[Federal Register: October 27, 1999 (Volume 64, Number 207)]
[Rules and Regulations]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
Department of Education
34 CFR Part 685
William D. Ford Federal Direct Loan Program; Final Rule
DEPARTMENT OF EDUCATION
34 CFR Part 685
William D. Ford Federal Direct Loan Program
AGENCY: Department of Education.
ACTION: Final regulations.
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
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
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
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.
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
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
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
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(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
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
1. The authority citation for part 685 continues to read as
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
* * * * *
[FR Doc. 99-27719 Filed 10-26-99; 8:45 am]
BILLING CODE 4000-01-U