[Federal Register Volume 60, Number 79 (Tuesday, April 25, 1995)]
[Notices]
[Pages 20326-20327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10101]




[[Page 20325]]

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Part IV





Department of Education





_______________________________________________________________________



Postsecondary Education: Federal Student Assistance Programs Under 
Title IV; Experimental Sites; Notice

Federal Register / Vol. 60, No. 79 / Tuesday, April 25, 1995 / 
Notices 
[[Page 20326]] 

DEPARTMENT OF EDUCATION


Federal Student Assistance Programs Under Title IV of the Higher 
Education Act of 1965, as Amended

AGENCY: Department of Education.

ACTION: Notice inviting proposals for experimental sites.

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SUMMARY: The Secretary invites institutions of higher education to 
propose new ways of administering the student assistance programs 
authorized by Title IV of the Higher Education Act of 1965, as amended 
(HEA). Under section 487A(d) of the HEA, if the Secretary approves an 
institution as an experimental site as a part of this student aid 
reform initiative, he may exempt the institution from any Title IV 
statutory or regulatory requirement that would bias experimental 
results. The Secretary anticipates approving approximately 50 
experiments in the first phase of this initiative and more after those 
experiments are in place. The Secretary establishes no regulatory 
requirements for the proposals invited by this notice.

DATES: Proposals may be submitted in response to this notice at any 
time after April 25, 1995.

ADDRESSES: Jeffrey S. Baker, U.S. Department of Education, 600 
Independence Avenue, SW (Room 3042, ROB-3), Washington, DC 20202.

FOR FURTHER INFORMATION CONTACT: Jeffrey S. Baker, telephone: (202) 
708-9261. Individuals who use a telecommunications device for the deaf 
(TDD) may call the Federal Information Relay Service (FIRS) at 1-800-
877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.

SUPPLEMENTARY INFORMATION:

Background

    Over the course of the past year, the Department of Education has 
made progress in simplifying regulations and administrative processes 
for the Federal student assistance programs authorized by Title IV of 
the HEA. Regulatory burden on institutions, students, and families has 
been reduced, and institutional flexibility in meeting legal 
requirements has been increased.
    During the coming months, the Secretary will undertake a series of 
additional initiatives to free institutions of higher education from 
administrative burdens that unnecessarily draw resources away from 
their educational mission. With this notice, the Secretary invites 
proposals to reinvent the administration of Federal student assistance 
programs through the use of the experimental sites authority. At the 
same time, at the direction of the President, the Secretary is 
conducting a page-by-page review of all student financial assistance 
regulations to identify those that should be modified or eliminated. On 
the basis of these two initiatives, as well as the Department's 
continuing dialogue with the higher education community, the Secretary 
will also consider developing proposals for statutory amendments to 
eliminate unnecessary administrative burden. Finally, the Secretary 
will increase the flexibility and expand the scope of the Department's 
Institutional Quality Assurance Program, which employs a cycle of 
assessment, improvement, and preventive actions in the administration 
of Title IV programs.
    The invitation for proposals in this notice is a part of the 
Secretary's effort to reform Title IV program administration in 
partnership with the higher education community. The community has 
given the Department the benefit of its views in a variety of ways 
during the past year--in negotiated rulemaking, in comments on proposed 
rules, at a series of regional meetings, and in numerous informal 
discussions. The community's views were indispensable to the reforms 
that the Department has undertaken to date. It is the Secretary's hope 
that the community will address issues of program administration that 
remain to be resolved in the proposals invited by this notice.

Invitation for Proposals

    The Secretary invites institutions of higher education that 
administer one or more Title IV programs to submit one or more 
proposals to participate as ``experimental sites'' under section 
487A(d) of the HEA. This section authorizes the Secretary to select 
institutions for voluntary participation in experiments to test new 
ways of administering the student assistance programs. The Secretary is 
further authorized to exempt a participating institution from any Title 
IV statutory or regulatory requirement that would bias experimental 
results.
    The Secretary establishes no regulatory requirements for the 
proposals invited by this notice. It is the Secretary's hope that this 
approach will encourage institutions to develop truly innovative 
strategies that relieve unnecessary burden, maintain program 
accountability, and inform the Department's future efforts to improve 
Title IV program administration. If these experimental strategies prove 
successful, the Secretary intends to incorporate them into Title IV 
program regulations or, if appropriate, legislative proposals.

Submission of Proposals

    Any institution that administers a Title IV program, or a group of 
these institutions, may submit a proposal in response to this notice at 
any time by mailing the proposal to Jeffrey S. Baker at the address 
provided at the beginning of this notice or by faxing it to him at 
(202) 205-0786. Early submission is encouraged, as the Secretary 
anticipates that the review of proposals will begin within 60 days of 
the date of this notice; however, proposals that are received later 
will also be considered.
    The Secretary particularly invites proposals from institutions that 
are participating in the William D. Ford Federal Direct Loan (Direct 
Loan) Program. The availability of comprehensive and timely management 
information under the Direct Loan Program permits effective monitoring, 
evaluation, and adjustment of administrative practices by participating 
institutions. The Secretary encourages these institutions to develop 
proposals that take advantage of this capability. Similarly, the 
Secretary encourages proposals from institutions that are participating 
in the Department's Institutional Quality Assurance Program and have 
developed their own comprehensive systems to identify and remedy 
problems in the administration of Title IV programs.
    The Secretary emphasizes that the Department seeks to approve 
proposals for innovative approaches in a variety of different areas. 
Since the Secretary anticipates approving only a small number of 
different experimental solutions to any one problem, he encourages 
institutions to collaborate in the development of proposals and to 
submit proposals together.
    To aid in the Department's review of proposals, the Secretary 
suggests, but does not require, that a proposal be in the range of two 
to eight pages and that it answer the following questions:

<diamond> What problem experienced by the institution or its students, 
or both, does the proposal address?
<diamond> What is the institution's proposed solution to that problem?
<diamond> From which specific statutory or regulatory requirements does 
the institution seek relief in order to test its proposed solution?
<diamond> What performance measures or alternative actions does the 
institution propose to use to fulfill the underlying purpose of the 
requirements from which relief is sought? [[Page 20327]] 
<diamond> For what period is the experiment proposed?
<diamond> When and how will the results of the experiment be reported 
to the Department?
<diamond> For an experiment proposed by a group of institutions, how 
will the group monitor and aggregate the results of the experiment?

    The following examples illustrate the elements of the proposals 
solicited by this notice. The problems addressed by the examples were 
selected because they have been the subject of considerable commentary 
by the higher education community. The Secretary's inclusion of these 
examples and not others is in no way intended to circumscribe the 
creativity of the community in identifying problems and developing 
solutions to them.
    Example 1. An institution finds that the statutorily-required 30-
day delay in the disbursement of student loan proceeds to college 
freshmen makes it difficult for them to pay for books, housing, and 
other educational costs incurred at the beginning of the school term. 
The institution proposes to disburse loan proceeds by the beginning of 
the school term and seeks relief from the requirements that preclude 
this action:

<diamond> Section 428G(b)(1) of the HEA;
<diamond> 34 CFR 682.604(c)(5), for the Federal Family Education Loan 
(FFEL) Program; and
<diamond> 34 CFR 685.303(b)(6) and 685.303(b)(4), for the Direct Loan 
Program in its first year and its subsequent years, respectively.

    To address the underlying purpose of the 30-day delayed 
disbursement requirement (protection against possible losses to the 
taxpayer and harm to the student in the event of the student's early 
withdrawal from school), the institution provides information 
indicating that few of its freshmen have withdrawn from school in the 
first 30 days of their courses of study. The institution also describes 
how it proposes to measure its performance in this respect and report 
that performance to the Department over a specified period.
    Example 2. An institution finds that its counseling of student loan 
borrowers, required in part by statute and in part by regulation, is 
inefficient and ineffective in ensuring that borrowers repay their 
student loans. The institution proposes an innovative alternative and 
seeks relief from the requirements that preclude this action:

<diamond> Sections 485(b) and, for the Federal Perkins Loan Program, 
463A of the HEA;
<diamond> 34 CFR 682.604 (f) and (g), for the FFEL Program;
<diamond> 34 CFR 685.303 (e) and (f), and 685.304, for the Direct Loan 
Program in its first year and its subsequent years, respectively; and
<diamond> 34 CFR 674.16(a) and 674.42(a) for the Federal Perkins Loan 
Program.

    To address the underlying purpose of the entrance and exit 
counseling requirements (promotion of borrowers' understanding of their 
responsibilities under the student loan programs), the institution 
describes its alternative approach and explains why it believes this 
approach will be more effective. It also describes how it proposes to 
measure its success in ensuring that borrowers repay their loans and 
report its performance to the Department over a specified period.

(Approved by the Office of Management and Budget under control 
number 1840-0708)

Review of Proposals

    The Secretary will review each proposal submitted in response to 
this notice on its own merits. If a proposal is approved, the 
participating institution's program participation agreement will be 
amended to reflect the terms of the experiment, including the 
obligations undertaken by the institution, the requirements from which 
the institution is relieved, the length of the experiment, and the 
right of either the institution or the Department to terminate the 
experiment.
    In reviewing proposals, the Secretary will be guided by the 
statutory purpose of the experimental sites authority, namely, to 
inform future policy choices relating to the administration of Title IV 
programs. The Secretary may approve a proposal as submitted, reject it, 
or, if he finds that a proposal is not fully approvable but has merit, 
work with the institution to refine it. To maximize the usefulness of 
experimental sites in informing future policy choices, the Secretary 
may encourage different approaches in similar institutions and similar 
approaches in different types of institutions. In addition, to ensure 
the smooth implementation of this reform initiative, the Secretary 
anticipates approving approximately 50 proposals from among those 
submitted in the first phase of the initiative and more after those 
experiments are in place.

Request for Comment

    The Secretary invites institutions of higher education, students, 
and other interested parties to comment on the student aid reform 
initiative announced in this notice. Is the Department on the right 
track in inviting proposals to reinvent Title IV program administration 
in this way? What else should the Department be doing to accomplish the 
objectives of this initiative? Does the Department's non-regulatory 
guidance impose unnecessary administrative burdens? If so, how can the 
Department provide relief from that guidance? Comments may be directed 
to the contact person identified in this notice.

    Dated: April 19, 1995.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
[FR Doc. 95-10101 Filed 4-24-95; 8:45 am]
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