Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59311 

Administrative Law Judge or the 

Commission if it reviews the matter in 

the first instance, shall issue a decision 

either dismissing the allegations or, if it 

is determined that the allegations are 

supported by a preponderance of the 

evidence, specify an appropriate 

sanction. An Administrative Law 

Judge’s decision may be appealed to the 

Commission by either party within 30 

days. If the Administrative Law Judge’s 

decision is appealed, the Commission 

will thereafter issue a scheduling order 

governing the appeal. 

(vii) Investigations and administrative 

proceedings prior to the hearing on the 

order to show cause will be nonpublic 

unless otherwise ordered by the 

Commission. Any administrative 

hearing on the order to show cause, and 

any oral argument on appeal, shall be 

open to the public unless otherwise 

ordered for good cause by the 

Commission or the Administrative Law 

Judge. 

(6) Regardless of any action or 

determination the Commission may or 

may not make, the Commission may 

direct the General Counsel to refer the 

allegations of misconduct to the 

appropriate state, territory, or District of 

Columbia bar or any other appropriate 

authority for further action. 

(7) Upon receipt of notification from 

any authority having power to suspend 

or disbar an attorney from the practice 

of law within any state, territory, or the 

District of Columbia, demonstrating that 

an attorney practicing before the 

Commission is subject to an order of 

final suspension (not merely temporary 

suspension pending further action) or 

disbarment by such authority, the 

Commission may, without resort to any 

of the procedures described in this 

section, enter an order temporarily 

suspending the attorney from practice 

before it and directing the attorney to 

show cause within 30 days from the 

date of said order why the Commission 

should not impose further discipline 

against the attorney. If no response is 

filed, the attorney will be deemed to 

have acceded to such further discipline 

as the Commission deems appropriate. 

If a response is received, the 

Commission may take action or initiate 

proceedings consistent with paragraph 

(e)(5) of this section before making a 

determination whether, and to what 

extent, to impose further discipline 

against the attorney. 

(8) The disciplinary process described 

in this section is in addition to, and 

does not supersede, the authority of the 

Commission or an Administrative Law 

Judge to discipline attorneys 

participating in part 3 proceedings 

pursuant to §§ 3.24(b)(2) or 3.42(d). 

§ 4.2 [Amended] 

■ 16. In § 4.2, amend paragraphs (d)(2) 

and (d)(4), by removing the phrase 

‘‘§ 2.7(d), § 2.7(f)’’ and adding in its 

place ‘‘§ 2.10(a)’’. 

§ 4.9 [Amended] 

■ 17. Amend § 4.9, by removing the 

phrase ‘‘(16 CFR 2.7)’’ from paragraph 

(b)(4) heading and the phrase ‘‘, requests 

for review by the full Commission of 

those rulings, and Commission rulings 

on such requests’’ from paragraph 

(b)(4)(i). 

By direction of the Commission, 

Commissioner Rosch dissenting. 

Donald S. Clark, 

Secretary. 

The following will not appear in the Code 

of Federal Regulations. 

Statement of Chairman Jon Leibowitz 

Regarding Revisions to the 

Commission’s Part 2 Rules and Rule 

4.1(e) 

September 19, 2012 

Today the Commission issued final 

changes to Parts 2 and 4 of the agency’s 

Rules of Practice. The revised Rules 

streamline and update the procedures 

for Commission investigations, and 

clarify the agency’s procedures for 

evaluating allegations of misconduct by 

attorneys practicing before the 

Commission, making us a more effective 

agency. 

All of the Commission generally 

supports the revisions. A legitimate 

question has been raised, however, that 

the revisions to the Part 2 Rules should 

have gone further. One issue involves 

the occasional use of ‘‘access letters,’’ 

rather than compulsory process, to 

conduct Commission competition 

investigations. Over the past few years, 

the Commission has moved decisively 

toward greater use of compulsory 

process in these investigations. 

Compulsory process results in faster, 

more efficient investigations, especially 

in anticompetitive conduct matters 

where the recipients may not have 

strong incentives to cooperate quickly 

with Commission staff. Our experience 

has shown that, all too often, the 

recipients of voluntary access letters 

slow walk compliance. Nevertheless, 

while most competition investigations 

warrant compulsory process, and its use 

is strongly encouraged, it makes sense to 

provide staff with at least some 

flexibility in choosing which method to 

deploy in at least some investigations. 

Another question that has been raised 

is whether the Rules should require staff 

to submit regular status reports to all 

Commissioners on pending 

investigations. Our staff already meets 

regularly with individual 

Commissioners and responds to any 

inquiries about particular matters. 

Moreover, our current practice is for 

staff to submit regular status updates to 

the Commission at six-month intervals. 

This best practice, however, is a matter 

of internal management that does not 

necessarily need to be enshrined in the 

Rules of Practice. 

[FR Doc. 2012–23691 Filed 9–26–12; 8:45 am] 

BILLING CODE 6750–01–P 

DEPARTMENT OF EDUCATION 

34 CFR Parts 668, 674, 682, and 685 

Federal Student Aid Programs 

(Student Assistance General 

Provisions, Federal Perkins Loan 

Program, Federal Family Education 

Loan Program, and the Federal Direct 

Loan Program) 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Updated waivers and 

modifications of statutory and 

regulatory provisions. 

SUMMARY: The Secretary is issuing 

updated waivers and modifications of 

statutory and regulatory provisions 

governing the Federal student financial 

aid programs under the authority of the 

Higher Education Relief Opportunities 

for Students Act of 2003 (HEROES Act). 

The HEROES Act requires the Secretary 

to publish, in a notice in the Federal 

Register, the waivers or modifications of 

statutory or regulatory provisions 

applicable to the student financial 

assistance programs under title IV of the 

Higher Education Act of 1965, as 

amended (HEA), to assist individuals 

who are performing qualifying military 

service, and individuals who are 

affected by a disaster, war or other 

military operation or national 

emergency, as described in the 

SUPPLEMENTARY INFORMATION section of 

this notice. 

DATES: Effective September 27, 2012. 

The waivers and modifications in this 

document expire on September 30, 

2017. 

FOR FURTHER INFORMATION CONTACT: For 

provisions related to the title IV loan 

programs (Federal Perkins Loan 

Program, Federal Family Education 

Loan (FFEL) Program, and Federal 

Direct Loan (Direct Loan) Program): Gail 

McLarnon, U.S. Department of 

Education, 1990 K Street NW., Room 

8026, Washington, DC 20006–8510. 

Telephone: (202) 219–7048 or by email: 

Gail.McLarnon@ed.gov. For other 


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59312 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

provisions: Wendy Macias, U.S. 

Department of Education, 1990 K Street 

NW., Room 8017, Washington, DC 

20006–8510. Telephone: (202) 502–7526 

or by email: Wendy.Macias@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD) or text 

telephone (TTY), call the Federal Relay 

Service (FRS), toll free, at 1–800–877– 

8339. 

Individuals with disabilities can 

obtain this document in an accessible 

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

audiotape, or compact disc) by 

contacting Wendy Macias, U.S. 

Department of Education, 1990 K Street 

NW., Room 8017, Washington, DC 

20006–8510. Telephone: (202) 502–7526 

or by email: Wendy.Macias@ed.gov. 

SUPPLEMENTARY INFORMATION: In a notice 

published in the Federal Register on 

December 12, 2003 (68 FR 69312), the 

Secretary exercised the authority under 

the HEROES Act (Pub. L. 108–76, 20 

U.S.C. 1098bb(b)) and announced 

waivers and modifications of statutory 

and regulatory provisions designed to 

assist ‘‘affected individuals.’’ Under 20 

U.S.C. 1098ee(2), the term ‘‘affected 

individual’’ means an individual who: 

• Is serving on active duty during a 

war or other military operation or 

national emergency; 

• Is performing qualifying National 

Guard duty during a war or other 

military operation or national 

emergency; 

• Resides or is employed in an area 

that is declared a disaster area by any 

Federal, State, or local official in 

connection with a national emergency; 

or 

• Suffered direct economic hardship 

as a direct result of a war or other 

military operation or national 

emergency, as determined by the 

Secretary. 

Under the HEROES Act, the 

Secretary’s authority to provide the 

waivers and modifications would have 

expired on September 30, 2005. On 

September 30, 2005, Public Law 109–78 

extended the expiration date of the 

Secretary’s authority to September 30, 

2007. Accordingly, in a notice in the 

Federal Register published on October 

20, 2005 (70 FR 61037), the Secretary 

extended the expiration of the waivers 

and modifications published on 

December 12, 2003, to September 30, 

2007. 

On September 30, 2007, the President 

signed into law Public Law 110–93, 

which eliminated the September 30, 

2007, expiration date of the HEROES 

Act, thereby making permanent the 

Secretary’s authority to issue waivers 

and modifications of statutory and 

regulatory provisions. 

On December 26, 2007, the Secretary 

published a notice in the Federal 

Register (72 FR 72947) extending the 

waivers and modifications published on 

December 12, 2003, to September 30, 

2012. In that notice, the Secretary also 

indicated an intent to review the 

waivers and modifications published on 

December 12, 2003, in light of statutory 

and regulatory changes and to consider 

whether to change some or all of the 

published waivers and modifications. 

We are now updating the waivers and 

modifications to reflect the results of 

that review. With limited exceptions, 

the waivers and modifications in this 

notice reflect the same waivers and 

modifications originally published in 

the December 12, 2003, Federal Register 

notice. However, they have been 

updated to reflect statutory and 

regulatory changes that have occurred 

since the original publication. In 

addition, a waiver has been added to 

assist affected individuals in regard to 

the annual reevaluation requirements 

for borrowers who are repaying loans 

made under the Federal Family 

Education Loan (FFEL) Program or 

Federal Direct Loan (Direct Loan) 

Program under the Income-Based 

Repayment (IBR) or Income-Contingent 

Repayment (ICR) plans. 

The waiver and modifications related 

to military deferments were eliminated 

because the time-limited military 

service deferment under section 

455(f)(4) of the HEA to which they 

applied (commonly referred to as the 

Armed Forces deferment) has been 

replaced by the military service 

deferment authorized in sections 

428(b)(1)(M)(iii), 455(f)(2)(C), and 

464(c)(2)(A)(iii) of the HEA, which is 

available to all borrowers, regardless of 

when they received their loans, for any 

period during which a borrower is 

serving on active duty during a war or 

other military operation or national 

emergency, or is performing qualifying 

National Guard duty during a war or 

other military operation or national 

emergency. 

In addition, the Secretary has decided 

not to retain the modification to the 

amount of unearned funds an institution 

must return under the Return of Title IV 

Funds requirements in section 484(b)(1) 

of the HEA and 34 CFR 668.22(g) 

because the Secretary has determined 

that it is not in the best interest of 

affected individuals. The removal of 

institutional charges that the institution 

is required to cover, and has covered, 

with non-title IV sources of aid 

generally results in the institution 

returning less unearned title IV, HEA 

program funds and the student 

returning more, often leaving the 

student with a larger title IV, HEA 

program loan debt. 

The Secretary is issuing these waivers 

and modifications under the authority 

of the HEROES Act, 20 U.S.C. 

1098bb(a). In accordance with the 

HEROES Act, the Secretary is providing 

the waivers and modifications of 

statutory and regulatory provisions 

applicable to the student financial 

assistance programs under title IV of the 

HEA that the Secretary believes are 

appropriate to ensure that: 

• Affected individuals who are 

recipients of student financial assistance 

under title IV are not placed in a worse 

position financially in relation to that 

financial assistance because they are 

affected individuals; 

• Affected individuals who are 

recipients of student financial assistance 

are not unduly subject to administrative 

burden or inadvertent, technical 

violations or defaults; 

• Affected individuals are not 

penalized when a determination of need 

for student financial assistance is 

calculated; 

• Affected individuals are not 

required to return or repay an 

overpayment of grant funds based on 

the HEA’s Return of title IV Funds 

provision; and 

• Entities that participate in the 

student financial assistance programs 

under title IV of the HEA and that are 

located in areas that are declared 

disaster areas by any Federal, State, or 

local official in connection with a 

national emergency, or whose 

operations are significantly affected by 

such a disaster, receive temporary relief 

from administrative requirements. 

In 20 U.S.C. 1098bb(b)(1), the 

HEROES Act further provides that 

section 437 of the General Education 

Provisions Act (20 U.S.C. 1232) and 

section 553 of the Administrative 

Procedure Act (5 U.S.C. 553) do not 

apply to the contents of this notice. 

In 20 U.S.C. 1098ee, the HEROES Act 

defines the following terms used in this 

notice: 

Active duty has the meaning given 

that term in 10 U.S.C. 101(d)(1), but 

does not include active duty for training 

or attendance at a service school (e.g., 

the U.S. Military Academy or U.S. Naval 

Academy). 

Military operation means a 

contingency operation as that term is 

defined in 10 U.S.C. 101(a)(13). 

National emergency means a national 

emergency declared by the President of 

the United States. 

Serving on active duty during a war or 

other military operation or national 

emergency includes service by an 

individual who is— 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59313 

(A) a Reserve member of an Armed 

Force ordered to active duty under 10 

U.S.C. 12301(a), 12301(g), 12302, 12304, 

or 12306, or any retired member of an 

Armed Force ordered to active duty 

under 10 U.S.C. 688, for service in 

connection with a war or other military 

operation or national emergency, 

regardless of the location at which that 

active duty service is performed; and 

(B) any other member of an Armed 

Force on active duty in connection with 

any war, operation, or emergency or 

subsequent actions or conditions who 

has been assigned to a duty station at a 

location other than the location at 

which the member is normally assigned. 

Qualifying National Guard duty 

during a war or other military operation 

or national emergency means service as 

a member of the National Guard on fulltime National Guard duty (as defined in 

10 U.S.C. 101(d)(5)) under a call to 

active service authorized by the 

President or the Secretary of Defense for 

a period of more than 30 consecutive 

days under 32 U.S.C. 502(f), in 

connection with a war, another military 

operation, or a national emergency 

declared by the President and supported 

by Federal funds. 

The following waivers and 

modifications are grouped into four 

categories, according to the affected 

individuals to whom they apply. 

Category 1: The Secretary is waiving 

or modifying the following provisions of 

title IV of the HEA and the Department’s 

regulations for ALL affected individuals 

as specified in the SUPPLEMENTARY

INFORMATION section of this notice: 

Need Analysis 

Section 480 of the HEA provides that, 

in the calculation of an applicant’s 

expected family contribution (EFC), the 

term ‘‘total income,’’ which is used in 

the determination of ‘‘annual adjusted 

family income’’ and ‘‘available income,’’ 

is equal to adjusted gross income plus 

untaxed income and benefits for the 

preceding tax year minus excludable 

income. The HEROES Act allows an 

institution to substitute adjusted gross 

income plus untaxed income and 

benefits received in the first calendar 

year of the award year for which such 

determination is made for any affected 

individual, and for his or her spouse 

and dependents, if applicable, in order 

to reflect more accurately the financial 

condition of an affected individual and 

his or her family. The Secretary has 

determined that an institution has the 

option of using the applicant’s original 

EFC or the EFC based on the data from 

the first calendar year of the award year. 

If an institution chooses to use the 

alternate EFC, it should use the 

administrative professional judgment 

procedures established by the Secretary 

as discussed in the following section on 

‘‘Professional Judgment.’’ 

Professional Judgment 

Section 479A of the HEA specifically 

gives the financial aid administrator 

(FAA) the authority to use professional 

judgment to make case-by-case 

adjustments to the cost of attendance or 

to the values of the items used in 

calculating the EFC to reflect a student’s 

special circumstances. The Secretary is 

modifying this provision by removing 

the requirement that adjustments be 

made case by case for affected 

individuals. The use of professional 

judgment in Federal need analysis is 

discussed in the Federal Student Aid 

Handbook available at www.ifap.ed.gov. 

The Secretary encourages FAAs to use 

professional judgment in order to reflect 

more accurately the financial need of 

affected individuals. To that end, the 

Secretary encourages institutions to 

determine an affected individual’s need 

using the method listed below that is 

the most beneficial to the affected 

individual: 

• By using the adjusted gross income 

(AGI) plus untaxed income and benefits 

received in the first calendar year of the 

award year; 

• By using professional judgment; or 

• By making no modifications. (For 

example, in some cases, an individual’s 

income will increase as a result of 

serving on active duty or performing 

qualifying National Guard duty.) 

The FAA must clearly document the 

reasons for any adjustment and the facts 

supporting the decision. In almost all 

cases, the FAA should have 

documentation from a third party with 

knowledge of the student’s unusual 

circumstances. As usual, any 

professional judgment decisions made 

by an FAA that affect a student’s 

eligibility for a subsidized student 

financial assistance program must be 

reported to the Central Processing 

System. 

Return of Title IV Funds—Grant 

Overpayments Owed by the Student 

Section 484B(b)(2) of the HEA and 34 

CFR 668.22(h)(3)(ii) require a student to 

return or repay, as appropriate, 

unearned grant funds for which the 

student is responsible under the Return 

of Title IV Funds calculation. For a 

student who withdraws from an 

institution because of his or her status 

as an affected individual, the Secretary 

is waiving these statutory and regulatory 

requirements so that a student is not 

required to return or repay any 

overpayment of grant funds based on 

the Return of Title IV Funds provisions. 

For these students, the Secretary also 

waives 34 CFR 668.22(h)(4), which: 

• Requires an institution to notify a 

student of a grant overpayment and the 

actions the student must take to resolve 

the overpayment; 

• Denies eligibility to a student who 

owes a grant overpayment and does not 

take an action to resolve the 

overpayment; and 

• Requires an institution to refer a 

grant overpayment to the Secretary 

under certain conditions. 

Therefore, an institution is not 

required to contact the student, notify 

the National Student Loan Data System, 

or refer the overpayment to the 

Secretary. However, the institution must 

document in the student’s file the 

amount of any overpayment as part of 

the documentation of the application of 

this waiver. 

The student is not required to return 

or repay an overpayment of grant funds 

based on the Return of Title IV Funds 

provision. Therefore, an institution 

must not apply any title IV credit 

balance to the grant overpayment prior 

to: using a credit balance to pay 

authorized charges; paying any amount 

of the title IV credit balance to the 

student or parent, in the case of a parent 

PLUS loan; or using the credit balance 

to reduce the student’s title IV loan debt 

(with the student’s authorization) as 

provided in Dear Colleague Letter GEN– 

04–03 (February 2004; revised 

November 2004). 

Verification of AGI and U.S. Income 

Tax Paid 

Pursuant to 34 CFR 668.57(a)(3)(ii), 

for an individual who is required to file 

a U.S. income tax return and has been 

granted a filing extension by the Internal 

Revenue Service (IRS), an institution 

must accept, in lieu of an income tax 

return for verification of AGI or income 

tax paid: 

• A copy of IRS Form 4868, 

‘‘Application for Automatic Extension 

of Time to File U.S. Individual Income 

Tax Return,’’ that the individual filed 

with the IRS for the specified year, or a 

copy of the IRS’s approval of an 

extension beyond the automatic sixmonth extension if the individual 

requested an additional extension of the 

filing time; and 

• A copy of each IRS Form W–2 that 

the individual received for the specified 

year or, for a self-employed individual, 

a statement signed by the individual 

certifying the amount of AGI for the 

specified year. 

The Secretary is modifying this 

provision so that the submission of a 


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59314 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

copy of IRS Form 4868 or a copy of the 

IRS extension approval is not required 

if an affected individual has not filed an 

income tax return by the filing deadline. 

For these individuals, an institution 

must accept, in lieu of an income tax 

return for verification of AGI and taxes 

paid: 

• A signed statement from the 

individual certifying that he or she has 

not filed an income tax return or a 

request for a filing extension because he 

or she was called up for active duty or 

for qualifying National Guard duty 

during a war or other military operation 

or national emergency; and 

• A copy of each W–2 received for the 

specified year or, for a self-employed 

individual, a statement signed by the 

individual certifying the amount of AGI 

for the specified year. 

An institution may request that an 

individual granted a filing extension 

submit tax information using the IRS 

Data Retrieval Tool, or by obtaining a 

tax return transcript from the IRS that 

lists tax account information for the 

specified year after the income tax 

return is filed. If an institution receives 

the tax information, it must verify the 

income information of the tax filer(s). 

Category 2: The Secretary is waiving 

or modifying the following provisions of 

title IV of the HEA and the Department’s 

regulations for affected individuals who 

are serving on active duty, performing 

qualifying National Guard duty during a 

war or other military operation or 

national emergency, or who reside or 

are employed in a disaster area as 

described in the SUPPLEMENTARY

INFORMATION section of this notice. 

Return of Title IV Funds—PostWithdrawal Disbursements of Loan 

Funds 

Under 34 CFR 668.22(a)(6)(iii)(A)(5) 

and (a)(6)(iii)(D), a student (or parent for 

a parent PLUS loan) must be provided 

a post-withdrawal disbursement of a 

title IV loan if the student (or parent) 

responds to an institution’s notification 

of the post-withdrawal disbursement 

within 14 days of the date that the 

institution sent the notice, or a later 

deadline set by the institution. If a 

student or parent submits a late 

response, an institution may, but is not 

required to, make the post-withdrawal 

disbursement. 

The Secretary is modifying this 

requirement so that, for a student who 

withdraws because of his or her status 

as an affected individual in this category 

and who is eligible for a postwithdrawal disbursement, the 14-day 

time period in which the student (or 

parent) must normally respond to the 

offer of the post-withdrawal 

disbursement is extended to 45 days, or 

to a later deadline set by the institution. 

If the student or parent submits a 

response after the designated period, the 

institution may, but is not required to, 

make the post-withdrawal 

disbursement. As required under the 

current regulations, if the student or 

parent submits the timely response 

instructing the institution to make all or 

a portion of the post-withdrawal 

disbursement, or the institution chooses 

to make a post-withdrawal 

disbursement based on receipt of a late 

response, the institution must disburse 

the funds within 180 days of the date of 

the institution’s determination that the 

student withdrew. 

Leaves of Absence 

Under 34 CFR 668.22(d)(3)(iii)(B), a 

student is required to provide a written, 

signed, and dated request, which 

includes the reason for that request, for 

an approved leave of absence prior to 

the leave of absence. However, if 

unforeseen circumstances prevent a 

student from providing a prior written 

request, the institution may grant the 

student’s request for a leave of absence 

if the institution documents its decision 

and collects the written request at a later 

date. It may be appropriate in certain 

limited cases for an institution to 

provide an approved leave of absence to 

a student who must interrupt his or her 

enrollment because he or she is an 

affected individual in this category. 

Therefore, the Secretary is waiving the 

requirement that the student provide a 

written request for affected individuals 

who have difficulty providing a written 

request as a result of being an affected 

individual in this category. The 

institution’s documentation of its 

decision to grant the leave of absence 

must include, in addition to the reason 

for the leave of absence, the reason for 

waiving the requirement that the leave 

of absence be requested in writing. 

Treatment of Title IV Credit Balances 

When a Student Withdraws 

Under 34 CFR 668.164(e), an 

institution must pay any title IV credit 

balance to the student, or parent in the 

case of a parent PLUS loan, within 14 

days after the balance occurred. 

However, under 34 CFR 668.165(b)(i), if 

a student (or parent) has provided 

authorization, an institution may use a 

title IV credit balance to reduce the 

borrower’s total title IV loan debt, not 

just the title IV loan debt for the period 

for which the Return of Title IV Funds 

calculation is performed. 

Therefore, for students who withdraw 

because they are affected individuals in 

this category, the Secretary is modifying 

34 CFR 668.164(e) to consider that the 

institution has met the 14-day 

requirement if, within that timeframe, 

the institution attempts to contact the 

student (or parent) to suggest that the 

institution be authorized to return the 

credit balance to the loan program(s). 

Based upon the instructions of the 

student (or parent), the institution must 

promptly return the funds to the title IV 

loan programs or pay the credit balance 

to the student (or parent). 

In addition, if an institution chooses 

to attempt to contact the student (or 

parent) for authorization to apply the 

credit balance to reduce the student’s 

title IV loan debt, it must allow the 

student (or parent) 45 days to respond. 

If there is no response within 45 days, 

the institution must promptly pay the 

credit balance to the student (or parent) 

or return the funds to the title IV 

programs if the student or parent cannot 

be located. 

Consistent with the guidance 

provided in Dear Colleague Letter GEN– 

04–03 (February 2004; revised 

November 2004), the institution may 

also choose to pay the credit balance to 

the student (or parent) without first 

requesting permission to apply the 

credit balance to reduce the student’s 

title IV loan debt. 

Cash Management—Borrower Request 

for Loan Cancellation 

Under 34 CFR 668.165(a)(4)(ii), an 

institution must return loan proceeds or 

cancel the loan, or both, if the 

institution receives a loan cancellation 

request from a borrower within 14 days 

after the date of the institution’s notice 

to the borrower of his or her right to 

cancel all or a portion of a loan, or by 

the first day of the payment period if the 

institution sends the notice more than 

14 days before the first day of the 

payment period. Under 34 CFR 

668.165(a)(4)(iii), if an institution 

receives a late loan cancellation request 

from a borrower, the institution may, 

but is not required to, comply with the 

request. For a borrower who is an 

affected individual in this category, the 

Secretary is modifying this provision to 

require an institution to allow at least 60 

days, rather than at least 14 days, for the 

borrower to request the cancellation of 

all or a portion of a loan for which 

proceeds have been credited to the 

account at the institution. If an 

institution receives a loan cancellation 

request from a borrower after the 60-day 

period, the institution may, but is not 

required to, comply with the request. 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59315 

Cash Management—Student and Parent 

Authorizations 

Under 34 CFR 668.164(c)(3)(i), an 

institution must obtain affirmative 

consent from a student or parent, as 

applicable, to disburse title IV funds to 

a bank account designated by the 

student or parent. In addition, 34 CFR 

668.165(b)(1) provides that an 

institution must obtain a written 

authorization from a student or parent, 

as applicable, to: 

• Use title IV funds to pay for 

educationally related charges incurred 

by the student at the institution other 

than charges for tuition and fees and, as 

applicable, room and board; and 

• Hold on behalf of the student or 

parent any title IV funds that would 

otherwise be paid directly to the student 

or parent. 

The Secretary is modifying these 

provisions to permit an institution to 

accept affirmative consent and any 

authorization provided by a student (or 

parent for a parent PLUS loan) orally, 

rather than in writing, if the student or 

parent is prevented from providing a 

written affirmative consent or 

authorization because of his or her 

status as an affected individual in this 

category. The institution must 

document the oral consent or 

authorization. 

Satisfactory Academic Progress 

Institutions may, in cases where a 

student failed to meet the institution’s 

satisfactory academic progress standards 

as a direct result of being an affected 

individual in this category, apply the 

exception provision of ‘‘other special 

circumstances’’ contained in 34 CFR 

668.34(a)(9)(ii). 

Borrowers in a Grace Period 

Sections 428(b)(7)(D) and 464(c)(7) of 

the HEA and 34 CFR 674.31(b)(2)(i)(C), 

682.209(a)(5), and 685.207(b)(2)(ii) and 

(c)(2)(ii) exclude from a Federal Perkins 

Loan, FFEL, or Direct Loan borrower’s 

(title IV borrower’s) initial grace period 

any period during which a borrower 

who is a member of an Armed Forces 

reserve component is called or ordered 

to active duty for a period of more than 

30 days. The statutory and regulatory 

provisions further require that any 

single excluded period may not exceed 

three years and must include the time 

necessary for the borrower to resume 

enrollment at the next available regular 

enrollment period. Lastly, any borrower 

who is in a grace period when called or 

ordered to active duty is entitled to 

another six- or nine-month grace period, 

as applicable, upon completion of the 

excluded period of service. 

The Secretary is modifying these 

statutory and regulatory provisions to 

exclude from a title IV borrower’s initial 

grace period, any period, not to exceed 

three years, during which a borrower is 

an affected individual in this category. 

Any excluded period must include the 

time necessary for an affected 

individual in this category to resume 

enrollment at the next available 

enrollment period. 

Borrowers in an ‘‘In-School’’ Period 

A title IV borrower is considered to be 

in an ‘‘in-school’’ status and is not 

required to make payments on a title IV 

loan that has not entered repayment as 

long as the borrower is enrolled at an 

eligible institution on at least a half-time 

basis. Under sections 428(b)(7) and 

464(c)(1)(A) of the HEA and 34 CFR 

674.31(b)(2), 682.209(a), and 685.207(b), 

(c), and (e)(2) and (3), when a title IV 

borrower ceases to be enrolled at an 

eligible institution on at least a half-time 

basis, the borrower is obligated to begin 

repayment of the loan after a six- or 

nine-month grace period, depending on 

the title IV loan program and the terms 

of the borrower’s promissory note. The 

Secretary is modifying the statutory and 

regulatory provisions that obligate an 

‘‘in-school’’ borrower who has dropped 

below half-time status to begin 

repayment if the borrower is an affected 

individual in this category, by requiring 

the holder of the loan to maintain the 

loan in an ‘‘in-school’’ status for a 

period not to exceed three years, 

including the time necessary for the 

borrower to resume enrollment in the 

next regular enrollment period, if the 

borrower is planning to go back to 

school. The Secretary will pay interest 

that accrues on a subsidized Stafford 

Loan as a result of the extension of a 

borrower’s in-school status under this 

modification. 

Borrowers in an In-School or Graduate 

Fellowship Deferment 

Under sections 427(a)(2)(C)(i), 

428(b)(1)(M)(i), 428B(a)(2) and (d)(1), 

428C(b)(4)(C), 455(f)(2)(A), and 

464(c)(2)(A)(i) of the HEA and 34 CFR 

674.34(b)(1), 682.210(b)(1)(i) and (ii), 

682.210(s)(2)and(3), and 

685.204(b)(1)(i)(A) and (B), a title IV 

borrower is eligible for a deferment on 

the loan during periods after the 

commencement or resumption of the 

repayment period on the loan when the 

borrower is enrolled and in attendance 

as a regular student on at least a halftime basis (or full-time, if required by 

the terms of the borrower’s promissory 

note) at an eligible institution; enrolled 

and in attendance as a regular student 

in a course of study that is part of a 

graduate fellowship program; or 

engaged in graduate or post-graduate 

fellowship-supported study outside the 

United States. The borrower’s deferment 

period ends when the borrower no 

longer meets one of the above 

conditions. 

The Secretary is waiving the statutory 

and regulatory eligibility requirements 

for this deferment for title IV borrowers 

who were required to interrupt a 

graduate fellowship deferment, or who 

were in an in-school deferment but who 

left school, because of their status as an 

affected individual in this category. The 

holder of the loan is required to 

maintain the loan in the graduate 

fellowship deferment or in-school 

deferment status for a period not to 

exceed three years during which the 

borrower is an affected individual in 

this category. This period includes the 

time necessary for the borrower to 

resume his or her graduate fellowship 

program or resume enrollment in the 

next regular enrollment period if the 

borrower returns to school. The 

Secretary will pay interest that accrues 

on a subsidized Stafford Loan as a result 

of extending a borrower’s eligibility for 

deferment under this waiver. 

Forbearance 

Under section 464(e) of the HEA and 

34 CFR 674.33(d)(2), there is a threeyear cumulative limit on the length of 

forbearances that a Federal Perkins Loan 

borrower can receive. To assist Federal 

Perkins Loan borrowers who are 

affected individuals in this category, the 

Secretary is waiving these statutory and 

regulatory requirements so that any 

forbearance based on a borrower’s status 

as an affected individual in this category 

is excluded from the three-year 

cumulative limit. 

Under section 464(e) of the HEA and 

34 CFR 674.33(d)(2) and (3), a school 

must receive a request and supporting 

documentation from a Federal Perkins 

Loan borrower before granting the 

borrower a forbearance, the terms of 

which must be in the form of a written 

agreement. The Secretary is waiving 

these statutory and regulatory 

provisions to require an institution to 

grant forbearance based on the 

borrower’s status as an affected 

individual in this category for a oneyear period, including a three-month 

‘‘transition period’’ immediately 

following, without supporting 

documentation or a written agreement, 

based on the written or oral request of 

the borrower, a member of the 

borrower’s family, or another reliable 

source. The purpose of the three-month 

transition period is to assist borrowers 

so that they will not be required to 


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reenter repayment immediately after 

they are no longer affected individuals 

in this category. In order to grant the 

borrower forbearance beyond the initial 

twelve- to fifteen-month period, 

supporting documentation from the 

borrower, a member of the borrower’s 

family, or another reliable source is 

required. 

Under 34 CFR 682.211(i)(1), a FFEL 

borrower who requests forbearance 

because of a military mobilization must 

provide the loan holder with 

documentation showing that he or she 

is subject to a military mobilization. The 

Secretary is waiving this requirement to 

allow a borrower who is not otherwise 

eligible for the military service 

deferment under 34 CFR 682.210(t)(9), 

685.204(e)(7), and 674.34(h)(7) to 

receive forbearance at the request of the 

borrower, a member of the borrower’s 

family, or another reliable source for a 

one-year period, including a threemonth transition period that 

immediately follows immediately 

following, without providing the loan 

holder with documentation. In order to 

grant the borrower forbearance beyond 

this period, documentation supporting 

the borrower’s military mobilization 

must be submitted to the holder of the 

loan. 

The Secretary will apply the 

forbearance waivers and modifications 

in this section to loans held by the 

Department of Education. 

Collection of Defaulted Loans 

In accordance with 34 CFR part 674, 

subpart C—Due Diligence, and 

682.410(b)(6), schools and guaranty 

agencies must attempt to recover 

amounts owed from defaulted Federal 

Perkins and FFEL borrowers, 

respectively. The Secretary is waiving 

the regulatory provisions that require 

schools and guaranty agencies to 

attempt collection on defaulted loans for 

the time period during which the 

borrower is an affected individual in 

this category and for a three-month 

transition period. The school or 

guaranty agency may stop collection 

activities upon notification by the 

borrower, a member of the borrower’s 

family, or another reliable source that 

the borrower is an affected individual in 

this category. Collection activities must 

resume after the borrower has notified 

the school or guaranty agency that he or 

she is no longer an affected individual 

and the three-month transition period 

has expired. The loan holder must 

document in the loan file why it has 

suspended collection activities on the 

loan, and the loan holder is not required 

to obtain evidence of the borrower’s 

status while collection activities have 

been suspended. The Secretary will 

apply the waivers described in this 

paragraph to loans held by the 

Department of Education. 

Loan Cancellation 

Depending on the loan program, 

borrowers may qualify for loan 

cancellation if they are employed 

fulltime in specified occupations, such 

as teaching, as a civil legal assistance 

attorney, or in law enforcement, 

pursuant to Sections 428J, 428L, 

460(b)(1), and 465(a)(2)(A)–(M) and 

(a)(3) of the HEA, and 34 CFR 674.53, 

674.55, 674.55(b), 674.56, 674.57, 

674.58, 674.60, 682.216, and 685.217. 

Generally, to qualify for loan 

cancellation, borrowers must perform 

uninterrupted, otherwise qualifying 

service for a specified length of time (for 

example, one year) or for consecutive 

periods of time, such as five consecutive 

years. 

For borrowers who are affected 

individuals in this category, the 

Secretary is waiving the requirements 

that apply to the various loan 

cancellations that such periods of 

service be uninterrupted or consecutive, 

if the reason for the interruption is 

related to the borrower’s status as an 

affected individual in this category. 

Therefore, the service period required 

for the borrower to receive or retain a 

loan cancellation for which he or she is 

otherwise eligible will not be 

considered interrupted by any period 

during which the borrower is an 

affected individual in this category, 

including the three-month transition 

period. The Secretary will apply the 

waivers described in this paragraph to 

loans held by the Department of 

Education. 

Rehabilitation of Defaulted Loans 

A borrower of a Direct Loan or FFEL 

Loan must make nine on-time, monthly 

payments over ten consecutive months 

to rehabilitate a defaulted loan in 

accordance with section 428F(a) of the 

HEA and 34 CFR 682.405 and 

685.211(f). Federal Perkins Loan 

borrowers must make nine consecutive, 

on-time monthly payments to 

rehabilitate a defaulted Federal Perkins 

Loan in accordance with section 

464(h)(1)(A) of the HEA. To assist title 

IV borrowers who are affected 

individuals in this category, the 

Secretary is waiving the statutory and 

regulatory requirements that payments 

made to rehabilitate a loan must be 

consecutive or made over no more than 

ten consecutive months. Loan holders 

should not treat any payment missed 

during the time that a borrower is an 

affected individual in this category, or 

the three-month transition period, as an 

interruption in the number of monthly, 

on-time payments required to be made 

consecutively, or the number of 

consecutive months in which payment 

is required to be made, for loan 

rehabilitation. If there is an arrangement 

or agreement in place between the 

borrower and loan holder and the 

borrower makes a payment during this 

period, the loan holder must treat the 

payment as an eligible payment in the 

required series of payments. When the 

borrower is no longer considered to be 

an affected individual in this category, 

and the three-month transition period 

has expired, the required sequence of 

qualifying payments may resume at the 

point they were discontinued as a result 

of the borrower’s status. The Secretary 

will apply the waivers described in this 

paragraph to loans held by the 

Department of Education. 

Reinstatement of Title IV Eligibility 

Under sections 428F(b) and 464(h)(2) 

of the HEA and under the definition of 

‘‘satisfactory repayment arrangement’’ 

in 34 CFR 668.35(a)(2), 674.2(b), 

682.200(b), and 685.102(b), a defaulted 

title IV borrower may make six 

consecutive, monthly, on-time 

payments to reestablish eligibility for 

title IV student financial assistance. To 

assist title IV borrowers who are affected 

individuals in this category, the 

Secretary is waiving statutory and 

regulatory provisions that require the 

borrower to make consecutive payments 

in order to reestablish eligibility for title 

IV student financial assistance. Loan 

holders should not treat any payment 

missed during the time that a borrower 

is an affected individual in this category 

as an interruption in the six 

consecutive, monthly, on-time 

payments required for reestablishing 

title IV eligibility. If there is an 

arrangement or agreement in place 

between the borrower and loan holder 

and the borrower makes a payment 

during this period, the loan holder must 

treat the payment as an eligible payment 

in the required series of payments. 

When the borrower is no longer 

considered to be an affected individual 

or in the three-month transition period 

for purposes of this notice, the required 

sequence of qualifying payments may 

resume at the point they were 

discontinued as a result of the 

borrower’s status. The Secretary will 

apply the waivers described in this 

paragraph to loans held by the 

Department of Education. 

Consolidation of Defaulted Loans 

Under the definition of ‘‘satisfactory 

repayment arrangement’’ in 34 CFR 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59317 

685.102(b), a defaulted FFEL or Direct 

Loan borrower may establish eligibility 

to consolidate a defaulted loan in the 

Direct Consolidation Loan Program by 

making three consecutive, monthly, ontime payments on the loan. The 

Secretary is waiving the regulatory 

requirement that such payments be 

consecutive. FFEL loan holders should 

not treat any payment missed during the 

time that a borrower is an affected 

individual in this category as an 

interruption in the three consecutive, 

monthly, on-time payments required for 

establishing eligibility to consolidate a 

defaulted loan in the Direct 

Consolidation Loan Program. If there is 

an arrangement or agreement in place 

between the borrower and loan holder 

and the borrower makes a payment 

during this period, the loan holder must 

treat the payment as an eligible payment 

in the required series of payments. 

When the borrower is no longer 

considered to be an affected individual 

in this category or in the three-month 

transition period, the required sequence 

of qualifying payments may resume at 

the point they were discontinued as a 

result of the borrower’s status as an 

affected individual. The Secretary will 

apply the waivers described in this 

paragraph to Direct and FFEL loans held 

by the Department of Education and to 

commercially held FFEL loans. 

Annual Reevaluation Requirements for 

Direct Loan and FFEL Borrowers Under 

the Income-Based Repayment (IBR) and 

Income-Contingent Repayment (ICR) 

Plans 

Section 493C(c) of the HEA requires 

the Secretary to establish procedures for 

annually determining a borrower’s 

eligibility for income-based repayment, 

including verification of a borrower’s 

annual income and the annual amount 

due on the total amount of the 

borrower’s loans. Section 493C(b)(6) of 

the HEA provides that if a borrower no 

longer has a partial financial hardship, 

the maximum monthly payment amount 

the borrower will be required to pay is 

an amount that does not exceed the 

monthly amount paid under the 

standard repayment plan based on a tenyear repayment period. Under 34 CFR 

682.215(e), 682.221(e), and 685.209, 

borrowers repaying under the IBR or 

ICR plan must be evaluated annually to 

determine if the borrower continues to 

have a partial financial hardship, if 

applicable, and whether the borrower’s 

monthly payment amount under the IBR 

or ICR plan should be recalculated 

based on changes in the borrower’s 

income or family size. Borrowers are 

required to provide information about 

their annual income and family size to 

the loan holder each year by the 

deadline specified by the holder. A 

borrower who fails to provide the 

required information would have his or 

her monthly payment amount adjusted 

to the amount the borrower would pay 

under the ten-year standard payment 

plan. 

The Secretary is waiving these 

statutory and regulatory provisions to 

require loan holders to maintain an 

affected borrower’s payment at the most 

recently calculated IBR or ICR monthly 

payment amount for up to a three-year 

period, including a three-month 

transition period immediately 

following, if the borrower’s status as an 

affected individual in this category has 

prevented the borrower from providing 

documentation of updated income and 

family size by the specified deadline for 

the holder’s receipt of that information. 

Category 3: The Secretary is waiving 

or modifying the following provisions of 

title IV of the HEA and the Department’s 

regulations for affected individuals who 

are serving on active duty or performing 

qualifying National Guard duty during a 

war or other military operation or 

national emergency as described in the 

SUPPLEMENTARY INFORMATION section of 

this notice. 

Institutional Charges and Refunds 

The HEROES Act encourages 

institutions to provide a full refund of 

tuition, fees, and other institutional 

charges for the portion of a period of 

instruction that a student was unable to 

complete, or for which the student did 

not receive academic credit, because he 

or she was called up for active duty or 

for qualifying National Guard duty 

during a war or other military operation 

or national emergency. Alternatively, 

the Secretary encourages institutions to 

provide a credit in a comparable amount 

against future charges. 

The HEROES Act also recommends 

that institutions consider providing easy 

and flexible reenrollment options to 

students who are affected individuals in 

this category. At a minimum, an 

institution must comply with the 

requirements of 34 CFR 668.18, which 

addresses the readmission requirements 

for service members under certain 

conditions. 

Of course, an institution may provide 

such treatment to affected individuals 

other than those who are called up to 

active duty or for qualifying National 

Guard duty during a war or other 

military operation or national 

emergency. 

Before an institution makes a refund 

of institutional charges, it must perform 

the required Return of Title IV Funds 

calculations based upon the originally 

assessed institutional charges. After 

determining the amount that the 

institution must return to the title IV 

Federal student aid programs, any 

reduction of institutional charges may 

take into account the funds that the 

institution is required to return. In other 

words, we do not expect that an 

institution would both return funds to 

the Federal programs and also provide 

a refund of those same funds to the 

student. 

Category 4: The Secretary is waiving 

or modifying the following provisions of 

the HEA and the Department’s 

regulations for dependents and spouses 

of affected individuals who are serving 

on active duty or performing qualifying 

National Guard duty during a war or 

other military operation or national 

emergency as described in the 

SUPPLEMENTARY INFORMATION section of 

this notice. 

Verification Signature Requirements 

Regulations in 34 CFR 668.57(b) and 

(c) require signatures to verify the 

number of family members in the 

household and the number of family 

members enrolled in postsecondary 

institutions. The Secretary is waiving 

the requirement that a dependent 

student submit a statement signed by 

one of the applicant’s parents when no 

responsible parent can provide the 

required signature because of the 

parent’s status as an affected individual 

in this category. 

Required Signatures on the Free 

Application for Federal Student Aid 

(FAFSA), Student Aid Report (SAR), 

and Institutional Student Information 

Record (ISIR) 

Generally, when a dependent 

applicant for title IV aid submits the 

FAFSA or submits corrections to a 

previously submitted FAFSA, at least 

one parental signature is required on the 

FAFSA, SAR, or ISIR. The Secretary is 

waiving this requirement so that an 

applicant need not provide a parent’s 

signature when there is no responsible 

parent who can provide the required 

signature because of the parent’s status 

as an affected individual in this 

category. In these situations, a student’s 

high school counselor or the FAA may 

sign on behalf of the parent as long as 

the applicant provides adequate 

documentation concerning the parent’s 

inability to provide a signature due to 

the parent’s status as an affected 

individual in this category. 

Electronic Access to This Document: 

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 


tkelley on DSK3SPTVN1PROD with RULES
59318 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

and the Code of Federal Regulations is 

available via the Federal Digital System 

at: www.gpo.gov/fdsys. At this site you 

can view this document, as well as all 

other documents of this Department 

published in the Federal Register, in 

text or Adobe Portable Document 

Format (PDF). To use PDF you must 

have Adobe Acrobat Reader, which is 

available free at the site. 

You may also access documents of the 

Department published in the Federal 

Register by using the article search 

feature at: www.federalregister.gov. 

Specifically, through the advanced 

search feature at this site, you can limit 

your search to documents published by 

the Department. 

(Catalog of Federal Domestic Assistance 

Numbers: 84.007 Federal Supplemental 

Educational Opportunity Grant Program; 

84.032 Federal Family Education Loan 

Program; 84.032 Federal PLUS Program; 

84.033 Federal Work Study Program; 84.038 

Federal Perkins Loan Program; 84.063 

Federal Pell Grant Program; and 84.268 

William D. Ford Federal Direct Loan 

Program.) 

Program Authority: 20 U.S.C. 1071, 1082, 

1087a, 1087aa, Part F–1. 

Dated: September 24, 2012. 

David A. Bergeron, 

Acting Assistant Secretary for Postsecondary 

Education. 

[FR Doc. 2012–23831 Filed 9–26–12; 8:45 am] 

BILLING CODE 4000–01–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 51 

RIN 2900–AO36 

Removal of 30-Day Residency 

Requirement for Per Diem Payments 

AGENCY: Department of Veterans Affairs. 

ACTION: Direct final rule. 

SUMMARY: The Department of Veterans 

Affairs (VA) is taking direct final action 

to amend its regulations concerning per 

diem payments to State homes for the 

provision of nursing home care to 

veterans. Specifically, this rule removes 

the requirement that a veteran must 

have resided in a State home for 30 

consecutive days before VA will pay per 

diem for that veteran when there is no 

overnight stay. The intended effect of 

this direct final rule is to permit per 

diem payments to State homes for 

veterans who do not stay overnight, 

regardless of how long the veterans have 

resided at the State homes, so that the 

State homes will hold the veterans’ beds 

until the veterans return. 

DATES: Effective: This rule is effective on 

November 26, 2012, without further 

notice, unless VA receives a significant 

adverse comment by October 29, 2012. 

If significant adverse comment is 

received, VA will publish a timely 

withdrawal of the rule in the Federal 

Register. 

ADDRESSES: Written comments may be 

submitted through http:// 

www.regulations.gov; by mail or hand 

delivery to the Director, Regulation 

Policy and Management (02REG), 

Department of Veterans Affairs, 810 

Vermont Ave., NW., Room 1068, 

Washington, DC 20420; or by fax to 

(202) 273–9026. Comments should 

indicate that they are submitted in 

response to ‘‘RIN 2900–AO36, Removal 

of 30-Day Residency Requirement for 

Per Diem Payments.’’ Copies of 

comments received will be available for 

public inspection in the Office of 

Regulation Policy and Management, 

Room 1063B, between the hours of 8 

a.m. and 4:30 p.m., Monday through 

Friday (except holidays). Please call 

(202) 461–4902 for an appointment. 

(This is not a toll-free number.) In 

addition, during the comment period, 

comments may be viewed online 

through the Federal Docket Management 

System at http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Harold Bailey, Program Management 

Officer (Director of Administration), VA 

Health Administration Center, 

Purchased Care (10NB3), Veterans 

Health Administration, Department of 

Veterans Affairs, 810 Vermont Ave., 

NW., Washington, DC 20420, (303) 331– 

7551. (This is not a toll-free number.) 

SUPPLEMENTARY INFORMATION: This rule 

amends part 51 of title 38, Code of 

Federal Regulations, to remove the 

requirement that a veteran receiving 

nursing home care in a State home must 

have resided in the State home for at 

least 30 consecutive days before VA will 

pay per diem when that veteran does 

not stay in the State home overnight. VA 

pays per diem to State homes for 

veterans who stay elsewhere overnight 

to create a ‘‘bed hold,’’ so that the State 

home reserves the veteran’s bed until 

the veteran returns from a temporary 

absence. Typically, these temporary 

absences arise from a veteran’s acute 

need for a higher level of care, such as 

a period of hospitalization. Temporary 

absences also arise for reasons other 

than hospital care, such as when a 

veteran travels to visit family members. 

This rule also clarifies in 38 CFR 

51.43(c) that VA calculates occupancy 

rate ‘‘by dividing the total number of 

patients in the nursing home or 

domiciliary by the total recognized 

nursing home or domiciliary beds in 

that facility.’’ This is consistent with 

current practice, and will help ensure 

that State homes understand our 

methodology. 

The 30-day residency requirement for 

bed hold per diem payments was 

established in 2009 in 38 CFR 51.43(c), 

which stated: ‘‘Per diem will be paid 

under §§ 51.40 and 51.41 for each day 

that the veteran is receiving care and 

has an overnight stay. Per diem also will 

be paid when there is no overnight stay 

if the veteran has resided in the facility 

for 30 consecutive days (including 

overnight stays) and the facility has an 

occupancy rate of 90 percent or greater. 

However, these payments will be made 

only for the first 10 consecutive days 

during which the veteran is admitted as 

a patient for any stay in a VA or other 

hospital (a hospital stay could occur 

more than once in a calendar year) and 

only for the first 12 days in a calendar 

year during which the veteran is absent 

for purposes other than receiving 

hospital care.’’ See 74 FR 19433. 

In the proposed rule that preceded the 

addition of § 51.43, we stated that the 

basis for the 30-day residency 

requirement was that ‘‘State homes 

should receive per diem payments to 

hold beds only for permanent residents 

and only if the State home would likely 

fill the bed without such payments. 

Allowing payments for bed holds only 

after a veteran has been in a nursing 

home for at least 30 consecutive days 

(including overnight stays) appears to be 

sufficient to establish permanent 

residency.’’ 73 FR 72402. In addition, 

the 2009 final rule confirmed VA’s 

intent to make the 30-day rule a factor 

that directly affected eligibility for bed 

hold payments, stating: ‘‘We believe that 

30 days is a minimal amount of time for 

demonstrating that a veteran intends to 

be a resident at the State home and that 

the veteran was not temporarily placed 

in the State home.’’ 74 FR 19429. 

VA adopted the 30-day residency 

requirement as the measure for 

determining whether a veteran would 

likely return to a State home after not 

having stayed there overnight, and in 

turn whether the State home should 

receive continued per diem payments in 

the veteran’s absence to hold the 

veteran’s bed. Through application of 

this requirement, however, VA has 

come to recognize that duration of 

residency in a State home is not an 

accurate predictor of whether a veteran 

is likely to return to a State home after 

a temporary absence. For instance, with 

absences resulting from the veteran’s 

need for hospital care, the veteran’s 

health status while hospitalized is 

actually what determines whether and 


tkelley on DSK3SPTVN1PROD with RULES