number of regular students

who were enrolled at your institution on

at least a half-time basis during any part

of the same 12-month period.

(2) If your cohort default rate for a

fiscal year is calculated as an average

rate under § 668.183(d)(2), you may

calculate your participation rate index

for that fiscal year using either that

average rate or the cohort default rate

that would be calculated for the fiscal

year alone using the method described

in § 668.183(d)(1).

(c) Deadline for submitting an appeal.

You must send us your appeal under

this section, including all supporting

documentation, within 30 days after you

receive the notice of your loss of

eligibility.

(d) Determination. (1) You do not lose

eligibility under § 668.187 if we

determine that you meet the

requirements for a participation rate

index appeal.

(2) If we determine that your

participation rate index for a fiscal year

is equal to or less than 0.0375, under

paragraph (d)(1) of this section, we also

excuse you from any subsequent loss of

eligibility under § 668.187(a)(2) that

would be based on the official cohort

default rate for that fiscal year.

65646 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.196 Average rates appeals.

(a) Eligibility. (1) You may appeal a

notice of a loss of eligibility under

§ 668.187(a)(1), based on one cohort

default rate over 40 percent, if that

cohort default rate is calculated as an

average rate under § 668.183(d)(2).

(2) You may appeal a notice of a loss

of eligibility under § 668.187(a)(2),

based on three cohort default rates of 25

percent or greater, if at least two of those

cohort default rates—

(i) Are calculated as average rates

under § 668.183(d)(2); and

(ii) Would be less than 25 percent if

calculated for the fiscal year alone using

the method described in § 668.183(d)(1).

(b) Deadline for submitting an appeal.

(1) Before notifying you of your official

cohort default rate, we make an initial

determination about whether you

qualify for an average rates appeal. If we

determine that you qualify, we notify

you of that determination at the same

time that we notify you of your official

cohort default rate.

(2) If you disagree with our initial

determination, you must send us your

average rates appeal, including all

supporting documentation, within 30

days after you receive the notice of your

loss of eligibility.

(c) Determination. You do not lose

eligibility under § 668.187 if we

determine that you meet the

requirements for an average rates

appeal.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.197 Thirty-or-fewer borrowers

appeals.

(a) Eligibility. You may appeal a

notice of a loss of eligibility under

§ 668.187 if 30 or fewer borrowers, in

total, are included in the 3 most recent

cohorts of borrowers used to calculate

your cohort default rates.

(b) Deadline for submitting an appeal.

(1) Before notifying you of your official

cohort default rate, we make an initial

determination about whether you

qualify for a thirty-or-fewer borrowers

appeal. If we determine that you qualify,

we notify you of that determination at

the same time that we notify you of your

official cohort default rate.

(2) If you disagree with our initial

determination, you must send us your

thirty-or-fewer borrowers appeal,

including all supporting documentation,

within 30 days after you receive the

notice of your loss of eligibility.

(c) Determination. You do not lose

eligibility under § 668.187 if we

determine that you meet the

requirements for a thirty-or-fewer

borrowers appeal.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

§ 668.198 Relief from the consequences of

cohort default rates for special institutions.

(a) Eligibility. You are only eligible for

relief from the consequences of cohort

default rates under this section if you

are a—

(1) Historically black college or

university as defined in section 322(2)

of the HEA;

(2) Tribally controlled community

college as defined in section 2(a)(4) of

the Tribally Controlled Community

College Assistance Act of 1978; or

(3) Navajo community college under

the Navajo Community College Act.

(b) Applicability of requirements. We

may determine that the loss of eligibility

provisions in § 668.187 and the

prohibition against full certification in

§ 668.16(m) do not apply to you for each

1-year period beginning on July 1 of

1999, 2000, or 2001, if you meet the

requirements in paragraph (a) of this

section and you send us—

(1) By July 1 of the first 1-year period

that begins after you receive our notice

of a loss of eligibility under § 668.187—

(i) A default management plan; and

(ii) A certification that you have

engaged an independent third party, as

described in this section; and

(2) By July 1 of each subsequent 1-

year period—

(i) Evidence that you have

implemented your default management

plan during the preceding 1-year period;

(ii) Evidence that you have made

substantial improvement in the

preceding 1-year period in your cohort

default rate; and

(iii) A certification that you continue

to engage an independent third party, as

described in this section.

(c) Default management plan. (1)

Your default management plan must

provide reasonable assurance that you

will, no later than July 1, 2002, have a

cohort default rate that is less than 25

percent. Measures that you must take to

provide this assurance include but are

not limited to—

(i) Establishing a default management

team by engaging your chief executive

officer and relevant senior executive

officials and enlisting the support of

representatives from offices other than

the financial aid office;

(ii) Identifying and allocating the

personnel, administrative, and financial

resources appropriate to implement the

default management plan;

(iii) Defining the roles and

responsibilities of the independent third

party;

(iv) Defining evaluation methods and

establishing a data collection system for

measuring and verifying relevant default

management statistics, including a

statistical analysis of the borrowers who

default on their loans;

(v) Establishing annual targets for

reductions in your cohort default rate;

and

(vi) Establishing a process to ensure

the accuracy of your cohort default rate.

(2) We will determine whether your

default management plan is acceptable,

after considering your history,

resources, dollars in default, and targets

for default reduction in making this

determination.

(3) If we determine that your

proposed default management plan is

unacceptable, you must consult with us

to develop a revised plan and submit

the revised plan to us within 30 days

after you receive our notice that your

proposed plan is unacceptable.

(4) If we determine, based on the

evidence you submit under paragraph

(b)(2) of this section, that your default

management plan is no longer

acceptable, you must develop a revised

plan in consultation with us and submit

the revised plan to us within 60 days

after you receive our notice that your

plan is no longer acceptable.

(5) A sample default management

plan is provided in appendix B to this

subpart. The sample is included to

illustrate components of an acceptable

default management plan. Since

institutions’ family income profiles,

student borrowing patterns, histories,

resources, dollars in default, and targets

for default reduction are different, you

must consider your own, individual

circumstances in developing and

submitting your plan.

(d) Independent third party. (1) An

independent third party may be any

individual or entity that—

(i) Provides technical assistance in

developing and implementing your

default management plan; and

(ii) Is not substantially controlled by

a person who also exercises substantial

control over your institution.

(2) An independent third party need

not be paid by you for its services.

(3) The services of a lender, guaranty

agency, or secondary market as an

independent third party under this

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65647

section are not considered to be

inducements under 34 CFR 682.200 or

682.401(e).

(e) Substantial improvement. (1) For

the purposes of this section, your

substantial improvement is determined

based on—

(i) A reduction in your most recent

draft or official cohort default rate;

(ii) An increase in the percentage of

delinquent borrowers who avoid default

by using deferments, forbearances, and

job placement assistance;

(iii) An increase in the academic

persistence of student borrowers;

(iv) An increase in the percentage of

students pursuing graduate or

professional study;

(v) An increase in the percentage of

borrowers for whom a current address is

known;

(vi) An increase in the percentage of

delinquent borrowers that you

contacted;

(vii) The implementation of

alternative financial aid award policies

and development of financial resources

that reduce the need for student

borrowing; or (viii) An increase in the

percentage of accurate and timely

enrollment status changes that you

submitted to the National Student Loan

Data System (NSLDS) on the Student

Status Confirmation Report (SSCR).

(2) When making a determination of

your substantial improvement, we

consider your performance in light of—

(i) Your history, resources, dollars in

default, and targets for default

reduction;

(ii) Your level of effort in meeting the

terms of your approved default

management plan during the previous 1-

year period; and

(iii) Any other mitigating

circumstance at your institution during

the 1-year period.

(f) Determination. (1) If we determine

that you are in compliance with this

section, the provisions of §§ 668.187

and 668.16(m) do not apply to you for

that 1-year period, beginning on July 1

of 1999, 2000, or 2001.

(2) If we determine that you are not

in compliance with this section, you are

subject to the provisions of §§ 668.187

and 668.16(m). You lose your eligibility

to participate in the FFEL, Direct Loan,

and Federal Pell Grant programs on the

date you receive our notice of the

determination.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

(Authority: 20 U.S.C. 1082, 1085, 1094,

1099c)

Appendix A to Subpart M of Part 668—

Summaries of Eligibility and

Submission Requirements for

Challenges, Adjustments, and Appeals

I. Summary of Submission Eligibility

Some types of appeals may be submitted

only if you are subject to a loss of eligibility

under § 668.187 or to provisional

certification under § 668.16(m). These types

of appeals are identified in the following

table. Submission deadlines are described in

the paragraphs and sections that are cited in

the table. For example, although you may

submit an uncorrected data adjustment, new

data adjustment, or loan servicing appeal if

you are subject to provisional certification,

the deadlines for those submissions are based

on the date you receive your cohort default

rate, not the date you receive the notice of

your provisional certification.

BILLING CODE 4000–01–P

BILLING CODE 4000–01–C

II. Summary of Submission Deadlines

1. General. The deadlines you must meet

when submitting a challenge, a request for

adjustment, or an appeal are summarized in

the following table. The full, official

requirements for these deadlines are in

§ 668.189 and in the sections and paragraphs

cited in the table.

2. Timeframes. The timeframes provided in

the table (‘‘30 Days’’, ‘‘15 Days’’, etc.) identify

the number of calendar days within which

that action must be performed. Timeframes

begin on the date that the previous action

(connected to that timeframe with an

arrowed line) is completed:

(i) For your first action (and for both

actions, during an economically

disadvantaged appeal), the timeframe begins

on the date that you receive your draft cohort

default rate, official cohort default rate,

notice of loss of eligibility, or notice of

provisional certification.

(ii) For all other actions, the timeframe

begins on the date you receive the response

to your pending request. If you are waiting

for responses from more than one data

manager, the timeframe begins on the date

that you receive the final response from the

last data manager.

3. Dotted borders. Some actions identified

in the table are required only in certain

circumstances. For example, if we don’t send

you a loan record detail report, because your

cohort default rate is less than 10 percent,

you must request one before you can request

an adjustment or appeal. Timeframes for

65648 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

actions that aren’t always required are

identified in the table by dotted borders:

(i) If you are required to perform that

action, the timeframes begin on the same

dates that they would if the timeframe

borders were not dotted.

(ii) If you are not required to perform that

action, the timeframe for your next required

action is determined as if the timeframes

with the dotted borders were not there. The

timeframe for your next required action

begins on the date that the last required

action was completed.

BILLING CODE 4000–01–P

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65649

BILLING CODE 4000–01–C

65650 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

Appendix B to Subpart M of Part 668—

Sample Default Management Plan for

Special Institutions To Use When

Complying With § 668.198

This appendix is provided as a sample

plan for those institutions developing a

default management plan in accordance with

§ 668.198. It describes some measures you

may find helpful in reducing the number of

students that default on federally funded

loans. These are not the only measures you

could implement when developing a default

management plan. In developing a default

management plan, you must consider your

history, resources, dollars in default, and

targets for default reduction to determine

which activities will result in the most

benefit to your students and to you.

I. Core Default Reduction Strategies (From

§ 668.198(c)(1))

1. Establish a default management team by

engaging your chief executive officer and

relevant senior executive officials and

enlisting the support of representatives from

offices other than the financial aid office.

2. Identify and allocate the personnel,

administrative, and financial resources

appropriate to implement the default

management plan.

3. Define the roles and responsibilities of

the independent third party.

4. Define evaluation methods and establish

a data collection system for measuring and

verifying relevant default management

statistics, including a statistical analysis of

the borrowers who default on their loans.

5. Establish annual targets for reductions in

your rate.

6. Establish a process to ensure the

accuracy of your rate.

II. Additional Default Reduction Strategies

1. Enhance the borrower’s understanding

of his or her loan repayment responsibilities

through counseling and debt management

activities.

2. Enhance the enrollment retention and

academic persistence of borrowers through

counseling and academic assistance.

3. Maintain contact with the borrower after

he or she leaves your institution by using

activities such as skip tracing to locate the

borrower.

4. Track the borrower’s delinquency status

by obtaining reports from data managers and

FFEL Program lenders.

5. Enhance student loan repayments

through counseling the borrower on loan

repayment options and facilitating contact

between the borrower and the data manager

or FFEL Program lender.

6. Assist a borrower who is experiencing

difficulty in finding employment through

career counseling, job placement assistance,

and facilitating unemployment deferments.

7. Identify and implement alternative

financial aid award policies and develop

alternative financial resources that will

reduce the need for student borrowing in the

first 2 years of academic study.

8. Familiarize the parent, or other adult

relative or guardian, with the student’s debt

profile, repayment obligations, and loan

status by increasing, whenever possible, the

communication and contact with the parent

or adult relative or guardian.

III. Defining the Roles and Responsibilities of

Independent Third Party

1. Specifically define the role of the

independent third party.

2. Specify the scope of work to be

performed by the independent third party.

3. Tie the receipt of payments, if required,

to the performance of specific tasks.

4. Assure that all the required work is

satisfactorily completed.

IV. Statistics for Measuring Progress

1. The number of students enrolled at your

institution during each fiscal year.

2. The average amount borrowed by a

student each fiscal year.

3. The number of borrowers scheduled to

enter repayment each fiscal year.

4. The number of enrolled borrowers who

received default prevention counseling

services each fiscal year.

5. The average number of contacts that you

or your agent had with a borrower who was

in deferment or forbearance or in repayment

status during each fiscal year.

6. The number of borrowers at least 60

days delinquent each fiscal year.

7. The number of borrowers who defaulted

in each fiscal year.

8. The type, frequency, and results of

activities performed in accordance with the

default management plan.

Appendix A to Part 668 [Removed]

13. Appendix A to Part 668 is

removed.

Appendix B to Part 668 [Redesignated

as Appendix A to Subpart B of Part

668]

14. Appendix B to Part 668 is

redesignated as Appendix A to Subpart

B of Part 668.

Appendix C to Part 668 [Redesignated

as Appendix A to Subpart B of Part

668]

15. Appendix C to Part 668 is

redesignated as Appendix B to Subpart

B of Part 668.

Appendix D to Part 668 [Removed]

16. Appendix D to Part 668 is

removed.

Appendix E to Part 668 [Redesignated

as Appendix A to Subpart D of Part

668]

17. Appendix E to Part 668 is

redesignated as Appendix A to Subpart

D of Part 668.

Appendix F to Part 668 [Redesignated

as Appendix A to Subpart L of Part 668]

18. Appendix F to Part 668 is

redesignated as Appendix A to Subpart

L of Part 668.

Appendix G to Part 668 [Redesignated

as Appendix B to Subpart L of Part 668]

19. Appendix G to Part 668 is

redesignated as Appendix B to Subpart

L of Part 668.

Appendix H to Part 668 [Removed]

20. Appendix H to Part 668 is

removed.

PART 682—FEDERAL FAMILY

EDUCATION LOAN (FFEL) PROGRAM

21. The authority citation for Part 682

continues to read as follows:

Authority: 20 U.S.C. 1071 to 1087–2,

unless otherwise noted.

22. In § 682.401, paragraph (b)(15) is

revised to read as follows:

§ 682.401 Basic program agreement.

* * * * *

(b) * * *

(15) Guaranty agency verification of

default data. A guaranty agency must

meet the requirements and deadlines

provided for it in subpart M of 34 CFR

part 668 for the cohort default rate

process.

* * * * *

23. In § 682.410, paragraph (c)(1)(i)(C)

is revised to read as follows:

§ 682.410 Fiscal, administrative, and

enforcement requirements.

* * * * *

(c) * * *

(1) * * *

(i) * * *

(C) Each participating school, located

in a State for which the guaranty agency

is the principal guaranty agency, that

has a cohort default rate, as described in

subpart M of 34 CFR part 668, for either

of the 2 immediately preceding fiscal

years, as defined in 34 CFR 668.182,

that exceeds 20 percent, unless the

school is under a mandate from the

Secretary under subpart M of 34 CFR

part 668 to take specific default

reduction measures or if the total dollar

amount of loans entering repayment in

each fiscal year on which the cohort

default rate over 20 percent is based

does not exceed $100,000; or

* * * * *

§ 682.601 [Amended]

24. In § 682.601, paragraph (a)(6) is

amended by removing ‘‘§ 668.17’’ and

adding, in its place, ‘‘subpart M of 34

CFR part 668’’.

§ 682.603 [Amended]

25. In § 682.603, paragraph (g) is

amended by removing ‘‘an FFEL cohort

default rate, Direct Loan cohort rate, or

weighted average cohort rate’’ and

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65651

adding, in its place, ‘‘a cohort default

rate’’.

§ 682.604 [Amended]

26. Section 682.604 is amended—

A. In paragraphs (c)(5)(i), (c)(5)(ii),

(c)(10)(i)(B), and (c)(10)(ii), by removing

‘‘an FFEL cohort default rate, Direct

Loan Program cohort rate, or weighted

average cohort rate’’ and adding, in its

place, ‘‘a cohort default rate, calculated

under subpart M of 34 CFR part 668,’’.

B. By removing paragraph (f)(3).

C. By redesignating paragraphs (f)(4)

and (f)(5) as paragraphs (f)(3) and (f)(4),

respectively.

D. By removing paragraph (g)(3).

E. By redesignating paragraphs (g)(4)

and (g)(5) as paragraphs (g)(3) and (g)(4),

respectively.

PART 685—WILLIAM D. FORD

FEDERAL DIRECT LOAN PROGRAM

27. The authority citation for Part 685

continues to read as follows:

Authority: 20 U.S.C. 1087a et seq., unless

otherwise noted.

§ 685.301 [Amended]

28. Section 685.301 is amended—

A. In paragraphs (b)(8)(i)(A)(2) and

(b)(8)(i)(B), by removing ‘‘a Direct Loan

Program cohort rate, FFEL cohort

default rate, or weighted average cohort

rate’’ and adding, in its place, ‘‘a cohort

default rate, calculated under subpart M

of 34 CFR part 668,’’.

B. In paragraph (b)(8)(ii), by removing

‘‘an FFEL cohort default rate, Direct

Loan cohort rate, or weighted average

cohort rate’’ and adding, in its place, ‘‘a

cohort default rate, calculated under

subpart M of 34 CFR part 668,’’.

§ 865.303 [Amended]

29. Section 685.303 is amended—

A. In paragraphs (b)(4)(i)(A) and

(b)(4)(i)(B), by removing ‘‘a Direct Loan

Program cohort rate, FFEL cohort

default rate, or weighted average cohort

rate’’ and adding, in its place, ‘‘a cohort

default rate, calculated under subpart M

of 34 CFR part 668,’’.

B. In paragraph (b)(4)(ii), by removing

‘‘an FFEL cohort default rate, Direct

Loan cohort rate, or weighted average

cohort rate’’, and adding, in its place, ‘‘a

cohort default rate, calculated under

subpart M of 34 CFR part 668,’’.

§ 685.304 [Amended]

30. Section 685.304 is amended—

A. By removing paragraph (a)(4).

B. By redesignating paragraphs (a)(5),

(a)(6), and (a)(7) as paragraphs (a)(4),

(a)(5), and (a)(6), respectively.

C. By removing paragraph (b)(5).

D. By redesignating paragraphs (b)(6)

and (b)(7) as paragraphs (b)(5) and

(b)(6), respectively.

PART 690—FEDERAL PELL GRANT

PROGRAM

31. The authority citation for Part 690

continues to read as follows:

Authority: 20 U.S.C. 1070a, unless

otherwise noted.

§ 690.7 [Amended]

32. Section 690.7 is amended—

A. In paragraph (c)(1), by removing

‘‘34 CFR 668.17’’ and adding, in its

place, ‘‘subpart M of 34 CFR part 668’’.

B. In paragraph (c)(2), by removing

‘‘34 CFR 668.17(b)’’ and adding, in its

place, ‘‘34 CFR 668.187’’.

[FR Doc. 00–27741 Filed 10–31–00; 8:45 am]

BILLING CODE 4000–01–P