[Federal Register Volume 59, Number 69 (Monday, April 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8523]


[[Page Unknown]]

[Federal Register: April 11, 1994]


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Part V





Department of Education





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34 CFR Part 682




Federal Family Education Loan Program; Final Rule
DEPARTMENT OF EDUCATION

34 CFR Part 682

RIN 1840-ACO7

 
Federal Family Education Loan Program

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations for the Federal Family 
Education Loan Program, formerly the Guaranteed Student Loan (GSL) 
program. The final regulations are needed to delete a provision of the 
regulations regarding the school closure plan requirement for certain 
private schools.

EFFECTIVE DATE: These regulations take effect July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Pat Newcombe, Acting Chief, FFEL 
Program Section, Loans Branch, Division of Policy Development, Policy, 
Training, and Analysis Service, U.S. Department of Education, room 
4310, ROB-3, 400 Maryland Avenue, SW., Washington, DC 20202-5449. 
Telephone (202) 708-8242. Individuals who use a telecommunications 
device for the deaf (TDD) may call the Federal Information Relay 
Service at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern time, 
Monday through Friday.

SUPPLEMENTARY INFORMATION: This amendment is needed to delete from the 
regulations the school closure plan requirement for certain private 
schools. On January 7, 1993, the Secretary issued final regulations 
amending 34 CFR 682.600 to require private schools that do not qualify 
as an ``institution of higher education'' under 34 CFR 600.4 and offer 
an undergraduate nonbaccalaureate program designed to prepare students 
for a particular vocation, trade or career field as a requirement for 
participation in the FFEL Program to have a school closure plan in 
place within six months of the effective date of April 13, 1993. The 
regulations were intended to address a serious problem that occurs 
whenever a school closes precipitously, leaving its students unable to 
complete their programs of study, usually without any provision for 
teaching out the affected students.
    The issue was initially addressed in a notice of proposed 
rulemaking (NPRM) published on June 5, 1989 (54 FR 24128). The NPRM 
proposed that a school would be required to have a teachout agreement 
with another participating school under which the second school would 
agree to teach the closing school's students. This requirement would 
have applied to all schools offering a program of study designed to 
prepare students for a particular vocation, trade or career. The public 
comments strongly opposed the ``teachout'' requirement and pointed out 
that, in many circumstances, a teachout was not possible due to the 
location of the school or the highly specialized nature of the course 
work. Many commenters also identified alternatives to a teachout 
arrangement. The Secretary decided, after extensive consultation with 
the community, not to pursue a final regulation based on this NPRM.
    On September 5, 1991 (56 FR 43978), the Secretary published a 
second NPRM that would require schools to maintain a school closure 
plan but would expand the options available to satisfy this 
requirement. While this regulatory proposal also generated a 
considerable amount of negative comment, the Secretary believed at that 
time that the need to protect the interests of students outweighed the 
possible negative impact of the regulations on affected schools. The 
final regulation was published on January 7, 1993 (58 FR 3174).
    Since publication of the final regulations, the Department has 
received many objections to the regulatory requirement of a school 
closure plan that were not raised during the public comment period. In 
addition, the Department has been evaluating the necessity of these 
regulations in light of other actions it is implementing or has 
initiated to address the problems created by school closures. For 
example, the Higher Education Amendments of 1992, Public Law 102-325, 
amended the Higher Education Act (HEA) to strengthen ED's oversight of 
institutions, including more frequent monitoring of the financial 
stability of schools. In those cases where there is a risk of 
precipitous closure, ED is already requiring surety arrangements to 
cover potential losses to students and taxpayers. Public Law 102-325 
also provides for cancellation of a borrower's obligation on a FFEL 
Program loan if the borrower is unable to complete his or her program 
of study because the institution closed. In light of additional 
information provided to the Department and these legislative 
developments, the Secretary has decided to withdraw 34 CFR 682.600(d).
    In the Paperwork Reduction Act of 1980 section of the NPRM that was 
published for this regulation in the September 5, 1991 Federal 
Register, the Department indicated that there was an information 
collection requirement under Sec. 682.600(d). The Department estimated 
the annual public reporting burden for this collection of information 
to be an average of one hour per response for 638 respondents, 
including the time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information. Based on an average salary of 
$5.00 an hour for a staff person at a school covered by this 
requirement, it would cost each covered school $5.00 to comply with 
this provision. This was not an annual cost for each school. Based on 
this estimate, deletion of this regulatory requirement would save the 
covered schools each one hour of work at $5.00 per hour.

Waiver of Notice of Proposed Rulemaking

    In accordance with section 431(b)(2)(A) of the General Education 
Provisions Act (20 U.S.C. 1232(b)(2)(A)), and the Administrative 
Procedure Act, 5 U.S.C. 553, it is the practice of the Secretary to 
offer interested parties the opportunity to comment on proposed 
regulations. However, since publication of the final regulations in 34 
CFR 682.600(d) in the January 7, 1993 Federal Register, the Secretary 
has received a substantial number of comments concerning the 
implementation of the regulatory requirement for school closure plans. 
As discussed above, significant cause has been shown to revoke 
Sec. 682.600(d) as an inappropriate burden on the program community. 
However, under section 482(c) of the Higher Education Act, such 
revocation may take effect on July 1, 1994 only if published in final 
form by May 1, 1994; otherwise the revocation will not take effect 
until July 1995. Therefore, to avoid the delay that would be occasioned 
by publication of a proposed rule, the Secretary has determined that 
publication of a proposed rule is impracticable and contrary to the 
public interest under 5 U.S.C. 553(b)(B).

Executive Order 12866

    These final regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order the Secretary has 
assessed the potential costs and benefits of this regulatory action. In 
assessing the potential costs and benefits--both quantitative and 
qualitative--of these regulations, the Secretary has determined that 
the benefits of the regulations justify the costs.

Assessment of Educational Impact

    The Secretary has determined that the regulations in this document 
do not require transmission of information that is being gathered by or 
is available from any other agency or authority of the United States.

List of Subjects in 34 CFR Part 682

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

(Catalog of Federal Domestic Assistance Number 84.032, Federal 
Family Education Loan Program)

    Dated: March 18, 1994.
Richard W. Riley,
Secretary of Education.

    The Secretary amends part 682 of title 34 of the Code of Federal 
Regulations as follows:

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

    1. The authority citation for part 682 continues to read as 
follows:

    Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.


Sec. 682.600  [Amended]

    2. Section 682.600 is amended by removing paragraph (d) and 
redesignating paragraph (e) as paragraph (d).

[FR Doc. 94-8523 Filed 4-8-94; 8:45 am]
BILLING CODE 4000-01-P