1

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable)

**SUPPORTING STATEMENT FOR PAPERWORK REDUCTION ACT SUBMISSION**  **Information on Borrower Defense to Repayment Loan Discharge**  **Claims A. Justification**  1. Explain the circumstances that make the collection of information necessary . Identify any legal or administrative requirements that necessitate the collection. Attach a hard cop y of the appropriate section of each statute and regulation mandating or authorizing the collection of information , or you may provide a valid URL link or paste the applicable section 1 . Specify the review t ype of the collection (new, revision, extension, reinstatement with change, reinstatement without change) . If revised, brie fl y specify the changes. If a rulemaking is involved, make note of the sections or changed sections, if applicable. Section 455(h) of the Higher Education Act of 1965, as amended ( 20 U.S.C. 1087e(h ) provides that the U.S. Department of Education (Department) defines b y regulation which claims against a school co nstitute defenses to repay ment of a loan under the Federal Direct Loan (Direct Loan) program. Following a negotiated rulemaking process, the Department published amendments to the Direct Loan program regulations on December 1, 1994. These regulations inc luded borrower defenses specified in 34 CFR 685.206(c) . The regulation, in part, states “ (c) (1) [i] n any proceeding to collect on a Direct Loan, the borrower may assert as a defense against repay ment, an act or omission of the school attended b y the student that would give rise to a cause of action against the school under applicable State law.” A subsequent negotiated rulemaki ng process was established for the purpose of developing regulations for borrower defenses for both the Direct Loan and the Federal Family Education Loan Program (FFEL) programs . However, during the first session of the negotiations, the non

- Federal negot iators recommended to the Department of Education (the Department) that no additional sessions were warranted and that no further regulatory

provisions for borrower defenses would be needed. It was determined that borrower defenses could be adequately addressed by

current regulation and administrative procedures. A further discussion of this is in the Federal Register, Vol. 60, No, 140, July

21, 1995, 37767
- 37770
. Prior to 2015, the borrower defense identified above was rarel y asserted b y any borrowers and no specific methods of collecting information was defined or found necessary . Corinthian Colleges, Inc. (CCI ) was the owner of a number of for

- profit postsecondary education institutions across the country . In January 2010, CCI purchased Heald College, which had 14 locations in California, Oregon, and Hawaii. At the time of its

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

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable) purchase b y CCI, Heald College participated in the federal student financial assistance programs authori zed under Title IV of the Higher Education Act of 1965 (HEA), as amended. CCI was also the owner of other title IV eligible institutions, including the Everest and W yotech chains of schools. In January

2014, the Department sent a letter to CCIin which the Department requested that CCIprovide a cop y of school performance disclosure documents for every CCI location, including Heald College institutions, for the calendar ye ars 2010, 2011, 2012, and, when available, 2013. The Department also asked that CCIprovide the evidence upon which CCIrelied to derive each of the placement rates cited in the disclosures, including a list of all students either placed or omitted from the placement calculati on due to any t ype of waiver, and the academic, emplo yment, and/or waiver information specified b y the Department. In June 2014 , the Department placed CCI on an increased level of financial oversight after the compan y failed to address concerns about its practices, including falsify ing job placement data used in marketing claims to prospective students and allegations of altered grades and attendance. CCIsubsequently agreed to graduall y wind down activity as part of an operating agreement with the Department. As a part of this, CCI sold 56 Everest and Wy otech campuses to the ECMC Group in November 2014. Over 70,000 students were enrolled in the programs that were transferred to ECMC. In April 2015, the Department issued a notice of intent to fine Heald Coll ege $30 million upon findings that Heald misrepresented placement rates for a number of its programs going back to 2010. Upon the issuance of the Department’s fine letter, CCI announced it would close its remaining programs immediatel y, including all its Heald locations and several Everest and W yo tech locations that were not part of the sale to the ECMC group. Almost 16,000 students were enrolled in these programs. Over the past several months, as the events related to CCIhave unfolded, former CCI stu dents, supported by

various organizations and non

- profits, have organized a campaign to assert that the Department should discharge their student loan debt pursuant to the borrower defense regulations. Over 1,000 students have already submitted borrower d efense claims to the Department. In the 20 ye ars prior, the Department received 5 claims for borrower defense. Over the last several months , the Department has received over 1 , 000 such claims due to a building debt activism movement as well as the noto riety of Corinthian’s collapse, creating a need for a clearer process for potential claimants. This exponential increase in demand was unexpected and outside of the Department’s control. Given that borrowers have a right to assert a defense to repay ment claim and that the Department has made findings against a number of CCI ’s former programs, we expect thousands of more claims to be submitted as several advocacy groups are working to organize CCIborrowers. Because borrowers have a right to submit defens e to repay ment claims, the Department must set up a process to review and adjudicate them.3

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable)
T o respond to these events and protect harmed borrowers the Department seeks to provide assistance to allow :

 Student borrowers who attended the Heald College programs that the Department has found made mis representations to have their loans discharged if they complete the attached attestation. These borrowers need not prove that Heald College’s actions violated State law as the Department’s findings show a State law violation. The Department estimates that there are potentially 50,000 borrowers in this category

.
 A process to be set up to review and adjudicate borrower defense claims from other borrowers, inc luding other CCIborrowers. This process will be the subject of a separate information collection and a lthough we will advise that borrowers hold their submissions until this process is made public, we cannot bar the submission of claims. Thus, while the Department is developing this process, it will post on its website the attached language , which will direct borrowers who choose not to wait for development of the review process, to send their claims to the address provided and to include a short list of information in support of their claim

. The Department estimates that there are potentially 100,000 borrowers who may exercise this defense. It is important to note that borrowers from other schools could also submit borrower defense claims if they

belie ve that their school has engaged in a State law violation related to their education that has harmed them. 2. Indicate how, by

whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency ha s made of the information received from the current collection. The Department will utilize the information provided by the borrower to confirm eligibility for the borrower defense against repayment. The information will be provided through a paper request with a borrower signature and attachments evidencing enrollment in a Heald College , as well as the information provided by non - Heald College borrowers who can provide evidence that the ir school has engaged in a State law violation related to their education that has harmed them. 3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or forms of information technology , e.g. permitti ng electronic submission of responses, and the basis for the decision of adopting this means of collection. Also describe an y consideration given to using technology

to reduce burden. The collection of information can be submitted to U.S. Department of Education, P.O. Box 194 407, San Francisco, CA 94119, or FSAOperations@ed.gov

. 4. Describe efforts to identify duplication. Show specificall y wh y an y similar information alread y available cannot be used or mo dified for use for the purposes described in Item 2 above.4

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable) The information requested of the borrower is needed for processing the borrower defense c laim r equest
. W hile borrower and loan information is held by the Department , there is no other mechanism for the Department to investigate or appl y the discharge except for the borrower to make the voluntary request . This request must be initiated by the borrower. 5. If the collection of information impacts small businesses or other small entities, describe an y methods used to minimize burden. A small entit y may be (1) a small business which is deemed to be one that is independently owned and operated and that is not dominant in its field of operation; (2) a small organization that is any not - for

- profit enterprise that is independently owned and operated and is not dominant in its field; or (3) a small government jurisdiction, which is a government of a city , count y, town, township, school district, or special district with a po pulation of less than 50,000. This information collection does not impact an y s mall businesses or other small entities. 6. Describe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequent ly , as well as an y technical or legal obstacles to reducing burden. If the Department did not collect the information on either the specific form or through the website , we would not have the information needed to appl y the discharge and could not provide borrowers with allowable recourse to loan repay ment
. 7. Explain any

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

 requiring respondents to report information to the agency more often than quarterl y;  requiring respondents to prepare a written response to a collection of information in fewer than 30 day s after receipt of it;
 requiring respondents to submit more than an original and two copies of any document;
 requiring respondents to retain records, other than health, medical, government contract, grant - in

- aid, or tax records for more than three y ears;  in connection with a statistical survey , that is not designed to produce valid and reliable results than can be generalized to the universe of study ;  requiring the use of a statistical data classification that has not been reviewed and approved b y OMB;
 that includes a pledge of confidentiality that is not supported by

authority established in statute or regulation, that is not supported by disclosure an d data security policies that are consistent with the pledge, or that unnecessaril y i mpedes sharing of data with other agencies for compatible confidential use; or
 requiring respondents to submit proprietary trade secrets, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information’s confidentiality to the extent permitted by law. This application is consistent with all of the guidelines in 5 CFR 1320.5(d)(2).5

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable)
8. As applicable, state that the Department has published the 60 and 30 Federal Register notices as required b y 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe act ions taken b y the agency in response to these comments. Specifically address comments received on cost and hour burden. Describe efforts to consult with persons outside the agency to obtain their views on the availability

of data, frequency

of collection , the clarity

of instruction and record keeping, disclosure, or reporting format (if an y), and on the data elements to be recorded, disclosed, or reported. Consultation with representatives of those from whom information is to be obtained or those who mus t compile records should occur at least once every 3 y ears
– even if the collection of information activity

is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained. This is the request for a six month e mergency clearance of the process for gathering information from Heald College borrowers to submit a borrower defense against repay ment claim. This is also the request for a six month emergency clearance for the gathering of information from an y federal student loan borrower who believes they have me t the circumstances under the borrower defense against repay ment claim allowed by regulation. 9. Explain any

decision to provide any

pay ment or gift to respo ndents, other than remuneration of contractors or grantees with meaningful justification

. There are no pay

ments or gifts to respondents. 10. Describe an y assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy . If personally

identifiable information (PII) is being collected, a Privacy Act statement should be included on the instrument. Please provide a citation for the Sy stems of Record Notice and the date a Privacy I mpact Assessment was completed as indicated on the I C Data Form . A confidentiality statement with a legal citation that authorizes the pledge of confidentiality should be provided. 2 If the collection is subject to the Privacy Act, the Privacy

Act statement is deemed suffi cient with respect to confidentiality . I f there is no expectation of confidentiality , simply state that the Department make s no pledge about the confidentiall y of the data.

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

- 108

– Privacy Act Implementation

– Guidelines and Responsibilities, OMB Circular A

- 130 Appendix I

– Federal Agency Responsibilities for Maintaining Records About Individuals, OMB M

- 03
- 22

– OMB Guidance for Implementing the Privacy Provisions of the E

- Government Act of 2002, OMB M

- 06
- 15

– Safeguarding Personally Identifiabl e Information, OM : 6
- 104

– Privacy Act of 1974 (Collection, Use and Protection of Personally Identifiable Information)6

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable)
A Privacy

Act statement will be included based on the Common Services for Borrowers Sy stem of Records Notice, 18

- 11
- 16, revised in the Federal Register Volume 79, Number 177, September 12, 2014

. 11. Provide additional justification for an y questions of a sensitive nature, such as sexual behavio r and attitudes, religious beliefs, and other matters that are commonly considered private. The justification should include the reasons wh y t he agency considers the questions necessary , the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and an y steps to be taken to obtain their consent. There are no questions of a sensitive nature in this collection. 12. Provide estimates of the hour burden of the collection of information. Th e statement should:

 Indicate the number of respondents by affected public ty

pe (federal government, individuals or households, private sector

– businesses or other for

- profit, private sector

– not - for

- profit institutions, farms, state, local or tribal gov ernments), frequency of response, annual hour burden, and an explanation of how the burden was estimated, including identification of burden t ype: recordkeeping, reporting or third party disclosure. All narrative should be included in item 12. Unless dire cted to do so, agencies should not conduct special survey s to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to va ry widel y because of differences in activity , size, or complexity , show the range of estimated hour burden, and explain the reasons for the variance. Generall y, estimates should not include burden hours for customary and usual business practices.
 If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in the ROCI S IC Burden Analy sis Table. (The table should at minimum include Respondent types, IC activity , Respondent and R esponses, Hours/Response, and Total Hours)
 Provide estimates of annualized cost to respondents of the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost of contracting out or paying outside partie s for information collection activities should not be included here. Instead, this cost should be included in Item 14. This is a new information collection. The Department is estimating an average of 60 minutes (1 hour) per respondent to complete the Heald College borrower attestation/ application for borrower defense to repay ment loan discharge request. This time includes reviewing the instructions for completion of the attestation/application, locating and providing the required evidence of enrollment , and submission to the Department

.7

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable)

Respondents Responses Burden Hours Application 5 0,000 5 0,000 x 1 hour 50,000 Totals 5 0,000 5 0,000 50,00 0 Additionally , the Department is estimating an average of 60 minutes (1 hour) per responde nt to respond to the minimum requested items identified on the studentloan.ed.gov website for borrowers wishing to assert their claim to the borrower defense against repay

ment loan discharge. This time includes reviewing the instructions neede d for filing a claim, locating and providing the required evidence of enrollment and State law violation and other information , and submission to the Department. Respondents Responses Burden Hours Application 100,000 100,000 x 1 hour 100,000 Totals 100,000 100,000 100,000 NEW COLLECTION TOTAL

Respondents Responses Burden Hours Individuals 150,000 150,000 150,000 13. Provide an estimate of the total annual cost burden to respondents or record keepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12 and 14.)

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

- up cost component (annualized over its expected useful life); and (b) a total operation and maintenance and purchase of services component. The estimates should take into account costs associated with generating, maintaining, and disclosing or providing the information. Include descriptions of methods used to esti mate major cost factors including s ys tem and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred. Capital and start - up costs include, among other items, preparation s for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing equipment; and acquiring and maintaining record storage facilities.
 If cost estimates are expected to vary widel y, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of contracting out information collection services should be a part of this cost burden estimate. In developing cost burden estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60

- day

pre - OMB submission public comment process and use existing economic or regulatory

impact anal ys is associated with the rulemaking containing the information collection, as appropriate.
 Generally , estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not associated with the information collection, (3) for reasons othe r than to8

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

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

____________________ Total Annualized Costs Requested : There are no start

- up costs for any respondent. 14. Provide estimates of annualized cost to the Federal government. Also, provide a description of the method us ed to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing, and support staff), and any other expense that would not have been incurred without this collection of information. Agencies al so may aggregate cost estimates from Items 12, 13, and 14 in a single table. To begin this new process, the Department will be hiring additional personnel to review the initial applications and refine the intake process. We anticipate hiring additional s taff for a total annual cost of approximately $ 3.6 million

. 15. Explain the reasons for an y program changes or adjustments. Generally, adjustments in burden result from re

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

pe of collection (new, revision, extension, reinstatement with ch ange, reinstatement without change) and include totals for changes in burden hours , responses and cost s (if applicable)

. This is a new information collection. There is no change to statutory or regulatory requirements. We estimate a total of 1 5 0,000 resp onses , resulting in a total of 1 50,0 00 new burden hours f

or 150,000 borrowers

. This new burden is necessary to ensure Heald College borrowers who wish to invoke the borrower defense against repay ment of federal student loans can do so in a uniform and informed manner . It will also allow for the uniform and directed collection of minimum borrower defense information from other federal student loan borrowers who believe they can provide evidence of such a claim for repay ment r elief. 16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analy

tical techniques that will be used. Provide the time schedule for the entire project, including beginning a nd ending dates of the collection of information, completion of report, publication dates, and other actions.9

OMB Number: 1845
- NEW A 6/4/2015 RIN Number: XXXX

- XXXX (if applicable) This information will not be published. 17. If seeking approval to not display the expiration date for OMB approval of the information collectio n, explain the reasons that display would be inappropriate. The Department is not seeking this approval. The OMB control number and expiration dates will be display ed on any form and website. 18. Explain each exception to the certification statement identified in the Certification of Paperwork Reduction Act. There are no exceptions to the certification statement.