[Federal Register Volume 66, Number 145 (Friday, July 27, 2001)]
[Notices]
[Pages 39264-39265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18782]



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Part IV





Department of Education





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Federal Family Education Loan (FFEL) Program and William D. Ford 
Federal Direct Loan Program; Notice

  Federal Register / Vol. 66, No. 145 / Friday, July 27, 2001 / 
Notices  

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DEPARTMENT OF EDUCATION


Federal Family Education Loan (FFEL) Program and William D. Ford 
Federal Direct Loan Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of child care loan forgiveness demonstration program for 
fiscal year (FY) 2001.

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SUMMARY: The Secretary announces the eligibility criteria and 
procedures for implementation of the child care loan forgiveness 
demonstration program authorized by section 428K of the Higher 
Education Act of 1965, as amended (HEA). Under the demonstration 
program, some child care providers may have a portion of their student 
loans forgiven for continued work in certain child care facilities.

EFFECTIVE DATE: This notice is effective July 27, 2001.
    Deadline for Transmittal of Applications: To assure consideration, 
applications for loan forgiveness under the demonstration program must 
be received no later than September 17, 2001.
    Eligible Applicants: (A) To qualify for the child care provider 
loan forgiveness demonstration program, a borrower must:
    (1) Be a new borrower in the FFEL or Direct Loan Programs, as 
defined in the ``Program Definitions'' section of this notice;
    (2) Have received an associate or bachelor's degree in the field of 
early childhood education that was awarded by an institution of higher 
education; and
    (3) Have worked full-time for the two consecutive years preceding 
the year during which forgiveness is requested as a provider in a 
facility that serves a low-income community.
    (B) A borrower may not receive benefits for the same child care 
service under both subtitles D of title I of the National and Community 
Service Act of 1990 (Americorps) and this demonstration program.

FOR FURTHER INFORMATION CONTACT: Mr. Gary Thomas for the Federal Family 
Education Loan Program (FFEL) or Mr. Donald Watson for the William D. 
Ford Direct Loan Program (Direct Loan). Mr. Thomas and Mr. Watson can 
be reached at the U.S. Department of Education, 400 Maryland Avenue, 
SW., room 3045, Regional Office Building 3, Washington, DC 20202-5346. 
Telephone: (202) 708-8242.
    To receive an application or a forbearance form, you may call the 
Child Care Provider Loan Forgiveness support desk toll free at 1-888-
562-7002. You may also write to the Child Care Provider Loan 
Forgiveness Program, P.O. Box 4639, Utica, NY 13504-4639. In addition, 
free internet access to the application and forbearance forms are 
available, in Adobe Portable Document Format (PDF) at the following 
site: http://ed.gov/offices/OSFAP/Students/
    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 program contact persons listed under FOR 
FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Background

    This notice implements a demonstration program of loan forgiveness 
for child care providers as authorized under section 428K of the HEA. 
The HEA authorizes the Secretary, contingent upon the availability of 
annual appropriations, to undertake a loan forgiveness demonstration 
program for borrowers under the FFEL and the Direct Loan programs who 
have completed their education and are providing full-time child care 
services in child care facilities in certain communities. The child 
care provider loan forgiveness demonstration program is intended to 
bring more highly trained individuals into the early child care 
profession and to retain those providers for longer periods of time. 
The Congress has appropriated $1,000,000 for the demonstration program 
for FY 2001.
    Under the demonstration program, new FFEL and Direct Loan borrowers 
(as defined in the ``Program Definitions'' section of this notice) may 
receive forgiveness of up to 100 percent of their total eligible loans 
made under the FFEL subsidized and unsubsidized Federal Stafford Loan, 
Direct Subsidized Loan, and Direct Unsubsidized Loan programs. A loan 
is eligible for forgiveness only if it was made after October 7, 1998, 
the date of enactment of the Higher Education Amendments of 1998, which 
authorized the program. Loan forgiveness is provided to eligible 
borrowers on a progressive basis (i.e., 20 percent of the total amount 
of loans following two years of service; 20 percent following the third 
year of service; and 30 percent following each of the fourth and fifth 
years of service) following completion of consecutive years of full-
time child care employment serving a low-income community.
    Under the HEA, loan forgiveness is available to eligible borrowers 
on a first-come, first-served basis, contingent upon the availability 
of funds. Priority for loan forgiveness in subsequent fiscal years is 
given to borrowers who received loan forgiveness for the preceding 
fiscal year.
    The Secretary is required to evaluate the success of the 
demonstration program in achieving the statutory goals of attracting 
and retaining highly trained individuals into the early child care 
profession. In order to perform this evaluation and to ensure priority 
for subsequent-year funding, the Secretary will commit funds from the 
current fiscal year to cover the full five years of loan forgiveness 
for recipients, so that they can continue to receive loan forgiveness 
for subsequent years in which they may qualify and for which funds are 
appropriated.

Procedures

    The Secretary has determined that the issuance of regulations to 
implement the loan forgiveness demonstration program for child care are 
not necessary at this time. Section 428K of the HEA creates the loan 
forgiveness for child care providers program as a demonstration 
program. Funding was first provided for this demonstration program in 
the Consolidated Appropriations Act, 2001, enacted on December 21, 2000 
(Pub. L. 106-554), in which $1,000,000 was appropriatedy.
    In light of the limited amount of funds available and the fact that 
the loan forgiveness program for child care providers is a 
demonstration program, the Secretary has decided to issue this notice 
to announce the program and explain the procedures for granting loan 
forgiveness under the program. These procedures are based on the 
statutory language, and further regulations are not needed at this 
time. However, the President's budget for FY 2002 includes funding for 
this program for future years. If continued funding is provided, the 
Secretary intends to undertake formal rulemaking.

Program Definitions

    Child care facility means a facility, including a home, that 
provides child care services and meets applicable State or local 
government licensing, certification, approval, or registration 
requirements.
    Child care services means activities and services for the education 
and care of children from birth through age five by an individual who 
has a degree in early childhood education.

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    Consecutive years of employment means maintaining full-time 
employment for successive, uninterrupted 12-month periods as a child 
care provider in an eligible facility.
    Degree means an associate's or a bachelor's degree awarded by an 
institution of higher education.
    Early childhood education means education in the areas of early 
child education, child care, or any other educational area related to 
child care that the Secretary determines appropriate.
    Eligible Loan means a loan made after October 7, 1998 to a new 
borrower under the subsidized or unsubsidized Federal Stafford Loan, 
Direct Subsidized Loan, or Direct Unsubsidized Loan programs and made 
for the purpose of completing the borrower's degree in early childhood 
education or child care.
    Full-time employment means working as a child care provider in a 
child care facility at least 30 hours per week.
    Institution of higher education means a public or nonprofit private 
institution of higher education as defined in section 101 of title I of 
the HEA.
    Low-income community means a community in which at least 70 percent 
of the individuals are from families that earn less than 85 percent of 
the State median household income. For the purposes of this notice, the 
community comprises the children who receive child care at the 
facility.
    New borrower means a borrower who had no outstanding loan balance 
under the FFEL or Direct Loan Program on October 7, 1998 or who has no 
outstanding loan balance on the date that he or she obtains a loan 
after October 7, 1998.

Forgiveness Amounts

    (A) A borrower employed full-time as a child care provider may 
receive forgiveness of the borrower's eligible loans in the amount of:
    (1) Twenty percent of the total amount of eligible loans after the 
second consecutive year (24 continuous months) of full-time employment;
    (2) Twenty percent of the total amount of eligible loans after the 
third consecutive year (36 continuous months) of full-time employment; 
and
    (3) Thirty percent of the total amount of eligible loans after each 
of the fourth and fifth consecutive years (48 and 60 continuous months 
respectively) of full-time employment.
    (B) An eligible borrower not previously participating in the loan 
forgiveness program who secures a degree in early childhood education 
after previously graduating from an institution of higher education in 
an area other than early childhood education is eligible to receive 
forgiveness of the total amount of eligible loans received for a 
maximum of two academic years in pursuit of an early childhood 
education degree, according to the percentages specified in paragraph 
(A) of this section.
    (C) For each year of qualifying service, the Secretary forgives the 
percentage of the eligible loans plus the proportionate amount of 
interest that accrues on the loan.
    (D) The loan holder does not refund payments that were received 
from, or paid on behalf of, a borrower who qualifies for loan 
forgiveness under this section.

Application Procedures for Cancellation and Payment Processing

    (A) After completing the eligible child care service, a borrower 
may request loan forgiveness from the Secretary on a form approved by 
the Secretary and accompanied by any required supporting documentation.
    (B) The Secretary makes loan forgiveness commitments to qualified 
applicants on a first-come, first-served basis according to the date 
that a complete and accurate application is received and contingent 
upon the availability of funds.
    (C) The Secretary notifies applicants of their eligibility or 
ineligibility for loan forgiveness and the amount that is being 
forgiven.
    (D) If the Secretary approves the borrower's request for 
forgiveness of the loan, the Secretary forwards payment of the forgiven 
amount to the holder of the borrower's largest current outstanding 
unsubsidized loan, if any, for payment on that loan. If the borrower 
has no outstanding unsubsidized loans, the Secretary forwards the 
forgiven amount to the holder of the borrower's largest current 
outstanding subsidized loan.
    (E) If the holder determines that the amount of the loan 
forgiveness payment received from the Secretary exceeds the remaining 
balance of the loan to which it is designated, the lender shall apply 
the remaining balance to another eligible loan of the borrower held by 
the holder. If the lender does not hold any of the borrower's other 
eligible loans, the lender shall refund the balance to the Secretary. 
If applicable, the Secretary then forwards the balance to another 
holder of the borrower's eligible loans.

Application Procedures for Forbearance

    (A) At the written request of the borrower, the Secretary or the 
holder of eligible loans grants forbearance in annual increments to a 
borrower performing the type of service that would qualify the borrower 
for loan forgiveness, unless the borrower has been granted a deferment 
for that period of service.
    (B) Before the borrower receives forbearance for eligible child 
care service, the borrower must:
    (1) Submit documentation to the Secretary or the holder for the 
period of the annual forbearance request showing the beginning and 
anticipated ending dates that the borrower is expected to perform, for 
that year, eligible child care service; and
    (2) Certify the borrower's understanding that receiving forbearance 
for eligible service does not guarantee receipt of loan forgiveness 
benefits.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
www.ed.gov/legislation/FedRegister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, 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 Numbers: 84.032 Federal 
Family Education Loan Program and 84.268 William D. Ford Federal 
Direct Loan Program)

    Program Authority: 20 U.S.C. 1078-11.

    Dated: July 23, 2001.
Maureen A. McLaughlin,
Deputy Assistant Secretary for Policy, Planning, and Innovation, Office 
of Postsecondary Education.
[FR Doc. 01-18782 Filed 7-26-01; 8:45 am]
BILLING CODE 4000-01-U