[Federal Register Volume 61, Number 196 (Tuesday, October 8, 1996)]
[Notices]
[Pages 52778-52779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25709]


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DEPARTMENT OF EDUCATION


William D. Ford Federal Direct Loan Program

AGENCY: Department of Education.

ACTION: Notice of processing deadlines to submit loan records and 
promissory notes.

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SUMMARY: This notice establishes processing deadlines for the 
submission of William D. Ford Federal Direct Loan (Direct Loan) Program 
promissory notes and electronic records to the Secretary for the 1994-
1995 academic year (Year 1) and the 1995-1996 academic year (Year 2). 
Any electronic records and promissory notes for loans made during Year 
1 and Year 2 are subject to the deadlines contained in this notice.

EFFECTIVE DATE: The deadline for processing any electronic records and 
promissory notes for loans made during Year 1 is November 22, 1996. The 
deadline for processing any electronic records and promissory notes for 
loans made during Year 2 is July 31, 1997.

FOR FURTHER INFORMATION CONTACT: Douglas Laine, Program Specialist, 
Direct Loan Policy Group, U.S. Department of Education, 600 
Independence Avenue, S.W., Room 3045, ROB-3, Washington, D.C. 20202. 
Telephone (202) 708-9406. Individuals who use a telecommunications 
device for the deaf (TDD) may call the Federal Information Relay 
Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern 
time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The Secretary is establishing processing 
deadlines by which institutions that participated in Year 1 or Year 2 
of the Direct Loan Program must submit electronic records and 
promissory notes for Direct Loans made during those years. Under an 
institution's participation agreement with the Secretary to participate 
in the Direct Loan Program, an institution must comply with all of the 
requirements established by the Secretary relating to student loan 
information with respect to loans made under the Direct Loan Program. 
See 34 CFR 685.300(b)(6). This provision includes the submission of 
records relating to Direct Loans. The Secretary is exercising his 
authority under this provision to establish a processing deadline by 
which all applicable electronic records and promissory notes for a 
particular academic year must be final, complete, accurate, and 
submitted to the Secretary.
    The Secretary believes that establishing annual processing 
deadlines for the submission of all electronic records (including 
initial and adjusted or revised records) and promissory notes is 
necessary to improve the integrity and accountability of the Direct 
Loan Program and to improve services to students and schools. Schools 
are required under 34 CFR 685.309(a) to establish and maintain proper 
administrative and fiscal procedures to protect the rights of student 
and parent borrowers as well as to protect the United States from 
unreasonable risk of loss. Establishing the processing deadlines 
contained in this notice will help achieve these goals. Further, 
establishing an annual processing deadline will enable the Secretary to 
finalize cash records under the Direct Loan Program for an academic 
year within a reasonable period of time following the end of that 
academic year. The Secretary also will be better able to ensure that 
Direct Loan monies were disbursed appropriately to student borrowers 
attending a school, or to parent borrowers borrowing on behalf of 
dependent students at the school. The processing deadlines also will 
enable the Department to conduct a program review of a Direct Loan 
school more efficiently, as all Direct Loan records

[[Page 52779]]

submitted to the Secretary by that date will be deemed final.
     It is important that schools understand the difference between the 
annual processing deadline and the 30-day requirement for the regular 
submission of Direct Loan records. The Secretary believes that 
institutions have been adequately notified that Direct Loan records 
must be submitted to the Secretary in a timely manner. The Department 
has published numerous documents emphasizing that schools should submit 
all loan origination records, promissory notes, and disbursement 
records to the Secretary on a monthly basis. The Department 
specifically provided this guidance in the April 26, 1994, Announcement 
of Criteria for Loan Origination--1995-1996 Academic Year (59 FR 21804) 
and in ``Direct Loan Program Bulletin'' DLB-15. Further, the Department 
has published regulations in the Federal Register on December 1, 1995, 
requiring schools that originate Direct Loans to submit loan 
origination records, promissory notes, and disbursement records, for 
the first disbursements of loans to the Secretary no later than 30 days 
following the date the disbursements are made. In addition, these 
regulations require that schools submit disbursement records for each 
subsequent disbursement to the Secretary no later than 30 days 
following the date the subsequent disbursements are made. Schools that 
participate under standard origination must submit an initial and 
subsequent disbursement record to the Secretary no later than 30 days 
following the date of each disbursement. See 34 CFR 685.301(d).
    These regulations, which were effective beginning on July 1, 1996, 
apply to all Direct Loan disbursements, both those made prior to July 1 
and those made on or after July 1. Thus, for any disbursement of a loan 
made prior to July 1, 1996, the institution was required to submit all 
electronic records and promissory notes associated with that 
disbursement no later than 30 days after the effective date of these 
regulations--July 31, 1996. Any institution that is not in compliance 
with the 30-day time period for reporting may be subject to fines, 
penalties, or other sanctions, as determined by the Secretary.
     The Secretary realizes that in some cases institutions will need 
to edit or adjust the electronic records after the initial records are 
submitted to the Secretary. Therefore, the Secretary is publishing this 
notice establishing annual processing deadlines and to notify 
institutions that any electronic record or promissory note submitted to 
the Secretary for Year 1 or Year 2 after the applicable deadline will 
be rejected. Borrower loan files that remain incomplete or inaccurate 
by the deadline date may result in institutional, rather than federal, 
responsibility for the loan or portion of the loan.

Deadlines for Submission of Records

     An institution that participated in Year 1 (academic year 1994-
1995) of the Direct Loan Program must submit all electronic loan 
records and promissory notes associated with Direct Loans made during 
Year 1 to the Secretary no later than (45 days after publication in the 
Federal Register).
     Institutions that participated in Year 2 (academic year 1995-1996) 
of the Direct Loan Program must submit all electronic loan records and 
promissory notes associated with Direct Loans made during Year 2 to the 
Secretary no later than July 31, 1997.

(Catalog of Federal Domestic Assistance Number 84.268, William D. 
Ford Federal Direct Loan Program)

     Dated: September 30, 1996.
 David A. Longanecker,
 Assistant Secretary for Postsecondary Education.
[FR Doc. 96-25709 Filed 10-7-96; 8:45 am]
BILLING CODE 4000-01-P