[Federal Register Volume 64, Number 207 (Wednesday, October 27, 1999)]
[Rules and Regulations]
[Pages 57960-57961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27719]



[[Page 57959]]

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Part IV





Department of Education





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34 CFR Part 685



William D. Ford Federal Direct Loan Program; Final Rule

  Federal Register / Vol. 64, No. 207 / Wednesday, October 27, 1999 / 
Rules and Regulations  

[[Page 57960]]



DEPARTMENT OF EDUCATION

34 CFR Part 685

RIN 1845-AA10


William D. Ford Federal Direct Loan Program

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations governing the William D. 
Ford Federal Direct Loan (Direct Loan) Program. The amendment is a 
result of a recently enacted change made to the Higher Education Act of 
1965, as amended (HEA) by the Higher Education Amendments of 1998 (1998 
Amendments). These final regulations reflect the Secretary's authority 
to charge reduced interest rates on Direct Loan Program loans to 
encourage on-time loan repayment.

DATES: Effective Date: These regulations are effective July 1, 2000.
    Implementation Date: The Secretary has determined, in accordance 
with section 482(c)(2)(A) of the HEA (20 U.S.C. 1089(c)(2)(A)), that 
Direct Loan Program borrowers may, at their discretion, choose to 
implement the provisions of Sec. 685.211(b) on or after November 1, 
1999. For further information see ``Implementation Date of These 
Regulations'' under the SUPPLEMENTARY INFORMATION section of this 
preamble.

FOR FURTHER INFORMATION CONTACT: Ms. Nicki Meoli, U.S. Department of 
Education, 400 Maryland Avenue, SW., ROB-3, Room 3045, Washington, DC 
20202-5346. Telephone: (202) 708-8242. If you use a telecommunications 
device for the deaf (TDD), you may call the Federal Information Relay 
Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION:
    These regulations address a change made to the HEA by the 1998 
Amendments (Pub. L. 105-244) that affects the Direct Loan Program. On 
June 16, 1999, the Secretary published a notice of proposed rulemaking 
(NPRM) for the Direct Loan Program in the Federal Register (64 FR 
32358). On August 24, 1999, the Secretary published final regulations 
in the Federal Register (64 FR 46252) for all of the proposed 
amendments in the NPRM except for the amendment to Sec. 685.211 that 
would reflect the Secretary's authority to charge borrowers reduced 
interest rates to encourage on-time loan repayment. Before publishing 
final regulations on repayment incentives, the Secretary met certain 
reporting procedures in section 455(b)(7) of the HEA. This final 
regulation is the same as the proposed amendment to Sec. 685.211 
published in the NPRM.

Implementation Date of These Regulations

    Section 482(c) of the HEA requires that regulations affecting 
programs under Title IV of the HEA be published in final form by 
November 1 prior to the start of the award year in which they apply. 
However, that section also permits the Secretary to designate any 
regulation as one that an entity subject to the regulation may choose 
to implement earlier. If the Secretary designates a regulation for 
early implementation, he may specify when and under what conditions the 
entity may implement it. Under this authority, the Secretary has 
designated the following regulations for early implementation:
    Sec. 685.211(b)--On or after November 1, 1999, these regulations 
may be implemented by Direct Loan Program borrowers at their 
discretion. This means that Direct Loan Program borrowers may receive a 
reduced interest rate by choosing to repay their loans under a system 
or on a schedule that meets requirements specified by the Secretary.

Analysis of Comments and Changes

    The regulations in this document were developed through the use of 
negotiated rulemaking. Section 492 of the HEA requires that, before 
publishing any proposed regulations to implement programs under Title 
IV of the HEA, the Secretary obtain public involvement in the 
development of the proposed regulations. After obtaining advice and 
recommendations, the Secretary must conduct a negotiated rulemaking 
process to develop the proposed regulations. All proposed regulations 
must conform to agreements resulting from the negotiated rulemaking 
process unless the Secretary reopens that process or explains any 
departure from the agreements to the negotiated rulemaking 
participants.
    These regulations were published in proposed form on June 16, 1999 
in conformance with the consensus of the negotiated rulemaking 
committee. Under the committee's protocols, consensus meant that no 
member of the committee dissented from the agreed-upon language. The 
Secretary invited comments on the proposed regulations by July 30, 1999 
and several comments were received. An analysis of the comments 
received on the proposed regulations for all of the provisions in the 
NPRM except Sec. 685.211 was included in the preamble to the final 
regulations the Secretary published on August 24, 1999. An analysis of 
the comments received on the proposed changes to Sec. 685.211 follows.
    Generally, we do not address technical and other minor changes--and 
suggested changes the law does not authorize the Secretary to make.

Repayment Incentives (Sec. 685.211(b))

    Comments: A number of commenters representing individual schools 
and associations of schools supported the proposed rule that would 
reflect the Secretary's authority to charge reduced interest rates to 
encourage on-time loan repayment. The commenters endorsed the proposed 
regulation as a means of reducing costs to Direct Loan Program 
borrowers in a way that previously had been available only to Federal 
Family Education Loan (FFEL) Program borrowers.
    Discussion: We appreciate the support expressed by the commmenters 
for the proposed change to Sec. 685.211(b).
    As the first step in implementing this regulation, the Secretary 
will reduce the interest rate charged on Direct Loan Program loans for 
borrowers repaying by means of automated account debiting. Beginning on 
November 1, 1999, borrowers repaying their Direct Loan Program loans 
via automated debiting of their personal checking, savings, or other 
type of account at a financial institution will receive a .25 percent 
reduction in the interest being charged on their loans.
    Change: None.

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of this order, we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those we have determined as 
necessary for administering this program effectively and efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, we have determined that 
the benefits of the regulations would justify the costs.
    We have also determined that this regulatory action would not 
unduly interfere with State, local, and tribal

[[Page 57961]]

governments in the exercise of their governmental functions.
    We summarized the potential costs and benefits of these final 
regulations in the preamble to the NPRM on June 16, 1999 (64 FR 32360).

Paperwork Reduction Act of 1995

    These regulations do not contain any information collection 
requirements.

Assessment of Educational Impact

    In the NPRM, we requested comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Based on the response to the NPRM and on our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

Electronic Access to This Document

    You may view this document in text or Adobe Portable Document 
Format (PDF) on the Internet at the following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/legislation/HEA/rulemaking/
http://ifap.ed.gov/csb__html/fedlreg.htm

    To use the PDF you must have the Adobe Acrobat Reader Program with 
Search, which is available free at the first of the previous sites. If 
you have questions about using the PDF, call the U.S. Government 
Printing Office (GPO) toll free, at 1-888-293-6498; or in the 
Washington, D.C., area at (202) 512-1530.

    Note: 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 on GPO Access at:

http://www.access.gpo.gov/nara/index.html

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

List of Subjects in 34 CFR Part 685

    Administrative practice and procedure, Colleges and universities, 
Education, Loan programs-education, Student aid, Vocational education.

    Dated: October 15, 1999.
Richard W. Riley,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary amends 
title 34 of the Code of Federal Regulations by amending Part 685 as 
follows:

PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

    1. The authority citation for part 685 continues to read as 
follows:

    Authority: 20 U.S.C. 1087 et seq., unless otherwise noted.

    2. Section 685.211 is amended by redesignating paragraphs (b), (c), 
(d), and (e) as paragraphs (c), (d), (e), and (f), respectively; by 
adding a new paragraph (b); by removing the reference to ``(d)(1)'' in 
the first sentence of newly redesignated paragraph (e)(2), and by 
adding, in its place, ``(e)(1)''; and by removing the reference to 
``(d)(2)'' in newly redesignated paragraph (e)(3), and by adding, in 
its place, ``(e)(2)'' to read as follows:


Sec. 685.211  Miscellaneous repayment provisions.

* * * * *
    (b) Repayment incentives. To encourage on-time repayment, the 
Secretary may reduce the interest rate for a borrower who repays a loan 
under a system or on a schedule that meets requirements specified by 
the Secretary.
* * * * *
[FR Doc. 99-27719 Filed 10-26-99; 8:45 am]
BILLING CODE 4000-01-U