Publication Date: June 16, 2016
Posted Date: June 16, 2016
Subject: Notice of Proposed Rulemaking on the Borrower Defense to Repayment Regulations
FR Type: Notice of Proposed Rulemaking (NPRM)
[Federal Register Volume 81, Number 116 (Thursday, June 16, 2016)] [Proposed Rules] [Pages 39329-39422] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 2016-14052] Vol. 81 Thursday, No. 116 June 16, 2016 Part II Department of Education ----------------------------------------------------------------------- 34 CFR Parts 30, 668, 674, et al. Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, William D. Ford Federal Direct Loan Program, and Teacher Education Assistance for College and Higher Education Grant Program; Proposed Rule Federal Register / Vol. 81 , No. 116 / Thursday, June 16, 2016 / Proposed Rules ----------------------------------------------------------------------- DEPARTMENT OF EDUCATION 34 CFR Parts 30, 668, 674, 682, 685, and 686 RIN 1840-AD19 [Docket ID ED-2015-OPE-0103] Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, William D. Ford Federal Direct Loan Program, and Teacher Education Assistance for College and Higher Education Grant Program AGENCY: Office of Postsecondary Education, Department of Education. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The Secretary proposes to amend the regulations governing the William D. Ford Federal Direct Loan (Direct Loan) Program to establish a new Federal standard and a process for determining whether a borrower has a defense to repayment on a loan based on an act or omission of a school. We propose to also amend the Direct Loan Program regulations by prohibiting participating schools from using certain contractual provisions regarding dispute resolution processes, such as mandatory pre-dispute arbitration agreements or class action waivers, and to require certain notifications and disclosures by schools regarding their use of arbitration. We propose to also amend the Direct Loan Program regulations to codify our current policy regarding the impact that discharges have on the 150 percent Direct Subsidized Loan Limit. We also propose to amend the Student Assistance General Provisions regulations to revise the financial responsibility standards and add disclosure requirements for schools. Finally, we propose to amend the discharge provisions in the Federal Perkins Loan (Perkins Loan), Direct Loan, Federal Family Education Loan (FFEL), and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs. The proposed changes would provide transparency, clarity, and ease of administration to current and new regulations and protect students, the Federal government, and taxpayers against potential school liabilities resulting from borrower defenses. DATES: We must receive your comments on or before August 1, 2016. FOR FURTHER INFORMATION CONTACT: For further information related to borrower defenses, Barbara Hoblitzell at (202) 453-7583 or by email at: Barbara.Hoblitzell@ed.gov. For further information related to false certification and closed school loan discharges, Brian Smith at (202) 453-7440 or by email at: Brian.Smith@ed.gov. For further information regarding institutional accountability, John Kolotos or Greg Martin at (202) 453-7646 or (202) 453-7535 or by email at: John.Kolotos@ed.gov or Gregory.Martin@ed.gov. If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1- 800-877-8339.