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(GEN-95-04) Simplification of our Federal student aid regulations and administrative processes

DCLPublicationDate: 1/1/95
Summary: Simplification of our Federal student aid regulations and administrative processes

January 1995

Dear President:

I want to take this opportunity to let you know about our
progress at the Department of Education to simplify our Federal
student aid regulations and administrative processes. In
developing the several regulations published in the Federal
Register in November and December 1994, we were guided by
President Clinton's Executive Order 12866, which requires Federal
agencies to minimize regulatory burden. These regulations,
necessary to implement congressional directives, were designed to
reduce burden on institutions, students, and families, by
regulating only when necessary to protect students' and
taxpayers' interests. They also give institutions increased
flexibility in meeting regulatory standards.

The higher education community participated extensively in this
regulatory effort by meeting with us, both formally as part of
the negotiated rulemaking process and in a series of less formal
discussions. The community also reviewed proposed regulations,
often on an expedited basis, and provided thoughtful and detailed
comments. We combined many of the comments and suggestions with
our regulatory principles to shape a set of regulations that
result in less burden for students and institutions, are easier
to implement, and serve our nation's postsecondary education

Our joint efforts simplify and reduce burden for 7,300
postsecondary institutions and approximately 7 million students
who annually receive about $30 billion in Federal student aid.
The following are a few highlights of the many improvements made
to our regulations this year:

- We eliminated the requirement that Federal Pell Grant
applicants submit a copy of their Student Aid Report to
their school of choice, thereby eliminating the need for
more than 5 million students to submit this form and for
schools to process them.

- We eliminated the requirement that all 7,300 schools that
participate in the Federal student aid program establish a
cash reserve fund to cover tuition refunds. Instead, we
will apply performance-based criteria, thus relieving
schools with good refund processing histories from the

- We modified rules to give more flexibility to schools in the
management of student accounts, thereby assisting students
with budgeting and enhancing opportunities to use new
technologies (e.g., Smart Cards, Electronic Funds Transfer).

I have enclosed a list of additional provisions from the
regulations that provide relief, flexibility, and simplification.

This burden reduction initiative is part of a continuing effort
by the Department of Education and the entire Administration to
minimize regulatory burden. In the coming year, the Department
will undertake a review of existing student financial aid
regulations to determine where additional burdens can be reduced,
and to identify performance and outcome measures that could be
used to target regulatory requirements more specifically to
situations where they are needed to protect students or Federal

We appreciate the advice and expertise provided by you and your
financial aid staff as we move forward together to simplify and
improve the administration of these important student aid
programs. If you need additional information, please contact
Jeff Baker, Director, Policy Development, Student Financial
Assistance Programs, at (202) 708-9967.

Yours sincerely,

Richard W. Riley


Last Modified: 12/31/1994