Summary: Interim Final Rule - Loan Discharges

Page Numbers: 78075-78086

Summary: Interim Final Rule - Loan Discharges

Posted on 01-10-2007

DEPARTMENT OF EDUCATION

34 CFR Parts 674, 682 and 685

RIN 1840-AC88

Federal Perkins Loan Program, Federal Family Education Loan
Program, and William D. Ford Federal Direct Loan Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Interim final regulations, request for comments.

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SUMMARY: The Secretary is amending the Federal Perkins Loan (Perkins
Loan) Program, Federal Family Education Loan (FFEL) Program, and
William D. Ford Federal Direct Loan (Direct Loan) Program regulations
to implement the changes to the Higher Education Act of 1965, as
amended (HEA), resulting from the enactment of the Third Higher
Education Extension Act of 2006 (THEEA), Public Law 109-292. These
interim final regulations reflect the provisions of the THEEA that
authorize the discharge of the outstanding balance of certain Perkins,
FFEL, and Direct Loan Program loans for survivors of eligible public
servants and other eligible victims of the September 11, 2001,
terrorist attacks.

DATES: Effective Date: These interim final regulations are effective January 29, 2007.

Comment date: The Department must receive any comments on or before January 29, 2007.

Information collection compliance date: Affected parties do not
have to comply with the information collection requirements in
Sec. Sec. 674.64, 682.407, and 685.218 until the Department publishes
in the Federal Register the control numbers assigned by the Office of
Management and Budget (OMB) to these information collection
requirements. Publication of the control numbers notifies the public
that OMB has approved these information collection requirements under
the Paperwork Reduction Act of 1995.

ADDRESSES: Address all comments about these interim final regulations
to Mr. Brian Smith, U.S. Department of Education, 1990 K Street, NW.,
8th Floor, Washington, DC 20006. Telephone: (202) 502-7551 or via the
Internet at: Brian.Smith@ed.gov.

If you prefer to deliver your comments by hand or by using a
courier service or commercial carrier, address your comments to: Mr.
Brian Smith, 1990 K Street, NW., room 8082, Washington, DC 20006-8542.
If you prefer to send your comments through the Internet, you may
address them to us at: DischargeComments@ed.gov. Or you may send them
to us at the U.S. Government Web site: http://www.regulations.gov. You
must include the term ``Discharge Interim Final Comments'' in the
subject line of your electronic message.

FOR FURTHER INFORMATION CONTACT: For provisions related to the FFEL and
Federal Perkins Loan Programs: Mr. Brian Smith, U.S. Department of
Education, 1990 K Street, NW., 8th Floor, Washington, DC 20006.
Telephone: (202) 502-7551 or via the Internet at: Brian.Smith@ed.gov.
For provisions related to the Federal Direct Loan Program: Mr. Jon Utz,
U.S. Department of Education, Union Center Plaza, 830 First Street,
NE., Washington, DC 20202-5345. Telephone: (202) 377-4008 or via the
Internet at: Jon.Utz@ed.gov.

If you use a telecommunications device for the deaf (TDD), you may
call the Federal Relay Service (FRS) 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 under FOR FURTHER
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: On September 30, 2006, Congress enacted the
THEEA, Public Law 109-292. The changes made by the THEEA include:
Restrictions on the use of eligible lender trustees by
higher education institutions that make FFEL Loans. Under the THEEA, as
of January 1, 2007, the FFEL lending activities of institutions of
higher education and organizations affiliated with institutions of
higher education through eligible lender trustee arrangements will be
subject to certain restrictions that apply to institutions of higher
education acting as lenders directly in the FFEL Program;
New discharge provisions for Title IV, HEA student loans
for the survivorsof eligible public servants and certain other eligible victims of the
terrorist attacks on the United States on September 11, 2001;
A technical modification to the HEA provision governing
account maintenance fees that are paid to guaranty agencies in the FFEL
Program; andModifications to the requirements for an institution to
receive a grant under the Hispanic Serving Institutions Program
authorized by Title V of the HEA.

These interim final regulations implement only the statutory
changes in section 6 of the THEEA that establish new discharges in the
Title IV, HEA student loan programs for the survivors of victims of the
terrorist attacks on September 11, 2001.

Significant Regulations

Discharge of Student Loan Indebtedness for Survivors of Victims of the
September 11, 2001, Attacks (Sec. Sec. 674.64, 682.407, and 685.218)
Statute: Section 6 of the THEEA amended the HEA by authorizing the
discharge of the obligation of a borrower to make further payments on
an eligible Perkins, FFEL or Direct Loan if the borrower is a survivor
of an eligible public servant or other eligible victim of the September
11, 2001, terrorist attacks. The discharge is authorized only for a
Perkins, FFEL or Direct Loan on which amounts were owed on September
11, 2001, or Consolidation Loans incurred to pay off loan amounts that
were owed on September 11, 2001. Amounts must still be owed on the loan
on the day the discharge is requested. The THEEA does not authorize a
refund of payments made by a borrower prior to the date the loan is
discharged.

Current Regulations: The current Perkins, FFEL, and Direct Loan
Program regulations do not reflect the new loan discharge provisions
for survivors of eligible public servants and other eligible victims of
the September 11, 2001, terrorist attacks.
New Regulations: New Sec. Sec. 674.64, 682.407, and 685.218 have
been added to the Perkins, FFEL, and Direct Loan Program regulations,
respectively, to reflect the THEEA provisions authorizing a loan
discharge for survivors of eligible public servants and other eligible
victims of the September 11, 2001, terrorist attacks.
For the purpose of this new loan discharge, an eligible public
servant is defined in the program regulations as an individual who
served as a police officer, firefighter, other safety or rescue
personnel, or as a member of the Armed Forces who died or became
permanently and totally disabled due to injuries suffered in terrorist
attacks on September 11, 2001. The term eligible victim is defined as
an individual who died or became permanently and totally disabled due
to injuries suffered in the terrorist attacks on September 11, 2001.
The interim final regulations specify, consistent with section 6(b)
of the THEEA, that the survivor of an eligible public servant can
qualify for loan discharge, including the discharge of any portion of a
joint Consolidation Loan that was used to repay the spouse's Title IV,
student loan, only if the survivor is the spouse of the eligible public
servant.

The interim final regulations, consistent with section 6(b)(1)(B),
(C), and (D) of the THEEA, also authorize loan discharge for spouses
and eligible parents of eligible victims (other than public servants).
An eligible parent is defined as the parent of an eligible victim if
the parent owes a parent PLUS Loan incurred on behalf of that eligible
victim, or owes a Consolidation Loan that repaid a parent PLUS Loan
incurred on behalf of that eligible victim.
For spouses of eligible victims other than eligible public
servants, the interim final regulations provide, consistent with
section 6(b)(1)(B) of the THEEA, for the discharge of the portion of a
joint Consolidation Loan that was incurred on behalf of the eligible
victim. To qualify for a discharge, in the case of a discharge based on
the permanent and total disability of the eligible public servant or
the eligible victim, the borrower and the public servant or victim must
still be married. In the case of a discharge based on the death of the
eligible public servant or eligible victim, the borrower must have been
married to the public servant or the victim until the death of the
public servant or the victim. For purposes of Federal law, the term
``spouse'' is defined in 1 U.S.C. 7 and does not include an ex-spouse.
Thus, the THEEA does not give the Secretary the authority to provide
for a loan discharge for an ex-spouse.
The interim final regulations also provide for the discharge of a
parent borrower's PLUS Loan (or the portion of a Consolidation Loan
that repaid a PLUS Loan) in the event of the death of the eligible
victim on whose behalf the PLUS Loan was obtained. Finally, the interim
final regulations provide for a discharge of a PLUS Loan (or the
portion of a Consolidation Loan that repaid a PLUS Loan) obtained on
behalf of an eligible victim who became permanently and totally
disabled due to injuries suffered in the terrorist attacks on September
11, 2001.

As required by the THEEA, the interim final regulations establish
procedures for filing applications for discharges by eligible
borrowers. The interim final regulations provide that a borrower's
eligibility for a loan discharge will be determined by the holder of
the loan: The lender or guarantor for an FFEL Loan; the institution
that made the loan for a Perkins Loan; and the Secretary for a Direct
Loan. The borrower must use an application approved by the Secretary
and provide the documentation required by the interim final
regulations.
The regulations require three types of documentation to support a
claim that an individual is an eligible public servant or an eligible
victim:
Documentation of the individual's presence at one of the
sites of the terrorist attacks on September 11, 2001;
In the case of an eligible public servant, documentation
of the individual's status as a public servant at the time of the
attacks; and Documentation that the individual's death or permanent and
total disability was a direct result of the attacks.
Documentation of an individual's status as a public servant is
provided by a certification from an authorized official that the
borrower was a member of the Armed Forces, or was employed as a police
officer, firefighter, or other safety or rescue personnel at one of the
sites of the terrorist attacks on September 11. This certification is
also used to document that the individual was present at one of the
sites. For an eligible victim, a certification that the individual was
present at one of the sites must be provided.

Under the interim final regulations, documentation of the permanent
and total disability of an eligible victim or an eligible public
servant must include copies of contemporaneous medical records
demonstrating that the victim was treated within 24 hours of the
borrower sustaining the injury, or 24 hours of the borrower being
rescued. The injury must have been sustained at the time or in the
immediate aftermath of the attacks. In addition, the borrower must
provide a certification from a physician that the borrower is
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001. Documentation of the
death of an eligible victim or an eligible public servant is provided
by the inclusion of the individual on an official list of individuals who
died in the terrorist attacks on September 11, 2001. If the individual
didn't die in the attacks, but died later as result of the attacks, documentation
requirements include an original or certified copy of the individual's death certificate, and a
certification from a physician or medical examiner that the individual
died due to injuries suffered in the terrorist attacks on September 11,
2001.

In some cases, substitutions for the documentation discussed above
may be used. For example, documentation that an individual's Title IV
loans were discharged due to death may be used in lieu of an original
or certified copy of a death certificate.

The documentation required by the interim final regulations is
necessary to limit the discharge to individuals who meet the statutory
eligibility criteria for the discharge. Contemporaneous medical records
are necessary to ensure that the individual was injured in the
terrorist attacks on September 11, 2001. A certification from a
physician that the borrower is permanently and totally disabled as a
result of that injury is necessary to ensure that the disability is a
result of the terrorist attacks.

Although the documentation requirements for the September 11
survivor's discharge require eligibility of the public servant or the
victim, the September 11 survivor's discharge under the THEEA is
available only to the spouse or parent of the eligible public servant
or the eligible victim. An eligible public servant or an eligible
victim is not eligible for a loan discharge under these interim final
regulations. A determination by a loan holder that an eligible public
servant or an eligible victim is permanently and totally disabled for
the purpose of discharging a spouse's or parent's loans does not
qualify the eligible public servant or the eligible victim for a total
and permanent disability discharge on his or her loans. To obtain a
total and permanent disability discharge, an eligible public servant or
an eligible victim must apply for a total and permanent disability
discharge under the current procedures in Sec. Sec. 674.61, 682.402,
685.212, and 685.213.

Under those regulations, a borrower who qualifies for a discharge
based on a total and permanent disability may be entitled to receive a
refund of payments made after the date of disability. Consistent with
section 6(e) of the THEEA, a discharge under the interim final
regulations provides a discharge only of the outstanding balance of the
loan and no refunds are authorized.
In developing these interim final regulations, we relied on the
definitions of immediate aftermath and present at the World Trade
Center in New York City, New York, at the Pentagon in Virginia, or at
the Shanksville, Pennsylvania site contained in the regulations
promulgated to administer the September 11th Victim Compensation Fund
of 2001 (the Fund). See 24 CFR Part 104; 66 FR 66273 (Dec. 21, 2001);
67 FR 11233 (March 13, 2002). The documentation required to show that
an eligible victim or public servant died or became permanently and
totally disabled due to injuries suffered in the terrorist attacks on
September 11, 2001 closely parallels the documentation required under
the Fund regulations. The Fund was created under Title IV of the Air
Transportation Safety and System Stabilization Act, Public Law 107-42,
which authorized compensation to any individual (or the personal
representative of a deceased individual) who was physically injured or
killed as a result of the September 11, 2001 terrorist-related aircraft
crashes. We determined that the Fund's regulations provided an
appropriate basis for several of the new regulatory provisions
resulting from the THEEA.

Waiver of Proposed Rulemaking

Under the Administrative Procedure Act (5 U.S.C. 553), the
Department is generally required to publish a notice of proposed
rulemaking and provide the public with an opportunity to comment on
proposed regulations prior to issuing a final rule. In addition, under
section 492 of the HEA, all Department regulations for programs
authorized under title IV of the HEA are subject to negotiated
rulemaking requirements and under section 482 of the HEA, any title IV
regulations that have not been published in final form by November 1
prior to the start of an award year cannot become effective until the
beginning of the second award year following the November 1 date.
Section 6(f) of the THEEA provides that sections 482(c) and 492 of
the HEA shall not apply to any regulations required to implement
provisions of the THEEA that authorize the discharge of a title IV, HEA
loan for survivors of victims of the September 11, 2001, attacks. The
THEEA also requires that procedures for filing an application for loan
discharge for survivors of the September 11, 2001, terrorist attacks be
prescribed and published by regulation 90 days after the date of
enactment or December 29, 2006, without regard to the rulemaking
requirements of the APA. Therefore, the requirements for a proposed
rule and negotiated rulemaking do not apply to these regulations.
These regulations are final and in effect as published, thirty days
after publication in the Federal Register. Although the Department is
adopting these regulations on an interim final basis, the Department
requests public comment on these regulations. After full consideration
of public comments, the Secretary will publish final regulations with
any necessary changes.

Executive Order 12866

Regulatory Impact Analysis

Under Executive Order 12866, the Secretary must determine whether
this regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the OMB.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action likely to result in a rule that may
(1) have an annual effect on the economy of $100 million or more, or
adversely affect a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or State, local or
tribal governments or communities in a material way (also referred to
as an ``economically significant'' rule); (2) create serious
inconsistency or otherwise interfere with an action taken or planned by
another agency; (3) materially alter the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raise novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
Pursuant to the terms of the Executive Order, it has been
determined this regulatory action will not have an annual effect on the
economy of more than $100 million. We believe that approximately 1,000
borrowers are eligible for a discharge on their loan under these
provisions and that the costs incurred by the Department, lenders, and
GAs to make the necessary systems changes to implement the discharge
will approximate $1,350,000. Therefore, this action is not
``economically significant'' and is not subject to OMB review under
section 3(f)(1) of Executive Order 12866. However, this action is
subject to OMB review under section 3(f)(4) of the Executive Order.

Need for Federal Regulatory Action

These interim final regulations are needed to implement the
provisions of the THEEA, which affects borrowers and other program
participants in the Federal Perkins, FFEL and Federal Direct Loan
Programs authorized under Title IV of the HEA.
The Secretary has limited discretion in implementing these
provisions. The changes included in these interim final regulations
implement loan discharges for the outstanding balance of certain Perkins, FFEL, and Direct Loan
Program loans for survivors of eligible public servants and other
eligible victims of the September 11, 2001 terrorist attacks.

Regulatory Flexibility Act Certification

The Secretary certifies that these interim final regulations will
not have a significant economic impact on a substantial number of small
entities.

Paperwork Reduction Act of 1995

Sections 674.64, 682.407 and 685.218 contain information collection
requirements. As required by the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)), the Department of Education is required to submit a
copy of these sections to the OMB for its review. The burden associated
with the above provisions is associated with forms and applications
currently under development and will be approved for use under new OMB
control numbers. The Department will develop new information collection
packages for the following sections: Sec. Sec. 674.64, 682.407, and
685.218.

The Department will develop the application necessary to implement
these provisions under an emergency clearance authorized by OMB.
Information required by Sec. Sec. 674.64(c), 674.64(d), 682.407(d),
682.407(e), 685.218(d), and 685.218(e) to determine eligibility for the
discharge will be collected on this OMB-approved application. The
information provided on the OMB-approved application will be collected
and maintained by the holder of the borrower's loan. In the case of a
FFEL loan, if the loan holder approves the discharge request the loan
holder will provide the information collected to the guaranty agency
that guaranteed the loan.

The Department has submitted a full information collection package
for OMB review to account for the burden associated with Sec. Sec.
674.64, 682.407, and 685.218 concurrently with the publication of these
interim final regulations. Accordingly, we invite comments on the
burden hours associated with the information collection package for
Sec. Sec. 674.64, 682.402, and 685.218 at this time.
Collection of Information: Federal Perkins Loan Program; Federal
Family Education Loan Program; and William D. Ford Federal Direct Loan
Program.

Sections 674.64, 682.407 and 685.218--Discharge of a Federal Perkins,
FFEL or Federal Direct Loan for Survivors of Eligible Public Servants
and Other Eligible Victims of the September 11, 2001 Terrorist Attacks

Under these interim final regulations, the Title IV, HEA loan
program regulations are amended to authorize the discharge of the
outstanding balance of certain Federal Perkins, FFEL, or Direct Loan
Program loans for survivors of eligible public servants and other
eligible victims of the September 11, 2001, terrorist attacks. The
burden associated with the new requirements will be accounted for under
a new OMB Control Number for a FFEL, Direct Loan, and Perkins Loan
Discharge Application for September 11, 2001 Survivors. This form has
been submitted for OMB review and approval by emergency clearance.
If you want to comment on the information collection requirements,
please send your comments to the Office of Information and Regulatory
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC
20503; Attention: Desk Officer for U.S. Department of Education. You
may also send a copy of these comments to the Department representative
named in the FOR FURTHER INFORMATION CONTACT section of this preamble.
We consider your comments on these proposed collections of
information in--
Deciding whether the proposed collections are necessary
for the proper performance of our functions, including whether the
information will have practical use; Evaluating the accuracy of our estimate of the burden of
the proposed collections, including the validity of our methodology and
assumptions; Enhancing the quality, usefulness, and clarity of the
information we collect; and Minimizing the burden on those who must respond.
This includes exploring the use of appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology; e.g., permitting electronic submission of
responses.
OMB is required to make a decision concerning the collection of
information contained in these interim final regulations between 30 and
60 days after publication of this document in the Federal Register.
Therefore, to ensure that OMB gives your comments full consideration,
it is important that OMB receives the comments within 30 days of
publication.

Assessment of Educational Impact

Based on our own review, we have determined that these interim
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

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/news/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 Access at: http://www.gpoaccess.gov/nara/index.html

(Catalog of Federal Domestic Assistance Numbers: 84.032 Federal
Family Education Loan Program; 84.038 Federal Perkins Loan Program;
84.268 William D. Ford Federal Direct Loan Program.)

List of Subjects in 34 CFR Parts 674, 682, and 685

Administrative practice and procedure, Colleges and universities,
Education, Loans program-education, Reporting and recordkeeping
requirements, Student aid, Vocational education.

Dated: December 22, 2006.
Margaret Spellings, Secretary of Education.

0
For the reasons discussed in the preamble, the Secretary amends parts
674, 682 and 685 of title 34 of the Code of Federal Regulations as
follows:

PART 674--FEDERAL PERKINS LOAN PROGRAM

0
1. The authority citation for part 674 continues to read as follows:

Authority: 20 U.S.C. 1087aa-1087hh and 20 U.S.C. 421-429, unless
otherwise noted.

0
2. New Sec. 674.64 is added to read as follows:

Sec. 674.64 Discharge of student loan indebtedness for survivors of victims of the September 11, 2001, attacks.

(a) Definition of terms. As used in this section--
(1) Eligible public servant means an individual who--

[[Page 78079]]

(i) Served as a police officer, firefighter, other safety or rescue
personnel, or as a member of the Armed Forces; and
(ii)(A) Died due to injuries suffered in the terrorist attacks on
September 11, 2001; or
(B) Became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001.
(2) Died due to injuries suffered in the terrorist attacks on
September 11, 2001 means the individual--
(i) Was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001, and the individual died
as a direct result of these crashes; or
(ii) Died on board American Airlines flights 11 or 77 or United
Airlines flights 93 or 175 on September 11, 2001.
(3) Became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001 means the
individual was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001, and the individual
became permanently and totally disabled as a direct result of these
crashes.
(i) An individual is considered permanently and totally disabled
if--
(A) The disability is the result of a physical injury to the
individual that was treated by a medical professional within 24 hours
of the injury having been sustained or within 24 hours of the rescue;
(B) The physical injury that caused the disability is verified by
contemporaneous medical records created by or at the direction of the
medical professional who provided the medical care; and
(C) The individual is unable to work and earn money due to the
disability and the disability is expected to continue indefinitely or
result in death.
(ii) If the injuries suffered due to the terrorist-related aircraft
crashes did not make the individual permanently and totally disabled at
the time of or in the immediate aftermath of the attacks, the
individual may be considered to be permanently and totally disabled for
purposes of this section if the individual's medical condition has
deteriorated to the extent that the individual is permanently and
totally disabled.
(4) Immediate aftermath means, for an eligible public servant, the
period of time from the aircraft crashes until 96 hours after the
crashes.
(5) Present at the World Trade Center in New York City, New York,
at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site
means physically present at the time of the terrorist-related aircraft
crashes or in the immediate aftermath--
(i) In the buildings or portions of the buildings that were
destroyed as a result of the terrorist-related aircraft crashes; or
(ii) In any area contiguous to the crash site that was sufficiently
close to the site that there was a demonstrable risk of physical harm
resulting from the impact of the aircraft or any subsequent fire,
explosions, or building collapses. Generally, this includes the
immediate area in which the impact occurred, fire occurred, portions of
buildings fell, or debris fell upon and injured persons.
(b) September 11 survivors discharge. (1) The obligation of a
borrower to make any further payments on an eligible Defense, NDSL, or
Perkins Loan is discharged if the borrower was, at the time of the
terrorist attacks on September 11, 2001, and currently is, the spouse
of an eligible public servant, unless the eligible public servant has
died. If the eligible public servant has died, the borrower must have
been the spouse of the eligible public servant at the time of the
terrorist attacks on September 11, 2001 and until the date the eligible
public servant died.
(2) A Defense, NDSL, or Perkins Loan owed by the spouse of an
eligible public servant may be discharged under the procedures for a
discharge in paragraphs (b)(3) through (b)(6) of this section.
(3) After being notified by the borrower that the borrower claims
to qualify for a discharge under this section, an institution shall
suspend collection activity on the borrower's eligible Defense, NDSL,
and Perkins Loans and promptly request that the borrower submit a
request for discharge on a form approved by the Secretary.
(4) If the institution determines that the borrower does not
qualify for a discharge under this section, or the institution does not
receive the completed discharge request form from the borrower within
60 days of the borrower notifying the institution that the borrower
claims to qualify for a discharge, the institution shall resume
collection and shall be deemed to have exercised forbearance of payment
of both principal and interest from the date the institution was
notified by the borrower. The institution must notify the borrower that
the application for the discharge has been denied, provide the basis
for the denial, and inform the borrower that the lender will resume
collection on the loan.
(5) If the institution determines that the borrower qualifies for a
discharge under this section, the institution shall notify the borrower
that the loan has been discharged and that there is no further
obligation to repay the loan. The institution shall return to the
sender any payments received by the institution after the date the loan
was discharged.
(6) A Defense, NDSL, or Perkins Loan owed by an eligible public
servant may be discharged under the procedures in Sec. 674.61 for a
discharge based on the death or total and permanent disability of the
eligible public servant.
(c) Documentation that an eligible public servant died due to
injuries suffered in the terrorist attacks on September 11, 2001. (1)
Documentation that an eligible public servant died due to injuries
suffered in the terrorist attacks on September 11, 2001 must include--
(i) A certification from an authorized official that the individual
was a member of the Armed Forces, or was employed as a police officer,
firefighter, or other safety or rescue personnel, and was present at
the World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes; and
(ii) The inclusion of the individual on an official list of the
individuals who died in the terrorist attacks on September 11, 2001.
(2) If the individual is not included on an official list of the
individuals who died in the terrorist attacks on September 11, 2001,
the borrower must provide--
(i) The certification described in paragraph (c)(1)(i) of this
section;
(ii) An original or certified copy of the individual's death
certificate; and
(iii) A certification from a physician or a medical examiner that
the individual died due to injuries suffered in the terrorist attacks
on September 11, 2001.
(3) If the individual owed a FFEL Program Loan, a Direct Loan, or a
Perkins Loan at the time of the terrorist attacks on September 11,
2001, documentation that the individual's loans were discharged by the
lender, the Secretary, or the institution due to death may be
substituted for the original or certified copy of a death certificate.
(4) If the borrower is the spouse of an eligible public servant,
and has been granted a discharge on a FFEL Program
Loan, a Direct Loan, or a Perkins Loan held by another institution,
because the eligible public servant died due to injuries suffered in
the terrorist attacks on September 11, 2001, documentation of the
discharge may be used as an alternative to the documentation required
in paragraphs (c)(1) through (c)(3) of this section.
(5) Under exceptional circumstances and on a case-by-case basis,
the determination that an eligible public servant died due to injuries
suffered in the terrorist attacks on September 11, 2001 may be based on
other reliable documentation approved by the chief financial officer of
the institution.
(d) Documentation that an eligible public servant became
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001.
(1) Documentation that an eligible public servant became
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001 must include--
(i) A certification from an authorized official that the individual
was a member of the Armed Forces or was employed as a police officer,
firefighter or other safety or rescue personnel, and was present at the
World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes;
(ii) Copies of contemporaneous medical records created by or at the
direction of a medical professional who provided medical care to the
individual within 24 hours of the injury having been sustained or
within 24 hours of the rescue; and
(iii) A certification by a physician, who is a doctor of medicine
or osteopathy and legally authorized to practice in a state, that the
individual became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001.
(2) If the borrower is the spouse of an eligible public servant,
and has been granted a discharge on a FFEL Loan, a Direct Loan, or a
Perkins Loan held by another institution, because the eligible public
servant became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001, documentation
of the discharge may be used as an alternative to the documentation
required in paragraph (d)(1) of this section.
(e) Additional information. (1) An institution may require the
borrower to submit additional information that the institution deems
necessary to determine the borrower's eligibility for a discharge under
this section.
(2) To establish that the eligible public servant was present at
the World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site, such additional
information may include but is not limited to--
(i) Records of employment;
(ii) Contemporaneous records of a federal, state, city, or local
government agency;
(iii) An affidavit or declaration of the eligible public servant's
employer; or
(iv) A sworn statement (or an unsworn statement complying with 28
U.S.C. 1746) regarding the presence of the eligible public servant at
the site.
(3) To establish that the disability of the eligible public servant
is due to injuries suffered in the terrorist attacks on September 11,
2001, such additional information may include but is not limited to--
(i) Contemporaneous medical records of hospitals, clinics,
physicians, or other licensed medical personnel;
(ii) Registries maintained by federal, state, or local governments;
or
(iii) Records of all continuing medical treatment.
(4) To establish the borrower's relationship to the eligible public
servant, such additional information may include but is not limited
to--
(i) Copies of relevant legal records including court orders,
letters of testamentary or similar documentation;
(ii) Copies of wills, trusts, or other testamentary documents; or
(iii) Copies of approved joint FFEL or Federal Direct Consolidation
loan applications.
(f) Limitations on discharge. (1) Only Defense, NDSL, and Perkins
Loans for which amounts were owed on September 11, 2001, are eligible
for discharge under this section.
(2) Eligibility for a discharge under this section does not qualify
a borrower for a refund of any payments made on the borrower's Defense,
NDSL, or Perkins Loans prior to the date the loan was discharged.
(3) A determination by an institution that an eligible public
servant became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001 for purposes of
this section does not qualify the eligible public servant for a
discharge based on a total and permanent disability under Sec. 674.61.
(4) The spouse of an eligible public servant may not receive a
discharge under this section if the eligible public servant has been
identified as a participant or conspirator in the terrorist-related
aircraft crashes on September 11, 2001.

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

0
3. The authority citation for part 682 continues to read as follows:

Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.

0
4. New Sec. 682.407 is added to read as follows:

Sec. 682.407 Discharge of student loan indebtedness for survivors of
victims of the September 11, 2001, attacks.

(a) Definition of terms. As used in this section--
(1) Eligible public servant means an individual who--
(i) Served as a police officer, firefighter, other safety or rescue
personnel, or as a member of the Armed Forces; and
(ii)(A) Died due to injuries suffered in the terrorist attacks on
September 11, 2001; or
(B) Became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001.
(2) Eligible victim means an individual who died due to injuries
suffered in the terrorist attacks on September 11, 2001 or became
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001.
(3) Eligible parent means the parent of an eligible victim if--
(i) The parent owes a FFEL PLUS Loan incurred on behalf of an
eligible victim; or
(ii) The parent owes a FFEL Consolidation Loan that was used to
repay a FFEL or Direct Loan PLUS Loan incurred on behalf of an eligible
victim.
(4) Died due to injuries suffered in the terrorist attacks on
September 11, 2001 means the individual--
(i) Was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001, and the individual died
as a direct result of these crashes; or
(ii) Died on board American Airlines flights 11 or 77 or United
Airlines flights 93 or 175 on September 11, 2001.
(5) Became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001 means the
individual was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of or in the immediate

[[Page 78081]]

aftermath of the terrorist-related aircraft crashes on September 11,
2001 and the individual became permanently and totally disabled as a
direct result of these crashes.
(i) An individual is considered permanently and totally disabled
if--
(A) The disability is the result of a physical injury to the
individual that was treated by a medical professional within 24 hours
of the injury having been sustained or within 24 hours of the rescue;
(B) The physical injury that caused the disability is verified by
contemporaneous medical records created by or at the direction of the
medical professional who provided the medical care; and
(C) The individual is unable to work and earn money due to the
disability and the disability is expected to continue indefinitely or
result in death.
(ii) If the injuries suffered due to the terrorist-related aircraft
crashes did not make the individual permanently and totally disabled at
the time of or in the immediate aftermath of the attacks, the
individual may be considered to be permanently and totally disabled for
purposes of this section if the individual's medical condition has
deteriorated to the extent that the individual is permanently and
totally disabled.
(6) Immediate aftermath means, except in the case of an eligible
public servant, the period of time from the aircraft crashes until 12
hours after the crashes. With respect to eligible public servants, the
immediate aftermath includes the period of time from the aircraft
crashes until 96 hours after the crashes.
(7) Present at the World Trade Center in New York City, New York,
at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site
means physically present at the time of the terrorist-related aircraft
crashes or in the immediate aftermath--
(i) In the buildings or portions of the buildings that were
destroyed as a result of the terrorist-related aircraft crashes; or
(ii) In any area contiguous to the crash site that was sufficiently
close to the site that there was a demonstrable risk of physical harm
resulting from the impact of the aircraft or any subsequent fire,
explosions, or building collapses. Generally, this includes the
immediate area in which the impact occurred, fire occurred, portions of
buildings fell, or debris fell upon and injured persons.
(b) September 11 survivors discharge. (1) The obligation of a
borrower and any endorser to make any further payments on an eligible
FFEL Program Loan is discharged if the borrower was, at the time of the
terrorist attacks on September 11, 2001, and currently is, the spouse
of an eligible public servant, unless the eligible public servant has
died. If the eligible public servant has died, the borrower must have
been the spouse of the eligible public servant at the time of the
terrorist attacks on September 11, 2001 and until the date the eligible
public servant died.
(2) The obligation of a borrower to make any further payments
towards the portion of a joint FFEL Consolidation Loan incurred on
behalf of an eligible victim is discharged if the borrower was, at the
time of the terrorist attacks on September 11, 2001, and currently is,
the spouse of an eligible victim, unless the eligible victim has died.
If the eligible victim has died, the borrower must have been the spouse
of the eligible victim at the time of the terrorist attacks on
September 11, 2001 and until the date the eligible victim died.
(3) If the borrower is an eligible parent--
(i) The obligation of a borrower and any endorser to make any
further payments on a FFEL PLUS Loan incurred on behalf of an eligible
victim is discharged.
(ii) The obligation of the borrower to make any further payments
towards the portion of a FFEL Consolidation Loan that repaid a FFEL or
Direct Loan PLUS Loan incurred on behalf of an eligible victim is
discharged.
(c) Applying for discharge. (1) A FFEL Program Loan owed by the
spouse of an eligible public servant or the spouse or parent of an
eligible victim may be discharged under the procedures for a discharge
in paragraphs (c)(2) through (c)(12) of this section.
(2) After being notified by the borrower that the borrower claims
to qualify for a discharge under this section, the lender shall suspend
collection activity on the borrower's eligible FFEL Program Loan and
promptly request that the borrower submit a request for discharge on a
form approved by the Secretary.
(3) If the lender determines that the borrower does not qualify for
a discharge under this section, or the lender does not receive the
completed discharge request form from the borrower within 60 days of
the borrower notifying the lender that the borrower claims to qualify
for a discharge, the lender shall resume collection and shall be deemed
to have exercised forbearance of payment of both principal and interest
from the date the lender was notified by the borrower. The lender must
notify the borrower that the application for the discharge has been
denied, provide the basis for the denial, and inform the borrower that
the lender will resume collection on the loan. The lender may
capitalize, in accordance with Sec. 682.202(b), any interest accrued
and not paid during this period.
(4) If the lender determines that the borrower qualifies for a
discharge under this section, the lender shall provide the guaranty
agency with the following documentation--
(i) The original promissory note or a copy of the promissory note
certified by the lender as true and exact;
(ii) The loan application, if a separate loan application was
provided to the lender; and
(iii) The completed discharge form, and all accompanying
documentation supporting the discharge request that formed the basis
for the determination that the borrower qualifies for a discharge.
(5) The lender must file a discharge claim within 60 days of the
date on which the lender determines that the borrower qualifies for a
discharge.
(6) The guaranty agency must review a discharge claim under this
section promptly.
(7) If the guaranty agency determines that the borrower does not
qualify for a discharge under this section, the guaranty agency must
return the claim to the lender with an explanation of the basis for the
agency's denial of the claim. Upon receipt of the returned claim, the
lender must notify the borrower that the application for the discharge
has been denied, provide the basis for the denial, and inform the
borrower that the lender will resume collection on the loan. The lender
is deemed to have exercised forbearance of both principal and interest
from the date collection activity was suspended until the first payment
due date. The lender may capitalize, in accordance with Sec.
682.202(b), any interest accrued and not paid during this period.
(8) If the guaranty agency determines that the borrower qualifies
for a discharge, the guaranty agency pays the lender on an approved
claim the amount of loss required under paragraph (c)(9) of this
section. The guaranty agency shall pay the claim within the timeframe
established for payment of disability claims in Sec.
682.402(h)(1)(i)(B).
(9) The amount of loss payable on a discharge claim is--
(i) An amount equal to the sum of the remaining principal balance
and interest accrued on the loan, unpaid collection costs incurred by
the lender and applied to the borrower's account within 30 days of the
date those costs were

[[Page 78082]]

actually incurred, and unpaid interest up to the date the lender should
have filed the claim; or
(ii) In the case of a partial discharge of a Consolidation Loan,
the amount specified in paragraph (c)(9)(i) of this section for the
portion of the Consolidation Loan incurred on behalf of the eligible
victim.
(10) After being notified that the guaranty agency has paid a
discharge claim, the lender shall notify the borrower that the loan has
been discharged or, in the case of a partial discharge of a
Consolidation Loan, partially discharged. Except in the case of a
partial discharge of a Consolidation Loan, the lender shall return to
the sender any payments received by the lender after the date the
guaranty agency paid the discharge claim.
(11) The Secretary reimburses the guaranty agency for a discharge
claim paid to the lender under this section after the agency pays the
lender. Any failure by the lender to satisfy due diligence requirements
prior to the filing of the claim that would have resulted in the loss
of reinsurance on the loan in the event of default are waived by the
Secretary, provided the loan was held by an eligible loan holder at all
times.
(12) Except in the case of a partial discharge of a Consolidation
Loan, the guaranty agency shall promptly return to the sender any
payment on a discharged loan made by the sender and received after the
Secretary pays a discharge claim. At the same time that the agency
returns the payment it shall notify the borrower that the loan has been
discharged and that there is no further obligation to repay the loan.
(13) A FFEL Program Loan owed by an eligible public servant or an
eligible victim may be discharged under the procedures in Sec. 682.402
for a discharge based on the death or total and permanent disability of
the eligible public servant or eligible victim.
(d) Documentation that an eligible public servant or eligible
victim died due to injuries suffered in the terrorist attacks on
September 11, 2001. (1) Documentation that an eligible public servant
died due to injuries suffered in the terrorist attacks on September 11,
2001 must include--
(i) A certification from an authorized official that the individual
was a member of the Armed Forces, or was employed as a police officer,
firefighter, or other safety or rescue personnel, and was present at
the World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes; and
(ii) The inclusion of the individual on an official list of the
individuals who died in the terrorist attacks on September 11, 2001.
(2) If the individual is not included on an official list of the
individuals who died in the terrorist attacks on September 11, 2001,
the borrower must provide--
(i) The certification described in paragraph (d)(1)(i) of this
section;
(ii) An original or certified copy of the individual's death
certificate; and
(iii) A certification from a physician or a medical examiner that
the individual died due to injuries suffered in the terrorist attacks
on September 11, 2001.
(3) If the individual owed a FFEL Program Loan, a Direct Loan, or a
Perkins Loan at the time of the terrorist attacks, documentation that
the individual's loans were discharged by the lender, the Secretary, or
the institution due to death may be substituted for the original or
certified copy of a death certificate.
(4) Documentation that an eligible victim died due to injuries
suffered in the terrorist attacks on September 11, 2001 is the
inclusion of the individual on an official list of the individuals who
died in the terrorist attacks on September 11, 2001.
(5) If the eligible victim is not included on an official list of
the individuals who died in the terrorist attacks on September 11,
2001, the borrower must provide--
(i) The documentation described in paragraphs (d)(2)(ii),
(d)(2)(iii), and (d)(3) of this section; and
(ii) A certification signed by the borrower that the eligible
victim was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of the terrorist-related aircraft crashes or in the
immediate aftermath of these crashes.
(6) If the borrower is the spouse of an eligible public servant,
and has been granted a discharge on a Perkins Loan, a Direct Loan, or a
FFEL Program Loan held by another FFEL lender because the eligible
public servant died due to injuries suffered in the terrorist attacks
on September 11, 2001, documentation of the discharge may be used as an
alternative to the documentation in paragraphs (d)(1) through (d)(3) of
this section.
(7) If the borrower is the spouse or parent of an eligible victim,
and has been granted a discharge on a Direct Loan or on a FFEL Program
Loan held by another FFEL lender because the eligible victim died due
to injuries suffered in the terrorist attacks on September 11, 2001,
documentation of the discharge may be used as an alternative to the
documentation in paragraphs (d)(4) and (d)(5) of this section.
(8) Under exceptional circumstances and on a case-by-case basis,
the determination that an eligible public servant or an eligible victim
died due to injuries suffered in the terrorist attacks on September 11,
2001 may be based on other reliable documentation approved by the chief
executive officer of the guaranty agency.
(e) Documentation that an eligible public servant or eligible
victim became permanently and totally disabled due to injuries suffered
in the terrorist attacks on September 11, 2001. (1) Documentation that
an eligible public servant became permanently and totally disabled due
to injuries suffered in the terrorist attacks on September 11, 2001
must include--
(i) A certification from an authorized official that the individual
was a member of the Armed Forces or was employed as a police officer,
firefighter or other safety or rescue personnel, and was present at the
World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes;
(ii) Copies of contemporaneous medical records created by or at the
direction of a medical professional who provided medical care to the
individual within 24 hours of the injury having been sustained or
within 24 hours of the rescue; and
(iii) A certification by a physician, who is a doctor of medicine
or osteopathy and legally authorized to practice in a state, that the
individual became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001.
(2) Documentation that an eligible victim became permanently and
totally disabled due to injuries suffered in the terrorist attacks on
September 11, 2001 must include--
(i) The documentation described in paragraphs (e)(1)(ii) and
(e)(1)(iii) of this section; and
(ii) A certification that the eligible victim was present at the
World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes.

[[Page 78083]]

(3) If the borrower is the spouse of an eligible public servant,
and has been granted a discharge on a Perkins Loan, a Direct Loan, or a
FFEL Program Loan held by another FFEL lender because the eligible
public servant became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001, documentation
of the discharge may be used as an alternative to the documentation in
paragraph (e)(1) of this section.
(4) If the borrower is the spouse or parent of an eligible victim,
and has been granted a discharge on a Direct Loan or on a FFEL Program
Loan held by another FFEL lender because the eligible victim became
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001, documentation of the discharge
may be used as an alternative to the documentation in paragraph (e)(2)
of this section.
(f) Additional information. (1) A lender or guaranty agency may
require the borrower to submit additional information that the lender
or guaranty agency deems necessary to determine the borrower's
eligibility for a discharge under this section.
(2) To establish that the eligible public servant or eligible
victim was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site, such additional information may include but is not limited to--
(i) Records of employment;
(ii) Contemporaneous records of a federal, state, city, or local
government agency;
(iii) An affidavit or declaration of the eligible public servant's
or eligible victim's employer; and
(iv) A sworn statement (or an unsworn statement complying with 28
U.S.C. 1746) regarding the presence of the eligible public servant or
eligible victim at the site.
(3) To establish that the disability of the eligible public servant
or eligible victim is due to injuries suffered in the terrorist attacks
on September 11, 2001, such additional information may include but is
not limited to--
(i) Contemporaneous medical records of hospitals, clinics,
physicians, or other licensed medical personnel;
(ii) Registries maintained by federal, state, or local governments;
or
(iii) Records of all continuing medical treatment.
(4) To establish the borrower's relationship to the eligible public
servant or eligible victim, such additional information may include but
is not limited to--
(i) Copies of relevant legal records including court orders,
letters of testamentary or similar documentation;
(ii) Copies of wills, trusts, or other testamentary documents; or
(iii) Copies of approved joint Consolidation Loan applications or
approved FFEL or Direct Loan PLUS loan applications.
(g) Limitations on discharge. (1) Only Federal SLS Loans, Federal
Stafford Loans, Federal PLUS Loans, and Federal Consolidation Loans for
which amounts were owed on September 11, 2001, or Federal Consolidation
Loans incurred to pay off loan amounts that were owed on September 11,
2001, are eligible for discharge under this section.
(2) Eligibility for a discharge under this section does not qualify
a borrower for a refund of any payments made on the borrower's loan
prior to the date the loan was discharged.
(3) A determination by a lender or a guaranty agency that an
eligible public servant or an eligible victim became permanently and
totally disabled due to injuries suffered in the terrorist attacks on
September 11, 2001 for purposes of this section does not qualify the
eligible public servant or the eligible victim for a discharge based on
a total and permanent disability under Sec. 682.402.
(4) The spouse of an eligible public servant or eligible victim may
not receive a discharge under this section if the eligible public
servant or eligible victim has been identified as a participant or
conspirator in the terrorist-related aircraft crashes on September 11,
2001. An eligible parent may not receive a discharge on a FFEL PLUS
Loan or on a Consolidation Loan that was used to repay a FFEL or Direct
Loan PLUS Loan incurred on behalf of an individual who has been
identified as a participant or conspirator in the terrorist-related
aircraft crashes on September 11, 2001.

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

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

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

0
6. Section 685.212 is amended by adding a new paragraph (i) to read as
follows:

Sec. 685.212 Discharge of a loan obligation.

* * * * *
(i) September 11 survivors discharge. If a borrower meets the
requirements in Sec. 685.218, the Secretary discharges the obligation
of the borrower and any endorser to make any further payments--
(1) On an eligible Direct Loan if the borrower qualifies as the
spouse of an eligible public servant;
(2) On the portion of a joint Direct Consolidation Loan incurred on
behalf of an eligible victim, if the borrower qualifies as the spouse
of an eligible victim;
(3) On a Direct PLUS Loan incurred on behalf of an eligible victim
if the borrower qualifies as an eligible parent; and
(4) On the portion of a Direct Consolidation Loan that repaid a
PLUS loan incurred on behalf of an eligible victim, if the borrower
qualifies as an eligible parent.

0
7. New Sec. 685.218 is added to read as follows:

Sec. 685.218 Discharge of student loan indebtedness for survivors of
victims of the September 11, 2001, attacks.

(a) Definition of terms. As used in this section--
(1) Eligible public servant means an individual who--
(i) Served as a police officer, firefighter, other safety or rescue
personnel, or as a member of the Armed Forces; and
(ii)(A) Died due to injuries suffered in the terrorist attacks on
September 11, 2001; or
(B) Became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001.
(2) Eligible victim means an individual who died due to injuries
suffered in the terrorist attacks on September 11, 2001 or became
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001.
(3) Eligible parent means the parent of an eligible victim if--
(i) The parent owes a Direct PLUS Loan incurred on behalf of an
eligible victim; or
(ii) The parent owes a Direct Consolidation Loan that was used to
repay a Direct PLUS Loan or a FFEL PLUS Loan incurred on behalf of an
eligible victim.
(4) Died due to injuries suffered in the terrorist attacks on
September 11, 2001 means the individual--
(i) Was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001 and the individual died
as a direct result of these crashes; or
(ii) Died on board American Airlines flights 11 or 77 or United
Airlines flights 93 or 175 on September 11, 2001.

[[Page 78084]]

(5) Became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001 means the
individual was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001 and the individual
became permanently and totally disabled as a direct result of these
crashes.
(i) An individual is considered permanently and totally disabled
if--
(A) The disability is the result of a physical injury to the
individual that was treated by a medical professional within 24 hours
of the injury having been sustained or within 24 hours of the rescue;
(B) The physical injury that caused the disability is verified by
contemporaneous medical records created by or at the direction of the
medical professional who provided the medical care; and
(C) The individual is unable to work and earn money due to the
disability and the disability is expected to continue indefinitely or
result in death.
(ii) If the injuries suffered due to the terrorist-related aircraft
crashes did not make the individual permanently and totally disabled at
the time of or in the immediate aftermath of the attacks, the
individual may be considered to be permanently and totally disabled for
purposes of this section if the individual's medical condition has
deteriorated to the extent that the individual is permanently and
totally disabled.
(6) Immediate aftermath means, except in the case of an eligible
public servant, the period of time from the aircraft crashes until 12
hours after the crashes. With respect to eligible public servants, the
immediate aftermath includes the period of time from the aircraft
crashes until 96 hours after the crashes.
(7) Present at the World Trade Center in New York City, New York,
at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site
means physically present at the time of the terrorist-related aircraft
crashes or in the immediate aftermath--
(i) In the buildings or portions of the buildings that were
destroyed as a result of the terrorist-related aircraft crashes; or
(ii) In any area contiguous to the crash site that was sufficiently
close to the site that there was a demonstrable risk of physical harm
resulting from the impact of the aircraft or any subsequent fire,
explosions, or building collapses. Generally, this includes the
immediate area in which the impact occurred, fire occurred, portions of
buildings fell, or debris fell upon and injured persons.
(b) September 11 survivors discharge. (1) The Secretary discharges
the obligation of a borrower and any endorser to make any further
payments on an eligible Direct Loan if the borrower was, at the time of
the terrorist attacks on September 11, 2001, and currently is, the
spouse of an eligible public servant, unless the eligible public
servant has died. If the eligible public servant has died, the borrower
must have been the spouse of the eligible public servant at the time of
the terrorist attacks on September 11, 2001 and until the date the
eligible public servant died.
(2) The Secretary discharges the obligation of a borrower and any
endorser to make any further payments towards the portion of a joint
Direct Consolidation Loan incurred on behalf of an eligible victim if
the borrower was, at the time of the terrorist attacks on September 11,
2001, and currently is, the spouse of an eligible victim, unless the
eligible victim has died. If the eligible victim has died, the borrower
must have been the spouse of the eligible victim at the time of the
terrorist attacks on September 11, 2001 and until the date the eligible
victim died.
(3) If the borrower is an eligible parent--
(i) The Secretary discharges the obligation of a borrower and any
endorser to make any further payments on a Direct PLUS Loan incurred on
behalf of an eligible victim.
(ii) The Secretary discharges the obligation of the borrower and
any endorser to make any further payments towards the portion of a
Direct Consolidation Loan that repaid a PLUS Loan incurred on behalf of
an eligible victim.
(c) Applying for discharge. (1) The Secretary discharges a Direct
Loan owed by the spouse of an eligible public servant or the spouse or
parent of an eligible victim under the procedures for a discharge in
paragraphs (c)(2) through (c)(4) of this section.
(2) After being notified by the borrower that the borrower claims
to qualify for a discharge under this section, the Secretary suspends
collection activity on the borrower's eligible Direct Loans and
requests that the borrower submit a request for discharge on a form
approved by the Secretary.
(3) If the Secretary determines that the borrower does not qualify
for a discharge under this section, or the Secretary does not receive
the completed discharge request form from the borrower within 60 days
of the borrower notifying the Secretary that the borrower claims to
qualify for a discharge, the Secretary resumes collection and grants
forbearance of payment of both principal and interest for the period in
which collection activity was suspended. The Secretary notifies the
borrower that the application for the discharge has been denied,
provides the basis for the denial, and informs the borrower that the
Secretary will resume collection on the loan. The Secretary may
capitalize any interest accrued and not paid during this period.
(4) If the Secretary determines that the borrower qualifies for a
discharge under this section, the Secretary notifies the borrower that
the loan has been discharged or, in the case of a partial discharge of
a Direct Consolidation Loan, partially discharged. Except in the case
of a partial discharge of a Direct Consolidation Loan, the Secretary
returns to the sender any payments received by the Secretary after the
date the loan was discharged.
(5) The Secretary discharges a Direct Loan owed by an eligible
victim or an eligible public servant under the procedures in Sec.
685.212 for a discharge based on death or under the procedures in Sec.
685.213 for a discharge based on a total and permanent disability.
(d) Documentation that an eligible public servant or eligible
victim died due to injuries suffered in the terrorist attacks on
September 11, 2001. (1) Documentation that an eligible public servant
died due to injuries suffered in the terrorist attacks on September 11,
2001 must include--
(i) A certification from an authorized official that the individual
was a member of the Armed Forces, or was employed as a police officer,
firefighter, or other safety or rescue personnel, and was present at
the World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes; and
(ii) The inclusion of the individual on an official list of the
individuals who died in the terrorist attacks on September 11, 2001.
(2) If the individual is not included on an official list of the
individuals who died in the terrorist attacks on September 11, 2001,
the borrower must provide--
(i) The certification described in paragraph (d)(1)(i) of this
section;
(ii) An original or certified copy of the individual's death
certificate; and

[[Page 78085]]

(iii) A certification from a physician or a medical examiner that
the individual died due to injuries suffered in the terrorist attacks
on September 11, 2001.
(3) If the individual owed a FFEL Program Loan, a Direct Loan, or a
Perkins Loan at the time of the terrorist attacks on September 11,
2001, documentation that the individual's loans were discharged by the
lender, the Secretary, or the institution due to death may be
substituted for the original or certified copy of a death certificate.
(4) Documentation that an eligible victim died due to injuries
suffered in the terrorist attacks on September 11, 2001 is the
inclusion of the individual on an official list of the individuals who
died in the terrorist attacks on September 11, 2001.
(5) If the eligible victim is not included on an official list of
the individuals who died in the terrorist attacks on September 11,
2001, the borrower must provide--
(i) The documentation described in paragraphs (d)(2)(ii),
(d)(2)(iii), and (d)(3) of this section; and
(ii) A certification signed by the borrower that the eligible
victim was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site at the time of the terrorist-related aircraft crashes or in the
immediate aftermath of these crashes.
(6) If the borrower is the spouse of an eligible public servant,
and has been granted a discharge on a Perkins Loan, a FFEL Program loan
or another Direct Loan because the eligible public servant died due to
injuries suffered in the terrorist attacks on September 11, 2001,
documentation of the discharge may be used as an alternative to the
documentation in paragraphs (d)(1) through (d)(3) of this section.
(7) If the borrower is the spouse or parent of an eligible victim,
and has been granted a discharge on a FFEL Program Loan or another
Direct Loan because the eligible victim died due to injuries suffered
in the terrorist attacks on September 11, 2001, documentation of the
discharge may be used as an alternative to the documentation in
paragraphs (d)(4) and (d)(5) of this section.
(8) The Secretary may discharge the loan based on other reliable
documentation that establishes, to the Secretary's satisfaction, that
the eligible public servant or the eligible victim died due to injuries
suffered in the September 11, 2001 attacks. The Secretary discharges a
loan based on documentation other than the documentation specified in
paragraphs (d)(1) through (d)(5) of this section only under exceptional
circumstances and on a case-by-case basis.
(e) Documentation that an eligible public servant or eligible
victim became permanently and totally disabled due to injuries suffered
in the terrorist attacks on September 11, 2001. (1) Documentation that
an eligible public servant became permanently and totally disabled due
to injuries suffered in the terrorist attacks on September 11, 2001
must include--
(i) A certification from an authorized official that the individual
was a member of the Armed Forces or was employed as a police officer,
firefighter or other safety or rescue personnel, and was present at the
World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes;
(ii) Copies of contemporaneous medical records created by or at the
direction of a medical professional who provided medical care to the
individual within 24 hours of the injury having been sustained or
within 24 hours of the rescue; and
(iii) A certification by a physician, who is a doctor of medicine
or osteopathy and legally authorized to practice in a state, that the
individual became permanently and totally disabled due to injuries
suffered in the terrorist attacks on September 11, 2001.
(2) Documentation that an eligible victim became permanently and
totally disabled due to injuries suffered in the terrorist attacks on
September 11, 2001 must include--
(i) The documentation described in paragraphs (e)(1)(ii) and
(e)(1)(iii) of this section; and
(ii) A certification that the eligible victim was present at the
World Trade Center in New York City, New York, at the Pentagon in
Virginia, or at the Shanksville, Pennsylvania site at the time of the
terrorist-related aircraft crashes or in the immediate aftermath of
these crashes.
(3) If the borrower is the spouse of an eligible public servant,
and has been granted a discharge on a Perkins Loan, a FFEL Program
loan, or another Direct Loan because the eligible public servant became
permanently and totally disabled due to injuries suffered in the
terrorist attacks on September 11, 2001, documentation of the discharge
may be used as an alternative to the documentation in paragraph (e)(1)
of this section.
(4) If the borrower is the spouse or parent of an eligible victim,
and has been granted a discharge on a FFEL Program Loan, or another
Direct Loan because the eligible victim became permanently and totally
disabled due to injuries suffered in the terrorist attacks on September
11, 2001, documentation of the discharge may be used as an alternative
to the documentation in paragraph (e)(2) of this section.
(f) Additional information. (1) The Secretary may require the
borrower to submit additional information that the Secretary deems
necessary to determine the borrower's eligibility for a discharge under
this section.
(2) To establish that the eligible public servant or eligible
victim was present at the World Trade Center in New York City, New
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania
site, such additional information may include but is not limited to--
(i) Records of employment;
(ii) Contemporaneous records of a federal, state, city, or local
government agency;
(iii) An affidavit or declaration of the eligible public servant's
or eligible victim's employer; or
(iv) A sworn statement (or an unsworn statement complying with 28
U.S.C. 1746) regarding the presence of the eligible public servant or
eligible victim at the site.
(3) To establish that the disability of the eligible public servant
or eligible victim is due to injuries suffered in the terrorist attacks
on September 11, 2001, such additional information may include but is
not limited to--
(i) Contemporaneous medical records of hospitals, clinics,
physicians, or other licensed medical personnel;
(ii) Registries maintained by federal, state, or local governments;
or
(iii) Records of all continuing medical treatment.
(4) To establish the borrower's relationship to the eligible public
servant or eligible victim, such additional information may include but
is not limited to--
(i) Copies of relevant legal records including court orders,
letters of testamentary or similar documentation;
(ii) Copies of wills, trusts, or other testamentary documents; or
(iii) Copies of approved joint FFEL or Direct Loan Consolidation
Loan applications or an approved Direct PLUS Loan application.
(g) Limitations on discharge. (1) Only Direct Subsidized Loans,
Direct Unsubsidized Loans, Direct PLUS Loans and Direct Consolidation
Loans for which amounts were owed on

[[Page 78086]]

September 11, 2001, or Direct Consolidation Loans incurred to pay off
loan amounts that were owed on September 11, 2001, are eligible for
discharge under this section.
(2) Eligibility for a discharge under this section does not qualify
a borrower for a refund of any payments made on the borrower's Direct
Loans prior to the date the loan was discharged.
(3) A determination that an eligible public servant or an eligible
victim became permanently and totally disabled due to injuries suffered
in the terrorist attacks on September 11, 2001 for purposes of this
section does not qualify the eligible public servant or the eligible
victim for a discharge based on a total and permanent disability under
Sec. 685.213.
(4) The spouse of an eligible public servant or eligible victim may
not receive a discharge under this section if the eligible public
servant or eligible victim has been identified as a participant or
conspirator in the terrorist-related aircraft crashes on September 11,
2001. An eligible parent may not receive a discharge on a Direct PLUS
Loan or on a Direct Consolidation Loan that was used to repay a Direct
Loan or FFEL Program PLUS Loan incurred on behalf of an individual who
has been identified as a participant or conspirator in the terrorist-
related aircraft crashes on September 11, 2001.

[FR Doc. E6-22245 Filed 12-27-06; 8:45 am]

BILLING CODE 4000-01-P