Federal Family Education Loan Program; Final Rule DEPARTMENT OF EDUCATION

SUMMARY: The Secretary amends the regulations for the Federal Family

Education Loan Program, formerly the Guaranteed Student Loan (GSL)

program. The final regulations are needed to delete a provision of the

regulations regarding the school closure plan requirement for certain

private schools.

EFFECTIVE DATE: These regulations take effect July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Pat Newcombe, Acting Chief, FFEL

Program Section, Loans Branch, Division of Policy Development, Policy,

Training, and Analysis Service, U.S. Department of Education, room

4310, ROB-3, 400 Maryland Avenue, SW., Washington, DC 20202-5449.

Telephone (202) 708-8242. Individuals who use a telecommunications

device for the deaf (TDD) may call the Federal Information Relay

Service at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern time,

Monday through Friday.

SUPPLEMENTARY INFORMATION: This amendment is needed to delete from the

regulations the school closure plan requirement for certain private

schools. On January 7, 1993, the Secretary issued final regulations

amending 34 CFR 682.600 to require private schools that do not qualify

as an ``institution of higher education'' under 34 CFR 600.4 and offer

an undergraduate nonbaccalaureate program designed to prepare students

for a particular vocation, trade or career field as a requirement for

participation in the FFEL Program to have a school closure plan in

place within six months of the effective date of April 13, 1993. The

regulations were intended to address a serious problem that occurs

whenever a school closes precipitously, leaving its students unable to

complete their programs of study, usually without any provision for

teaching out the affected students.

The issue was initially addressed in a notice of proposed

rulemaking (NPRM) published on June 5, 1989 (54 FR 24128). The NPRM

proposed that a school would be required to have a teachout agreement

with another participating school under which the second school would

agree to teach the closing school's students. This requirement would

have applied to all schools offering a program of study designed to

prepare students for a particular vocation, trade or career. The public

comments strongly opposed the ``teachout'' requirement and pointed out

that, in many circumstances, a teachout was not possible due to the

location of the school or the highly specialized nature of the course

work. Many commenters also identified alternatives to a teachout

arrangement. The Secretary decided, after extensive consultation with

the community, not to pursue a final regulation based on this NPRM.

On September 5, 1991 (56 FR 43978), the Secretary published a

second NPRM that would require schools to maintain a school closure

plan but would expand the options available to satisfy this

requirement. While this regulatory proposal also generated a

considerable amount of negative comment, the Secretary believed at that

time that the need to protect the interests of students outweighed the

possible negative impact of the regulations on affected schools. The

final regulation was published on January 7, 1993 (58 FR 3174).

Since publication of the final regulations, the Department has

received many objections to the regulatory requirement of a school

closure plan that were not raised during the public comment period. In

addition, the Department has been evaluating the necessity of these

regulations in light of other actions it is implementing or has

initiated to address the problems created by school closures. For

example, the Higher Education Amendments of 1992, Public Law 102-325,

amended the Higher Education Act (HEA) to strengthen ED's oversight of

institutions, including more frequent monitoring of the financial

stability of schools. In those cases where there is a risk of

precipitous closure, ED is already requiring surety arrangements to

cover potential losses to students and taxpayers. Public Law 102-325

also provides for cancellation of a borrower's obligation on a FFEL

Program loan if the borrower is unable to complete his or her program

of study because the institution closed. In light of additional

information provided to the Department and these legislative

developments, the Secretary has decided to withdraw 34 CFR 682.600(d).

In the Paperwork Reduction Act of 1980 section of the NPRM that was

published for this regulation in the September 5, 1991 Federal

Register, the Department indicated that there was an information

collection requirement under Sec. 682.600(d). The Department estimated

the annual public reporting burden for this collection of information

to be an average of one hour per response for 638 respondents,

including the time for reviewing instructions, searching existing data

sources, gathering and maintaining the data needed, and completing and

reviewing the collection of information. Based on an average salary of

$5.00 an hour for a staff person at a school covered by this

requirement, it would cost each covered school $5.00 to comply with

this provision. This was not an annual cost for each school. Based on

this estimate, deletion of this regulatory requirement would save the

covered schools each one hour of work at $5.00 per hour.

Waiver of Notice of Proposed Rulemaking

In accordance with section 431(b)(2)(A) of the General Education

Provisions Act (20 U.S.C. 1232(b)(2)(A)), and the Administrative

Procedure Act, 5 U.S.C. 553, it is the practice of the Secretary to

offer interested parties the opportunity to comment on proposed

regulations. However, since publication of the final regulations in 34

CFR 682.600(d) in the January 7, 1993 Federal Register, the Secretary

has received a substantial number of comments concerning the

implementation of the regulatory requirement for school closure plans.

As discussed above, significant cause has been shown to revoke

Sec. 682.600(d) as an inappropriate burden on the program community.

However, under section 482(c) of the Higher Education Act, such

revocation may take effect on July 1, 1994 only if published in final

form by May 1, 1994; otherwise the revocation will not take effect

until July 1995. Therefore, to avoid the delay that would be occasioned

by publication of a proposed rule, the Secretary has determined that

publication of a proposed rule is impracticable and contrary to the

public interest under 5 U.S.C. 553(b)(B).

Executive Order 12866

These final regulations have been reviewed in accordance with

Executive Order 12866. Under the terms of the order the Secretary has

assessed the potential costs and benefits of this regulatory action. In

assessing the potential costs and benefits--both quantitative and

qualitative--of these regulations, the Secretary has determined that

the benefits of the regulations justify the costs.

Assessment of Educational Impact

The Secretary has determined that the regulations in this document

do not require transmission of information that is being gathered by or

is available from any other agency or authority of the United States.

List of Subjects in 34 CFR Part 682

Administrative practices and procedure, Colleges and universities,

Loan programs-education, Reporting and recordkeeping requirements,

Student aid, Vocational education.

(Catalog of Federal Domestic Assistance Number 84.032, Federal

Family Education Loan Program)

Dated: March 18, 1994.

Richard W. Riley,

Secretary of Education.

The Secretary amends part 682 of title 34 of the Code of Federal

Regulations as follows:

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

1. The authority citation for part 682 continues to read as

follows:

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

Sec. 682.600 [Amended]

2. Section 682.600 is amended by removing paragraph (d) and

redesignating paragraph (e) as paragraph (d).

[FR Doc. 94-8523 Filed 4-8-94; 8:45 am]

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