[Federal Register Volume 61, Number 244 (Wednesday, December 18, 1996)]
[Proposed Rules]
[Page 66854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32047]



[[Page 66853]]

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Part IV





Department of Education





_______________________________________________________________________



34 CFR Part 668



Student Assistance General Provisions; Reopening of Comment Period; 
Proposed Rule

  Federal Register / Vol. 61, No. 244 / Wednesday, December 18, 1996 /  
Proposed Rules  

[[Page 66854]]



DEPARTMENT OF EDUCATION

34 CFR Part 668


Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Reopening of comment period.

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SUMMARY: On September 20, 1996, the Department of Education published 
in the Federal Register a notice of proposed rulemaking (NPRM) for the 
Student Assistance General Provisions (34 CFR Part 668) regarding 
standards of financial responsibility (60 FR 49552-49574). The proposed 
standards would apply to all institutions that participate in a program 
authorized by title IV of the Higher Education Act of 1965, as amended 
(title IV, HEA programs), and to third-party servicers that enter into 
a contract with a lender or guarantee agency to administer any aspect 
of that lender's or agency's Federal Family Education Loan (FFEL) 
programs.
    Many commenters responding to the NPRM requested that the Secretary 
extend the comment period to give institutions, higher education 
associations, and other interested parties more time to evaluate 
further the proposed ratio methodology and standards, and to prepare 
substantive comments and recommendations based on that additional 
analysis. The Secretary agrees that more time is needed to evaluate the 
proposed ratio methodology and standards, as well as the proposed rules 
regarding changes of ownership, and that additional public comment 
would improve the quality of information available for rulemaking. 
Therefore, the Secretary is reopening for 60 days the comment period 
for the following parts of the September 20, 1996 NPRM:
     The proposed Subpart L.
     The proposed Appendix F.
     Paragraphs (e)-(h) of the proposed Sec. 668.23 (the 
repayment standards formerly contained in Sec. 668.24).

DATES: Comments must be received on or before February 18, 1997.

ADDRESSES: All comments concerning this notice or the notice of 
proposed rulemaking should be addressed to Mr. David Lorenzo, U.S. 
Department of Education, P.O. Box 23272, Washington, D.C. 20026, or to 
the following internet address: [email protected]

FOR FURTHER INFORMATION CONTACT: Mr. David Lorenzo or Mr. John Kolotos, 
U.S. Department of Education, 600 Independence Avenue, S.W., Room 3045 
ROB-3, Washington, D.C. 20202, telephone (202) 708-7888. 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 standard time, Monday through Friday.

Background

    On November 29, 1996, the Secretary published final regulations 
amending Secs. 668.15 and 668.23 of the Student Assistance General 
Provisions. In that document, the Secretary indicated that the 
Department would reopen the comment period for several parts of the 
September 20, 1996 NPRM. The parts for which the comment period is 
reopened are indicated above. The Secretary is not reopening the 
comment period for those parts of the September 20, 1996 NPRM on which 
final regulations were published on November 29 and which are not 
listed above.
    The Secretary is particularly interested in receiving comments on 
the following topics. These topics were originally raised in the NPRM 
and noted by commenters as areas of special concern. The Secretary is 
seeking additional comment and recommendations on these issues that 
more fully reflect the commenters' positions:
     The utility and appropriateness of the proposed ratio 
methodology for evaluating the financial condition of participating 
institutions. The Secretary is interested in specific comments on how 
the various ratios may be improved, as well as comments on the 
weighting mechanism, strength factors, and composite score standard. 
The Secretary is particularly interested in suggestions that would 
improve the way the proposed ratio methodology may be used to judge the 
financial health of an institution that has not incurred debt, given 
the fact that an institution may have no debt either because it has 
avoided debt as a management strategy, or because it is in such poor 
financial condition that it cannot secure credit.
     Ways in which a public institution may demonstrate that it 
is backed by the full faith and credit of a state or equivalent 
governmental entity, as an alternative means under which a public 
institution may satisfy the statutory requirement that it is 
financially responsible.
     Ways to streamline the process by which the Secretary 
determines that an institution may retain or resume participation in 
title IV, HEA programs during or after a change of ownership. The 
Secretary is looking for suggestions outlining steps the Department may 
take to shorten or eliminate funding interruptions to students while 
protecting title IV, HEA program funds.
     The impact on financial statements of the new accounting 
standards contained in the Financial Accounting Standards Board's 
Statements of Financial Accounting Standards 116 and 117. The Secretary 
particularly requests comments from institutions that have already 
adopted those new accounting standards.
     Whether the proposed ratio methodology is appropriate for 
evaluating the financial responsibility of third-party servicers that 
enter into a contract with a lender or guarantee agency to administer 
any aspect of that lender's or agency's FFEL programs. Commenters are 
encouraged to submit concrete suggestions for possible revisions to the 
proposed ratio methodology and standards, or for an alternative 
methodology or standards, if the commenters do not agree that the 
proposed ratio methodology and standards are appropriate for these 
servicers.
     At present, the Secretary does not have a data base of 
third-party servicer financial statements to use while evaluating 
comments on the proposed ratio methodology and standards as they apply 
to third-party servicers. In order to help the Secretary evaluate 
comments on the proposed ratio methodology and standards as they apply 
to third-party servicers, and any suggested revisions or alternatives 
to the proposed ratio methodology and standards, the Secretary 
encourages third-party servicers to submit their latest audited 
financial statement along with their comments.

    Dated: December 12, 1996.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
[FR Doc. 96-32047 Filed 12-17-96; 8:45 am]
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