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Notice of child care provider loan forgiveness demonstration program for fiscal year (FY) 2002.

Publication Date: August 2002
FRPart:
RegPartsAffected:









Page Numbers: 55385-55388

Notice of child care provider loan forgiveness demonstration program for fiscal year (FY) 2002.

[Federal Register: August 29, 2002 (Volume 67, Number 168)]
[Notices]               
[Page 55385-55388]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29au02-37]                         

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DEPARTMENT OF EDUCATION

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

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of child care provider loan forgiveness demonstration 
program for fiscal year (FY) 2002.

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SUMMARY: The Secretary announces the eligibility criteria and 
procedures for implementation of the child care provider loan 
forgiveness demonstration program authorized by section 428K of the 
Higher Education Act of 1965, as amended (HEA), for FY 2002. 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 each year up to 5 years.
    This notice explains the criteria for both new applicants and for 
borrowers who have previously applied for, and received, loan 
forgiveness under this loan forgiveness program during a prior fiscal 
year. For the purpose of program administration, borrowers who have 
previously applied for, and received, loan forgiveness under this loan 
forgiveness program during a prior fiscal year are called ``renewal 
applicants''.

EFFECTIVE DATE: This notice is effective August 29, 2002.
    Deadline for Submission of Applications: If you are a new 
applicant, the demonstration program will accept completed Child Care 
Provider Loan Forgiveness Applications until such time as the funds 
appropriated for the current fiscal year 2002 have been fully 
committed.
    Eligible New Applicants:
    (A) To qualify for the child care provider loan forgiveness 
demonstration program, an applicant must:

[[Page 55386]]

    (1) Be a new borrower with eligible loans, 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 or child care that was awarded by an 
institution of higher education after October 7, 1998; and
    (3) After receiving an associate's or bachelor's degree in early 
childhood education or child care, have worked full-time for at least 
two consecutive years preceding the year during which forgiveness is 
requested as a child care 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.
    Renewal Applicants Who Received a Partial Forgiveness in FY 2001:
    (A) To qualify for further loan forgiveness under the Child Care 
Provider Loan Forgiveness Demonstration Program, a borrower must:
    (1) Have been determined previously to meet the eligibility 
requirements for a forgiveness as described in this notice and 
continues to meet those criteria; and
    (2) Have completed the third consecutive year of full-time 
employment as a provider in a child care facility that serves a low-
income community.

FOR FURTHER INFORMATION CONTACT: Mr. Don Watson at the U.S. Department 
of Education, 830 First Street NE., Washington, DC 20202-5346. 
Telephone: (202) 377-4008. To receive an application, 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 to receive an application at, 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://www.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 announces the continuation of the demonstration 
program, first implemented in FY 2001, 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 
received an associate's or bachelor's degree in early childhood 
education or child care and who are providing full-time child care 
services in child care facilities that serve certain low income 
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 new 
applicants under the demonstration program for fiscal year 2002. As 
described in the notice published in the Federal Register on July 27, 
2001 (66 FR 39263-39265), the Secretary committed funds from the FY 
2001 appropriation for this demonstration program to cover the full 
five years of loan forgiveness for borrowers who were granted loan 
forgiveness during that fiscal year. Thus, any additional forgiveness 
granted to borrowers who received forgiveness during FY 2001 will be 
funded from FY 2001 appropriations and not from FY 2002 appropriations.
    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 (1) was made on or after October 
7, 1998, the date of enactment of the Higher Education Amendments of 
1998, which authorized the program; (2) was received for the purpose of 
obtaining an associate's or bachelor's degree in early childhood 
education or child care; and (3) was made before the beginning of 
qualifying service. 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 in a child care facility serving a low-income 
community.
    Under section 428K of 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 in 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 eligible applicants for subsequent-year funding, the Secretary is 
continuing his practice from last year of committing funds from the 
current fiscal year to cover the full five years of loan forgiveness 
for eligible new applicants.

Procedures

    The Secretary has determined that the issuance of regulations to 
implement the loan forgiveness demonstration program for child care is 
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 provided for the second year of this demonstration 
program in the Departments of Labor, Health and Human Services, and 
Education, and Related Agencies Appropriations Act 2002, enacted on 
January 10, 2002 (Pub. L. 107-116), in which $1,000,000 was 
appropriated.
    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 continue the loan forgiveness demonstration program for the 2002 
application year and to explain the procedures for granting loan 
forgiveness to new applicants and renewal applicants for the 2002 
application year. These procedures are based on the statutory language, 
and further regulations are not needed at this time.

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.

[[Page 55387]]

    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 obtaining the borrower's associate's or bachelor's 
degree in early childhood education or child care prior to employment 
as a child care provider.
    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 had no 
outstanding loan balance on the date that he or she obtains a loan 
after October 7, 1998.
    Renewal applicant means a FFEL or Direct Loan program borrower who 
has previously applied for, and received, loan forgiveness benefits 
under this loan forgiveness program in a prior fiscal year.

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 an associate's or bachelor's degree in 
early childhood education or child care 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 that early childhood education or child care 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, after receiving a completed and accurate 
application:
    (1) Makes a loan forgiveness commitment to a qualified new 
applicant 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; and
    (2) Reaffirms the prior commitment for a renewal applicant if the 
renewal applicant continues to meet the eligibility requirements.
    (C) The Secretary notifies applicants of their eligibility or 
ineligibility for loan forgiveness and the amount that is being 
forgiven for that application year.
    (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 holder shall apply 
the remaining balance to another eligible loan of the borrower held by 
the holder. If the holder 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 a new applicant 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.
    (C) Before a renewal applicant receives forbearance for eligible 
child care service, the renewal applicant must 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.

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: 
http://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

[[Page 55388]]

Access at: http://www.access.gpo.gov/nara/index.html.


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

    Dated: August 26, 2002.
Sally L. Stroup,
Assistant Secretary, Office of Postsecondary Education.
[FR Doc. 02-22113 Filed 8-28-02; 8:45 am]
BILLING CODE 4000-01-P

Last Modified: 08/28/2002