SUPPORTING STATEMENT
Information Collections Under the Final Regulations Governing the Federal Perkins Loan Program, and the Federal Work Study Program.
A. Justification
1. Necessity of Information Collected
The Federal Perkins Loan Program (Perkins Loan) notice of proposed rulemaking regulations propose revisions to the current regulations in the areas of program administration.
These proposed regulations are a result of regulatory review of the program regulations to reduce administrative burden for program participants, provide benefits to borrowers, and protect the taxpayers' interest. This request is for approval of reporting and recordkeeping requirements contained in the attached proposed regulations related to the administrative requirements of the Perkins Loan program. The information collection requirements in these proposed regulations are necessary to determine eligibility to receive program benefits and to prevent fraud and abuse of program funds.
Perkins Loan Program: OMB control number: 1845-0019
Sections 674.8, 674.16, 674.19, 674.38, 674.45, 674.50, 674.61 contain information collection requirements and are currently approved by OMB under control number 1845-0019. We are making the following changes to those sections:
Section 674.8 and 674.50 -- Program Participation Agreement and Assignment of defaulted loans to the United States.
The proposed changes provides the Department with the authority to require assignment of Perkins loan where the outstanding principle balance is $100 or more, the loan had been in default for seven or more years, and a payment has not been received on the loan for the past twelve months. This change would be an increase in burden for the affected institutions participating in the Federal Perkins Loan program.
Section 674.16 – Making and disbursing loans.
The proposed changes to §674.16 require schools, lenders, and guaranty agencies to report enrollment and loan status information, or any other data required by the Secretary, to the National Student Loan Data system by the deadline date established by the Secretary. The proposed changes do not represent an increase in burden because the new language simply codifies existing Departmental practice. Currently, reporting requirements are disseminated in “Data Provider Guidance” on the Department’s Information for Financial Aid Professional website.
Section 674.19 and 674.50 -- Fiscal procedures and records and Assignment of defaulted loans to the United States.
The proposed regulations would allow schools that participate in the Perkins Loan Program to grant deferments based upon information from another FFEL Loan holder or from the Department of Education instead of requiring the borrower to provide a duplicate request for deferment to multiple loan holders. As a result, burden for the borrowers and loan holders would decrease.
The proposed changes in §674.45 would limit collection costs an institution may assess against a Perkins Loan borrower to 30 percent of principal, interest, and late charges collected for first collection efforts, 40 percent for second collection efforts, and 40 percent plus court costs in cases of litigation. The changes affect institutions that participate in the Perkins Loan Program and collection agencies.
The changes do not represent a change in burden. Collection practices and procedures would not change; only the amount assessed against a defaulted borrower would change. Therefore, there is no additional burden associated with this provision.
Deferment of repayment--Federal Perkins loans, NDSLs and Defense loans.
The proposed regulations would allow the use of an accurate and complete copy of a borrower’s death certificate, instead of only permitting the submission of the original or a certified copy of the certificate.
Sections 674.10, 674.13, 674.20, 674.31, 674.35, 674.36, and 674.37 contain information requirements and are currently approved by OMB under control number 1845-0019. We are not making changes to these sections. We are requesting continued approval of these sections.
Section 673.5 is also cleared under OMB control number 1845-0019. We are making a change to this section in a separate package under the General Provisions regulations. We are requesting continued approval of this section.
Sections 675.10, 675.16, 675.19, 675.20, 675.27, 675.34, 675.35, 675.47, 675.48, 676.16, 676.19 also contain information requirements under the General Provisions regulations and are currently approved by OMB under 1845-0019. We are not making changes to these sections. We are requesting continued approval of these sections.
2. Purpose and Use of Information Collected
Perkins Loan Program:
The information collected, recorded, and/or disclosed in §§674.8, 674.16, 674.19, 674.38, 674.45, 674.50, and 674.61 will continue to be used as necessary to provide for the making and servicing of Perkins Loans. If we did not require the collection, recordation, and/or disclosure of information as specified in these sections, the processing of Perkins Loans would not be possible.
3. Consideration of Improved Information Technology
Perkins Loan Program:
We continue to revise our regulations so that they allow institutions to maximize the use of available technology in making and servicing Perkins Loans.
4. Efforts to Identify Duplication
A thorough review of procedures indicates that current requirements are minimal and avoid duplication. This review was done in conjunction with affected parties who have a vested interest in eliminating duplication.
5. Burden Minimization as Applied to Small Business
No small businesses are impacted by this collection.
6. Consequences of Less Frequent Data Collection
Recordkeeping requirements are imposed to assure accountability of program participants for proper program administration and less frequent collection could impair accountability of program participants.
Special Circumstances Governing Data Collection
The collection of this information will be conducted in a manner that is consistent with the guidelines in 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
These regulations were discussed at regulatory negotiated rulemaking meetings of the Department with the financial aid community over a five-month period, as detailed in the preamble to the Notice of Proposed Regulations published June, 2007.
9. Payments or Gifts to Respondents
No payments or gifts will be provided to the respondents.
10. Assurance of Confidentiality
A Privacy Act Notice is included on the Application Form and Promissory Note. In this notice, the borrower is informed of the statutory authority for collecting the information requested. Although disclosure of the information is voluntary, the borrower is informed that in order to be considered for Perkins Loan funds, the information must be provided. The information provided is used to verify the borrower's identity, to determine the borrower's eligibility to receive a Perkins Loan and benefits, to permit the servicing of the borrower's loan(s), and to locate the borrower and collect on the loan(s) if the loan(s) become delinquent or default. A listing of the persons and entities to which the information may be disclosed and for what purposes the information may be disclosed is also included.
11. Questions of Sensitive Nature
The Department is not requesting any sensitive data.
12. Annual Hour Burden for Respondents/Recordkeepers.
The proposed changes provides the Department with the authority to require assignment of Perkins loan where the outstanding principal balance is $100 or more, the loan has been in default for seven or more years, and a payment has not been received on the loan for the past twelve months. This change would be an increase in burden for the affected institutions participating in the Federal Perkins Loan program.
# of Perkins loans in default for more than 7 years:
289,070
Amt. time to assign a
Perkins loan the ED X .33 hours (20 minutes)
Affected Entity:
INSTITUTIONS: 95,393 hours
Respondents, Responses and Burden Hours:
# of Respondents # of Responses # Hrs/Response #Hrs
Burden
321 289,070 .33 hrs = 95,393
The proposed regulations would require that upon request schools would submit an affidavit or certification regarding the creation and maintenance of electronic Master Promissory Notes (MPNs) or promissory notes including the authentication and signature process. Also, the records retention requirement for affected parties would increase from the current requirement of three years after the end of the award year to seven years after all the loans on the MPN are satisfied.
# of borrowers referred for litigation – 2006-2007:
Program Type: # of loans X % of E-MPNs = # affected
by program
Perkins Loan Program 28 .15 4
FFEL Program 842 .85 716
Total # of Perkins Loans and 870 1.00 720
FFEL Loans Referred for
Litigation
Burden associated with data collection:
Providing ED with a copy of
the affidavit or certification .5 hours (30 minutes)
The burden associated with the collection of the original data and its retention, exists under the current rules. There is no increase in burden to retain these loan records until 7 years after the loans are satisfied.
Total burden increase:
# loans referred for litigation 720
amount of burden reduction X .5 hours (30 minutes)
Total burden hour increase 360 hours
Affected Entity:
# of affected X burden = increase in burden
loans per MPN hours
INSTITUTIONS 4 .5 2
[NOTE: The remaining additional burden of 358 hours is attributable to FFEL lenders and guarantors found in OMB 1845-0020.]
Respondents, Responses and Burden Hours:
# of Respondents # of Responses # Hrs/Response #Hrs
Burden
4 4 .5 = 2
Sections 674.19 and 674.50 – Retention of Disbursement Records Supporting MPNs
The proposed regulations would require that upon request that schools retain disbursement records for each loan made to a borrower on a MPN until all the loans on the MPN are satisfied. The proposed changes would also require an institution to submit disbursement records, upon request, for each loan assigned to the Department for the enforcement of the loan.
# of loans projected for 2007-2008:
Program Type # of loans X % of E-MPNs = # affected
by program
Perkins Loan Program 501,000 .15 75,150
Projected # of Perkins Loans assigned:
# affected 75,150
% assigned to ED X .0005
Projected # of Perkins assigned 38
to ED w/documentation
Amount of time to submit:
Electronic records .08 hours (5 minutes)
Copy and mail paper documents + .50 hours (30 minutes)
Total time per loan assigned .58 hours
Affected Entity:
# of assignments X hours of burden = total hours
increased burden
INSTITUTIONS: 38 .58 22
Respondents, Responses and Burden Hours:
# of Respondents # of Responses # Hrs/Response #Hrs
Burden
38 38 .58 = 22
The proposed regulations would allow schools that participate in the Perkins Loan Program to grant deferments based upon information from another FFEL holder or from the Department of Education instead of requiring the borrower to provide a duplicate request for deferment to multiple loan holders. As a result, burden for borrowers and loan holders would decrease.
A total of 41,700 Perkins, FFEL and Direct loan borrowers were granted a non-in-school deferment in Award Year 2006 and received loans with more than one loan holder.
41,700 borrowers granted non-in-school deferment with multiple holders
X .25 hours projected amount of decreased burden per borrower
10,425 hours total number of hours of decreased burden
For 2007-2008: # of Loans: %
Total projected # of Perkins Loan Program awards 501,000 .03
Total projected # of FFEL Program awards 12,483,000 .78
Total projected # of Direct Loan Program awards 3,039,000 .19
Total # of Title IV projected loans 16,023,000 1.00
Total Burden Reduction for the Perkins Loan Program:
10,425 total hours of burden reduction
X .03 percentage of all projected loans as Perkins
313 total # of hours of decreased burden in the Perkins Loan program
Affected Entities:
The amount of burden reduction is split between borrowers and loan holders. The majority of the burden reduction is provided to the borrowers since they will not have to complete and submit additional, duplicative deferment requests.
Affected Entity: % of burden hours of burden = total hours of
reduction reduction reduction
BORROWERS: .9 313 282
LOAN HOLDERS: .1 313 31 313
Respondents, Responses and Burden Hours:
# of Respondents # of Responses # Hrs/Response #Hrs
Burden
1251 1251 .25 = -313
The proposed regulations would allow the use of an accurate and complete copy of a borrower’s death certificate, instead of only permitting the submission of the original or a certified copy of the certificate. While all respondents (survivors who submit death certificate information to obtain a Title IV loan death discharge), we estimate that 83.5% will take advantage of the provisions of this proposed regulation. Therefore, while there are 1,692 respondents and responses, 83.5% or 1,413 will potentially benefit by submitting a copy of the death certicate.
The # of death discharges for Title IV loans as of September 30, 2006 are as follows:
Program Type # of loans % by program
FFEL Program 55,148 .78
Direct Loan Program 14,199 .20
Perkins Loan Program 1,692 .02
Total # of Title IV Loan 71,039 1.00
Discharges for Death
Current Requirement:
Amount of time to contact the Office of Vital Statistics (or its equivalent) to obtain a certified copy of a death certificate = .25 hour (15 minutes).
Proposed Requirement:
Amount of time to copy and submit a copy of an original or certified copy of a death certificate = .17 hour (10 minutes).
.25 hour (15 minutes)
less .17 hour (10 minutes)
Burden reduction per record .08 hour (5 minutes)
Total burden reduction:
# of death discharges 71,039
amount of burden reduction X .08 hour (5 minutes)
Total burden hours reduced 5,683 hours
Total burden reduction by program:
Program type: % of discharges total hours of hours of
by program burden reduction reduction by
program
FFEL Program .78 5,683 4,433
Direct Loan Program .20 5,683 1,137
Perkins Loan Program .02 5,683 113
5,638
Affected Entities: % of entities hours of amount of burden reduction
impacted reduction by by affected entity
PERKINS program
SURVIVOR OF
BORROWER: .6 113 68
LOAN HOLDER: .4 113 45
113
Of the 1,692 Respondents and Responses, 83.5% are estimated to benefit from the proposed regulation (the other 16.5% we estimate will provide the original or certified copy of the death certificate).
Respondents, Responses and Burden Hours:
# of Respondents # of Responses # Hrs/Response #Hrs
Burden
1692 1692 .835* .08 = - 113
13. Annual Cost Burden to Respondents
There is no change from the current inventory.
14. Estimated Annual Cost to the Federal Government
There are no additional costs to the Federal government as a result of the final regulations.
15. Reasons for Changes to Burden Hour Estimated
As a result of the Perkins Loan Program proposed regulations there are increases and decreases to the burden hours for the affected entities as indicated in Item 12 above. Below is a summary of the changes in burden.
# of Respondents # of Responses # Hrs/Response #Hrs
Burden
Section 674.8 and 674.50 – Mandatory Assignment
321 289,070 .33 hrs = 95,393
Sections 674.19 and 674.50 – Certification of Electronic Signatures on Loan MPNs assigned to the Department
4 4 .5 = 2
Sections 674.19 and 674.50 – Retention of Disbursement Records Supporting MPNs
38 38 .58 = 22
Section 674.38 – Deferment
1251 1251 .25 = -313
Section 674.61 – Loan Discharge for Death
1692 1692 .835 * .08 = - 113
Sub-total:
# of Respondents # of Responses #Hrs
Burden
3,306 292,055 94,991
Current
Inventory: # of Respondents # of Responses #Hrs
Burden
95,262 95,262 25,859
Revised
Inventory: # of Respondents # of Responses #Hrs
Burden
98,568 387,317 120,850
16. Collection of Information with Published Results
The results of the collection of information will not be published.
17. Approval to Not Display Expiration Date
ED is not seeking this approval.
18. Exception to the Certification Statement
ED is not requesting any exceptions to the "Information Collection” form Parts 1 & 2.
| File Type | application/msword |
| File Title | SUPPORTING STATEMENT |
| Author | I.R.G. |
| Last Modified By | Sheila.Carey |
| File Modified | 2007-06-13 |
| File Created | 2007-06-13 |