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

[Federal Register: December 18, 1996 (Volume 61, Number 244)]

[Proposed Rules]               

[Page 66853-66854]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr18de96-34]



[[Page 66853]]


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Part IV






Department of Education






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34 CFR Part 668




Student Assistance General Provisions; Reopening of Comment Period; 

Proposed Rule



[[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:

     <bullet&gt The proposed Subpart L.

     <bullet&gt The proposed Appendix F.

     <bullet&gt 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: fin__resp@ed.gov


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:

     <bullet&gt 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.

    <bullet> 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.

    <bullet> 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.

    <bullet> 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.

    <bullet> 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.

    <bullet> 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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