[Federal Register Volume 82, Number 199 (Tuesday, October 17, 2017)]
[Rules and Regulations]
[Pages 48195-48202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22489]



[[Page 48195]]

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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 
requirements; republication.

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SUMMARY: On September 29, 2017, the Secretary published a document in 
the Federal Register announcing the updated waivers and modifications 
of statutory and regulatory requirements governing the Federal student 
financial aid programs under the authority of the Higher Education 
Relief Opportunities for Students Act of 2003 (HEROES Act). We are 
republishing this document to include the definitions of certain terms 
used in this document. We have made no changes to the waivers and 
modifications.

DATES: The waivers and modifications began on September 29, 2017. The 
waivers and modifications in this document expire on September 30, 
2022.

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): 
Barbara Hoblitzell, U.S. Department of Education, 400 Maryland Ave. 
SW., Room 6W253, Washington, DC 20202. Telephone: (202) 453-7583 or by 
email: <a href="/cdn-cgi/l/email-protection#01436073636073602f496e636d68757b646d6d4164652f666e77"><span class="__cf_email__" data-cfemail="cd8facbfafacbface385a2afa1a4b9b7a8a1a18da8a9e3aaa2bb">[email protected]</span></a> or Brian Smith, U.S. Department of 
Education, 400 Maryland Ave. SW., Room 7E222, Washington, DC 20202. 
Telephone: (202) 453-7440 or by email: <a href="/cdn-cgi/l/email-protection#5e1c2c373f30700d33372a361e3b3a70393128"><span class="__cf_email__" data-cfemail="bcfeced5ddd292efd1d5c8d4fcd9d892dbd3ca">[email protected]</span></a>. For other 
provisions: Wendy Macias, U.S. Department of Education, 400 Maryland 
Ave. SW., Room 6C111, Washington, DC 20202. Telephone: (202) 203-9155 
or by email: <a href="/cdn-cgi/l/email-protection#2572404b415c0b6844464c44566540410b424a53"><span class="__cf_email__" data-cfemail="db8cbeb5bfa2f596bab8b2baa89bbebff5bcb4ad">[email protected]</span></a>.
    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, 400 
Maryland Ave. SW., Room 6C111, Washington, DC 20202. Telephone: (202) 
203-9155 or by email: <a href="/cdn-cgi/l/email-protection#085f6d666c712645696b61697b486d6c266f677e"><span class="__cf_email__" data-cfemail="4314262d273a6d0e22202a22300326276d242c35">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: On September 29, 2017 (82 FR 45465), the 
Secretary published a document in the Federal Register announcing the 
updated waivers and modifications. We are republishing this document to 
include the definitions of certain terms used in this document. We have 
made no changes to the waivers and modifications.
    In a document 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:
    <bullet> Is serving on active duty during a war or other military 
operation or national emergency;
    <bullet> Is performing qualifying National Guard duty during a war 
or other military operation or national emergency;
    <bullet> 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
    <bullet> Suffered direct economic hardship as a direct result of a 
war or other military operation or national emergency, as determined by 
the Secretary.
    Please note that these waivers and modifications do not apply to an 
individual who resides or is employed in an area declared a disaster 
area by any Federal, State, or local official unless that declaration 
has been made in connection with a national emergency.
    Under the HEROES Act, the Secretary's authority to provide the 
waivers and modifications would have expired on September 30, 2005. 
However, Public Law 109-78, enacted on September 30, 2005, extended the 
expiration date of the Secretary's authority to September 30, 2007. 
Accordingly, in a document 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.
    Public Law 110-93, enacted on September 30, 2007, 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 document in the 
Federal Register (72 FR 72947) extending the waivers and modifications 
published on December 12, 2003, to September 30, 2012. In that 
document, 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.
    In a document in the Federal Register published on September 27, 
2012 (77 FR 59311), the Secretary published updated waivers and 
modifications to reflect the results of the review. Under that 
document, the updated waivers and modifications expire on September 30, 
2017.
    The Secretary is updating the waivers and modifications to reflect 
statutory and regulatory changes that have occurred since the September 
27, 2012, document was published. The waivers and modifications in this 
document will expire on September 30, 2022. With a few limited 
exceptions, the waivers and modifications in this document are the same 
waivers and modifications published in the September 27, 2012, Federal 
Register document. However, the 2012 waivers and modifications have 
been updated in the following areas:
    (1) The Secretary updated the need analysis modification to reflect 
the change in which tax year's information is collected on the Free 
Application for Federal Student Aid (FAFSA) and used to calculate the 
applicant's expected family contribution (EFC). Previously when 
completing a FAFSA, a student provided income information from the most 
recently completed tax year prior to the beginning of the financial aid 
application cycle (e.g., 2015 income information for the 2016-2017 
FAFSA). Beginning with the 2017-2018 FAFSA, income information is 
collected from one tax year earlier--referred to as the ``prior-prior 
year.'' This change was made under the authority of section 
480(a)(1)(B) of the Higher Education Act of 1965, as amended (HEA). 
This modification was also updated to make it consistent with the 
modification to professional judgment included in this document, which 
provides three options that a financial aid administrator (FAA) may use 
to make adjustments to the values of the items used to calculate the 
EFC to reflect a student's special circumstances.
    (2) For the professional judgment modification, the Secretary 
clarified that in addition to using income information

[[Page 48196]]

from the first or second calendar year of the award year, an 
institution may use another annual income that more accurately reflects 
the family's current financial circumstances.
    (3) The Secretary updated the modifications related to verification 
of adjusted gross income (AGI) and U.S. income tax paid so that 
affected individuals under this category are no longer required to 
provide a signature on the statement 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; or certifying the amount of AGI and U.S. income tax paid for 
the specified year.
    (4) The Secretary extended the waiver assisting affected 
individuals with regard to the annual reevaluation requirements for 
FFEL and Direct Loan borrowers who are repaying loans under the Income-
Based Repayment (IBR) plan, and Direct Loan borrowers who are repaying 
loans under the Income-Contingent Repayment (ICR) plan to include 
borrowers who are repaying Direct Loans under the Pay As You Earn 
(PAYE) or Revised Pay As You Earn (REPAYE) repayment plans.
    (5) For the fourth category of affected individuals to which 
waivers and modifications apply, as described later in this document, 
the Secretary removed the reference to 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, 
since the waivers under this category only pertain to the dependent 
student of such affected individuals.
    (6) The Secretary updated the waiver related to verification 
signature requirements to waive the requirement for a parental 
signature on any verification documentation required for title IV 
eligibility for a dependent student because of the parent's status as 
an affected individual.
    (7) The Secretary made a technical change to the waiver related to 
the section on required signatures on the FAFSA, the Student Aid Report 
(SAR), and the Institutional Student Information Record (ISIR), 
replacing the reference to ``ISIR'' with ``or submitting corrections 
electronically''. The Secretary also changed the reference to 
``responsible parent'' to ``relevant parent'' to mean the parent whose 
information is reported on the FAFSA.
    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 requirements applicable to 
the student financial assistance programs under title IV of the HEA 
that the Secretary believes are appropriate to ensure that:
    <bullet> 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;
    <bullet> Affected individuals who are recipients of student 
financial assistance are not unduly subject to administrative burden or 
inadvertent, technical violations or defaults;
    <bullet> Affected individuals are not penalized when a 
determination of need for student financial assistance is calculated;
    <bullet> 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
    <bullet> 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 document.
    In 20 U.S.C. 1098ee, the HEROES Act provides definitions critical 
to determining whether a student is an ``affected individual'' under 
the act and, if so, to which waivers and modifications the affected 
individual is entitled. Because these definitions are located outside 
of the statutes and regulations administered by the Department and with 
which financial aid administrators are most familiar, whether a student 
qualifies as an ``affected individual'' is a frequent source of 
confusion. To help ensure that the terms are not misinterpreted and 
that affected individuals receive the waivers and modifications to 
which they are entitled under the HEROES Act, we provide these 
definitions below.
    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.
    Qualifying National Guard duty during a war or other military 
operation or national emergency means service as a member of the 
National Guard on full-time 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.
    Serving on active duty during a war or other military operation or 
national emergency includes service by an individual who is--
    (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.
    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 
requirements of title IV of the HEA and the Department of Education's 
(Department's) regulations for ALL affected individuals.

Need Analysis

    Section 480 of the HEA provides that, in the calculation of an 
applicant's EFC, the term ``total income,'' which is used in the 
determination of ``annual adjusted family income'' and ``available 
income,'' is equal to the applicant's, the applicant's spouse's, or the 
applicant's parent's AGI plus untaxed income and benefits for the 
second preceding tax year minus excludable income. The HEROES Act 
allows an institution to substitute AGI plus untaxed income and 
benefits received in the first calendar year of the award year for 
which such

[[Page 48197]]

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 (the EFC based on the 
income and tax information reported on the FAFSA), the EFC based on the 
data from the first calendar year of the award year, or the EFC based 
on another annual income that more accurately reflects the family's 
current financial circumstances.
    If an institution chooses to use anything other than the original 
EFC, it should use the administrative professional judgment options 
discussed in the following section.

Professional Judgment

    Section 479A of the HEA specifically gives the FAA at an 
institution the authority to use professional judgment to make, on a 
case-by-case basis, 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 on a case-by-case 
basis 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 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 one of the options listed below:
    <bullet> Using the AGI plus untaxed income and benefits received in 
the first calendar year of the award year;
    <bullet> Using another annual income that more accurately reflects 
the family's current financial circumstances; or
    <bullet> Making no modifications.
    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 
special 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:
    <bullet> Requires an institution to notify a student of a grant 
overpayment and the actions the student must take to resolve the 
overpayment;
    <bullet> Denies eligibility to a student who owes a grant 
overpayment and does not take an action to resolve the overpayment; and
    <bullet> 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 U.S. 
income tax paid:
    <bullet> 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 six-month extension 
if the individual requested an additional extension of the filing time; 
and
    <bullet> 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 and U.S. income 
tax paid for the specified year.
    The Secretary is modifying the requirement of this provision so 
that the submission of a copy of IRS Form 4868 or a copy of the IRS's 
approval of an extension beyond the six-month extension 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 U.S. income tax paid:
    <bullet> A 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
    <bullet> A copy of each W-2 received for the specified year or, for 
a self-employed individual, a statement by the individual certifying 
the amount of AGI and U.S. income tax paid 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 requirements in 
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, or who reside or are employed 
in a disaster area.

Return of Title IV Funds--Post-Withdrawal Disbursements of Loan Funds

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

[[Page 48198]]

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 post-withdrawal 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(h)(2), an institution must pay any title IV 
credit balance to the student, or parent in the case of a parent PLUS 
loan, as soon as possible, but no later than: 14 days after the balance 
occurred if the balance occurred after the first day of class of a 
payment period; or 14 days after the first day of class of a payment 
period if the balance occurred on or before the first day of class of 
that payment period. If the 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.
    For students who withdraw because they are affected individuals in 
this category, the Secretary finds that the institution has met the 14-
day requirement under 34 CFR 668.164(h)(2) 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--Student or Parent Request for Loan or TEACH Grant 
Cancellation

    Under 34 CFR 668.165(a)(4)(ii), an institution must return loan or 
TEACH Grant proceeds, cancel the loan or TEACH Grant, or do both, if 
the institution receives a loan or TEACH Grant cancellation request 
from a student or parent:
    <bullet> By the later of the first day of a payment period or 14 
days after the date the institution notifies the student or parent of 
his or her right to cancel all or a portion of a loan or TEACH Grant, 
if the institution obtains affirmative confirmation from the student 
under 34 CFR 668.165(a)(6)(i); or
    <bullet> Within 30 days of the date the institution notifies the 
student or parent of his or her right to cancel all or a portion of a 
loan, if the institution does not obtain affirmative confirmation from 
the student under 34 CFR 668.165(a)(6)(i).
    Under 34 CFR 668.165(a)(4)(iii), if an institution receives a loan 
cancellation request from a borrower after the period specified in 34 
CFR 668.165(a)(4)(ii), the institution may, but is not required to, 
comply with the request. For a student or parent who is an affected 
individual in this category, the Secretary is modifying this 
requirement so that an institution must allow at least 60 days for the 
student or parent to request the cancellation of all or a portion of a 
loan or TEACH Grant for which proceeds have been credited to the 
account at the institution. If an institution receives a loan or TEACH 
Grant cancellation request after the 60-day period, the institution 
may, but is not required to, comply with the request.

Cash Management--Student and Parent Authorizations

    Under 34 CFR 668.165(b)(1), an institution must obtain a written 
authorization from a student or parent, as applicable, to:
    <bullet> 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
    <bullet> 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 requirements to permit an 
institution to accept an 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 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).

[[Page 48199]]

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 
requirements 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 requirements 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, Graduate Fellowship, or Rehabilitation 
Training Program 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), (ii), and (iii), 682.210(s)(2), 
(3), and (4), 685.204(b), 685.204(d), and 685.204(e), 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 half-time 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; engaged in an eligible rehabilitation 
training program; or, for Federal Perkins Loan borrowers, 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 or rehabilitation training 
program 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, rehabilitation training program, 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, resume a rehabilitation training 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 FFEL subsidized Stafford Loan or not charge interest on a 
Direct 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 
three-year 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 
requirements to require an institution to grant forbearance based on 
the borrower's status as an affected individual in this category for a 
one-year 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 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), 685.204(h), and 674.34(h) 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 
three-month transition period that immediately follows, without 
providing the loan holder with documentation. To grant the borrower 
forbearance beyond this period, documentation supporting the borrower's 
military mobilization must be submitted to the loan holder.
    The Secretary will apply the forbearance waivers and modifications 
in this section to loans held by the Department.

[[Page 48200]]

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 Loan 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.

Loan Cancellation

    Depending on the loan program, borrowers may qualify for loan 
cancellation if they are employed fulltime in specified occupations, 
such as teaching or in law enforcement, pursuant to sections 428J, 
460(b)(1), and 465(a)(2)(A)-(M) and (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.

Rehabilitation of Defaulted Loans

    A borrower of a Direct Loan or FFEL Loan must make nine voluntary 
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 
and 34 CFR 674.39. 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 during 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 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.

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, on-time, voluntary, full, monthly 
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 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, on-time, voluntary, full, monthly 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 an affected individual or in 
the three-month transition period for purposes of this document, 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.

Consolidation of Defaulted Loans

    Under the definition of ``satisfactory repayment arrangement'' in 
34 CFR 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, voluntary, on-
time, monthly, full 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, voluntary, monthly, full, 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 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 loans 
held by the Department.

[[Page 48201]]

Annual Income Documentation Requirements for Direct Loan and FFEL 
Borrowers Under the IBR, PAYE, REPAYE, and ICR Plans

    Section 493C(c) of the HEA requires the Secretary to establish 
procedures for annually determining a borrower's eligibility for the 
IBR plan, including verification of a borrower's annual income and the 
annual amount due on the total amount of the borrower's loans. Section 
455(e)(1) of the HEA provides that the Secretary may obtain such 
information as is reasonably necessary regarding the income of a 
borrower for the purpose of determining the annual repayment obligation 
of the borrower under an income-contingent repayment plan. Under 34 CFR 
682.215(e), 685.209(a)(5), (b)(3), and (c)(4), and 685.221(e), 
borrowers repaying under the IBR, PAYE, REPAYE, or ICR plans must 
annually provide their loan holder with documentation of their income 
and family size so that the loan holder may, if necessary, adjust the 
borrower's monthly payment amount 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 a deadline specified by the holder. If a borrower who is repaying 
his or her loans under the IBR, PAYE, or ICR plans fails to provide the 
required information by the specified deadline, the borrower's monthly 
payment amount is adjusted and is no longer based on the borrower's 
income. This adjusted monthly payment amount is generally higher than 
the payment amount that was based on the borrower's income.
    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, PAYE, REPAYE, or ICR monthly payment 
amount for up to a three-year period, including a three-month 
transition period immediately following the three-year period, 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.
    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.

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 serving for a period of more than 30 
consecutive days under certain conditions. Some institutions must also 
abide by the protections provided by the Principles of Excellence 
(Executive Order 13607, issued April 27, 2012) to service members who 
are absent for shorter periods of service. Institutions agree to comply 
with the Principles of Excellence through arrangements with the 
Department of Defense and the Department of Veterans Affairs. Executive 
Order 13607 is available at www.whitehouse.gov/the-press-office/2012/04/27/executive-order-establishing-principles-excellence-educational-instituti.
    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 
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.

Verification Signature Requirements

    The Department's regulations in 34 CFR 668.57(b), (c), and (d) 
require signatures to verify the number of family members in the 
household, the number of family members enrolled in postsecondary 
institutions, or other information specified in the annual Federal 
Register document that announces the FAFSA information that an 
institution and an applicant may be required to verify, as well as the 
acceptable documentation for verifying that FAFSA information. The 
Secretary is waiving the requirement for a parent's signature on any 
verification documentation required for title IV eligibility for a 
dependent student when no relevant parent can provide the required 
signature because of the parent's status as an affected individual in 
this category.

Required Signatures on the FAFSA, SAR, or in Connection With Submitting 
Corrections Electronically

    Generally, when a dependent applicant for title IV aid submits the 
FAFSA or submits corrections to a previously submitted FAFSA, at least 
one parent's signature is required on the FAFSA, SAR, or in connection 
with submitting corrections electronically. The Secretary is waiving 
this requirement so that an applicant need not provide a parent's 
signature when there is no relevant 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 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 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

[[Page 48202]]

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: October 12, 2017.
Kathleen A. Smith,
Acting Assistant Secretary for Postsecondary Education.
[FR Doc. 2017-22489 Filed 10-16-17; 8:45 am]
 BILLING CODE 4000-01-P


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