[Federal Register: November 1, 2000 (Volume 65, Number 212)]
[Rules and Regulations]
[Page 65623-65630]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01no00-21]
[[Page 65623]]
-----------------------------------------------------------------------
Part VI
Department of Education
-----------------------------------------------------------------------
34 CFR Parts 682 and 685
Federal Family Education Loan Program and William D. Ford Federal
Direct Loan Program; Final Rule
[[Page 65624]]
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
34 CFR Parts 682 and 685
RIN 1845-AA11
Federal Family Education Loan Program and William D. Ford Federal
Direct Loan Program
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: The Secretary amends the Federal Family Education Loan (FFEL)
Program and the William D. Ford Federal Direct Loan (Direct Loan)
Program regulations. These final regulations implement changes made to
the Higher Education Act of 1965, as amended, (HEA) by the Higher
Education Amendments of 1998 (1998 Amendments). The final regulations
implement the teacher loan forgiveness programs in the FFEL and Direct
Loan programs that were included in the 1998 Amendments. In addition,
these final regulations make conforming changes for both the FFEL
Program and the Direct Loan Program, as well as unrelated technical
amendments to the Direct Loan Program regulations.
DATES: These regulations are effective July 1, 2001.
FOR FURTHER INFORMATION CONTACT: For the FFEL Program, Ms. Beth
Grebeldinger, or for the Direct Loan Program, Mr. Don Watson, U.S.
Department of Education, 400 Maryland Avenue, SW., Room 3045, Regional
Office Building #3, Washington, DC 20202-5346. Telephone: (202) 708-
8242. If you use a telecommunications device for the deaf (TDD), you
may call the Federal Information Relay Service (FIRS) at 1-800-877-
8339.
Individuals with disabilities may obtain this document in an
alternate format (e.g., Braille, large print, audiotape, or computer
diskette) on request to one of the contact persons listed in the
preceding paragraph.
SUPPLEMENTARY INFORMATION: These regulations implement certain changes
made to the HEA by the 1998 Amendments (Pub.L. 105-244) that affect the
FFEL and Direct Loan programs.
On August 10, 2000, the Secretary published a notice of proposed
rulemaking (NPRM) for the FFEL and Direct Loan programs in the Federal
Register (65 FR 49124).
In the preamble to the NPRM, on pages 49125 to 49127, the Secretary
discussed the proposed regulations that would implement the teacher
loan forgiveness program in the FFEL and Direct Loan programs. These
include the following:
Amending Secs. 682.211(h)(2) and (3), 682.215(e), 685.205(a)(5),
and 685.205(b)(6) to allow some borrowers to request forbearance while
performing qualifying teaching service, and during the submission and
processing of their applications for teacher loan forgiveness.
Amending Secs. 682.215(a), 685.212(h), and 685.217(a) to reflect
sections 428J and 460 of the HEA, which established teacher loan
forgiveness programs for certain borrowers in the FFEL Direct Loan
programs.
Amending Secs. 682.215(b) and 685.217(b) to provide specific
definitions for the terms ``academic year'', ``elementary school'',
``full-time'', ``secondary school'', and ``teacher'' for purposes of
the teacher loan forgiveness program.
Amending Secs. 682.215(c) and 685.217(c) to provide that to qualify
for the teacher loan forgiveness program a borrower must have been
employed full-time for five consecutive complete years in a low-income
elementary or secondary school that has been listed in a designated
Department directory.
Amending Secs. 682.215(d) and 685.217(d) to provide that $5,000 is
the maximum amount that may be forgiven for an individual teacher under
these programs.
Amending Secs. 682.215(f) and 685.217(e) to explain the application
process for both the borrower and the loan holder.
Analysis of Comments and Changes
The regulations in this document were developed through the use of
negotiated rulemaking. Section 492 of the HEA requires that, before
publishing any proposed regulations to implement programs under Title
IV of the HEA, the Secretary obtain public involvement in the
development of the proposed regulations. After obtaining advice and
recommendations, the Secretary must conduct a negotiated rulemaking
process to develop the proposed regulations.
These regulations were published in proposed form on August 10,
2000, following completion of the negotiated rulemaking process. The
Secretary invited comments on the proposed regulations by September 25,
2000. In response to the Secretary's invitation in the NPRM, 10 parties
submitted comments on the proposed regulations. An analysis of the
comments and of the changes in the regulations since publication of the
NPRM follows.
We discuss substantive issues under the sections of the regulations
to which they pertain. Generally, we do not address technical and other
minor changes--and suggested changes the law does not authorize the
Secretary to make.
Section 682.215(a)--General
Comment: One commenter requested additional information regarding
the regulatory requirement that the loan for which the borrower is
requesting forgiveness must have been made prior to the end of the
fifth year of qualifying teaching service.
Discussion: The regulations require that the loan for which
forgiveness is sought must have been made prior to the end of the five-
year qualifying teaching service. This requirement was included to be
consistent with the stated intent of the statute that the teacher loan
forgiveness programs encourage individuals to enter and continue in the
teaching profession. We believe that there needs to be a safeguard
against the possibility that a borrower, who after meeting the teaching
requirements of the forgiveness program, quits teaching, returns to
school to train for another profession and then asks to have $5,000 in
loans for the new training forgiven based on that earlier teaching. To
avoid this situation, the regulations require that loans for which
forgiveness is being sought must have been made prior to the end of the
qualifying five-year teaching service.
Changes: None.
Comment: Four commenters recommended modifying Sec. 682.215(a) to
clarify that $5,000 is the total amount for all loans that a borrower
may be eligible to have forgiven, not a per program amount.
Discussion: We agree that the regulations would be clearer with the
recommended change.
Change: We have revised the language in both Sec. 682.215(a) and
Sec. 685.217(a) to state that the combined total forgiveness limit is
$5,000 for loans in the FFEL or Direct Loan programs.
Section 682.215(c)--Borrower Eligibility
Comment: Four commenters stated that they believed that the
discussion in the preamble to the NPRM, regarding when the borrower's
qualifying teaching at the school begins, seemed contradictory to the
statute and the proposed regulations and requested clarification.
Discussion: To clarify, if the school at which a borrower is
performing qualifying teaching is not a designated eligible low-income
school when the borrower begins the teaching service, but becomes such
a school while the borrower is performing qualifying
[[Page 65625]]
teaching, the required five years begins from the point that the school
gains the designated eligible low-income school status. Any years of
teaching prior to that designation do not apply to the five complete,
consecutive years required for forgiveness. On the other hand, if an
eligible, designated school loses its designation while the borrower is
teaching there, any continuous subsequent years of qualified teaching
service at that same school may be included in the five-year
requirement.
Change: None.
Comment: Three commenters suggested specifically including criteria
to Sec. 682.215(c)(3) and (4) to make special education teachers
eligible for the loan forgiveness based solely on their role as a
special education teacher.
Discussion: The regulations that the commenters wish to revise are
based directly on the statute and the requested change is not supported
by the statutory language. Special education teaching is not one of the
specific criteria included in the statute, but the teacher may qualify
for the loan forgiveness program if the qualifying teaching otherwise
meets the statutory requirements. The regulations do specifically
include special education teachers in the definition of a teacher, so
if a special education teacher met the other criteria in paragraphs
(c)(3) or (c)(4), he or she could be eligible for teacher loan
forgiveness.
Change: None.
Comment: One commenter suggested that the regulations provide
certification criteria for school officials to follow to ensure
consistent, objective and fair determinations of a teacher's
eligibility to participate in the loan forgiveness program.
Discussion: We do not see a need for such regulatory guidance. The
statute requires that the chief administrative officer of the school
determine that a borrower has met the criteria outlined in the statute
and the regulations. We believe that the criteria are sufficiently
clear and that school administrators will be able to provide the needed
certifications. Our experience with the certifications used in the
Federal Perkins Loan Program, while based on slightly different
eligibility criteria, has shown that school administrators can apply
the required standards without prescriptive regulatory guidance.
Change: None.
Comment: One commenter indicated that Sec. 682.215(c)(5) did not
address ``gaps'' that may occur between the end of an accepted
condition that would not constitute a ``break'' in the consecutive
complete years of teaching required by the law and the resumption of
qualified teaching. This commenter requested that these regulations
allow borrowers to delay their return to qualifying teaching service to
the beginning of the next academic year if necessary, as was done in
connection with the special grace period for borrowers returning from
active duty military service.
Discussion: We agree that due to the scheduling of academic years,
it may be impossible for a teacher to resume teaching immediately at
the conclusion of one of the exempted conditions. Such ``gap'' periods
should not penalize a borrower who met an exempted condition.
Change: We have made a change in Secs. 682.215(c)(6) and
685.217(c)(6) to ensure that these gaps are not treated as a break in
qualifying service.
Comment: One commenter suggested an expansion of conditions that
would not constitute a break in the consecutive, complete qualifying
teaching service. The commenter argued that there are other conditions
over which the teacher has no control. Among the conditions suggested
were: periods of protracted labor disputes, natural disasters or
emergencies, and funding shortfalls.
Discussion: While we acknowledge that these conditions are events
over which the teacher may have no control, it was not our intent to
address every possible event that could disrupt the school year. We
believe that if the events listed by the commenter occur, the school or
school district would extend the academic year or declare that the
academic year has been completed early. Either of these results would
qualify the year as a complete academic year for purposes of teacher
loan forgiveness.
Change: None.
Comment: One commenter suggested that the school's certifying chief
administrative official should have greater flexibility in determining
the relationship of the studies the borrower undertakes in returning to
postsecondary education while taking a break in their qualifying
teaching if the borrower returns to qualifying teaching.
Discussion: We believe that it is appropriate to require that the
teacher undertake education that is ``directly related'' to the
performance of the service that the statute wants to support. We do not
think it would be appropriate to allow the borrower to engage in
postsecondary education that is unrelated to the performance of the
qualifying service and still receive the loan forgiveness.
Change: None.
Sections 682.215(d) and 685.217(d)--Forgiveness Amount
Comment: Three commenters suggested changing the regulations to
clarify that a borrower with a consolidation loan qualifies for loan
forgiveness only if the consolidation loan is outstanding and the
forgiveness amount relates to a qualifying loan (a subsidized or
unsubsidized loan made under the FFEL Program or the Direct Loan
Program) that was repaid by the Consolidation Loan.
Discussion: We agree that the regulations need to be clarified to
describe the relationship between the consolidation loan and the
underlying loans for purposes of the loan forgiveness.
Change: We have changed Secs. 682.215(d)(1) and 685.217(d)(1) to
clarify how loan forgiveness affects consolidation loans.
Comment: Three commenters suggested clarifying that the forgiveness
amount total of $5,000 includes both outstanding principal and accrued
interest.
Discussion: We agree that this change would clarify the
regulations.
Change: We have made the suggested change to Secs. 682.215(d)(2)
and 685.217(d)(2) to clarify that the forgiveness amount limit of
$5,000 applies to both outstanding principal and accrued interest.
Comment: Four commenters suggested revising Sec. 682.215(d)(3) to
clarify that payments received from a borrower or on behalf of a
borrower would not be refunded as directed in the statute.
Discussion: Proposed Secs. 682.215(d)(3) and 685.217(d)(3) reflect
the statutory provision that payments received from a borrower are not
refunded if the borrower qualifies for loan forgiveness. However, the
statutory provision also applies to payments made on behalf of the
borrower and we agree with the commenters that the regulations should
make it clear that payments made on the borrower's behalf also will not
be refunded.
Change: We have modified Secs. 682.215(d)(3) and 685.217(d)(3) to
clarify that payments made on a borrower's behalf are not returned if
the borrower qualifies for loan forgiveness.
Section 682.215(e)--Authorized Forbearance During Qualifying Teaching
Service and Discharge Processing
Comment: Two commenters questioned the interchangeable use of
``holder'' and ``lender'' in the FFEL proposed regulations. They argued
that
[[Page 65626]]
this practice creates consistency and accuracy problems.
Discussion: We agree that it is important to use the terms
``lender'' and ``holder'' carefully since the term ``holder'' includes
parties who are not included in the definition of a lender.
Change: Throughout these regulations we will use the term
``holder'' since the obligations placed on the loan holders in the
teacher loan forgiveness program do not just apply to lenders but to
all loan holders.
Comment: Four commenters proposed using the term ``must'' in
Sec. 682.215(e)(1), as well as redesignating paragraphs. These changes
would require a loan holder to provide an annual forbearance to a
borrower for certain qualified periods without a request from the
borrower. The commenters noted that a borrower is not required to
request a forbearance in connection with other loan cancellation
opportunities such as the unpaid refund, false certification, and
closed school discharges.
Discussion: The commenter incorrectly assumes that the regulations
do not require the loan holder to grant a forbearance to a borrower who
may qualify for the teacher loan forgiveness program. Section
682.215(e)(1) includes a cross-reference to the mandatory forbearance
section of the FFEL regulations. Therefore, the use of ``must'' is not
necessary. We also do not agree with the commenter's suggestion that a
borrower should not have to request the forbearance. This mandatory
forbearance requires an annual request from the borrower, in part to
allow the loan holder to ensure that the borrower still meets the
qualifications for the discharge. The request also allows the borrower
to certify his or her intent to satisfy the five-year teaching
requirement. In addition, since the $5,000 discharge will not, for many
borrowers, extinguish their entire debt, a borrower may determine that
it is better to make payments for a period of time and not request the
forbearance. The requirement for an annual request gives the borrower
an opportunity to consider his or her options. As to the commenter's
statement that other loan cancellation programs do not require a
borrower request, we note that those loan cancellations are based on
situations relating to the loan that would be reflected in records that
are otherwise available to the holder. The borrower's qualification for
a teacher loan forgiveness and the related forbearance would not be
reflected in other information available to the loan holder.
Change: None.
Comment: Some commenters also suggested that lenders only be
required to review the borrower's balance at the time the initial
forbearance request is submitted instead of multiple times throughout
the qualifying five-year teaching period.
Discussion: As noted earlier, these regulations permit the borrower
to request a forbearance for each year of the qualifying service. As
discussed in the preamble to the NPRM, this mandatory forbearance was
added to ensure that borrowers with a low balance loan who qualify for
loan forgiveness would not lose the maximum benefit by continuing to
make monthly payments. The annual request allows the lender to
determine if capitalized interest will create an outstanding balance
for the borrower at the end of the five-year period. It also provides
an opportunity for the lender to counsel the borrower regarding the
effects of capitalized interest and to advise the borrower of any
balance that may remain outstanding at the conclusion of the qualifying
teaching period.
Change: None.
Section 682.215(f)--Application and processing
Comment: Three commenters suggested adding an additional cross-
reference to Sec. 682.215(f)(2)(i) to include all references to
certifying officials. Another commenter suggested revising the language
of Sec. 682.215(f)(2)(i) to make it clear that the application may
include the certifications of the borrower and the appropriate chief
administrative official or officials.
Discussion: With respect to the comment about adding a cross-
reference, we believe that removing all cross-references is the better
approach to address the commenters' concerns. We agree with the
commenter who expressed concern that the proposed rule implied that
there would be multiple application and certification forms.
Change: Section 682.215(f)(2)(i) has been modified by removing the
cross-references and broadening the language regarding the application
to address the commenters' concerns.
Comment: Three commenters recommended adding to the regulations a
provision allowing late filing by a lender of the request for payment
with the guaranty agency. One commenter suggested that for late filings
the lender would be responsible for repaying the Secretary all interest
and special allowance for the late period.
Discussion: We agree and thank the commenters for pointing out this
oversight.
Change: A new paragraph (iii) has been added to Sec. 682.215(f)(2)
to address the comments.
Comment: One commenter suggested clarifying that forgiveness
payments should first be applied to unsubsidized and then to subsidized
Federal Consolidation loans.
Discussion: The FFEL Program does not distinguish between
subsidized and unsubsidized Federal Consolidation Loans. Thus, this
change will not be made.
Change: None
Comment: One commenter requested an addition to the regulations to
allow a guaranty agency that holds a defaulted loan that is eligible
for this forgiveness to be able to recover from the Department the
complement of the reinsurance percentage paid on the applicable loan
amount. The commenter noted that this change would be consistent with
the treatment provided in other loan discharge situations.
Discussion: Since a defaulted loan for which the borrower has made
satisfactory arrangement may be eligible for discharge under these
programs, we agree with the commenter.
Change: We have added a new paragraph (g) to Sec. 682.215 to
reflect this correction.
Executive Order 12866
We have reviewed these final regulations in accordance with
Executive Order 12866. Under the terms of the order we have assessed
the potential costs and benefits of this regulatory action.
The potential costs associated with the final regulations are those
resulting from statutory requirements and those we have determined as
necessary for administering these programs effectively and efficiently.
Elsewhere in this SUPPLEMENTARY INFORMATION section, we identify and
explain any burdens specifically associated with information collection
requirements.
In assessing the potential costs and benefits--both quantitative
and qualitative--of this regulatory action, we have determined that the
benefits would justify the costs.
We have also determined that this regulatory action does not unduly
interfere with State, local, and tribal governments in the exercise of
their governmental functions.
We summarized the potential costs and benefits of these final
regulations in the preamble to the NPRM (65 FR 49127).
Paperwork Reduction Act of 1995
The Paperwork Reduction Act of 1995 does not require you to respond
to a
[[Page 65627]]
collection of information unless it displays a valid OMB control
number. We display the valid OMB control number assigned to the
collection of the information in these final regulations at the end of
the affected section of the regulations.
Assessment of Educational Impact
Based on the response to the NPRM and on our review, we have
determined that these 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 either the following
sites:
http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html
To use PDF you must have Adobe Acrobat Reader, which is available free
at either of the previous sites. 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.access.gpo.gov/nara/index.html
(Catalog of Federal Domestic Assistance Numbers 84.032 Federal
Family Education Loan Program, and 84.268 William D. Ford Federal
Direct Loan Program)
List of Subjects in 34 CFR Parts 682 and 685
Administrative practice and procedure, Colleges and universities,
Education, Loan programs-education, Reporting and recordkeeping
requirements, Student aid, Vocational education.
Dated: October 24, 2000.
Richard W. Riley,
Secretary of Education.
For the reasons stated in the preamble, the Secretary amends title
34 of the Code of Federal Regulations by revising parts 682 and 685 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.
2. Section 682.211 is amended as follows:
A. In paragraph (h)(2)(ii)(B), by removing the period at the end
and adding in its place, ``; or''.
B. By adding a new paragraph (h)(2)(ii)(C).
C. By adding a new paragraph (h)(3)(iii).
The additions and revisions read as follows:
Sec. 682.211 Forbearance.
* * * * *
(h) * * *
(2) * * *
(ii) * * *
(C) Is performing the type of service that would qualify the
borrower for loan forgiveness and associated forbearance under the
requirements of the teacher loan forgiveness program in Sec. 682.215.
* * * * *
(3) * * *
(iii) Before granting a forbearance to a borrower under paragraph
(h)(2)(ii)(C) of this section, the lender must require the borrower
to--
(A) Submit documentation for the period of the annual forbearance
request showing the beginning and anticipated ending dates that the
borrower is expected to perform, for that year, the type of service
described in Sec. 682.215(c); and
(B) Certify the borrower's intent to satisfy the requirements of
Sec. 682.215(c).
(Approved by the Office of Management and Budget under control
number 1845-0020)
* * * * *
3. A new Sec. 682.215 is added to read as follows:
Sec. 682.215 Teacher loan forgiveness program.
(a) General. The teacher loan forgiveness program is intended to
encourage individuals to enter and continue in the teaching profession.
For new borrowers, the Secretary repays up to a combined total of
$5,000 of subsidized and unsubsidized Federal Stafford Loans, Direct
Subsidized Loans, Direct Unsubsidized Loans, and in certain cases,
Federal Consolidation Loans or Direct Consolidation Loans. The
forgiveness program is only available to a borrower who has no
outstanding loan balance under the FFEL Program or the Direct Loan
Program on October 1, 1998 or who has no outstanding loan balance on
the date he or she obtains a loan after October 1, 1998. In addition,
the borrower must have been employed as a full-time teacher for five
consecutive complete academic years, at least one of which was after
the 1997-1998 academic year, in certain eligible elementary or
secondary schools that serve low-income families. The loan for which
forgiveness is sought must have been made prior to the end of the
borrower's fifth year of qualifying teaching service.
(b) Definitions. The following definitions apply to this section:
Academic year means one complete school year at the same school, or
two complete and consecutive half years at different schools, or two
complete and consecutive half years from different school years at
either the same school or different schools. Half years exclude summer
sessions and generally fall within a twelve-month period. For schools
that have a year-round program of instruction, nine months is
considered an academic year.
Elementary school means a public or nonprofit private school that
provides elementary education as determined by State law or the
Secretary if that school is not in a State.
Full-time means the standard used by a State in defining full-time
employment as a teacher. For a borrower teaching in more than one
school, the determination of full-time is based on the combination of
all qualifying employment.
Secondary school means a public or nonprofit private school that
provides secondary education as determined by State law or the
Secretary if the school is not in a State.
Teacher means a person who provides direct classroom teaching or
classroom-type teaching in a non-classroom setting, including Special
Education teachers.
(c) Borrower eligibility. (1) A borrower may obtain loan
forgiveness under this program if he or she has been employed as a
full-time teacher for five consecutive complete academic years, at
least one of which was after the 1997-1998 academic year, in an
elementary or secondary school that--
(i) Is in a school district that qualifies for funds under title I
of the Elementary and Secondary Education Act of 1965, as amended;
(ii) Has been selected by the Secretary based on a determination
that more than 30 percent of the school's total enrollment is made up
of children who qualify for services provided under title I; and
(iii) Is listed in the Annual Directory of Designated Low-Income
Schools for Teacher Cancellation Benefits. If this directory is not
available before May 1 of any year, the previous year's directory may
be used.
(2) If the school at which the borrower is employed meets the
requirements specified in paragraph (c)(1) of this
[[Page 65628]]
section for at least one year of the borrower's five consecutive
complete academic years of teaching and the school fails to meet those
requirements in subsequent years, those subsequent years of teaching
qualify for purposes of this section for that borrower.
(3) A borrower who is employed as an elementary school teacher must
demonstrate knowledge and teaching skills in reading, writing,
mathematics, and other areas of the elementary school curriculum, as
certified by the chief administrative officer of the school in which
the borrower was employed.
(4) A borrower who is employed as a secondary school teacher must
teach in a subject area that is relevant to the borrower's academic
major as certified by the chief administrative officer of the school in
which the borrower was employed.
(5) The academic year may be counted as one of the borrower's five
consecutive complete academic years if the borrower completes at least
one-half of the academic year and the borrower's employer considers the
borrower to have fulfilled his or her contract requirements for the
academic year for the purposes of salary increases, tenure, and
retirement if the borrower is unable to complete an academic year due
to--
(i) A return to postsecondary education, on at least a half-time
basis, that is directly related to the performance of the service
described in this section;
(ii) A condition that is covered under the Family and Medical Leave
Act of 1993 (FMLA) (19 U.S.C. 2654); or
(iii) A call or order to active duty status for more than 30 days
as a member of a reserve component of the Armed Forces named in section
10101 of title 10, United States Code.
(6) A borrower's period of postsecondary education, qualifying FMLA
condition, or military active duty as described in paragraph (c)(5) of
this section, including the time necessary for the borrower to resume
qualifying teaching no later than the beginning of the next regularly
scheduled academic year, does not constitute a break in the required
five consecutive years of qualifying teaching service.
(7) A borrower who taught in more than one qualifying school during
an academic year and demonstrates that the combined teaching was the
equivalent of full-time, as supported by the certification of one or
more of the chief administrative officers of the schools involved, is
considered to have completed one academic year of qualifying teaching.
(8) A borrower is not eligible for teacher loan forgiveness on a
defaulted loan unless the borrower has made satisfactory repayment
arrangements to re-establish title IV eligibility, as defined in
Sec. 682.200.
(9) A borrower may not receive loan forgiveness for qualifying
teaching service under this section if the borrower receives a benefit
for the same teaching service under subtitle D of title I of the
National and Community Service Act of 1990.
(d) Forgiveness amount. (1) A qualified borrower is eligible for
forgiveness of up to $5,000 of the aggregate amount of a borrower's
subsidized or unsubsidized Federal Stafford or Federal Consolidation
Loan obligation that is outstanding after the borrower completes his or
her fifth consecutive complete academic year of teaching as described
in paragraph (c) of this section. Only the outstanding portion of the
consolidation loan that was used to repay an eligible subsidized or
unsubsidized Federal Stafford loan, an eligible Direct Subsidized Loan,
or an eligible Direct Unsubsidized Loan qualifies for loan forgiveness
under this section.
(2) A borrower may not receive more than a total of $5,000 in loan
forgiveness for outstanding principal and accrued interest under both
this section and under section 34 CFR 685.217.
(3) The holder does not refund payments that were received from or
on behalf of a borrower who qualifies for loan forgiveness under this
section.
(e) Authorized forbearance during qualifying teaching service and
discharge processing. (1) At the borrower's request, a holder grants a
forbearance--
(i) Under Sec. 682.211(h)(2)(ii)(C) and (h)(3)(iii), in annual
increments for each of the years of qualifying teaching service, if the
holder believes, at the time of each annual request, that the expected
cancellation amount will satisfy the anticipated remaining outstanding
balance on the loan at the time of the expected cancellation;
(ii) For a period not to exceed 60 days while the holder is
awaiting a completed teacher loan forgiveness application from the
borrower; and
(iii) For the period beginning on the date the holder receives a
completed loan forgiveness application to the date the holder receives
either a denial of the request or the loan discharge amount from the
guaranty agency, in accordance with paragraph (f) of this section.
(2) At the conclusion of a forbearance authorized under paragraph
(e)(1) of this section, the holder must resume collection activities
and may capitalize any interest accrued and not paid during the
forbearance period in accordance with Sec. 682.202(b).
(3) Nothing in paragraph (e) of this section restricts holders from
offering other forbearance options to borrowers who do not meet the
requirements of paragraph (e)(1)(i) of this section.
(f) Application and processing. (1) A borrower, after completing
the qualifying teaching service, requests loan forgiveness from the
holder of the loan on a form approved by the Secretary.
(2)(i) The holder must file a request for payment with the guaranty
agency on a teacher forgiveness discharge no later than 60 days after
the receipt, from the borrower, of a completed teacher loan forgiveness
application.
(ii) When filing a request for payment on a teacher forgiveness
discharge, the holder must provide the guaranty agency with the
completed loan forgiveness application submitted by the borrower and
any required supporting documentation.
(iii) If the holder files a request for payment later than 60 days
after the receipt of the completed teacher loan forgiveness application
form, interest that accrued on the loan after the expiration of the 60-
day filing period is ineligible for reimbursement by the Secretary, and
the holder must repay all interest and special allowance received on
the loan for periods after the expiration of the 60-day filing period.
The holder cannot collect from the borrower any interest that is not
paid by the Secretary under this paragraph.
(3)(i) Within 45 days of receiving the holder's request for
payment, the guaranty agency must determine if the borrower meets the
eligibility requirements for loan forgiveness under this section and
must notify the holder of its determination of the borrower's
eligibility for loan forgiveness under this section.
(ii) If the guaranty agency approves the discharge, it must, within
the same 45-day period, pay the holder the amount of the discharge, up
to $5,000, subject to paragraphs (c)(9), (d)(1) and (d)(2) of this
section.
(4) After being notified by the guaranty agency of its
determination of the eligibility of the borrower for the discharge, the
holder must, within 30 days, inform the borrower of the determination.
If the discharge is approved, the holder must also provide the borrower
with information regarding any new repayment terms of remaining loan
balances.
(5) Unless otherwise instructed by the borrower, the holder must
apply the proceeds of the teacher forgiveness discharge first to any
outstanding
[[Page 65629]]
unsubsidized Federal Stafford loan balances, next to any outstanding
subsidized Federal Stafford loan balances, then to any eligible
outstanding Federal Consolidation loan balances.
(g) Claims for reimbursement from the Secretary on loans held by
guaranty agencies. In the case of a teacher loan forgiveness discharge
applied to a defaulted loan held by the guaranty agency, the Secretary
pays the guaranty agency a percentage of the amount discharged that is
equal to the complement of the reinsurance percentage paid on the loan.
The payment of up to $5,000 may also include interest that accrues on
the discharged amount during the period from the date on which the
guaranty agency received payment from the Secretary on a default claim
to the date on which the guaranty agency determines that the borrower
is eligible for the teacher loan forgiveness discharge. (Approved by
the Office of Management and Budget under control number 1845-0020)
(Authority: 20 U.S.C. 1078-10)
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
4. The authority citation for Part 685 continues to read as
follows:
Authority: 20 U.S.C. 1087a et seq., unless otherwise noted.
Sec. 685.102 [Amended]
5. Section 685.102(b) is amended in paragraph (2) of the definition
of ``Satisfactory repayment arrangement'' by removing the reference to
``34 CFR 685.215(d)(1)(ii)(E)'' and adding, in its place, ``34 CFR
685.220(d)(1)(ii)(E)''.
Sec. 685.200 [Amended]
6. Section 685.200 is amended by:
A. Removing from paragraph (a)(1)(v) ``34 CFR 668.7(b)'' and
adding, in its place, ``34 CFR 668.32(e)(2) or (3)''.
B. Removing from paragraph (b)(1)(iv) ``34 CFR 668.7'' and adding,
in its place ``34 CFR 668.32(g)''.
C. Removing from paragraph (c) ``Sec. 685.215(d)(1)(ii)(F)'' and
adding, in its place, ``685.220(d)(1)(ii)(F)''.
Sec. 685.201 [Amended]
7. Section 685.201(c)(2) is amended by removing the reference to
``Sec. 685.216'' and by adding, in its place ``Sec. 685.220''.
8. Section 685.205 is amended by:
A. Redesignating paragraph (a)(5) as (a)(6).
B. Adding a new paragraph (a)(5).
C. Removing from paragraph (b)(6)(i) the reference to
``Sec. 685.213'' and adding, in its place, ``Sec. 685.214''.
D. Removing from paragraph (b)(6)(ii) the reference to
``Sec. 685.214'' and adding, in its place, ``Sec. 685.215''.
E. Removing from paragraph (b)(6)(iii) the reference to
``Sec. 685.215; or'' and adding, in its place, ``Sec. 685.216;''.
F. By redesignating paragraph (b)(6)(iv), as paragraph (b)(6)(v).
G. By adding a new paragraph (b)(6)(iv).
The additions read as follows:
Sec. 685.205 Forbearance.
(a) * * *
(5) The borrower--
(i) Is performing the type of service that would qualify the
borrower for loan forgiveness under the requirements of the teacher
loan forgiveness program in Sec. 685.217; and
(ii) Is required, by the Secretary, before a forbearance is granted
under Sec. 685.205(a)(5)(i) to--
(A) Submit documentation for the period of the annual forbearance
request showing the beginning and ending dates that the borrower is
expected to perform, for that year, the type of service described in
Sec. 685.217(c); and
(B) Certify the borrower's intent to satisfy the requirements of
Sec. 685.217(c).
* * * * *
(b) * * *
(6) * * *
(iv) Under Sec. 685.217; or
(Approved by the Office of Management and Budget under control
number 1845-0021)
* * * * *
Sec. 685.210 [Amended]
9. Section 685.210(b)(2)(ii) is amended by removing the reference
to ``Sec. 685.209(d)(2)'' and by adding, in its place
``Sec. 685.209(c)(4)''.
Sec. 685.211 [Amended]
10. Section 685.211(e)(4) is amended by removing the reference to
``Sec. 685.215'' and by adding, in its place, ``Sec. 685.220''.
11. Section 685.212 is amended by:
A. Removing from paragraph (d) the reference to ``Sec. 685.213''
and adding, in its place, ``Sec. 685.214''.
B. Removing from paragraph (e) the reference to ``Sec. 685.214''
and adding, in its place, ``Sec. 685.215''.
C. Removing from paragraph (f) the reference to ``Sec. 685.215''
and adding, in its place, ``Sec. 685.216''.
D. By adding a new paragraph (h).
The addition reads as follows:
Sec. 685.212 Discharge of a loan obligation.
* * * * *
(h) Teacher loan forgiveness program. If a new borrower meets the
requirements in Sec. 685.217, the Secretary repays up to $5,000 of the
borrower's Direct Subsidized Loans, Direct Unsubsidized Loans, and, in
certain cases, Direct Consolidation Loans.
Secs. 685.214, 685.215, 685.216 [Redesignated as Secs. 685.215,
685.216, and 685.220]
12. Sections 685.214, 685.215, and 685.216 are redesignated as
Secs. 685.215, 685.216, and 685.220, respectively.
Sec. 685.213 [Redesignated as Sec. 685.214, Sec. 685.213 Reserved]
13. Section 685.213 is redesignated as Sec. 685.214, and
Sec. 685.213 is reserved.
Sec. 685.215 [Amended]
14. In Sec. 685.215, paragraph (c)(5)(ii) is amended by removing
the references to ``Sec. 685.213(d)'' and ``Sec. 685.213(e)'' and
adding, in their place, ``Sec. 685.214(d)'' and ``Sec. 685.214(e)'',
respectively.
Sec. 685.216 [Amended]
15. In Sec. 685.216, paragraph (c)(1)(iii)(B) is amended by
removing the references to ``Sec. 685.213(d)'' and ``Sec. 685.213(e)''
and adding, in their place, ``Sec. 685.214(d)'' and
``Sec. 685.214(e)'', respectively.
16. A new Sec. 685.217 is added to read as follows:
Sec. 685.217 Teacher loan forgiveness program.
(a) General. The teacher loan forgiveness program is intended to
encourage individuals to enter and continue in the teaching profession.
For new borrowers, the Secretary will repay up to a combined total of
$5,000 of subsidized and unsubsidized Federal Stafford Loans, Direct
Subsidized Loans, Direct Unsubsidized Loans, and, in certain cases,
Federal Consolidation Loans or Direct Consolidation Loans. The
forgiveness program is only available to a borrower who has no
outstanding loan balance under the FFEL Program or the Direct Loan
Program on October 1, 1998 or who has no outstanding loan balance on
the date he or she obtains a loan after October l, 1998. In addition,
the borrower must have been employed as a full-time teacher for five
consecutive complete academic years, at least one of which was after
the 1997-1998 academic year, in certain eligible elementary or
secondary schools that serve low-income families. The loan for which
the borrower is seeking forgiveness must have been made prior to the
end of the fifth year of qualifying teaching service.
(b) Definitions. The following definitions apply to this section:
[[Page 65630]]
Academic year means one complete school year at the same school, or
two complete and consecutive half years at different schools, or two
complete and consecutive half years from different school years at
either the same school or different schools. Half years exclude summer
sessions and generally fall within a twelve-month period. For schools
that have a year-round program of instruction, a minimum of nine months
is considered an academic year.
Elementary school means a public or nonprofit private school that
provides elementary education as determined by State law or the
Secretary if that school is not in a State.
Full-time means the standard used by a State in defining full-time
employment as a teacher. For a borrower teaching in more than one
school, the determination of full-time is based on the combination of
all qualifying employment.
Secondary school means a public or nonprofit private school that
provides secondary education as determined by State law or the
Secretary if the school is not in a State.
Teacher means a person who provides direct classroom teaching or
classroom-type teaching in a non-classroom setting, including Special
Education teachers.
(c) Borrower eligibility. (1) A borrower may obtain loan
forgiveness under this program if he or she has been employed as a
full-time teacher for five consecutive complete academic years, at
least one of which was after the 1997-1998 academic year, in an
elementary or secondary school that--
(i) Is in a school district that qualifies for funds under title I
of the Elementary and Secondary Education Act of 1965, as amended;
(ii) Has been selected by the Secretary based on a determination
that more than 30 percent of the school's total enrollment is made up
of children who qualify for services provided under title I; and
(iii) Is listed in the Annual Directory of Designated Low-Income
Schools for Teacher Cancellation Benefits. If this directory is not
available before May 1 of any year, the previous year's directory may
be used.
(2) If the school at which the borrower is employed meets the
requirements specified in paragraph (c)(1) of this section for at least
one year of the borrower's five consecutive complete academic years of
teaching and the school failed to meet those requirements in subsequent
years, those subsequent years of teaching qualify for purposes of this
section for that borrower.
(3) A borrower who is employed as an elementary school teacher must
demonstrate knowledge and teaching skills in reading, writing,
mathematics, and other areas of the elementary school curriculum, as
certified by the chief administrative officer of the school in which
the borrower was employed.
(4) A borrower who is employed as a secondary school teacher must
teach in a subject area that is relevant to the borrower's academic
major as certified by the chief administrative officer of the school in
which the borrower was employed.
(5) The academic year may be counted as one of the borrower's five
consecutive complete academic years if the borrower completes at least
one-half of the academic year and the borrower's employer considers the
borrower to have fulfilled his or her contract requirements for the
academic year for the purposes of salary increases, tenure, and
retirement if the borrower is unable to complete an academic year due
to--
(i) A return to postsecondary education, on at least a half-time
basis, that is directly related to the performance of the service
described in this section;
(ii) A condition that is covered under the Family and Medical Leave
Act of 1993 (FMLA) (19 U.S.C. 2654); or
(iii) A call or order to active duty status for more than 30 days
as a member of a reserve component of the Armed Forces named in section
10101 of title 10, United States Code.
(6) If a borrower meets the requirements of paragraph (c)(5) of
this section, the borrower's period of postsecondary education, active
duty, or qualifying FMLA condition including the time necessary for the
borrower to resume qualifying teaching no later than the beginning of
the next regularly scheduled academic year, does not constitute a break
in the required five consecutive years of qualifying teaching service.
(7) A borrower who teaches in more than one qualifying school
during an academic year and demonstrates that the combined teaching was
the equivalent of full-time, as supported by the certification of one
or more of the chief administrative officers of the schools involved,
is considered to have completed one academic year of qualifying
teaching.
(8) A borrower is not eligible for teacher loan forgiveness on a
defaulted loan unless the borrower has made satisfactory repayment
arrangements to re-establish title IV eligibility, as defined in
Sec. 685.200(b).
(9) A borrower may not receive loan forgiveness for qualifying
teaching service under this section if the borrower receives a benefit
for the same teaching service under subtitle D of title I of the
National and Community Service Act of 1990.
(d) Forgiveness amount. (1) A qualified borrower is eligible for
forgiveness of up to $5,000 of the aggregate amount of a borrower's
Direct Subsidized Loan, Direct Unsubsidized Loan, or Direct
Consolidation Loan obligation that is outstanding after the borrower
completes his or her fifth consecutive complete academic year of
teaching as described in paragraph (c) of this section. Only the
outstanding portion of a Direct Consolidation Loan that was used to
repay an eligible subsidized or unsubsidized Federal Stafford loan, an
eligible Direct Subsidized Loan, or an eligible Direct Unsubsidized
Loan qualifies for loan forgiveness under this section.
(2) A borrower may not receive more than a total of $5,000 in loan
forgiveness for outstanding principal and accrued interest under both
this section and 34 CFR Sec. 682.215.
(3) The Secretary does not refund payments that were received from
or on behalf of a borrower who qualifies for loan forgiveness under
this section.
(e) Application. (1) A borrower, after completing the qualifying
teacher service, must request loan forgiveness from the Secretary on a
form provided by the Secretary.
(2) If the Secretary determines that the borrower meets the
eligibility requirements for loan forgiveness under this section, the
Secretary--
(i) Notifies the borrower of this determination; and
(ii) Unless otherwise instructed by the borrower, applies the
proceeds of the loan forgiveness first to any outstanding Direct
Unsubsidized Loan balances, next to any outstanding Direct Subsidized
Loan balances, next to any qualifying Direct Unsubsidized Consolidation
Loan balances, and last to any qualifying outstanding Direct Subsidized
Consolidation Loan balances.
(3) If the Secretary determines that the borrower does not meet the
eligibility requirements for loan forgiveness under this section, the
Secretary notifies the borrower of this determination.
(Approved by the Office of Management and Budget under the control
number 1845-0021)
(Authority: 20 U.S.C. 1087a et seq.)
Secs. 685.218, 685.219 [Added and Reserved]
17. New Secs. 685.218 and 685.219 are added and reserved.
[FR Doc. 00-27737 Filed 10-31-00; 8:45 am]
BILLING CODE 4000-01-P