[Federal Register Volume 82, Number 204 (Tuesday, October 24, 2017)]
[Proposed Rules]
[Pages 49155-49160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22850]


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DEPARTMENT OF EDUCATION

34 CFR Parts 668, 674, 682, and 685

[Docket ID ED-2017-OPE-0112]
RIN 1840-AD28


Student Assistance General Provisions, Federal Perkins Loan 
Program, Federal Family Education Loan Program, William D. Ford Federal 
Direct Loan Program, and Teacher Education Assistance for College and 
Higher Education Grant Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to further delay, until July 1, 2019, 
the effective date of selected provisions of the final regulations 
entitled Student Assistance General Provisions, Federal Perkins Loan 
Program, Federal Family Education Loan (FFEL) Program, William D. Ford 
Federal Direct Loan Program, and Teacher Education Assistance for 
College and Higher Education Grant Program (the final regulations), 
published in the Federal Register on November 1, 2016. The Secretary 
proposes this further delay to ensure that there is adequate time to 
conduct negotiated rulemaking and, as necessary, develop revised 
regulations. The provisions for which we propose to further delay the 
effective date are listed in the SUPPLEMENTARY INFORMATION section of 
this document. The current effective date of selected provisions of the 
final regulations is July 1, 2018, in accordance with the interim final 
rule (IFR) published elsewhere in this issue of the Federal Register.

DATES: We must receive your comments on or before November 24, 2017.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments submitted by fax or by email or those submitted after 
the comment period. To ensure that we do not receive duplicate copies, 
please submit your comments only once. In addition, please include the 
Docket ID at the top of your comments.
    If you are submitting comments electronically, we strongly 
encourage you to submit any comments or attachments in Microsoft Word 
format. If you must submit a comment in Portable Document Format (PDF), 
we strongly encourage you to convert the PDF to print-to-PDF format or 
to use some other commonly used searchable text format. Please do not 
submit the PDF in a scanned format. Using a print-to-PDF format allows 
the Department to electronically search and copy certain portions of 
your submissions.
    <bullet> Federal eRulemaking Portal: Go to www.regulations.gov to 
submit your comments electronically. Information on using 
Regulations.gov, including instructions for accessing agency documents, 
submitting comments, and viewing the docket, is available on the site 
under ``Help.''
    <bullet> Postal Mail, Commercial Delivery, or Hand Delivery: The 
Department strongly encourages commenters to submit their comments 
electronically. However, if you mail or deliver your comments about the 
notice of proposed rulemaking, address them to Jean-Didier Gaina, U.S. 
Department of Education, 400 Maryland Ave. SW., Mail Stop 6W248, 
Washington, DC 20202.
    Privacy Note: The Department's policy is to make all comments 
received from members of the public available for public viewing on the 
Federal eRulemaking Portal at www.regulations.gov. Therefore, 
commenters should be careful to include in their comments only 
information that they wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: Barbara Hoblitzell, U.S. Department of 
Education, 400 Maryland Ave. SW., Mail Stop 6W248, Washington, DC 
20202. Telephone: (202) 453-7583 or by email at: 
<a href="/cdn-cgi/l/email-protection#591b382b3b382b387711363b35302d233c3535193c3d773e362f"><span class="__cf_email__" data-cfemail="30725142525142511e785f525c59444a555c5c7055541e575f46">[email protected]</span></a>.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), 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 
this notice of proposed rulemaking. We will consider comments on the 
further delayed effective date only and will not consider comments on 
the wording or substance of the final regulations. See

[[Page 49156]]

ADDRESSES for instructions on how to submit comments.
    During and after the comment period, you may inspect all public 
comments about this notice of proposed rulemaking by accessing 
Regulations.gov. You may also inspect the comments in person in room 
6W245, 400 Maryland Avenue SW., Washington, DC, between 8:30 a.m. and 
4:00 p.m. Washington, DC time, Monday through Friday of each week, 
except Federal holidays. If you want to schedule time to inspect 
comments, please contact the person listed under FOR FURTHER 
INFORMATION CONTACT.
    Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking 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 notice of proposed rulemaking. 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.
    Elsewhere in this issue of the Federal Register, the Department is 
publishing an IFR delaying until July 1, 2018, the effective date of 
selected provisions of the final regulations. The original effective 
date of the final regulations published November 1, 2016 (81 FR 75926) 
was July 1, 2017. On June 16, 2017, the Department published in the 
Federal Register a notification of the partial delay of effective dates 
under section 705 of the Administrative Procedure Act (5 U.S.C. 705) 
(82 FR 27621) (705 Notice), to delay the effectiveness of certain 
provisions of the final regulations until a legal challenge by the 
California Association of Private Postsecondary Schools is resolved. 
See Complaint and Prayer for Declaratory and Injunctive Relief, 
California Association of Private Postsecondary Schools v. DeVos, Civil 
Action No. 1:17-cv-00999 (D.D.C. May 24, 2017). As explained in the 
IFR, because the final regulations have been postponed by the 705 
Notice beyond July 1, 2017, they must become effective no earlier than 
July 1, 2018, to comply with section 482 of the Higher Education Act of 
1965, as amended (HEA) (20 U.S.C. 1089), also known as the ``master 
calendar requirement.''
    Also on June 16, 2017, the Department announced its intent to 
convene a committee to develop proposed regulations to revise the 
regulations on borrower defense to repayment of Federal student loans 
and other matters. Given that the first negotiated rulemaking session 
is scheduled for November 13-15, 2017, we cannot complete the 
negotiated rulemaking process and the development of revised 
regulations by November 1, 2018. Under the master calendar, a 
regulatory change that has been published in final form on or before 
November 1 prior to the start of an award year--which begins on July 1 
of any given year--may take effect only at the beginning of the next 
award year, or in other words, on July 1 of the next year. In light of 
this requirement, the regulations resulting from negotiated rulemaking 
could not be effective before July 1, 2019.
    As noted previously, elsewhere in this issue of the Federal 
Register, the Department is publishing an IFR delaying the effective 
date of the final regulations until July 1, 2018. The Department could 
implement the final regulations on July 1, 2018, pursuant to the IFR, 
or, through notice and comment rulemaking, we could delay the effective 
date until July 1, 2019, or a future July 1. We propose to further 
delay the effective date of the final regulations, to continue to 
preserve the regulatory status quo, until July 1, 2019. The Department 
would continue to process borrower defense claims under the existing 
regulations that will remain in effect during the delay so that 
borrowers may continue to apply for the discharge of all or a part of 
their loans.
    Based on the above considerations, the Department is proposing to 
delay until July 1, 2019, the effective date of the following 
provisions of the final regulations in title 34 of the Code of Federal 
Regulations (CFR):
    <bullet> Sec.  668.14(b)(30), (31), and (32) Program participation 
agreement.
    <bullet> Sec.  668.41(h) and (i) Reporting and disclosure of 
information.
    <bullet> Sec.  668.71(c) Scope and special definitions.
    <bullet> Sec.  668.90(a)(3) Initial and final decisions.
    <bullet> Sec.  668.93(h), (i), and (j) Limitation.
    <bullet> Sec.  668.171 General.
    <bullet> Sec.  668.175(c), (d), (f), and (h) Alternative standards 
and requirements.
    <bullet> Part 668 subpart L, Appendix C.
    <bullet> Sec.  674.33(g)(3) and (g)(8) Repayment.
    <bullet> Sec.  682.202(b)(1) Permissible charges by lenders to 
borrowers.
    <bullet> Sec.  682.211(i)(7) Forbearance.
    <bullet> Sec.  682.402(d)(3), (d)(6)(ii)(B)(1) and (2), 
(d)(6)(ii)(F) introductory text, (d)(6)(ii)(F)(5), (d)(6)(ii)(G), 
(d)(6)(ii)(H) through (K), (d)(7)(ii) and (iii), (d)(8), and 
(e)(6)(iii) Death, disability, closed school, false certification, 
unpaid refunds, and bankruptcy payments.
    <bullet> Sec.  682.405(b)(4)(ii) Loan rehabilitation agreement.
    <bullet> Sec.  682.410(b)(4) and (b)(6)(viii) Fiscal, 
administrative, and enforcement requirements.
    <bullet> Sec.  685.200(f)(3)(v) and (f)(4)(iii) Borrower 
eligibility.
    <bullet> Sec.  685.205(b)(6) Forbearance.
    <bullet> Sec.  685.206(c) Borrower responsibilities and defenses.
    <bullet> Sec.  685.212(k) Discharge of a loan obligation.
    <bullet> Sec.  685.214(c)(2) and (f)(4) through (7) Closed school 
discharge.
    <bullet> Sec.  685.215(a)(1), (c)(1) through (c)(8), and (d) 
Discharge for false certification of student eligibility or 
unauthorized payment.
    <bullet> Sec.  685.222 Borrower defenses.
    <bullet> Part 685 subpart B, Appendix A Examples of borrower 
relief.
    <bullet> Sec.  685.300(b)(11), (b)(12), and (d) through (i) 
Agreements between an eligible school and the Secretary for 
participation in the Direct Loan Program.
    <bullet> Sec.  685.308(a) Remedial actions.
    As noted in the IFR, the Department interprets all references to 
``July 1, 2017'' in the text of the above-referenced regulations to 
mean the effective date of those regulations. The regulatory text 
included references to the specific July 1, 2017, date in part to 
provide clarity to readers in the future as to when the regulations had 
taken effect. Because the regulations did not take effect on July 1, 
2017, we would, in connection with this proposed additional delay of 
effective date, read those regulations as referring to the new 
effective date established by this further delay, i.e., July 1, 2019.
    This proposed delay of the final regulations will not delay the 
effective dates of the following regulatory provisions published in 81 
FR 75926 which: (1) Expand the types of documentation that may be used 
for the granting of a discharge based on the death of the borrower; (2) 
amend the regulations governing the consolidation of Nursing Student 
Loans and Nurse Faculty Loans so that they align with the statutory 
requirements of section 428C(a)(4)(E) of the HEA; (3) amend the 
regulations governing Direct Consolidation Loans to allow a borrower to 
obtain a Direct Consolidation Loan regardless of whether the borrower 
is also seeking to consolidate a Direct Loan Program or FFEL Program 
loan, if the borrower has a loan type identified in 34 CFR 685.220(b); 
(4) address severability; and (5) make technical corrections. As 
established in 81 FR 75926, 34 CFR 682.211(i)(7) and 
682.410(b)(6)(viii) would remain designated for early implementation, 
at the discretion of each lender or guaranty agency.

[[Page 49157]]

    Waiver of Negotiated Rulemaking: Under section 492 of the HEA (20 
U.S.C. 1098a), all regulations proposed by the Department for programs 
authorized under title IV of the HEA are subject to negotiated 
rulemaking requirements. However, section 492(b)(2) of the HEA provides 
that negotiated rulemaking may be waived for good cause when doing so 
would be ``impracticable, unnecessary, or contrary to the public 
interest.'' Section 492(b)(2) of the HEA also requires the Secretary to 
publish the basis for waiving negotiations in the Federal Register at 
the same time as the proposed regulations in question are first 
published.
    For the reasons stated above, it would not be practicable, before 
the July 1, 2018 effective date specified in the IFR, to engage in 
negotiated rulemaking and publish final regulations. There is, 
therefore, good cause to waive negotiated rulemaking pertaining to this 
delay.

Executive Orders 12866, 13563, and 13771

Regulatory Impact Analysis

    Under Executive Order 12866, it must be determined whether this 
regulatory action is ``significant'' and, therefore, subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action likely to 
result in a rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
Tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    The Department estimates the quantified annualized economic and net 
budget impacts of the delay of the effective date to be -$26.9 million 
in reduced costs to institutions and the Federal government. These 
reduced costs result from the delay of the borrower defense provisions 
of the final regulations as they would apply to the 2017 to 2019 loan 
cohorts, as well as from the delayed paperwork burden on institutions, 
and the delayed execution of the closed school automatic discharge. 
This proposed regulatory action is a significant regulatory action 
subject to review by OMB under section 3(f) of Executive Order 12866.
    We have also reviewed this proposed rule under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing this proposed rule only on a reasoned determination 
that its benefits justify its costs. Based on the analysis that 
follows, the Department believes that this proposed rule is consistent 
with the principles in Executive Order 13563.
    We also have determined that this regulatory action does not unduly 
interfere with State, local, or Tribal governments in the exercise of 
their governmental functions.
    In accordance with both Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action.
    The quantified economic effects and net budget impact associated 
with the delayed effective date are not expected to be economically 
significant.
Effects of One-Year Delay
    As indicated in the Regulatory Impact Analysis (RIA) published with 
the final regulations on November 1, 2016, the final regulations were 
economically significant with a total estimated net budget impact of 
$16.6 billion over the 2017-2026 loan cohorts in the primary estimate 
scenario, including a cost of $381 million for cohorts 2014-2016 
attributable to the provisions for a three-year automatic closed school 
discharge. As the net budget impact is based on the net present value 
of the cash flows of the relevant cohorts over 40 years, delaying the 
final regulations for an additional year will have limited effect, as 
discussed below. This analysis is limited to the effect of delaying the 
effective date of the final regulations an additional year from July 1, 
2018 to July 1, 2019, and does not account for any potential changes in 
the final regulations.
    Even with the further delayed effective date, borrowers will still 
be able to submit claims. The provisions of the final regulations 
pertaining to the process for review and determination of claims were 
not limited to specific cohorts designated by the effective date so the 
delay will not result in specific cohorts of borrowers being excluded 
from the process reflected in the final regulations, when implemented. 
Once in effect, the protection generated by the financial protection 
provisions will be available to be applied to claims from loans 
originated earlier, including the period from July 1, 2018 to June 30, 
2019. Loans made before July 1, 2017, were always subject to the State-
based standard and borrowers' ability to bring claims under that 
standard is unchanged by the delay. For claims filed after the 
effective date of the regulations, for loans made on or after July 1, 
2019, the Federal standard established in the final regulations would 
apply. As discussed previously, the Department interprets all 
references to ``July 1, 2017'' in the text of the final regulations to 
mean the effective date of the final regulations. As a result, the 
further delay in the effective date means that loans made between July 
1, 2018 and June 30, 2019, will be subject to the

[[Page 49158]]

current State-based standard. As we noted in the final regulations, the 
Federal standard was designed to address much of the conduct already 
covered by the State-based standard, so the vast majority of claims 
associated with loans made between July 1, 2017, and the delayed 
effective date could be made under the current, State-based standard as 
well.
    In addition to borrowers, institutions are also affected by the 
delayed effective date. As indicated in the RIA for the final 
regulations, institutions bear the major costs of compliance, paperwork 
burden, and providing financial protection. The financial protection 
provisions of the final regulations depend on the effective date, so 
institutions will not incur these costs until the final regulations are 
in effect. In terms of cost savings for institutions, the estimated 
annual paperwork burden was approximately $9.4 million in the initial 
year of the final regulations. In the revised scenario developed to 
estimate the effect of the additional one-year delay in the effective 
date, transfers from institutions to students, via the Federal 
government, would be reduced by approximately $9.3 million for the 2017 
and 2018 loan cohorts. The costs of providing financial protection were 
not quantified in the RIA for the final regulations, and the Department 
has no additional data to estimate costs institutions may avoid from 
the delayed effective date of the financial protection provisions.
Net Budget Impact
    In order to estimate the net budget impact of the additional one-
year delay in the effective date to July 1, 2019, the Department 
developed a scenario that revised the primary estimate assumptions from 
the final regulations for the affected 2017 to 2019 loan cohorts, as 
was done for the one-year delay described in the IFR. As before, the 
Department applies an assumed level of school misconduct, borrower 
claims success, and recoveries from institutions (respectively labeled 
as Conduct Percent, Borrower Percent, and Recovery Percent in Table 1) 
to the President's Budget 2018 (PB2018) loan volume estimates to 
generate the estimated net borrower defense claims for each cohort, 
loan type, and sector. The assumptions for the primary scenario from 
the 2016 final regulation were the basis for the President's Budget 
2018 (PB2018) baseline that assumed the final regulations would go into 
effect on July 1, 2017. The scenario developed for this NPRM is 
designed to capture the incremental change from the one-year delay in 
the IFR associated with the further one-year delay in the effective 
date to July 1, 2019. Compared to the scenario developed for the IFR, 
recoveries are reduced by an additional two percent for the 2017 and 
2018 cohorts, all of the 2018 cohort is subject to the State-based 
standard, and the affected portion of the 2019 cohort is subject to the 
current, State-based standard and reduced recoveries at the five 
percent level used for the one-year delay in the IFR. Table 1 presents 
assumptions for the primary estimate from the final regulations and the 
revised estimate for the further one-year delay, from July 1, 2018 to 
July 1, 2019, in the effective date. In this scenario, the conduct 
percent is 90 percent of the primary scenario from the final 
regulations and the borrower percent is the same. The financial 
protection provided was always expected to increase over time, so the 
delayed effective date in the near term is not expected to 
significantly affect the amount of recoveries over the life of any 
particular loan cohort, limiting any net budget impact from the delay. 
To estimate the potential reduction in recoveries related to the 
proposed delayed effective date, we reduced recoveries for the affected 
portion of the 2017 and 2018 cohorts by seven percent for the private 
not-for-profit and proprietary sectors and by five percent for the 2019 
cohort. As in the final regulations and the IFR, recoveries from public 
institutions were held constant at 75 percent across scenarios.

                                    Table 1--Revised Assumptions for One-Year Delay From July 1, 2018 to July 1, 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       2017                            2018                            2019
                         Cohort                          -----------------------------------------------------------------------------------------------
                                                           Pub/Priv NFP        Prop        Pub/Priv NFP        Prop        Pub/Priv NFP        Prop
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conduct Percent:
    Final Primary.......................................             3.0              20             2.4              16             2.0            13.6
    Delay to 2019.......................................             2.7              18            2.16            14.4             1.8           12.24
Borrower Percent:
    Final Primary.......................................              35              45            36.8            47.3            36.8            47.3
    Delay to 2019.......................................              35              45            36.8            47.3            36.8            47.3
                                                         -----------------------------------------------------------------------------------------------
                                                                 0Public     Priv/Prop        Public         Priv/Prop        Public         Priv/Prop
                                                         -----------------------------------------------------------------------------------------------
Recovery Percent:
    Final Primary.......................................              75            23.8              75            23.8              75            23.8
    Delay to 2019.......................................              75          22.134              75          22.134              75          24.871
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The net budget impact associated with these effects of the 
additional one-year delay in the effective date on the borrower defense 
provisions only is approximately -$46.1 million from the 2017 to 2019 
loan cohorts.
    As the amount and composition of borrower defense claims and 
estimated recoveries over the lifetime of the relevant loan cohorts are 
not expected to change greatly due to the delayed effective date, the 
Department does not estimate an economically significant net budget 
impact from the delay itself, with a potential net budget impact 
related to borrower defense claims of -$46.1 million in reduced costs 
for the affected cohorts. This represents the incremental change 
associated with the additional one-year delay from July 1, 2018 to July 
1, 2019. If compared to the PB2018 baseline, the savings would be 
approximately -$78.8 million.
    The closed school automatic discharge provisions were the other 
significant source of estimated net budget impact in the final 
regulations. Under credit reform scoring, the modification to older 
cohorts for the automatic discharge provision estimated to cost $364 
million was expected to occur in fiscal year (FY) 2017 in the 
President's Budget for FY 2018 (PB2018). As a result of the delay in 
the effective date, the Department will not execute the modification in 
FY 2017.
    As indicated in the IFR, the Department does expect to incur the 
costs associated with the three-year

[[Page 49159]]

automatic discharge after the delayed effective date, but moving the 
execution of the modification beyond FY 2017 will require a new cost 
analysis with economic assumptions from the fiscal year of the 
execution. This will result in a change of cost, but at this point it 
is not possible to know the discount rates in future fiscal years, so 
the cost of the modification will be determined in the year that it is 
executed. While the actual cost of the future modification cannot be 
determined at this time, the Department did approximate the effect of 
the delay by shifting the timing of the relevant discharges back by a 
year and recalculating a modification using the discount rates and 
economic assumptions used for the calculation of the PB2018 
modification. When calculated in this manner, the delay in the 
modification to July 2018 described in the IFR resulted in estimated 
savings of less than $10 million. Using the same approach, the further 
delay to July 2019 is expected to save approximately $15 million above 
the savings from the initial one-year delay.
    As the delay does not change the substance of the automatic 
discharge, we would expect the amount and composition of loans affected 
by the automatic discharge not to change significantly. The closed 
school three-year automatic discharge provisions were applicable to 
loans made on or after November 1, 2013, and were not linked to the 
effective date of the final regulations. Therefore, delaying the 
effective date of those provisions will not change the set of loans 
eligible for this automatic discharge. Additionally, borrowers would 
have the ability to apply for a closed school discharge before July 1, 
2019, if they did not want to wait for the automatic discharge to be 
implemented. For future cohorts, the delay is not significant as the 
three-year period will fall beyond the delayed effective date. Any 
significant change to the estimated net budget impact associated with 
the closed school automatic discharge depends on any substantive 
changes made to the provisions as a result of the upcoming rulemaking 
and changes to economic assumptions when the modification is executed.
    Consistent with Executive Order 13771 (82 FR 9339, February 3, 
2017), we have estimated that this proposed rule will result in cost 
savings. Therefore, this proposed rule would be considered an Executive 
Order 13771 deregulatory action.
Accounting Statement
    In evaluating whether a regulation is economically significant, a 
key consideration is whether the annual effect in any given year is 
over $100 million. To evaluate this, the Department looked at the 
difference in the undiscounted cashflows related to the death, 
disability, and bankruptcy (DDB) claims in which borrower defense 
claims are included for the one-year delay established in the IFR and 
the further one-year delay scenario described under Net Budget Impacts. 
The difference from subtracting the further delay scenario from the IFR 
one-year delay scenario for the 2017 to 2019 cohorts is summarized in 
Table 2.

  Table 2--Difference in Undiscounted Net Cashflows for the 2017 to 2019 Loan Cohorts From the Further One-Year
                               Delay in 2016 Borrower Defense Rule to July 1, 2019
----------------------------------------------------------------------------------------------------------------
                                      FY 2017         FY 2018         FY 2019         FY 2020         FY 2021
----------------------------------------------------------------------------------------------------------------
Change in DDB Cashflow..........             159           7,489         496,637         637,361         538,468
----------------------------------------------------------------------------------------------------------------
                                         FY 2022         FY 2023         FY 2024         FY 2025         FY 2026
----------------------------------------------------------------------------------------------------------------
Change in DDB Cashflow..........       6,004,802       9,525,520       4,668,143       2,156,009       3,003,657
----------------------------------------------------------------------------------------------------------------

    Table 3 shows the effects when those differences in the DDB 
cashflows are discounted at 7 and 3 percent and annualized.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Category                                             Benefits
------------------------------------------------------------------------
Institutions may not incur compliance
 costs or costs of obtaining financial
 protection until the rule is in effect.          Not Quantified
------------------------------------------------------------------------
Category                                               Costs
------------------------------------------------------------------------
                                                      7%              3%
------------------------------------------------------------------------
Continued use of State-law based
 standard                                         Not Quantified
Delay in providing consumer information
 about institution's performance and
 practices
Potential decreased awareness and usage
 of closed school and false
 certification discharges
------------------------------------------------------------------------
Savings associated with delay in                    -9.5           -9.51
 compliance with paperwork requirements.
------------------------------------------------------------------------
Category                                             Transfers
------------------------------------------------------------------------
                                                      7%              3%
------------------------------------------------------------------------
Reduction in transfers from the Federal             -3.5            -3.8
 Government to affected borrowers in the
 2017 to 2019 cohorts that would have
 been partially borne by affected
 institutions via reimbursements........
------------------------------------------------------------------------
Reduced reimbursements from affected                -1.2            -1.3
 institutions to affected students, via
 the Federal government as loan cohorts
 2017 to 2019 are subject to the
 existing borrower defense regulation...
------------------------------------------------------------------------
Delay in closed school automatic                   -14.8           -14.8
 discharge implementation from 2018 to
 2019...................................
------------------------------------------------------------------------


[[Page 49160]]

Paperwork Reduction Act of 1995

    As indicated in the Paperwork Reduction Act section published in 
the final regulations, the assessed estimated burden was 253,136 hours, 
affecting both institutions and individuals, with an estimated annual 
cost of $9,458,484. The table below identifies the regulatory sections, 
OMB Control Numbers, estimated burden hours, and estimated costs of the 
final regulations.

----------------------------------------------------------------------------------------------------------------
                                                                                                 Estimated cost
                                                                                                  $36.55/hour
         Regulatory section           OMB Control No.                Burden hours                 institution
                                                                                                  $16.30/hour
                                                                                                   individual
----------------------------------------------------------------------------------------------------------------
668.14.............................          1845-0022  1,953................................             71,382
668.41.............................          1845-0004  5,346................................            195,396
668.171............................          1845-0022  3,028................................            110,673
668.175............................          1845-0022  60,560...............................          2,213,468
682.211............................          1845-0020  5,784................................            211,405
682.402............................          1845-0020  1,838................................             67,179
685.222............................          1845-0142  249 (Individuals)....................              4,059
685.222............................          1845-0142  800 (Institutions)...................             29,240
685.300............................          1845-0143  179,362..............................          6,555,681
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total..........................  .................  258,920..............................          9,458,484
Cost savings due to delayed          .................  253,136..............................          9,247,079
 effective date excluding 682.211
 early implementation allowed.
Burden remaining...................  .................  5,784................................            211,405
----------------------------------------------------------------------------------------------------------------

    This notice of proposed rulemaking delays the effective date of the 
implementation of all of the cited regulations and would result in a 
cost savings of the total amount of $9,458,484. However, Sec.  
682.211(i)(7) of the final regulations, regarding mandatory forbearance 
based on a borrower defense claim, with an estimated 5,784 hours and 
$211,405 cost, as would continue to be designated for early 
implementation. Lenders may have elected early implementation and, 
therefore, those specific costs and hours remain applicable and have 
been subtracted from the overall estimated cost saving. Based on the 
delayed effective date of July 1, 2019, the revised estimated annual 
cost savings to institutions and individuals is $9,247,079 ($9,458,484 
- $211,405) with an estimated burden hours savings of 253,136 (258,920 
- 5,784).
    Accessible Format: Individuals with disabilities may obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the contact person listed 
under FOR FURTHER INFORMATION CONTACT.
    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 PDF. To use PDF, you must have Adobe Acrobat 
Reader, which is available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

List of Subjects

34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Grant programs--education, Loan programs--
education, Reporting and recordkeeping requirements, Selective Service 
System, Student aid, Vocational education.

34 CFR Part 674

    Loan programs--education, Reporting and recordkeeping requirements, 
Student aid.

34 CFR Parts 682 and 685

    Administrative practice and procedure, Colleges and universities, 
Loan programs--education, Reporting and recordkeeping requirements, 
Student aid, Vocational education.

    Dated: October 16, 2017.
Betsy DeVos,
Secretary of Education.
[FR Doc. 2017-22850 Filed 10-20-17; 4:15 pm]
 BILLING CODE 4000-01-P


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