suppstatptA 1845-0023 v6 30 day comment period

ICRAS Tracking and OMB Number: (1404) 1845-0023 v6 Revised: 04/18/2013

RIN Number: XXXX-XXXX (if applicable)

SUPPORTING STATEMENT

FOR PAPERWORK REDUCTION ACT SUBMISSION

Information Collection for Regulations Governing the Federal Perkins Loan Program

A. Justification

1. Explain the circumstances that make the collection of information necessary. Identify any legal or administrative requirements that necessitate the collection. Attach a hard copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information, or you may provide a valid URL link or paste the applicable section¹. Specify the review type of the collection (new, revision, extension, reinstatement with change, reinstatement without change). If revised, briefly specify the changes. If a rulemaking is involved, make note of the sections or changed sections, if applicable.

This request is for the extension of the Office of Management and Budget (OMB) approval of the reporting and recordkeeping requirement contained in 34 CFR sections 674.39, 674.41, 674.42, 674.43, 674.45, 674.47, 674.48, and 674.49 under the control number 1845-0023. The information collections in these regulations are necessary to determine Federal Perkins Loan Program borrower eligibility to receive program benefits and to prevent fraud and abuse of program funds. We are not making any changes to the language of these regulations. We are requesting an extension of the current collection with an increase in respondents and hours due to an increase in the number of loans in the portfolio.

Section 674.39 – Loan rehabilitation.

This section establishes that participating institutions are required to have a loan rehabilitation program for the purposes of rehabilitating defaulted loans and outlines the requirements of the rehabilitation program.

Section 674.41 – Due diligence – general requirements.

This section establishes that institutions are required to inform the borrower on a timely basis and exercise due diligence in the collection of Perkins loans. Additionally, institutions are required to coordinate among the various campus administrative offices to share information as it relates to a borrower and the billing and collection process

Section 674.42 – Contact with the borrower.

This section establishes that institutions are required to provide borrowers with information about the repayment of the loan, a description of charges, an explanation of loan consolidation or other refinancing as well as other information about the amount of the repayment, the frequency, and to whom the payments must be made. Generally, this information is provided to the borrowers as a part of the required exit interview process. The institution is required to maintain information substantiating the institution’s compliance with these due diligence regulations.

Section 674.43 – Billing procedures.

This section establishes that institutions are required to notify borrowers about the amount of repayment due, to remind borrowers when their payment is overdue, and to demand payment of overdue amounts.

Section 674.45 – Collection procedures.

This section establishes that borrowers who do not respond satisfactorily to demand notices for repayment of defaulted loans must be referred for intensive collection efforts. Those efforts include reporting defaults to a national credit bureau, either the use of institutional resources to collect of the use of a collection agency, and ultimately, litigation to resolve the debt.

Section 674.47 – Costs chargeable to the Fund.

This section establishes detail about the billing costs, late charge costs, other collections costs, as well as write-offs and waivers of collection costs and the limitations of those costs that can be charged to the Perkins fund.

Section 674.48 – Use of contractors to perform billing and collection activities.

This section establishes that institutions that use contractors to perform billing and collection activities retain all responsibility to comply with the Title IV program requirements and must insure that the third-party provider meets all the compliance requirements.

Section 674.49 – Bankruptcy of borrower.

This section establishes that institutions that receive notice that a borrower has filed a petition for relief in bankruptcy must follow the procedures in the regulations to avoid a discharge of the loan. The institution must assert any defense consistent with its status under applicable law to avoid discharge of the loan debt.

2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection.

The information collected, recorded, and/or disclosed in 34 CFR 674.39, 674.41, 674.42, 674.43, 674.45, 674.47, and 674.49 will be used by the institution, as necessary, to provide for the making and servicing of Perkins Loans. If the information was not collected, recorded and/or disclosed as specified in the sections, the processing and collection of Perkins Loans could be open to fraud and waste of the program funds.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision of adopting this means of collection. Also describe any consideration given to using technology to reduce burden.

There is nothing in these regulations that prohibits the use of technology to perform the required functions. And we continue to review the regulations so that can maximize the use of available technology in the making and servicing of Perkins Loans.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.

A review of the current procedures indicated that the requirements are minimal and avoid duplication.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden. A small entity may be (1) a small business which is deemed to be one that is independently owned and operated and that is not dominant in its field of operation; (2) a small organization that is any not-for-profit enterprise that is independently owned and operated and is not dominant in its field; or (3) a small government jurisdiction, which is a government of a city, county, town, township, school district, or special district with a population of less than 50,000.

No small businesses are impacted by this collection.

6. Describe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

The recordkeeping and reporting requirements are imposed to assure accountability of program participants for proper program administration and less frequent collection could impair accountability of program participants.

7. Explain any special circumstances that would cause an information collection to be conducted in a manner:

• requiring respondents to report information to the agency more often than quarterly;

• requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it;

• requiring respondents to submit more than an original and two copies of any document;

• requiring respondents to retain records, other than health, medical, government contract, grant-in-aid, or tax records for more than three years;

• in connection with a statistical survey, that is not designed to produce valid and reliable results than can be generalized to the universe of study;

• requiring the use of a statistical data classification that has not been reviewed and approved by OMB;

• that includes a pledge of confidentiality that is not supported by authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or that unnecessarily impedes sharing of data with other agencies for compatible confidential use; or

• requiring respondents to submit proprietary trade secrets, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information’s confidentiality to the extent permitted by law.

The collection of this information is conducted in a manner that is consistent with the guidelines in 5 CFR 1320.5(d)(2).

8. As applicable, state that the Department has published the 60 and 30 Federal Register notices as required by 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments. Specifically address comments received on cost and hour burden.

Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instruction and record keeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.

Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 years – even if the collection of information activity is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.

This is the 30 day comment period for this collection package to solicit comments on the current burden assigned to this regulation. The regulations were initially developed in consultation with the community. There is no change to the regulatory language. There were no public comments received during the 60 day comment period.

9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees with meaningful justification.

No payments or gifts will be provided to the respondents that provide the information.

10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy. If personally identifiable information (PII) is being collected, a Privacy Act statement should be included on the instrument. Please provide a citation for the Systems of Record Notice and the date a Privacy Impact Assessment was completed as indicated on the IC Data Form. A confidentiality statement with a legal citation that authorizes the pledge of confidentiality should be provided.² If the collection is subject to the Privacy Act, the Privacy Act statement is deemed sufficient with respect to confidentiality. If there is no expectation of confidentiality, simply state that the Department makes no pledge about the confidentially of the data.

A Privacy Act Notice is included on the Federal Perkins Loan Promissory Note. In this notice, the borrower is informed of the statutory authority for collecting the information required. Although disclosure of the information is voluntary, the borrower is informed that in order to be considered for Perkins Loan Program 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 Program 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. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. The justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

The Department is not requesting any sensitive data.

12. Provide estimates of the hour burden of the collection of information. The statement should:

• Indicate the number of respondents by affected public type (federal government, individuals or households, private sector – businesses or other for-profit, private sector – not-for-profit institutions, farms, state, local or tribal governments), frequency of response, annual hour burden, and an explanation of how the burden was estimated, including identification of burden type: recordkeeping, reporting or third party disclosure. All narrative should be included in item 12. Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

• If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in the ROCIS IC Burden Analysis Table. (The table should at minimum include Respondent types, IC activity, Respondent and Responses, Hours/Response, and Total Hours)

• Provide estimates of annualized cost to respondents of the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14.

Section 674.39 – Loan rehabilitation.

Participating institutions are required to have a loan rehabilitation program for the purposes of rehabilitating defaulted Perkins Loans.

Affected Parties:

Individuals 485,482 X .016666 hours = 8,091 hours

Institutions

Public 557 X .45 hours = 251 hours

Private 899 X .45 hours = 405 hours

For-profit 131 X .45 hours = 59 hours

# of Respondents # of Responses # of Burden Hours

487,069 487,069 8,806

Section 674.41 – Due diligence – general requirements.

This section establishes that institutions are required to inform the borrower on a timely basis and exercise due diligence in the collection of Perkins loans. Additionally, institutions are required to coordinate among the various campus administrative offices to share information as it relates to a borrower and the billing and collection process

Affected Parties:

Individuals 2,070,514 X .016666 hours = 34,507 hours

Institutions

Public 557 X 1.42 hours = 791 hours

Private 899 X 1.42 hours = 1,277 hours

For-profit 131 X 1.42 hours = 186 hours

# of Respondents # of Responses # of Burden Hours

2, 072,101 2, 072,101 36,761

Section 674.42 – Contact with the borrower.

This section establishes that institutions are required to provide borrowers with information about the repayment of the loan, a description of charges, an explanation of loan consolidation or other refinancing as well as other information about the amount of the repayment, the frequency, and to whom the payments must be made. Generally, this information is provided to the borrowers as a part of the required exit interview process. The institution is required to maintain information substantiating the institution’s compliance with these due diligence regulations.

Affected Parties:

Individuals 2,070,514 X .016666 hours = 34,507 hours

Institutions

Public 557 X 1.42 hours = 791 hours

Private 899 X 1.42 hours = 1,277 hours

For-profit 131 X 1.42 hours = 186 hours

# of Respondents # of Responses # of Burden Hours

2, 072,101 2, 072,101 36,761

Section 674.43 – Billing procedures.

This section establishes that institutions are required to notify borrowers about the amount of repayment due, to remind borrowers when their payment is overdue, and to demand payment of overdue amounts.

Affected Parties:

Individuals 2,555,996 X .016666 hours = 42,598 hours

Institutions

Public 557 X 1.42 hours = 791 hours

Private 899 X 1.42 hours = 1,277 hours

For-profit 131 X 1.42 hours = 186 hours

# of Respondents # of Responses # of Burden Hours

2,557,583 2,557,583 44,852

Section 674.45 – Collection procedures.

This section establishes that borrowers who do not respond satisfactorily to demand notices for repayment of defaulted loans must be referred for intensive collection efforts. Those efforts include reporting defaults to a national credit bureau, either the use of institutional resources to collect of the use of a collection agency, and ultimately, litigation to resolve the debt.

Affected Parties:

Individuals 242,741 X .016666 hours = 4,046 hours

Institutions

Public 557 X .75 hours = 418 hours

Private 899 X .75 hours = 674 hours

For-profit 131 X .75 hours = 98 hours

# of Respondents # of Responses # of Burden Hours

244,328 244,328 5,236

Section 674.47 – Costs chargeable to the Fund.

This section establishes detail about the billing costs, late charge costs, other collections costs, as well as write-offs and waivers of collection costs and the limitations of those costs that can be charged to the Perkins fund.

Affected Parties:

Individuals 242,741 X .016666 hours = 4,046 hours

Institutions

Public 557 X .83 hours = 462 hours

Private 899 X .83 hours = 746 hours

For-profit 131 X .83 hours = 109 hours

# of Respondents # of Responses # of Burden Hours

244,328 244,328 5,363

Section 674.48 – Use of contractors to perform billing and collection activities.

This section establishes that institutions that use contractors to perform billing and collection activities retain all responsibility to comply with the Title IV program requirements and must insure that the third-party provider meets all the compliance requirements.

Affected Parties:

Institutions

Public 557 X .92 hours = 512 hours

Private 899 X .92 hours = 827 hours

For-profit 131 X .92 hours = 121 hours

# of Respondents # of Responses # of Burden Hours

1,587 1,587 1,460

Section 674.49 – Bankruptcy of borrower.

This section establishes that institutions that receive notice that a borrower has filed a petition for relief in bankruptcy must follow the procedures in the regulations to avoid a discharge of the loan. The institution must assert any defense consistent with its status under applicable law to avoid discharge of the loan debt.

Affected Parties:

Institutions

Public 557 X .92 hours = 512 hours

Private 899 X .92 hours = 827 hours

For-profit 131 X .92 hours = 121 hours

# of Respondents # of Responses # of Burden Hours

1,587 1,587 1,460

13. Provide an estimate of the total annual cost burden to respondents or record keepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12 and 14.)

• The cost estimate should be split into two components: (a) a total capital and start-up cost component (annualized over its expected useful life); and (b) a total operation and maintenance and purchase of services component. The estimates should take into account costs associated with generating, maintaining, and disclosing or providing the information. Include descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred. Capital and start-up costs include, among other items, preparations for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing equipment; and acquiring and maintaining record storage facilities.

• If cost estimates are expected to vary widely, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of contracting out information collection services should be a part of this cost burden estimate. In developing cost burden estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60-day pre-OMB submission public comment process and use existing economic or regulatory impact analysis associated with the rulemaking containing the information collection, as appropriate.

• Generally, estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not associated with the information collection, (3) for reasons other than to provide information or keep records for the government or (4) as part of customary and usual business or private practices. Also, these estimates should not include the hourly costs (i.e., the monetization of the hours) captured above in Item 12

Total Annualized Capital/Startup Cost :      

Total Annual Costs (O&M) :      

Total Annualized Costs Requested :      

There are no start-up costs associated with these regulations.

14. Provide estimates of annualized cost to the Federal government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing, and support staff), and any other expense that would not have been incurred without this collection of information. Agencies also may aggregate cost estimates from Items 12, 13, and 14 in a single table.

There are no additional costs to the Federal government as a result of these regulations.

15. Explain the reasons for any program changes or adjustments. Generally, adjustments in burden result from re-estimating burden and/or from economic phenomenon outside of an agency’s control (e.g., correcting a burden estimate or an organic increase in the size of the reporting universe). Program changes result from a deliberate action that materially changes a collection of information and generally are result of new statute or an agency action (e.g., changing a form, revising regulations, redefining the respondent universe, etc.). Burden changes should be disaggregated by type of change (i.e., adjustment, program change due to new statute, and/or program change due to agency discretion), type of collection (new, revision, extension, reinstatement with change, reinstatement without change) and include totals for changes in burden hours, responses and costs (if applicable).

The Department is requesting an extension of this information collection. The regulations requiring this collection remain in place without change. There is an increase in hours to account for an increase in the size of the Federal Perkins Loan portfolio.

16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analytical techniques that will be used. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions.

The results of the collection of information will not be published.

17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.

The Department is not seeking this approval.

18. Explain each exception to the certification statement identified in the Certification of Paperwork Reduction Act.

The Department is not requesting any exceptions to the “Certification for Paperwork Reduction Act Submissions” of the OMB Form 83-I.

1 Please limit pasted text to no longer than 3 paragraphs.

2 Requests for this information are in accordance with the following ED and OMB policies: Privacy Act of 1974, OMB Circular A-108 – Privacy Act Implementation – Guidelines and Responsibilities, OMB Circular A-130 Appendix I – Federal Agency Responsibilities for Maintaining Records About Individuals, OMB M-03-22 – OMB Guidance for Implementing the Privacy Provisions of the E-Government Act of 2002, OMB M-06-15 – Safeguarding Personally Identifiable Information, OM:6-104 – Privacy Act of 1974 (Collection, Use and Protection of Personally Identifiable Information)

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