[Federal Register Volume 83, Number 139 (Thursday, July 19, 2018)]
[Rules and Regulations]
[Pages 34047-34049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15260]


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DEPARTMENT OF EDUCATION

34 CFR Part 685

[Docket ID ED-2017-OPE-0112]
RIN 1840-AD28


Student Assistance General Provisions, Federal Perkins Loan 
Program, Federal Family Education Loan Program, William D. Ford Federal 
Direct Loan Program, and Teacher Education Assistance for College and 
Higher Education Grant Program; Corrections

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final rule; correcting amendments.

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SUMMARY: In the Federal Register of February 14, 2018, the Department 
of Education (Department) published a final rule (the delay rule) 
delaying, until July 1, 2019, the effective date of selected provisions 
of the final regulations entitled Student Assistance General 
Provisions, Federal Perkins Loan Program, Federal Family Education Loan 
Program, William D. Ford Federal Direct Loan Program, and Teacher 
Education Assistance for College and Higher Education Grant Program 
(the 2016 final regulations), published in the Federal Register on 
November 1, 2016. This rule inadvertently omitted regulations from the 
list in the DATES section of regulations for which the effective date 
is delayed. This document removes the regulations that we intended to 
delay from the text of the Code of Federal Regulations and specifies 
July 1, 2019 as their effective date.

DATES: This rule is effective July 19, 2018 except for amendatory 
instruction 3 which is effective July 1, 2019.

FOR FURTHER INFORMATION CONTACT: Annmarie Weisman, U.S. Department of 
Education, 400 Maryland Avenue SW, Mail Stop 294-20, Washington, DC 
20202-6244. Telephone: (202) 453-6712. Email: [email protected].
    If you use a telecommunications device for the deaf or a text 
telephone, call the Federal Relay Service, toll free, at 1-800-877-
8339.

SUPPLEMENTARY INFORMATION: In the delay rule (83 FR 6458), the list of 
regulations in the DATES section in the first column on page 6459, for 
which the effective date is delayed until July 1, 2019, inadvertently 
excluded Sec.  685.300(b)(11), (b)(12), and (d) through (i). Those 
regulations were properly included in the list of regulations for which 
the effective date is delayed in the body of the document (in the third 
column of page 6459) and discussed elsewhere in the document. However, 
to effectuate this correction and restore the Code of Federal 
Regulations to properly reflect the delay, we are publishing amendatory 
language that will remove these provisions.

Waiver of Proposed Rulemaking

    In accordance with the Administrative Procedure Act, 5 U.S.C. 553, 
it is the Secretary's practice to offer interested parties the 
opportunity to comment on proposed regulations. However, the actions in 
this document are merely to correct a technical error, and thus, the 
Secretary has determined that publication of a proposed rule is 
unnecessary under 5 U.S.C. 553(b)(B).
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the contact person listed 
under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations via the Federal Digital System at: www.gpo.gov/fdsys. At this site you can view this document, as well as all other 
documents of this Department published in the Federal Register, in text 
or Portable Document Format (PDF). To use PDF you must have Adobe 
Acrobat Reader, which is available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

List of Subjects in 34 CFR Part 685

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

    Dated: July 12, 2018.
Betsy DeVos,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary of 
Education amends part 685 of title 34 of the Code of Federal 
Regulations as follows:

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

0
1. The authority citation for part 685 continues to read as follows:


[[Page 34048]]


    Authority:  20 U.S.C. 1070g, 1087a, et seq., unless otherwise 
noted.


Sec.  685.300  [Amended]

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2. Effective July 19, 2018, Sec.  685.300 is amended by:
0
a. Removing paragraph (b)(11) and redesignating paragraph (b)(12) as 
paragraph (b)(11).
0
b. Removing paragraphs (d) through (i).

0
3. Effective July 1, 2019, Sec.  685.300 is amended by:
0
a. Redesignating paragraph (b)(11) as paragraph (b)(12).
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b. Adding a new paragraph (b)(11).
0
c. Adding paragraphs (d) through (i).
    The additions read as follows:


Sec.  685.300   Agreements between an eligible school and the Secretary 
for participation in the Direct Loan Program.

* * * * *
    (b) * * *
    (11) Comply with the provisions of paragraphs (d) through (i) of 
this section regarding student claims and disputes.
* * * * *
    (d) Borrower defense claims in an internal dispute process. The 
school will not compel any student to pursue a complaint based on a 
borrower defense claim through an internal dispute process before the 
student presents the complaint to an accrediting agency or government 
agency authorized to hear the complaint.
    (e) Class action bans. (1) The school will not seek to rely in any 
way on a predispute arbitration agreement or on any other predispute 
agreement with a student who has obtained or benefited from a Direct 
Loan, with respect to any aspect of a class action that is related to a 
borrower defense claim, including to seek a stay or dismissal of 
particular claims or the entire action, unless and until the presiding 
court has ruled that the case may not proceed as a class action and, if 
that ruling may be subject to appellate review on an interlocutory 
basis, the time to seek such review has elapsed or the review has been 
resolved.
    (2) Reliance on a predispute arbitration agreement, or on any other 
predispute agreement, with a student, with respect to any aspect of a 
class action includes, but is not limited to, any of the following:
    (i) Seeking dismissal, deferral, or stay of any aspect of a class 
action.
    (ii) Seeking to exclude a person or persons from a class in a class 
action.
    (iii) Objecting to or seeking a protective order intended to avoid 
responding to discovery in a class action.
    (iv) Filing a claim in arbitration against a student who has filed 
a claim on the same issue in a class action.
    (v) Filing a claim in arbitration against a student who has filed a 
claim on the same issue in a class action after the trial court has 
denied a motion to certify the class but before an appellate court has 
ruled on an interlocutory appeal of that motion, if the time to seek 
such an appeal has not elapsed or the appeal has not been resolved.
    (vi) Filing a claim in arbitration against a student who has filed 
a claim on the same issue in a class action after the trial court in 
that class action has granted a motion to dismiss the claim and, in 
doing so, the court noted that the consumer has leave to refile the 
claim on a class basis, if the time to refile the claim has not 
elapsed.
    (3) Required provisions and notices:
    (i) The school must include the following provision in any 
agreements with a student recipient of a Direct Loan for attendance at 
the school, or, with respect to a Parent PLUS Loan, a student for whom 
the PLUS loan was obtained, that include any agreement regarding 
predispute arbitration or any other predispute agreement addressing 
class actions and that are entered into after the effective date of 
this regulation: ``We agree that neither we nor anyone else will use 
this agreement to stop you from being part of a class action lawsuit in 
court. You may file a class action lawsuit in court or you may be a 
member of a class action lawsuit even if you do not file it. This 
provision applies only to class action claims concerning our acts or 
omissions regarding the making of the Direct Loan or the provision by 
us of educational services for which the Direct Loan was obtained. We 
agree that only the court is to decide whether a claim asserted in the 
lawsuit is a claim regarding the making of the Federal Direct Loan or 
the provision of educational services for which the loan was 
obtained.''
    (ii) When a predispute arbitration agreement or any other 
predispute agreement addressing class actions has been entered into 
before the effective date of this regulation and does not contain a 
provision described in paragraph (e)(3)(i) of this section, the school 
must either ensure the agreement is amended to contain the provision 
specified in paragraph (e)(3)(iii)(A) of this section or provide the 
student to whom the agreement applies with the written notice specified 
in paragraph (e)(3)(iii)(B) of this section.
    (iii) The school must ensure the agreement described in paragraph 
(e)(3)(ii) of this section is amended to contain the provision 
specified in paragraph (e)(3)(iii)(A) of this section or must provide 
the notice specified in paragraph (e)(3)(iii)(B) of this section to 
students no later than the exit counseling required under Sec.  
685.304(b), or the date on which the school files its initial response 
to a demand for arbitration or service of a complaint from a student 
who has not already been sent a notice or amendment.
    (A) Agreement provision. ``We agree that neither we nor anyone else 
who later becomes a party to this agreement will use it to stop you 
from being part of a class action lawsuit in court. You may file a 
class action lawsuit in court or you may be a member of a class action 
lawsuit in court even if you do not file it. This provision applies 
only to class action claims concerning our acts or omissions regarding 
the making of the Federal Direct Loan or the provision by us of 
educational services for which the Federal Direct Loan was obtained. We 
agree that only the court is to decide whether a claim asserted in the 
lawsuit is a claim regarding the making of the Federal Direct Loan or 
the provision of educational services for which the loan was 
obtained.''
    (B) Notice provision. ``We agree not to use any predispute 
agreement to stop you from being part of a class action lawsuit in 
court. You may file a class action lawsuit in court or you may be a 
member of a class action lawsuit even if you do not file it. This 
provision applies only to class action claims concerning our acts or 
omissions regarding the making of the Federal Direct Loan or the 
provision by us of educational services for which the Federal Direct 
Loan was obtained. We agree that only the court is to decide whether a 
claim asserted in the lawsuit is a claim regarding the making of the 
Federal Direct Loan or the provision of educational services for which 
the loan was obtained.''
    (f) Predispute arbitration agreements. (1)(i) The school will not 
enter into a predispute agreement to arbitrate a borrower defense 
claim, or rely in any way on a predispute arbitration agreement with 
respect to any aspect of a borrower defense claim.
    (ii) A student may enter into a voluntary post-dispute arbitration 
agreement with a school to arbitrate a borrower defense claim.
    (2) Reliance on a predispute arbitration agreement with a student 
with respect to any aspect of a borrower defense claim includes, but is 
not limited to, any of the following:
    (i) Seeking dismissal, deferral, or stay of any aspect of a 
judicial action filed by the student, including joinder with others in 
an action;
    (ii) Objecting to or seeking a protective order intended to avoid

[[Page 34049]]

responding to discovery in a judicial action filed by the student; and
    (iii) Filing a claim in arbitration against a student who has filed 
a suit on the same claim.
    (3) Required provisions and notices:
    (i) The school must include the following provision in any 
predispute arbitration agreements with a student recipient of a Direct 
Loan for attendance at the school, or, with respect to a Parent PLUS 
Loan, a student for whom the PLUS loan was obtained, that include any 
agreement regarding arbitration and that are entered into after the 
effective date of this regulation: ``We agree that neither we nor 
anyone else will use this agreement to stop you from bringing a lawsuit 
concerning our acts or omissions regarding the making of the Federal 
Direct Loan or the provision by us of educational services for which 
the Federal Direct Loan was obtained. You may file a lawsuit for such a 
claim or you may be a member of a class action lawsuit for such a claim 
even if you do not file it. This provision does not apply to lawsuits 
concerning other claims. We agree that only the court is to decide 
whether a claim asserted in the lawsuit is a claim regarding the making 
of the Federal Direct Loan or the provision of educational services for 
which the loan was obtained.''
    (ii) When a predispute arbitration agreement has been entered into 
before the effective date of this regulation that did not contain the 
provision specified in paragraph (f)(3)(i) of this section, the school 
must either ensure the agreement is amended to contain the provision 
specified in paragraph (f)(3)(iii)(A) of this section or provide the 
student to whom the agreement applies with the written notice specified 
in paragraph (f)(3)(iii)(B) of this section.
    (iii) The school must ensure the agreement described in paragraph 
(f)(3)(ii) of this section is amended to contain the provision 
specified in paragraph (f)(3)(iii)(A) of this section or must provide 
the notice specified in paragraph (f)(3)(iii)(B) of this section to 
students no later than the exit counseling required under Sec.  
685.304(b), or the date on which the school files its initial response 
to a demand for arbitration or service of a complaint from a student 
who has not already been sent a notice or amendment.
    (A) Agreement provision. ``We agree that neither we nor anyone else 
who later becomes a party to this predispute arbitration agreement will 
use it to stop you from bringing a lawsuit concerning our acts or 
omissions regarding the making of the Federal Direct Loan or the 
provision by us of educational services for which the Federal Direct 
Loan was obtained. You may file a lawsuit for such a claim or you may 
be a member of a class action lawsuit for such a claim even if you do 
not file it. This provision does not apply to other claims. We agree 
that only the court is to decide whether a claim asserted in the 
lawsuit is a claim regarding the making of the Federal Direct Loan or 
the provision of educational services for which the loan was 
obtained.''
    (B) Notice provision. ``We agree not to use any predispute 
arbitration agreement to stop you from bringing a lawsuit concerning 
our acts or omissions regarding the making of the Federal Direct Loan 
or the provision by us of educational services for which the Federal 
Direct Loan was obtained. You may file a lawsuit regarding such a claim 
or you may be a member of a class action lawsuit regarding such a claim 
even if you do not file it. This provision does not apply to any other 
claims. We agree that only the court is to decide whether a claim 
asserted in the lawsuit is a claim regarding the making of the Direct 
Loan or the provision of educational services for which the loan was 
obtained.''
    (g) Submission of arbitral records. (1) A school must submit a copy 
of the following records to the Secretary, in the form and manner 
specified by the Secretary, in connection with any claim filed in 
arbitration by or against the school concerning a borrower defense 
claim:
    (i) The initial claim and any counterclaim.
    (ii) The arbitration agreement filed with the arbitrator or 
arbitration administrator.
    (iii) The judgment or award, if any, issued by the arbitrator or 
arbitration administrator.
    (iv) If an arbitrator or arbitration administrator refuses to 
administer or dismisses a claim due to the school's failure to pay 
required filing or administrative fees, any communication the school 
receives from the arbitrator or arbitration administrator related to 
such a refusal.
    (v) Any communication the school receives from an arbitrator or an 
arbitration administrator related to a determination that a predispute 
arbitration agreement regarding educational services provided by the 
school does not comply with the administrator's fairness principles, 
rules, or similar requirements, if such a determination occurs.
    (2) A school must submit any record required pursuant to paragraph 
(g)(1) of this section within 60 days of filing by the school of any 
such record with the arbitrator or arbitration administrator and within 
60 days of receipt by the school of any such record filed or sent by 
someone other than the school, such as the arbitrator, the arbitration 
administrator, or the student.
    (h) Submission of judicial records. (1) A school must submit a copy 
of the following records to the Secretary, in the form and manner 
specified by the Secretary, in connection with any claim concerning a 
borrower defense claim filed in a lawsuit by the school against the 
student or by any party, including a government agency, against the 
school:
    (i) The complaint and any counterclaim.
    (ii) Any dispositive motion filed by a party to the suit; and
    (iii) The ruling on any dispositive motion and the judgment issued 
by the court.
    (2) A school must submit any record required pursuant to paragraph 
(h)(1) of this section within 30 days of filing or receipt, as 
applicable, of the complaint, answer, or dispositive motion, and within 
30 days of receipt of any ruling on a dispositive motion or a final 
judgment.
    (i) Definitions. For the purposes of paragraphs (d) through (h) of 
this section, the term--
    (1) ``Borrower defense claim'' means a claim that is or could be 
asserted as a borrower defense as defined in Sec.  685.222(a)(5), 
including a claim other than one based on Sec.  685.222(c) or (d) that 
may be asserted under Sec.  685.222(b) if reduced to judgment;
    (2) ``Class action'' means a lawsuit in which one or more parties 
seek class treatment pursuant to Federal Rule of Civil Procedure 23 or 
any State process analogous to Federal Rule of Civil Procedure 23;
    (3) ``Dispositive motion'' means a motion asking for a court order 
that entirely disposes of one or more claims in favor of the party who 
files the motion without need for further court proceedings;
    (4) ``Predispute arbitration agreement'' means any agreement, 
regardless of its form or structure, between a school or a party acting 
on behalf of a school and a student providing for arbitration of any 
future dispute between the parties.
* * * * *

[FR Doc. 2018-15260 Filed 7-18-18; 8:45 am]
 BILLING CODE 4000-01-P