[Federal Register Volume 84, Number 228 (Tuesday, November 26, 2019)]
[Rules and Regulations]
[Pages 65000-65007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25813]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
34 CFR Parts 674, 682, and 685
RIN 1840-AD48
[Docket ID ED-2019-FSA-0115]
Total and Permanent Disability Discharge of Loans Under Title IV
of the Higher Education Act
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Interim final regulations.
-----------------------------------------------------------------------
SUMMARY: The Department of Education (Department) issues these interim
final regulations to amend and update the regulations for total and
permanent disability student loan discharge for veterans by removing
administrative burdens that may have prevented at least 20,000 totally
and permanently disabled veterans from obtaining discharges of their
student loans, as the law provides. These barriers create significant
and unnecessary hardship for these veterans. Removing these barriers is
a matter of pressing national concern. Although the Department
construes its interim final rulemaking power narrowly, under these
circumstances the Department finds
[[Page 65001]]
good cause to implement the rule immediately.
DATES: These regulations are effective July 1, 2020.
Implementation date: For the implementation date of these
regulatory changes, see the Implementation Date of These Regulations
section of this document.
We must receive your comments on or before January 27, 2020.
ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments submitted by fax or by email or those submitted after
the comment period. To ensure that we do not receive duplicate copies,
please submit your comments only once. In addition, please include the
Docket ID at the top of your comments.
If you are submitting comments electronically, we strongly
encourage you to submit any comments or attachments in Microsoft Word
format. If you must submit a comment in Adobe Portable Document Format
(PDF), we strongly encourage you to convert the PDF to print-to-PDF
format or to use some other commonly used searchable text format.
Please do not submit the PDF in a scanned format. Using a print-to-PDF
format allows the Department to electronically search and copy certain
portions of your submissions.
Federal eRulemaking Portal: Go to www.regulations.gov to
submit your comments electronically. Information on using
regulations.gov, including instructions for accessing agency documents,
submitting comments, and viewing the docket, is available on the site
under ``Help.''
Postal Mail, Commercial Delivery, or Hand Delivery: The
Department strongly encourages commenters to submit their comments
electronically. However, if you mail or deliver your comments, address
them to Robert King, U.S. Department of Education, 400 Maryland Ave.
SW, Washington, DC 20202.
Privacy Note: The Department's policy is to make comments received
from members of the public available for public viewing on the Federal
eRulemaking Portal at www.regulations.gov. Therefore, commenters should
include in their comments only information that they wish to make
publicly available.
FOR FURTHER INFORMATION CONTACT: Robert King, U.S. Department of
Education, Office of Postsecondary Education, 400 Maryland Avenue SW,
Washington, DC 20202-2241. Telephone: (202) 453-6914. Email:
[email protected].
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service, toll free, at 1-800-
877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print, audiotape, or compact
disc) on request to the contact person listed in this section.
SUPPLEMENTARY INFORMATION:
Implementation Date of These Regulations: These regulations are
effective on July 1, 2020. Section 482(c) of the HEA requires that
regulations affecting programs under title IV of the HEA be published
in final form by November 1, prior to the start of the award year (July
1) to which they apply. However, that section also permits the
Secretary to designate any regulation as one that an entity subject to
the regulations may choose to implement earlier, as well as the
conditions for early implementation.
The Secretary is exercising her authority under section 482(c) of
the HEA to designate the regulatory changes to parts 674, 682, and
section 685.213 of the Code of Federal Regulations, included in this
document, for early implementation effective immediately for the
reasons set forth in the Summary, Background, and Need for Regulatory
Action sections included in this document. Under this rule, eligible
veterans who do not opt out of receiving a discharge will receive one.
Invitation to Comment:
Although the Secretary has decided to issue these final regulations
without first publishing proposed regulations for public comment, we
are interested in whether you think we should make any changes in these
regulations. We invite your comments. We will consider these comments
in determining whether to revise the regulations.
To ensure that your comment has maximum effect, we urge you to
clearly identify the specific section or sections of the proposed
regulations that your comment addresses, and provide relevant
information and data whenever possible, even when there is no specific
solicitation of data and other supporting materials in the request for
comment. We also urge you to arrange your comments in the same order as
the regulations. Please do not submit a comment that is outside the
scope of this notice of interim final regulations (IFR).
We invite you to assist us in complying with the specific
requirements of Executive Orders 12866 and 13563 and their overall
requirement of reducing regulatory burden that might result from these
regulations. Please let us know of any further ways we could reduce
potential costs or increase potential benefits while preserving the
effective and efficient administration of the Department's programs and
activities.
During and after the comment period, you may inspect all public
comments about the regulations by accessing regulations.gov. You may
also inspect the comments in person at 400 Maryland Ave. SW,
Washington, DC, between 8:30 a.m. and 4:00 p.m., Eastern Time, Monday
through Friday of each week except Federal holidays. To schedule a time
to inspect comments, please contact the person listed under FOR FURTHER
INFORMATION CONTACT.
Assistance to Individuals with Disabilities in Reviewing the
Rulemaking Record: On request, we will provide an appropriate
accommodation or auxiliary aid to an individual with a disability who
needs assistance to review the comments or other documents in the
public rulemaking record for the regulations. To schedule an
appointment for this type of accommodation or auxiliary aid, please
contact the person listed under FOR FURTHER INFORMATION CONTACT.
Background:
Congress has authorized the discharge of student loans made
pursuant to Title IV of the Higher Education Act of 1965, as amended
(HEA), due to the borrower's total and permanent disability. 20 U.S.C.
1087(a), 1087e(a)(1), and 1087dd(c)(1)(F).
For veterans, Congress has specifically authorized total and
permanent disability discharge if the Department of Veterans Affairs
(VA) has determined that the veteran is unemployable due to a service-
connected disability. 20 U.S.C. 1087(a)(2), 1087e(a)(1), and
1087dd(c)(1)(F)(iv). The Secretary has promulgated regulations
governing the total and permanent disability discharge process for
veterans. See 34 CFR 674.61(c), 682.402(c)(9), and 685.213(c). At the
time these regulations were promulgated, the Department did not obtain
information directly from the VA, and therefore required the eligible
veteran to submit an application and supporting documentation from the
VA to receive student loan discharge. However, in 2018 the Department
enter into a data sharing agreement with the VA to retrieve the
necessary information directly from the VA. As such, the application is
an unnecessary administrative barrier, which the
[[Page 65002]]
Department believes may have prevented more than 20,000 disabled
veterans from obtaining the student loan discharge that they are by law
entitled to receive.
Despite streamlining the application process, it continues to be a
barrier that creates significant and unnecessary hardship for our
disabled veterans. Consequently, removing these barriers is a pressing
problem of national concern. For example, Congress directed the
Secretary to take additional actions to automate the total and
permanent disability discharge application process for eligible
veterans. S. Rep. No. 115-150, at 182 (2017). The Attorneys General of
more than 50 States and territories wrote to encourage the Department
to remove administrative barriers so that veterans are able to receive
loan discharge. Letter from National Association of Attorneys General
to the Honorable Betsy DeVos, U.S. Secretary of Education (May 24,
2019). Finally, the President has directed the Secretary to facilitate
the discharge of student loans for totally and permanently disabled
veterans in a manner that is quick, efficient, and minimally
burdensome. Presidential Memorandum of August 21, 2019, Discharging the
Federal Student Loan Debt of Totally and Permanently Disabled Veterans,
84 FR 44677.
Significant Regulations
The following is a discussion of the significant regulations.
Statute: Pursuant to 20 U.S.C. 1087(a)(2), 1087e(a)(1), and
1087dd(c)(1)(F)(iv), the Secretary is directed to discharge the loans
under the Federal Direct Loan Program, the Federal Family Education
Loan Program, and the Federal Perkins Loan Program of borrowers who
have become permanently and totally disabled if the Secretary of
Veterans Affairs has determined the borrower unemployable due to a
service-connected condition and the borrower provides that
documentation to the Secretary.
Current Regulations: Under 34 CFR 674.61(c), 682.402(c)(9), and
685.213(c), if a veteran who is also a student loan borrower is
determined to be unemployable by the Secretary of Veterans Affairs due
to a service-connected disability, the borrower must apply to the
Secretary of Education for a discharge of his or her student loans.
This application must include documentation of the Secretary of
Veterans Affairs determination.
New Regulations: Under 34 CFR 674.61(c)(2)(x), 682.402(c)(9)(xiii),
and 685.213(c)(1)(v), the Secretary will consider a borrower for whom
data is obtained from the Department of Veterans Affairs showing that
the borrower is ``totally and permanently disabled'' to be eligible for
discharge and will not require additional documentation to discharge
the borrower's loans.
Reasons: The Secretary is amending the regulations for the Federal
Direct Loan Program, the Federal Family Education Loan Program, and the
Federal Perkins Loan Program to remove administrative barriers for
veterans who are entitled to student loan discharge due to a service-
related total and permanent disability.
Due to concerns that unnecessary bureaucratic burdens prevented
eligible veterans from obtaining loan discharges guaranteed by law, in
2018 the Departments of Education and Veterans Affairs entered into a
data sharing agreement to enable the Department of Education to
identify eligible totally and permanently disabled veterans.
Approximately 50,000 eligible veterans were identified as the result of
this agreement. However, due to a burdensome administrative process,
more than 20,000 eligible veterans have failed to receive relief.
Consequently, to help veterans receive the relief to which they are
entitled, the Secretary is amending the regulations to eliminate the
need for a separate application from each borrower. Instead, the
Secretary will consider a borrower to be eligible for a loan discharge
when the Secretary has received information from the Department of
Veterans Affairs showing that the borrower has a total and permanent
disability. After determining that this information demonstrates the
borrower meets statutory criteria and is eligible for a loan discharge,
the Secretary will notify the borrower that his or her loan is being
discharged. The borrower may reject the discharge within the number of
days specified in the notification. In that case, the borrower will be
liable for the full amount of the principal and interest on the loan,
as well as any other fees and costs that may be legally assessed.
Executive Orders 12866 and 13563
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
Office of Management and Budget (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 ``economically significant'' regulations);
(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 stated in the
Executive order.
This IFR is an economically significant action and will have an
annual effect on the economy of more than $100 million because the
proposed changes to an opt-out process for veterans are expected to
increase transfers from the federal government to qualifying veterans
by $138.7 million when annualized at a 7 percent discount rate.
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the
Office of Information and Regulatory Affairs designated this rule as a
``major rule,'' as defined by 5 U.S.C. 804(2).
Under Executive Order 13771, for each new regulation that the
Department proposes for notice and comment or otherwise promulgates
that is a significant regulatory action under Executive Order 12866 and
that imposes total costs greater than zero, it must identify two
deregulatory actions. For FY 2019, any new incremental costs associated
with a new regulation must be fully offset by the elimination of
existing costs through deregulatory actions. These regulations are
expected to reduce burden on qualifying veterans by eliminating the
application for discharge. We estimate that this rule will generate
approximately $0.11 million in annualized net PRA savings at a 7
percent discount rate, discounted to a 2016 equivalent, over a
perpetual time horizon. This regulation is a deregulatory action under
Executive Order 13771 and therefore the requirements of Executive Order
13771 do not apply.
We have also reviewed these regulations under Executive Order
13563, which supplements and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, Executive Order
13563 requires that an agency--
[[Page 65003]]
(1) Propose or adopt regulations only upon a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives and taking into
account, among other things, and to the extent practicable, the costs
of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance a regulated entity must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including economic incentives--such as user fees or
marketable permits--to encourage the desired behavior, or providing
information that enables the public to make choices.
Executive Order 13563 also requires an agency ``to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible.'' The Office of
Information and Regulatory Affairs of OMB has emphasized that these
techniques may include ``identifying changing future compliance costs
that might result from technological innovation or anticipated
behavioral changes.''
The Department has assessed the potential costs and benefits, both
quantitative and qualitative, of this regulatory action, and we are
issuing this IFR in response to the pressing need for, and manifest
public interest in, deregulatory relief from bureaucratic burdens that
have denied tens of thousands of veterans who are totally and
permanently disabled due to service-related injuries their statutory
right to student loan discharges. The harm caused to our veterans and
to the public interest by the unnecessary bureaucratic burdens targeted
for deregulatory action here is significant and widely recognized. See
Presidential Memorandum at 44677; S. Rep. No. 115-150, at 182. Based on
this analysis and the reasons stated in the preamble, the Department
believes that this IFR is consistent with the principles in Executive
Order 13563.
We also have determined that this regulatory action does not unduly
interfere with State, local, or Tribal governments in the exercise of
their governmental functions.
Need for Regulatory Action
The Higher Education Act of 1965 as amended, provides that veterans
who are totally and permanently disabled are eligible to have their
Federal student loans discharged. Once determined by the Secretary of
Veterans Affairs to be totally and permanently disabled due to a
service-connected condition, under the current regulations the veteran
must obtain documentation of that status from the Department of
Veterans Affairs and provide it to the Secretary of Education, along
with an application for total and permanent disability discharge, to
receive the discharge of a student loan. However, now that the
Department has a data sharing agreement with the VA in place, the
Department obtains all of the information it needs to discharge loans
directly from the VA. This makes the application an unnecessary and
burdensome step. Consequently, the President and Congress have asked
the Department to ensure our veterans receive all benefits the law
allows. Veterans would only need to contact the Department if they
choose not to accept the discharge, in which case they would be
responsible for full payment on the loan.
The Department of Education has been working with the Department of
Veterans Affairs since 2018 to facilitate a more expedited process and
about 22,000 veterans have received approximately $650 million in
discharges. However, thousands more have not applied for the discharge
for which they were eligible.
The amendments in this rule should result in a quicker, more
efficient process and many more qualified veterans receiving the
discharge to which they are legally entitled. Based on available data,
this regulatory action would be significant and the initial annual
impact on the economy would be estimated at over $100 million.
In the past, loan discharge amounts were subject to Federal and in
some geographies State tax, which may have dissuaded some veterans who
could otherwise navigate the bureaucratic process from seeking a
discharge. However, under the Tax Cuts and Jobs Act of 2017 (Pub. L.
115-97), all Federal tax was eliminated on loan discharges of borrowers
based on death or total and permanent disability. Some small percentage
of these eligible veterans may opt out due to concerns over State tax
treatment that was not affected by the 2017 Federal tax law.
In addition, veterans who are enrolled at the time of the
disability determination, or who plan to enroll in postsecondary
education in the future, may opt to forego loan forgiveness so that
they can continue to receive new Federal student loans in the future.
Although a veteran who accepts loan forgiveness may still be able to
borrow in the future, the Department requires such a borrower to obtain
a certification from a physician that the borrower is able to engage in
substantial gainful employment and must sign a statement acknowledging
that neither the new Direct Loan the borrower receives cannot be
discharge in the future on the basis of any impairment present when the
new loan is made, unless that impairment substantially deteriorates.
Some veterans may elect to simply forego loan forgiveness to preserve
future borrowing opportunities or the need to obtain medical
certification.
Nevertheless, this new deregulatory approach should remove
unnecessary bureaucratic barriers and allow many more qualified
veterans to receive the discharge to which they are entitled.
Costs, Benefits and Transfers
The primary parties affected by these regulations will be the
veterans who qualify for the discharge and the taxpayers, through the
transfers from the Federal Government to the qualifying veterans.
Qualifying veterans and their families will be relieved of a financial
burden related to Federal student loans, including the stress
associated with repayment or potential defaults and collections. The
Department of Veteran's Affairs estimates that approximately 150,000
veterans a year will reach a qualifying disability rating over the next
ten years, of which approximately 18 percent will be 50 years old or
under and around 20 percent will have at least some postsecondary
education at the time of their separation from the armed services. Many
more likely use education benefits and loans to pursue postsecondary
credentials after separation. Therefore, it makes sense that thousands
of current and future veterans will benefit from the change to the opt-
out approach.
As described in the Paperwork Reduction Act section of this
preamble, the elimination of the application will reduce the burden on
veterans who qualify for the discharge. The elimination of the
application is a reduction in burden of [5,000] hours and $140,900
calculated at a wage rate of $28.18.\1\
---------------------------------------------------------------------------
\1\ Bureau of Labor Statistics, Economic News Release Table B-3.
Average hourly and weekly earnings of all employees on private
nonfarm payrolls by industry sector, seasonally adjusted. Applying
average hourly wage rate for October 2019 for total private
industry. Available at https://www.bls.gov/news.release/empsit.t19.htm.
---------------------------------------------------------------------------
[[Page 65004]]
The increase in transfers will affect taxpayers, through the
Federal government, as more veterans receive the loan discharge for
which they qualify. This effect is described in the Net Budget Impacts
section of this preamble. Estimated annualized transfers are $138.7
million at a 7 percent discount rate.
Net Budget Impact
We estimate that these final regulations will have a net Federal
budget impact over the 2020-2029 loan cohorts of $787 million in
outlays and a modification to past cohorts of $543.8 million, for a
total net impact of $1.3 billion. A cohort reflects all loans
originated in a given fiscal year. Consistent with the requirements of
the Credit Reform Act of 1990, budget cost estimates for the student
loan programs reflect the estimated net present value of all future
non-administrative Federal costs associated with a cohort of loans. The
Net Budget Impact is compared to the 2020 President's Budget baseline,
as estimated for Mid-Session Review (PB2020).
As discussed throughout this preamble, these regulations will make
the discharge process of loans for veterans with a service-related
disability an opt-out process instead of the opt-in process associated
with the current match between the Department and the Department of
Veterans Affairs. While the existing match has been processed since
2018 and the Department has accepted Department of Veterans' Affairs
determinations of disability status without additional medical
information since 2013, a significant percentage of veterans who would
qualify for the discharge do not submit applications. Of approximately
58,000 likely qualifying veterans identified in the match process, only
about 22,000 veterans have received approximately $650 million in
discharges. According to Federal Student Aid, approximately 4,000
additional veterans are identified in each quarterly match.
To estimate the effect of the opt-out procedure, the Department
adjusted the disability component of its Death, Disability, and
Bankruptcy assumption (DDB), which also includes closed school and
borrower defense discharges that have been the subject of recent
regulations. To calculate the effect on past cohorts from borrowers
currently eligible for the discharge who have no record of receiving
one, the Department summarized the balances, collections, and payments
associated with veterans identified in the August 2018 match who had
not received a disability or death discharge by the end of FY 2019.
These potential claims were grouped by population identification (non-
consolidated, consolidated not-from-default, and consolidated from
default), and offset between the fiscal year of loan origination and
fiscal year of disability. Baseline disability claims were also
summarized by these factors and an adjustment factor for the increase
represented by the potential claims was calculated. For example, for
the 2010 cohort for consolidated loans, potential claims were
approximately 5 percent of baseline disability claims, so the
adjustment factor was 1.05 percent.
This adjustment accounts for the potential increase in claims from
former borrowers with an existing qualifying disability rating. The
change to the opt-out approach will increase the level of disability
discharges going forward, but not to the same degree as the significant
adjustment in FY2020 that captures the build-up of years from those who
did not submit applications. To estimate the adjustment for future
claims, the Department focused on those newly identified as disabled in
2018 and calculated an adjustment factor based on those who received a
discharge versus those potential discharges who were in the match but
did not submit applications. This adjustment was applied to future
cohorts and future disability determinations for borrowers in past
cohorts.
The Department incorporated this increase into the DDB assumption
estimated for PB2020 and this generated the $1.3 billion in costs
associated with the regulations.
A number of factors may affect the estimated cost of these
regulations. Some borrowers may have lacked awareness of the potential
discharge or found the application process difficult. To the extent
existing borrowers choose to not apply for tax reasons, the tax
provision granting that relief is currently scheduled to expire on
December 31, 2025. While it may be renewed, the opt-out rate for future
discharges occurring in 2026 and later could increase. In estimating
the net budget impact of these interim final regulations, the
Department reduced the adjustment factor for 2026 and later by 15
percent to account for this. If that provision is extended or if more
of the unfiled applications were for process reasons and did not
reflect deliberate tax planning, the opt-out rate may decrease and the
costs could go up.
Another issue is the assumption that the non-applicants and future
qualifying veterans will have a similar profile to applicants in terms
of the amount of loans, repayment profiles, and the timing of their
qualifying disability. It is possible that those who applied for a
discharge as the result of the match had higher balances and thus more
incentive to file, especially once the federal tax consequences were
removed. Applicants and non-applicants could vary by debt level,
educational attainment, nature of their disability, availability of
support or other factors that could result in the discharges granted
through the opt-out provision having a different average amount or
subsidy cost for the Department.
Another challenge is predicting the effect on future loan cohorts.
We assume the level and timing of service-related disabilities will
remain similar to that for existing borrowers. Clearly, geopolitical
factors that the Department of Education does not predict could affect
the number of veterans who qualify for the discharge. Additionally,
student loan borrowing among those who may serve in the military and
eventually qualify for a discharge could increase depending upon
recruitment patterns and further education pursued by those serving in
the military. However, it is possible that the relatively generous
provisions of the Post 9/11 GI bill will reduce borrowing by more
recent and future cohorts of veterans relative to past cohorts. An
analysis done by Veterans Education Success of National Postsecondary
Student Aid Survey data for the most recent three survey cycles
(NPSAS:08, NPSAS:12 and NPSAS:16) indicated that the percentage of
veterans borrowing at proprietary schools decreased from 78 percent in
NPSAS:08 to 42 percent in NPSAS:16 and the average annual amount
borrowed decreased slightly from $8,680 to $8,630 in 2015 dollars.\2\
The percent of veterans borrowing declined slightly in other sectors
(38 percent to 32 percent for public 4-year institutions) and the
average amounts borrowed also declined ($10,410 for 4-year private non-
profit in NPSAS:08 to $8,980 in NPSAS:16).\3\
---------------------------------------------------------------------------
\2\ Walter Ochinko and Kathy Payea, Veterans Education Success,
Veteran Student Loan Debt: Data from NPSAS:08,12,16, January 2019,
Figure 1, p.4. Available at https://vetsedsuccess.org/veteran-student-loan-debt-7-years-after-implementation-of-the-post-9-11-gi-bill/.
\3\ Id.
---------------------------------------------------------------------------
Medical or technical advances that affect the classification of
disability could potentially be a factor reducing the estimated costs
associated with
[[Page 65005]]
future loan cohorts. For estimation purposes, we assume future cohorts
will look like existing cohorts but acknowledge that a number of
factors could shift the estimated costs in either direction.
Accounting Statement
As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in the
following table we have prepared an accounting statement showing the
classification of the expenditures associated with the provisions of
these final regulations. This table provides our best estimate of the
changes in annual monetized transfers as a result of these final
regulations. Expenditures are classified as transfers from the Federal
Government to veterans who qualify for a total and permanent disability
discharge.\4\
---------------------------------------------------------------------------
\4\ An indirect cost of the interim final rule is the increased
distortions in the nationwide labor market and other markets taxed
to pay for the loan discharge program. Such distortions are
sometimes referred to as marginal excess tax burden (METB), and
Circular A-94--OMB's guidance on cost-benefit analysis of federal
programs, available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A94/a094.pdf--suggests that METB
may be valued at roughly 25 percent of the estimated transfer
attributed to a policy change; the Circular goes on to direct the
inclusion of estimated METB change in supplementary analyses. If
secondary costs--such as increased marginal excess tax burden is, in
the case of this IFR--are included in regulatory impact analyses,
then secondary benefits must be as well, in order to avoid
inappropriately skewing the net benefits results, and including METB
only in supplementary analyses provides some acknowledgement of this
potential imbalance.
Table 6--Accounting Statement: Classification of Estimated Expenditures
[in millions]
------------------------------------------------------------------------
------------------------------------------------------------------------
Category Benefits
------------------------------------------------------------------------
Increased share of qualifying veterans
who receive a total and permanent
disability discharge................... Not Quantified
------------------------------------------------------------------------
Not Quantified
------------------------------------------------------------------------
Reduced paperwork burden on Veterans who 7% 3%
qualify for a TPD discharge............ $-.141 $$-.141
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Increased loan discharges for veterans 7% 3%
with a qualifying total and permanent $138.7 $130.2
disability status......................
------------------------------------------------------------------------
Waiver of Notice and Comment Rulemaking, Negotiated Rulemaking, and
Delayed Effective Date Under the Administrative Procedure Act
The Department believes its interim final rulemaking authority must
be narrowly construed and exercised only when there is a sound basis
for doing so. However, Congress has directed the Department to remove
unnecessary bureaucratic barriers that constructively deny lawful
benefits to veterans who are totally and permanently disabled because
of service-connected injuries and has left the Department no discretion
in the matter. Consequently, given the uniquely specific facts of this
case, the critical public need for the Federal Government to support
disabled veterans, and the nature of this deregulatory action, the
Department has determined that there is good cause for interim final
rulemaking and that such action is in the public interest.
Under the Administrative Procedure Act (APA) (5 U.S.C. 553), the
Department generally offers interested parties the opportunity to
comment on proposed regulations. However, the APA provides that an
agency is not required to conduct notice and comment rulemaking when
the agency, for good cause, finds that notice and public comment
thereon are impracticable, unnecessary, or contrary to the public
interest (5 U.S.C. 553(b)(B)).
Section 437(a)(2) of the HEA provides that ``[a] borrower who has
been determined by the Secretary of Veterans Affairs to be unemployable
due to a service-connected condition and who provides documentation of
such determination to the Secretary of Education, shall be considered
permanently and totally disabled for the purpose of discharging such
borrower's loans under this subsection, and such borrower shall not be
required to present additional documentation for purposes of this
subsection.'' (emphasis added). The Senate Appropriations Committee
Report (S. Rep. No. 115-150, at 182 (2017)) directed ``the Secretary of
Education to enter into a Memorandum of Understanding with the
Secretaries of Defense and Veterans Affairs to automate the application
of loan benefits to eligible servicemembers and veterans using
information in existing Federal databases in a timely manner so that
servicemembers and veterans can receive the benefits due under law.''
To effectuate this automation, the Departments of Education and
Veterans Affairs entered into a data sharing agreement to enable the
Department of Education to identify eligible totally and permanently
disabled veterans. As this automation through the data sharing
agreement will fulfill the statutory requirement of providing
documentation from the Secretary of Veterans Affairs of a borrower's
unemployability due to a service-connected condition, borrowers will
not be required to submit additional documentation to the Secretary. As
a result of this automated process and the requirements of section
437(a)(2), which specifically states no additional documentation is to
be required, there will no longer be a need for, nor will the
Department have the discretion to require, a separate application from
identified borrowers. We are revising the regulations accordingly.
As the Court found in Metzenbaum v. Federal Energy Regulatory
Commission, 675 F.2d 1282, 1291 (D.C. Cir. 1982), the opportunity for
notice and comment where there is no discretion is ``unnecessary.'' Id.
(quoting 5 U.S.C. 553(b)(B)). The Court further stated that notice and
comment for such a nondiscretionary action ``might even have been
`contrary to the public interest,' given the expense that would have
been involved in a futile gesture.'' Id. See also Lake Carriers' Ass'n
v. E.P.A., 652 F.3d 1, 10 (D.C. Cir. 2011) (notice and comment
rulemaking ``would have served no purpose'' where EPA lacked the
authority to amend or
[[Page 65006]]
reject the conditions at issue). Therefore, there is good cause to
waive notice and comment rulemaking for these interim final
regulations.
In addition, under section 492 of the HEA (20 U.S.C. 1098a), all
regulations proposed by the Department for programs authorized under
title IV of the HEA are subject to negotiated rulemaking requirements.
Section 492(b)(2) of the HEA provides that negotiated rulemaking may be
waived for good cause when doing so would be ``impracticable,
unnecessary, or contrary to the public interest.'' Section 492(b)(2) of
the HEA also requires the Secretary to publish the basis for waiving
negotiations in the Federal Register at the same time as the
regulations in question are first published. There is likewise good
cause to waive the negotiated rulemaking requirement in this case,
since, as explained above, notice and comment rulemaking is unnecessary
in this case.
The APA also generally requires that regulations be published at
least 30 days before their effective date, but excepts from that
requirement rules which grant or recognize an exemption or relieve a
restriction (5 U.S.C. 553(d)(1)). Because these regulations relieve
restrictions on veterans by removing unintended administrative burdens,
this exception to the delayed effective date under the APA applies. The
CRA requires a major rule may take effect no sooner than 60 calendar
days after an agency submits a CRA report to Congress or the rule is
published in the Federal Register, whichever is later. 5 U.S.C.
801(a)(3)(A). However, the CRA creates limited exceptions to this
requirement. See id. Sec. 801(c); Sec. 808. An agency may invoke the
``good cause'' exception under Sec. 808(2) in the case of rules for
which the agency has found ``good cause'' under the APA, Sec.
553(b)(3)(B), to issue the rule without providing the public with an
advance opportunity to comment. As stated above the Department has
found good cause to issue this rule without notice and comment
rulemaking and thus we are not including the 60-day delayed effective
date in this rule.
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations will not have a
significant economic impact on a substantial number of small entities.
The U.S. Small Business Administration Size Standards define ``small
entities'' as for-profit or nonprofit institutions with total annual
revenue below $7,000,000 or, if they are institutions controlled by
small governmental jurisdictions (that are comprised of cities,
counties, towns, townships, villages, school districts, or special
districts), with a population of less than 50,000.
This regulation would not affect any small entities. Small entities
do not qualify as borrowers under these Federal loan programs, nor do
small entities provide or fund Federal loans or their discharge.
Paperwork Reduction Act of 1995
As part of its continuing effort to reduce paperwork and respondent
burden, the Department provides the general public and Federal agencies
with an opportunity to comment on proposed and continuing collections
of information in accordance with the Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public
understands the Department's collection instructions, respondents
provide the requested data in the desired format, reporting burden
(time and financial resources) is minimized, collection instruments are
clearly understood, and the Department can properly assess the impact
of collection requirements on respondents.
Sections 674.61, 682.402, and 685.213 of this interim final rule
contain information collection requirements. Under the PRA, the
Department has submitted a copy of these sections and an Information
Collections Request to the Office of Management and Budget (OMB) for
its review. This interim final rule does not impose any new information
collection burden. OMB previously approved the information collection
requirements under OMB control number 1845-0065. The forms that are
part of this information collection do not change as a result of this
interim final rule.
A Federal agency may not conduct or sponsor a collection of
information unless OMB approves the collection under the PRA and the
corresponding information collection instrument displays a currently
valid OMB control number. Notwithstanding any other provision of the
law, no person is required to comply with, or is subject to penalty for
failure to comply with, a collection of information if the collection
instrument does not display a currently valid OMB control number.
Sections 674.61(c), 682.402(c)(9), and 685.213(c)
Discussion: Currently the regulations pertain to a veteran's
cancellation or discharge of a Federal Perkins Loan Program, Federal
Family Education Loan Program, or Federal Direct Loan Program loan
based on total and permanent disability as certified by the U.S.
Department of Veterans Affairs (VA). This information has been
collected under OMB approved form control number 1845-0065. The current
regulations required a veteran to submit a separate application with
documentation from the VA. These regulatory changes eliminate the
application requirement where appropriate.
Requirements: These changes allow the Secretary to offer a Federal
student loan borrower who is identified from VA documentation as being
totally and permanently disabled a discharge of his or her loans
without submitting a separate application. The veteran may elect to
reject the discharge and continue to repay the loans.
Burden Calculation: These changes eliminate burden on the veteran.
The currently approved form, 1845-0065, estimates 30 minutes (.50
hours) to read, gather documentation, and complete the discharge
application. We estimate that annually approximately 10,000 veterans
would have submitted the application for discharge due to total
permanent disability. This regulatory change reduces the burden
assessed on the approved form by 5,000 hours (10,000 applicants x .50
hours = 5,000 hours). This would be a one-time reduction in burden. We
do not anticipate changing the Discharge Application currently in
renewal to remove the section applicable to a veteran's request for
such a discharge.
1845-0065 Discharge Application--Total and Permanent Disability
----------------------------------------------------------------------------------------------------------------
Number of Number of Burden per Total burden
Entity respondents responses response hours
----------------------------------------------------------------------------------------------------------------
Individual (Veteran)........................ -10,000 -10,000 .50 hours -5,000
----------------------------------------------------------------------------------------------------------------
[[Page 65007]]
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 a practical use;
Evaluating the accuracy of our estimate of 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.
OMB is required to make a decision concerning the collection of
information contained in this interim final rule 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 your comments by December 26, 2019.
Intergovernmental Review
This program is not subject to Executive Order 12372 and the
regulations in 34 CFR part 79.
Assessment of Educational Impact
Based on our own review, we have determined that this IFR does not
require transmission of information that any other agency or authority
of the United States gathers or makes available.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. You may
access the official edition of the Federal Register and the Code of
Federal Regulations at www.govinfo.gov. At this site you can view this
document, as well as all other documents of this Department published
in the Federal Register, in text or PDF. To use PDF you must have Adobe
Acrobat Reader, which is available free at the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at
www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
List of Subjects
34 CFR Part 674
Loan programs-education, Reporting and recordkeeping, Student aid.
34 CFR Part 682
Administrative practice and procedure, Colleges and Universities,
Loan programs-education, Reporting and recordkeeping requirements,
Student aid, Vocational education.
34 CFR Part 685
Administrative practice and procedure, Colleges and Universities,
Loan programs-education, Reporting and recordkeeping requirements,
Student aid, Vocational education.
Dated: November 22, 2019.
Betsy DeVos,
Secretary of Education.
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. 1070g, 1087aa-1087hh; Pub. L. 111-256, 124
Stat. 2643; unless otherwise noted.
0
2. Section 674.61 is amended by adding paragraph (c)(2)(x) to read as
follows:
Sec. 674.61 Discharge for death or disability.
* * * * *
(c) * * *
(2) * * *
(x) The Secretary will consider a borrower for whom data is
obtained from the Department of Veterans Affairs showing that the
borrower has a total and permanent disability as defined in Sec.
674.51(aa)(2) to be eligible for discharge and will not require
additional documentation to discharge the borrower's loans.
* * * * *
PART 682--FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFEL)
0
3. The authority citation for part 682 continues to read as follows:
Authority: 20 U.S.C. 1071-1087-4, unless otherwise noted.
0
4. Section 682.402 is amended by adding paragraph (c)(9)(xiii) to read
as follows:
Sec. 682.402 Death, disability, closed school, false certification,
unpaid refunds, and bankruptcy payments.
* * * * *
(c) * * *
(9) * * *
(xiii) The Secretary will consider a borrower for whom data is
obtained from the Department of Veterans Affairs showing that the
borrower is ``totally and permanently disabled'' as defined in
paragraph (2) of the definition of that term in Sec. 682.200(b)(2) to
be eligible for discharge) and will not require additional
documentation to discharge the borrower's loans.
* * * * *
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 1070g, 1087a, et seq., unless otherwise
noted.
0
6. Section 685.213 is amended by adding paragraph (c)(1)(v) to read as
follows:
Sec. 685.213 Total and permanent disability discharge.
* * * * *
(c) * * *
(1) * * *
(v) The Secretary will consider a borrower for whom data is
obtained from the Department of Veterans Affairs showing that the
borrower is ``totally and permanently disabled'' as defined in
paragraph (2) of the definition of that term in Sec. 685.102(b) to be
eligible for discharge and will not require additional documentation to
discharge the borrower's loans.
* * * * *
[FR Doc. 2019-25813 Filed 11-22-19; 4:15 pm]
BILLING CODE 4000-01-P