2518 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices 

DEPARTMENT OF EDUCATION 

Submission for OMB Review; 

Comment Request 

AGENCY: Department of Education. 

SUMMARY: The Director, Information 

Collection Clearance Division, 

Regulatory Information Management 

Services, Office of Management, invites 

comments on the submission for OMB 

review as required by the Paperwork 

Reduction Act of 1995. 

DATES: Interested persons are invited to 

submit comments on or before February 

17, 2009. 

ADDRESSES: Written comments should 

be addressed to the Office of 

Information and Regulatory Affairs, 

Attention: Education Desk Officer, 

Office of Management and Budget, 725 

17th Street, NW., Room 10222, New 

Executive Office Building, Washington, 

DC 20503 or faxed to (202) 395–6974. 

SUPPLEMENTARY INFORMATION: Section 

3506 of the Paperwork Reduction Act of 

1995 (44 U.S.C. Chapter 35) requires 

that the Office of Management and 

Budget (OMB) provide interested 

Federal agencies and the public an early 

opportunity to comment on information 

collection requests. OMB may amend or 

waive the requirement for public 

consultation to the extent that public 

participation in the approval process 

would defeat the purpose of the 

information collection, violate State or 

Federal law, or substantially interfere 

with any agency’s ability to perform its 

statutory obligations. The IC Clearance 

Official, Regulatory Information 

Management Services, Office of 

Management, publishes that notice 

containing proposed information 

collection requests prior to submission 

of these requests to OMB. Each 

proposed information collection, 

grouped by office, contains the 

following: (1) Type of review requested, 

e.g. new, revision, extension, existing or 

reinstatement; (2) Title; (3) Summary of 

the collection; (4) Description of the 

need for, and proposed use of, the 

information; (5) Respondents and 

frequency of collection; and (6) 

Reporting and/or Recordkeeping 

burden. OMB invites public comment. 

Dated: January 12, 2009. 

Angela C. Arrington, 

IC Clearance Official, Regulatory Information 

Management Services, Office of Management. 

Institute of Education Sciences 

Type of Review: Revision. 

Title: Early Childhood Longitudinal 

Study Kindergarten Class of 2010–2011. 

Frequency: Annually. 

Affected Public: Individuals or 

household. 

Reporting and Recordkeeping Hour 

Burden: 

Responses: 164,869. 

Burden Hours: 101,055. 

Abstract: The ECLS–K 2010–2011 is 

the follow-up study to the ECLS–K. It is 

a longitudinal study that will follow 

children from kindergarten through fifth 

grade to measure child development, 

school readiness and early school 

experiences. It will include cognitive 

assessments of children on an annual 

basis, parent interviews, and surveys of 

teachers, school administrators and the 

primary care provider. 

Requests for copies of the information 

collection submission for OMB review 

may be accessed from http:// 

edicsweb.ed.gov, by selecting the 

‘‘Browse Pending Collections’’ link and 

by clicking on link number 3872. When 

you access the information collection, 

click on ‘‘Download Attachments’’ to 

view. Written requests for information 

should be addressed to U.S. Department 

of Education, 400 Maryland Avenue, 

SW., LBJ, Washington, DC 20202–4537. 

Requests may also be electronically 

mailed to the Internet address 

ICDocketMgr@ed.gov or faxed to (202) 

401–0920. Please specify the complete 

title of the information collection when 

making your request. 

Comments regarding burden and/or 

the collection activity requirements 

should be electronically mailed to 

ICDocketMgr@ed.gov. Individuals who 

use a telecommunications device for the 

deaf (TDD) may call the Federal 

Information Relay Service (FIRS) at 1– 

800–877–8339. 

[FR Doc. E9–805 Filed 1–14–09; 8:45 am] 

BILLING CODE 4000–01–P 

DEPARTMENT OF EDUCATION 

DEPARTMENT OF THE TREASURY 

OFFICE OF MANAGEMENT AND 

BUDGET 

Federal Family Education Loan 

Program (FFELP) 

AGENCY: Department of Education, 

Department of the Treasury, Office of 

Management and Budget. 

ACTION: Notice of terms and conditions 

of additional purchase of loans under 

the Ensuring Continued Access to 

Student Loans Act of 2008. 

SUMMARY: Under the authority of section 

459A of the Higher Education Act of 

1965, as amended (‘‘HEA’’), as enacted 

by the Ensuring Continued Access to 

Student Loans Act of 2008 (Pub. L. 110– 

227) and amended by Public Law 110– 

315 and Public Law 110–350, the 

Department of Education 

(‘‘Department’’) may purchase, or enter 

into forward commitments to purchase, 

Federal Family Education Loan Program 

(‘‘FFELP’’) loans made under sections 

428 (subsidized Stafford loans), 428B 

(PLUS loans), or 428H (unsubsidized 

Stafford loans) of the HEA, on such 

terms as the Secretary of Education 

(‘‘Secretary’’), the Secretary of the 

Treasury, and the Director of the Office 

of Management and Budget 

(collectively, ‘‘Secretaries and Director’’) 

jointly determine are ‘‘in the best 

interest of the United States’’ and ‘‘shall 

not result in any net cost to the Federal 

Government (including the cost of 

servicing the loans purchased).’’ 

This notice establishes the terms and 

conditions that will govern certain loan 

purchases made under section 459A of 

the HEA, as extended by Public Law 

110–350, including (a) purchases from 

an asset-backed commercial paper 

vehicle referred to as an ‘‘ABCP 

Conduit’’ or ‘‘Conduit’’ (‘‘ABCP Conduit 

Program’’) and (b) replication for the 

2009–2010 academic year of the Loan 

Participation Purchase Program (‘‘2009– 

2010 Participation Program’’) and Loan 

Purchase Commitment Program (‘‘2009– 

2010 Purchase Program’’) (collectively, 

‘‘Programs’’). 

This notice also outlines the 

Department’s methodology and factors 

that have been considered in evaluating 

the price at which the Department will 

purchase these additional FFELP loans; 

and describes how the use of those 

factors and methodology will ensure 

that the additional loan purchases do 

not result in any net cost to the Federal 

Government. The Secretaries and 

Director concur in the publication of 

this notice and have jointly determined 

that, based on the Department’s 

analysis, the purchase of additional 

loans as described in this notice is in the 

best interest of the United States and 

shall not result in any net cost to the 

Federal Government (including the cost 

of servicing the loans purchased). 

DATES: Effective Date: The terms and 

conditions governing the purchase of 

loans under the 2009–2010 Participation 

Program and Purchase Program, and the 

ABCP Conduit Program are effective 

January 16, 2009. 

FOR FURTHER INFORMATION CONTACT: U.S. 

Department of Education, Office of 

Federal Student Aid, Union Center 

Plaza, 830 First Street, NE., room 111G3, 

Washington, DC 20202. Telephone: 

(202) 377–4401 or by e-mail: 

ffel.agreementprocess@ed.gov. 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices 2519 

1The Secretaries and Director announced the 

terms and conditions governing the Participation 

Program and the Purchase Program for academic 

year 2008–2009 in a notice published in the Federal 

Register on July 1, 2008 (73 FR 37422). Minor 

revisions to this notice were published in the 

Federal Register on July 17, 2008 (73 FR 41048). 

If you use a telecommunications 

device for the deaf (TDD), 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 computer diskette) 

on request to the office listed under FOR

FURTHER INFORMATION CONTACT. 

SUPPLEMENTARY INFORMATION: 

Introduction 

The Department’s purchase of FFELP 

loans is intended primarily to ensure 

that students and parents continue to 

have access to FFELP loans for the 

remainder of the 2008–2009 academic 

year and for the 2009–2010 academic 

year. 

The Department of Education first 

exercised its authority under section 

459A of the HEA in July 2008, when the 

Secretaries and Director established the 

Participation Program and Purchase 

Program for eligible loans made for 

academic year 2008–2009.1

Under the Participation Program, the 

Department has purchased participation 

interests in eligible loans that are held 

by an eligible lender acting as a sponsor 

under a Master Participation Agreement. 

Under the Purchase Program, the 

Department has purchased eligible loans 

that are held by eligible lenders. To 

participate in either the Participation 

Program or the Purchase Program, a 

lender must enter into an agreement 

with the Department for that program. 

Subsequent to the announcements of 

the Purchase Program and Participation 

Program in July, the Secretary of 

Education concluded that additional 

action was necessary to ensure students 

and parents have access to FFELP for 

the remainder of the 2008–2009 

academic year. Specifically, the 

Secretaries and Director acknowledged 

the possibility that some lenders would 

not be able to obtain capital to make 

second disbursements of 2008–2009 

academic year FFELP loans even for the 

short-term necessary before lenders can 

utilize the ABCP Conduit Program. To 

provide needed liquidity to support new 

lending, the Department, through the 

Short-term Purchase Program 

announced in December 2008, extended 

the offer to purchase loans to include 

eligible loans made for the 2007–2008 

academic year. The Department at that 

time gave notice that it would purchase 

such loans beginning on or about 

December 1, 2008 and would continue 

purchasing them through February 28, 

2009 or the date on which one or more 

conforming Asset-Backed Commercial 

Paper (ABCP) Conduits for purchasing 

FFELP loans become operational, 

whichever occurs earlier. Through the 

Short-term Purchase Program, the 

Department will expend up to $500 

million to purchase eligible loans each 

week during this period, for a potential 

total aggregate amount of up to $6.5 

billion. 

The Secretaries and the Director 

believe that, although capital markets 

have improved, lenders may continue to 

have difficulty in obtaining funding to 

make loan commitments for the 

upcoming academic year, or to make 

subsequent disbursements on loans, 

without a commitment from the 

Department to purchase those loans. To 

address this need, the Secretaries and 

the Director have concluded that the 

Purchase Program and the Participation 

Program should be replicated for the 

2009–2010 academic year. The 

Secretaries and the Director further 

conclude that the Department should 

enter into forward purchase 

commitments with one or more 

conforming ABCP Conduits that can 

purchase FFELP loans, and thereby 

provide additional liquidity to support 

new lending. An entity that wishes to 

establish an ABCP Conduit must submit 

such offers to the Department at http:// 

www.federalstudentaid.ed.gov/ffelp. 

Terms and Conditions 

Pursuant to section 459A of the HEA, 

the Secretaries and Director establish 

the terms and conditions that will 

govern these additional purchase 

programs. The terms and conditions 

governing the replication of the Loan 

Purchase Program for academic year 

2009–2010 (‘‘2009–2010 Loan Purchase 

Commitment Program Terms and 

Conditions’’) are attached as Appendix 

A to this notice; those governing the 

replication of the Participation Program 

for academic year 2009–2010 (‘‘2009– 

2010 Loan Participation Program Terms 

and Conditions’’) are attached as 

Appendix B to this notice, and those 

governing the ABCP Conduit Program 

are attached as Appendix C to this 

notice. 

The 2009–2010 Purchase Program and 

2009–2010 Participation Program will 

operate for the 2009–2010 academic 

year in substantially the same way as 

the Purchase Program and Participation 

Program did for the 2008–2009 

academic year. 

Under the ABCP Conduit Program, 

the Department will enter into forward 

purchase commitments to purchase 

FFELP loans (subsidized Stafford loans, 

unsubsidized Stafford loans, and PLUS 

loans) on which the lender made the 

first disbursement on or after October 1, 

2003, but no later than June 30, 2009, 

fully disbursed no later than September 

30, 2009, and conveyed to the Conduit 

no later than June 30, 2010. The 

Department will not agree to purchase 

FFELP Consolidation loans under this 

program. 

In order to participate in the ABCP 

Conduit Program, a sponsoring entity 

must enter into a ‘‘Put Agreement’’ with 

the Department consistent with the 

terms and conditions stated in 

Appendix C. The Put Agreement will 

establish the nature of the relationship 

between the Department and the 

Conduit and Conduit Manager. The 

Department will agree to purchase loans 

from the Conduit upon demand as 

needed to support the issuance of 

commercial paper by the Conduit. The 

Conduit is expected to exercise the Put 

only after the Conduit has attempted to 

obtain funds to meet maturing 

commercial paper from other resources, 

including other financial institutions, 

and has either been unable to do so, or, 

if it has obtained such funding, is 

unable to issue new commercial paper 

sufficient to obtain funds to repay those 

borrowings. 

As explained in detail in Appendix C, 

the Department will agree to purchase 

loans at either 97 percent or 100 percent 

of the total of the outstanding principal 

balance plus accrued but unpaid 

interest as of the purchase date, 

depending on the characteristics of the 

loan. The Conduit may purchase loans 

as defined in the Put Agreement and the 

attached terms and conditions for the 

ABCP Conduit Program in Appendix C. 

Loans purchased by the Conduit must 

have been selected from the seller’s 

portfolio in a manner that assures the 

sale to the Conduit of loans is fairly 

representative of the seller’s total 

portfolio of conduit eligible loans. In 

addition, a lender that sells the Conduit 

a loan owed by a particular borrower 

must also sell the Conduit all other 

eligible loans it holds for that particular 

borrower. 

Under the 2009–2010 Purchase 

Program and 2009–2010 Participation 

Program, the Department will purchase 

loans or participation interests in loans 

that have ‘‘eligible borrower benefits,’’ 

which are borrower benefits previously 

deemed acceptable in the 2008–2009 

programs (upfront fee reductions 

already consummated or interest 

reductions not exceeding .25 percent 

conditioned on borrower use of an 

automatic loan payment process). 


jlentini on PROD1PC65 with NOTICES
2520 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices 

However, under the ABCP Conduit 

Program, the Department will agree to 

purchase loans with a broader range of 

borrower benefits, as summarized in the 

terms and conditions for the ABCP 

Conduit Program in Appendix C to this 

notice. In addition, a list of those 

specific borrower benefits will be posted 

to the Department’s Web site at http:// 

www.federalstudentaid.ed.gov/ffelp. 

While loans that have a direct 

payment to a borrower as a borrower 

benefit—rather than an interest or 

principal reduction—are eligible for 

inclusion in the Conduit, the 

Department will require the holder of 

the loan to make the payment to the 

borrower prior to sale to the 

Department, regardless of whether the 

borrower actually earned the benefit. 

The Department will also require the 

seller of the loan to establish a reserve 

for this purpose. 

Outline of Methodology and Factors in 

Determining Prices for All Programs 

In accordance with Public Law No. 

110–227, Public Law 110–315, and 

Public Law 110–350, the goal in 

structuring the 2009–2010 Purchase 

Program, the 2009–2010 Participation 

Program, and the ABCP Conduit 

Program is to maximize student loan 

availability while ensuring loan 

purchases result in no net cost to the 

Federal Government. The Secretaries 

and Director described the basis for 

determining the cost neutrality for the 

Purchase Program and Participation 

Program in the Federal Register notice 

published on July 1, 2008 (73 FR 

37422). While this notice provides 

updated cost estimates, the 

methodology remains essentially the 

same for the 2009–2010 Purchase 

Program, the 2009–2010 Participation 

Program, and the ABCP Conduit 

Program based on analysis of the 

Department of Education. This section 

of the notice responds in particular to 

the statutory requirement for an outline 

of the methodology and factors 

considered in evaluating the price at 

which loans may be purchased, and 

describes how the use of such 

methodology and consideration of such 

factors will ensure no net cost to the 

Federal Government results from the 

loan purchases for the 2009–2010 

Purchase Program, the 2009–2010 

Participation Program, and the ABCP 

Conduit Program. 

Price: To determine the price at which 

FFELP loans would be purchased from 

the Conduit, the Secretary of Education 

considered several factors. These factors 

included the price that would ensure 

this program resulted in no net cost to 

the Federal Government; the increased 

liquidity that the rate would offer 

distressed lenders; borrower benefits; 

and other factors. Based on this 

analysis, the Secretary of Education 

determined that 100 percent of 

outstanding principal and accrued 

interest was the appropriate price for 

those loans first disbursed on or after 

May 1, 2008, with no borrower benefits 

or only ‘‘eligible borrower benefits,’’ and 

not more than 255 days delinquent at 

the time of purchase, and 97 percent of 

principal and interest for any other 

loans. For the 2009–2010 Purchase 

Program and the 2009–2010 

Participation Program, the Secretary of 

Education determined that the prices 

used for the 2008–2009 Programs 

remained the appropriate prices for 

2009–2010. The Department will pay a 

purchase price for a loan for 2009–2010 

of 100 percent of outstanding principal 

and interest plus one percent fee 

previously paid on the loan and $75.00. 

To purchase a participation interest in 

2009–2010 loan, the Department will 

pay 100 percent of the amount of the 

outstanding principal (including any 

capitalized interest) of the loan at the 

time of purchase of the interest. 

Analysis of Cost Neutrality 

The cost-neutrality analysis 

conducted solely by the Department of 

Education used, in part, credit subsidy 

cost estimation procedures established 

under the Federal Credit Reform Act of 

1990 (Pub. L. No. 101–508) and OMB 

Circular A–11. These procedures entail 

performing various analyses to project 

cash flows to and from the Government, 

excluding administrative costs. For 

changes to outstanding FFELP 

guaranteed loans, the analysis reflects 

the modification cost, or the difference 

between the estimate of the net present 

value of the remaining cash flows 

underlying the most recent President’s 

Budget for such loan guarantees, and the 

estimate of the net present value of 

these cash flows after the purchase 

program, reflecting only the effects of 

the modification. For new loans, cash 

flows are discounted to the point of 

disbursement, using the Credit Subsidy 

Calculator 2 (‘‘OMB calculator’’), 

developed by the Office of Management 

and Budget to estimate credit subsidy 

costs for all Federal credit programs, as 

the discounting tool. Costs for new 

loans can be expressed as subsidy rates 

that reflect the Federal costs associated 

with a loan; these costs are expressed as 

a percentage of the credit extended by 

the loan. For example, a subsidy rate of 

10.0 percent indicates a Federal cost of 

$10 on a $100 loan. 

The metric to determine cost 

neutrality was that costs under the new 

programs should not exceed costs 

expected under the FFELP in the 

absence of these programs. All cost 

estimates were based on economic and 

technical assumptions developed for the 

FY 2009 President’s Budget for the 

FFELP, updated to reflect the impact of 

statutory or administrative actions that 

have occurred since the budget was 

published in February 2008. 

Student loan cost estimates were 

developed to assess the Federal cost 

incurred for loans financed for each 

loan type. The analysis also considered 

risk factors particular to the 2009–2010 

Purchase Program, the 2009–2010 

Participation Program and the ABCP 

Conduit Program, such as the likelihood 

that lenders would sell only their least 

profitable loans. 

This discussion outlines the 

Department’s analysis of the 2009–2010 

Purchase Program, the 2009–2010 

Participation Program, and the ABCP 

Conduit Program with respect to the 

following critical aspects affecting the 

Federal cost: 

• Administrative costs 

• Borrower behavior 

• Lender behavior 

• Risk factors 

Administrative Costs. Federal 

administrative costs are normally not 

included in subsidy cost calculations. 

To capture the full cost of the 2009– 

2010 Purchase Program, the 2009–2010 

Participation Program, and the ABCP 

Conduit Program, however, section 

459A of the HEA requires that the 

determination of cost neutrality reflect 

total costs, including Federal 

administrative costs subject to annual 

appropriation, and these costs were 

included in this analysis. 

Administrative cash flows primarily 

involve servicing costs associated with 

loans purchased by the Department. 

These costs can extend for up to 40 

years, as servicing must continue until 

the last loan is paid in full. Under the 

base scenario for the 2009–2010 

Participation and Purchase Programs, 

servicing costs would be $557 million 

on a present value basis. Servicing costs 

associated loans put to the Department 

from an ABCP Conduit, weighted across 

the three loan volume scenarios 

discussed below under ‘‘Lender 

Behavior,’’ would be $35 million on a 

net present value basis. The 

Department’s estimates were developed 

using the price structure of the 

Department’s servicing contract for put 

loans, with adjustments for start-up 

costs, inflation, and other costs. 

Borrower Behavior. Since the base 

FFELP serves as the foundation of the 

2009–2010 Purchase Program, the 2009– 

2010 Participation Program, and the 


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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices 2521 

ABCP Conduit Program, and the 

characteristics of the base program are 

unchanged, there is no reason to believe 

that the 2009–2010 Purchase Program, 

the 2009–2010 Participation Program, or 

the ABCP Conduit Program will affect 

borrower behavior. Thus, this cost 

analysis uses borrower behavior 

assumptions used to prepare the FY 

2009 President’s Budget to gauge the 

effect on program costs of borrowerbased activities such as loan repayment, 

use of statutory benefits such as 

deferments and loan discharges, and 

default rates and timing. These 

assumptions are based on a wide range 

of data sources, including the National 

Student Loan Data System, the 

Department’s operational and financial 

systems, and a group of surveys 

conducted by the National Center for 

Education Statistics such as the 2004 

National Postsecondary Student Aid 

Survey, the 1994 National Education 

Longitudinal Study, and the 1996 

Beginning Postsecondary Student 

Survey. 

Lender Behavior. A key factor in 

assessing whether the proposed 

programs would operate in a costneutral manner was lender behavior: 

specifically for the ABCP Conduit 

Program, how many ABCP Conduits 

would be created, and for the 2009– 

2010 Purchase Program and the 2009– 

2010 Participation Program, how many 

lenders would participate in the 

program, including how many and what 

type of loans would they eventually 

choose to sell to the Department. The 

Department considered alternative 

scenarios of lender behavior to 

determine whether the 2009–2010 

Purchase Program, the 2009–2010 

Participation Program, and ABCP 

Conduit Program could be considered 

cost-neutral under each. Because the 

ABCP Conduit Program would allow the 

Conduit Manager to sell loans with 

contingent borrower benefits—such as 

interest rate reductions for a specified 

number of on-time payments—all 

alternatives include an adjustment to 

reflect the impact of these potential 

reductions on future loan repayments. 

Consistent with stress tests applied by 

rating agencies in the private 

securitization market, this adjustment 

reduces the net cash flow to the 

Government by reducing the principal 

of sold loans by 0.5 percent a year. 

Based on an analysis of lender and 

probability data provided by the 

Treasury Department and the 

Department of Education’s financial 

advisors, it was determined the most 

likely size of the ABCP Conduit Program 

was $25 billion. Within that total, three 

scenarios were used to assess the impact 

of different behavior by participating 

lenders. The first assumed the ABCP 

Conduit Program would be unsuccessful 

and 100 percent of loans would be put 

to the Department on October 1, 2009; 

the likelihood of this scenario occurring 

was 2 percent. Under Scenario 2, 

ongoing minor market disruptions were 

assumed to result in 20 percent of loans 

being put, evenly distributed across the 

five-year life of the ABCP Conduit; this 

scenario had a likelihood of 10 percent. 

The third and most probable scenario, 

with an 88 percent likelihood, assumed 

that, at the end of the ABCP Conduit, 

not-for-profit lenders would put 75 

percent of their volume and for-profit 

lenders would put 10 percent of their 

volume. Scenarios 2 and 3 both also 

assume loans would be put upon 

becoming more than 210 days 

delinquent. Consolidated results were 

developed weighted by each scenario’s 

relative probability. 

Two scenarios were examined for the 

2009–2010 Participation Program, one 

under which lenders would put 100 

percent of loans financed through the 

program at the end of 2010 and one 

under which lenders would put 50 

percent of loans financed through 

participations and redeem the other 50 

percent. For the latter scenario, the 

Department assumed a ‘‘worst case’’ in 

which lenders sold their smallest, least 

profitable loans. Because long-term loan 

servicing costs are generally charged on 

an account basis independent of loan 

size, small loans tend to be less 

profitable than larger loans. Considering 

the probability of the various scenarios, 

the Department determined that costs 

for the 2009–2010 Purchase Program, 

the 2009–2010 Participation Program, 

and the ABCP Conduit Program were 

less expensive to the Government than 

baseline subsidy costs for FFELP loans. 

(Please see Tables in this notice for a 

summary of the analysis.) 

Risk Factors. Analyzing whether the 

2009–2010 Purchase Program, the 2009– 

2010 Participation Program, and the 

ABCP Conduit Program would operate 

in a cost-neutral manner requires that 

projected costs account for the presence 

of various risk factors that must be 

assumed since these programs will not 

operate entirely like the base FFELP, or 

without operational risk. As such, the 

Secretary of Education’s estimates for 

the 2009–2010 Purchase and 

Participation Programs included the 

same adjustments included for the 

original 2008–2009 programs. For the 

ABCP Conduit Program, the estimates 

include five risk factors: (1) That 

improvements in the national economy 

will reduce lenders’ incentives to put 

loans for the ABCP Conduit; (2) that 

some of the loans purchased by the 

Department would be those on which 

the Department would reject a 

reinsurance claim under the FFELP 

(‘‘claim rejects’’); (3) that unforeseen 

problems undermine the Department’s 

ability to effectively oversee and 

administer the ABCP Conduit Program 

(‘‘operational risk’’); (4) that costs 

related to servicing purchased loans do 

not fully reflect possible future 

requirements (‘‘general administrative 

risk’’); and (5) that the composition of 

loans ultimately sold to the Department 

may result in higher Federal costs than 

the composition assumed in this 

analysis (‘‘portfolio composition risk’’). 

To ensure cost estimates reflect a 

conservative assessment of possible 

Federal costs, the Secretary of Education 

added cost adjustments to incorporate 

each risk factor. The adjustments were 

based on an assessment of private-sector 

behavior and program data as follows: 

Economic Factors. While the current 

estimates assume a general 

improvement in the national economy, 

it also assumes that there will be some 

periods wherein it will be in lenders’ 

financial interest to sell loans in the 

ABCP Conduit to the Department. 

Because there is a chance conditions 

will be such that lenders will choose to 

fund these loans privately rather than 

sell them to the Department, a risk 

factor of 50 basis points has been added 

to the estimate. 

Claim Rejects. This risk factor takes 

into account the costs associated with 

the purchase of loans that would not 

typically qualify for the federal 

reinsurance coverage under the FFELP 

due to improper origination or 

servicing. The 12 basis point increase in 

cost is based on a historical rejected 

claim rate of 1 percent of volume, and 

assumes that these loans would have 

lower loss rates than the average 

portfolio. 

Operational Risk. This factor 

addresses risks that might result from 

servicing errors, technology failures, or 

fraud. The Department has made every 

effort to mitigate operational risk. 

Nonetheless, this analysis assumes a 

very conservative 100 basis point risk 

factor to reflect reduction in program 

cost to reflect this risk. This is 

consistent with the risk factor used for 

the original Participation and Purchase 

Programs. 

General Administrative Risk. The 

Department’s analysis of cost neutrality 

examined the Department’s current loan 

servicing contract and assumptions of 

borrower status over the life of the loan 

after purchase by the Department. The 

Department’s analysis assumed minimal 

start-up costs because the ABCP 


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2522 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices 

Conduit Program builds on the current 

previously established programmatic 

infrastructure. In December 2008, the 

Department extended its current loan 

servicing contract for one year. This 

involved the renegotiation of payment 

rates for certain activities which may 

affect long-term servicing costs for the 

loans purchased under the original 

Purchase Program, the original 

Participation Program, the 2009–2010 

Purchase Program, the 2009–2010 

Participation Program, and the ABCP 

Conduit Program. Given the future 

uncertainty surrounding several factors, 

including the assumptions outlined in 

this notice and the status of loans 

ultimately purchased by the 

Department, it is possible that 

unforeseen additional costs may be 

incurred. Accordingly, a General 

Administrative Risk Factor of 100 basis 

points was added to the analysis. 

Portfolio Composition Risk. The cost 

to the Government of the ABCP Conduit 

Program depends on numerous factors, 

including loan size, default/prepayment 

risk, borrower benefits, and other 

characteristics of the purchased loans. 

The cost-neutrality analysis accounts for 

some of these factors, as outlined in this 

notice, but may not incorporate all of 

the dimensions of lender behavior and 

the loans ultimately purchased by the 

Department. Given this uncertainty, 

savings may deviate to some degree 

from the Department’s estimate of 

savings in the model. To ensure that the 

potential risk and the potential costs are 

adequately reflected, a Portfolio 

Composition Risk Factor of 100 basis 

points was added to the analysis. 

The Department also considered a 

high operational risk scenario in which 

the cost assessment for operation risk 

was raised from 20 basis points to 80 

basis points. Even with this increased 

assessment, the Department estimates 

that the 2009–2010 Purchase Program, 

the 2009–2010 Participation Program, 

and the ABCP Conduit Program remain 

cost-neutral. The Terms and Conditions 

for the 2009–2010 Purchase Program, 

the 2009–2010 Participation Program, 

and the ABCP Conduit Program seek to 

reduce the likelihood of lenders 

exclusively selling low-balance loans. 

Lenders will be required to sell all 

eligible loans they hold for a specific 

borrower into the ABCP Conduit, and 

the Conduit Manager would be required 

to select loans for any put to the 

Department in a manner that assures 

that the loans to be put are 

representative of the Conduit portfolio. 

These provisions make it less likely that 

lenders will choose to sell only poorlyperforming loans to the Department. 

Conclusion. After taking into account 

alternative market and lender behavior 

scenarios, the Administration 

determines that the 2009–2010 Purchase 

Program, the 2009–2010 Participation 

Program, and the ABCP Conduit 

Program are in the best interest of the 

United States and will result in no net 

cost to the Government. 

Applicable Program Regulations: 34 

CFR part 682. 

Electronic Access to This Document 

You may view this document, as well 

as all other Department of Education 

documents published in the Federal 

Register, in text or Adobe Portable 

Document Format (PDF) on the Internet 

at the following site: http://www.ed.gov/ 

news/fedregister/index.html. 

To use PDF you must have Adobe 

Acrobat Reader, which is available free 

at this site. 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. You may 

also view this document in PDF at the 

following site: http://www.ifap.ed.gov. 

You may obtain a copy of the Master 

Loan Sale Agreement and direction 

regarding submission of the Master Loan 

Sale Agreement and offers to sell loans 

at http://federalstudentaid.ed.gov/ffelp. 

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.gpoaccess.gov/nara/ 

index.html. 

(Catalog of Federal Domestic Assistance 

Number 84.032 Federal Family Education 

Loan Program) 

Program Authority: 20 U.S.C. 1087i–1. 

Dated: January 9, 2009. 

Margaret Spellings, 

Secretary of Education. 

Dated: January 9, 2009. 

Henry M. Paulson, Jr., 

Secretary of the Treasury. 

Dated: January 9, 2009. 

Stephen S. McMillin, 

Deputy Director, Office of Management and 

Budget. 

BILLING CODE 4000–01–P 


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[FR Doc. E9–712 Filed 1–14–09; 8:45 am] 

BILLING CODE 4000–01–C 

DEPARTMENT OF EDUCATION 

National Institute on Disability and 

Rehabilitation Research—Notice of 

Proposed Long-Range Plan for Fiscal 

Years 2010–2014 

AGENCY: Office of Special Education and 

Rehabilitative Services, Department of 

Education. 

ACTION: Notice of proposed long-range 

plan for fiscal years 2010–2014. 

SUMMARY: The Assistant Secretary for 

Special Education and Rehabilitative 

Services proposes the National Institute 

on Disability and Rehabilitation 

Research’s (NIDRR’s) Long-Range Plan 

(Plan) for fiscal years 2010 through 

2014. Pursuant to section 202(h)(1) of 

the Rehabilitation Act of 1973, as 

amended, the Department is required to 

develop a plan for NIDRR that outlines 

NIDRR’s priorities for rehabilitation 

research, demonstration projects, 

training, and related activities, and 

explains the basis for these priorities. 

DATES: We must receive your comments 

on or before March 16, 2009. 

ADDRESSES: Address all comments about 

the proposed Plan to Donna Nangle, 

U.S. Department of Education, 400 

Maryland Avenue, SW., Room 6029, 

Potomac Center Plaza, Washington, DC 

20202–2700. If you prefer to send your 

comments through the Internet, use the 

following address: NIDRRMailbox@ed.gov. 

You must include the term ‘‘LongRange Plan’’ in the subject line of your 

electronic message. 

FOR FURTHER INFORMATION CONTACT: 

Donna Nangle. Telephone: (202) 245– 

7462 or by e-mail: 

donna.nangle@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD), call the 

Federal Relay Service (FRS), toll free, at 

1–800–877–8339. 

SUPPLEMENTARY INFORMATION: 

Invitation to Comment: We invite you 

to submit comments regarding the 

proposed Plan. To ensure that your 

comments have maximum effect in 

developing the final Plan, we urge you 

to identify clearly the specific area of 

the Plan that each comment addresses 

and to arrange your comments in the 

same order as the proposed Plan. 

During and after the comment period, 

you may inspect all public comments 

about the proposed Plan on our Web 

site, at: http://www.ed.gov/about/ 

offices/list/osers/nidrr/policy.html. 

Assistance to Individuals With 

Disabilities in Reviewing the Record: On 

request we will provide an appropriate 

accommodation or auxiliary aid to an 

individual with a disability who needs 

assistance to review the comments or 

other documents in the public 

rulemaking record for this proposed 

Plan. If you want to schedule an 

appointment for this type of 

accommodation or auxiliary aid, please 

contact the person listed under FOR

FURTHER INFORMATION CONTACT. 

Background: In developing the 

research agenda in the proposed Plan, 

NIDRR considered: the legislative 

mandate for the Plan; consumer goals 

(as documented, for example, in public 

input on preparation of this Plan 

received via e-mail, the Web, and in a 

national teleconference in response to a 

notice published in the Federal Register 

and an e-mail solicitation inviting 

comment on the Plan); and scientific 

advances documented through state of 

the science conferences and literature. 

The purposes of the proposed Plan 

are: 

(1) To describe the broad general 

principles that will guide NIDRR’s 

policies and use of resources; 

(2) To establish objectives for research 

and related activities from which annual 

research priorities can be formulated; 

and 

(3) To describe how NIDRR will 

operationalize the Plan, i.e., the process 

by which NIDRR establishes annual 

priorities. 

The authority for the Secretary to 

establish the Plan is contained in 

section 202(h) of the Rehabilitation Act 

of 1973, as amended (29 U.S.C. 762(h)). 

The proposed Plan is published as an 

attachment to this notice. 

Accessible Format: Individuals with 

disabilities can obtain this document in 

an accessible format (e.g., braille, large 

print, audiotape, or computer diskette) 

on request to the contact person listed 

under FOR FURTHER INFORMATION

CONTACT. 

Electronic Access to This Document: 

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) on the Internet at the 

following site: http://www.ed.gov/news/ 

fedregister. 

To use PDF you must have Adobe 

Acrobat Reader, which is available free 

at this site. 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.gpoaccess.gov/nara/ 

index.html. 

Dated: January 9, 2009. 

Tracy R. Justesen, 

Assistant Secretary for Special Education and 

Rehabilitative Services. 

National Institute on Disability and 

Rehabilitation Research: Long-Range 

Plan (Plan) for Fiscal Years (FYs) 2010– 

2014 

I. Introduction 

NIDRR’s mission is to support 

research and related activities to 

generate new knowledge and promote 

its effective use in order to improve the 

lives of individuals with disabilities and 

their opportunities for full participation 

in society. The Plan presents goals, 

objectives, and strategies for NIDRR 

research investments for FYs 2010 

through 2014 that are aligned with this 

mission and that may be implemented 

through funding priorities. 

Statutory Mandate 

NIDRR was established by the 1978 

amendments to the Rehabilitation Act of 

1973, as amended (Act). As specified in 

section 200 of the Act (29 U.S.C. 760), 

NIDRR’s role is to: (a) Support research, 

demonstration projects, training, and 

related activities to maximize the full 

inclusion and integration into society, 

employment, independent living, family 

support, and economic and social selfsufficiency of individuals with 

disabilities of all ages; (b) provide for a 

comprehensive and coordinated 

approach to the support and conduct of 

research, demonstration projects, 

training, and related activities; (c) 

promote the transfer of rehabilitation 

technology; (d) ensure the widespread 

distribution of practical scientific and 

technological information; and (e) 

increase opportunities for researchers 

who are members of minority groups 

and researchers who are individuals 

with disabilities. 

NIDRR implements its statutory 

mandate by supporting research and 

development projects to generate new 

knowledge and products, along with 

supporting knowledge translation and 

capacity building activities. Research 

and development are supported through 

a variety of program mechanisms 

described later in this document. 

Knowledge translation is a process of 

ensuring that new knowledge and 

products gained through research and 

development will ultimately be used to 

improve the lives of individuals with 

disabilities and further their 


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