Department of Education: Removal of William D. Ford’s Federal Direct Loan Grant Restriction

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B-333378

July 1, 2021

The Honorable Patty Murray
Chair
The Honorable Richard Burr
Rating member
Committee on Health, Education, Labor and Pensions
US Senate

The Honorable Robert K. “Bobby” Scott
Chairperson
The Honorable Virginia Fox
Rating member
Committee on Education and Labor
House of Representatives

Item: Department of Education: Removal of William D. Ford’s Federal Direct Loan Grant Restriction

Pursuant to section 801 (a) (2) (A) of Title 5 of the United States Code, this is our report on a master rule published by the Department of Education (Department) titled “William D. Ford’s Federal Direct Loan Cancellation. Limiting the Limit on the Use of Subsidized Programs ”(RIN: 1840-AD60). We got the rule on June 17, 2021. It was published in Federal register as final resolution June 14, 2021 86 Fed. Reg. 31432. Effective date – August 13, 2021.

According to the Department, the Minister of Education, by this action, removed and amended the rules to be in line with the changes introduced by the Consolidated Appropriations Act of 2021. See in general The pub. L. No. 116-260, 134 Stat. 1182 (December 27, 2020). The department said the secretary lifted the Subsidized Credit Disbursement Limit (SULA) limit for any borrower who receives a Federal Direct Subsidized Credit of Stafford first disbursed on or after July 1, 2021, regardless of the loan year associated with the loan. The Department also said that all subsidy exemptions will be reinstated retroactively to the date the subsidy loss was applied for all Federal Direct Subsidized Stafford loans with outstanding balances as of July 1, 2021, and for all grant years from 2013-2014. … Finally, the Department said the Secretary also removed the SULA-related rules and made other technical changes.

The Congressional Review Act (CRA) requires a 60-day grace period for the main rule to take effect from the date of publication in Federal register or getting the rule by Congress, whichever comes later. 5 USC § 801 (a) (3) (A). However, the 60-day delay in the effective date may be waived if the agency considers the delay to be inappropriate, unnecessary, or contrary to the public interest, and if the agency includes a statement of results and reasons for it in the rule. published. 5 USC § 808 (2). Here, while the Department did not specifically mention the 60-day CRA delay in the effective date requirement, the Department stated that notification and comment procedures were not needed for this final regulatory action and that it found good reason to waive such procedures under section 553 (b) (3) (B) Administrative Procedure Act. The department argues that this is a good reason to opt out of notices and comments, as this final regulatory action reverses rules over which legislative powers have been revoked. In addition, the Department stated that this final regulatory action does not provide for new regulations and does not establish or affect the underlying policy. The Department noted that there is no need to rule-making notices and comments as it has no right to maintain or otherwise apply those regulations, regardless of public opinion and opinion. Therefore, according to the Department, the Secretary, pursuant to 5 USC § 553 (b) (B) (3), determined that the proposed rules were unnecessary and thus opted out of developing rules with notices and comments.

Attached is our assessment of the Department’s compliance with the procedural steps required by sections 801 (a) (1) (B) (i) – (iv) section 5 in relation to the rule. If you have any questions about this report or would like to contact the GAO officials responsible for assessment work related to the subject of the rule, please contact Shari Brewster, Assistant General Counsel, at (202) 512-6398 …

Shirley Jones
Shirley A. Jones
Managing Junior General Counsel

The attachment

Copy: Amanda Amann
Deputy Assistant General Counsel
Regulatory Services Division
Education department

FRAME

BASIC REPORT 5 USC § 801 (a) (2) (A) BASIC RULE
ISSUED BY
EDUCATION DEPARTMENT
AUTHORIZED
WILLIAM D. FORD’S FEDERAL DIRECTION REDACTED
RESTRICTIONS ON ADDITIONAL USE OF THE LOAN PROGRAM “
(RIN: 1840-AD60)

(i) Cost-benefit analysis

The Department of Education (Department) has submitted an accounting report for this final regulatory action. The department said it would reduce the burden of paperwork for students and educational institutions by eliminating subsidized information on usage limits in counseling requirements at entry and exit. The department estimates this benefit at $ 4.8 million at discount rates of 3 and 7 percent. The department also said it would cost $ 0.06 million at a 7 percent discount rate and $ 0.05 million at a 3 percent discount rate to change government student loan management systems to remove the restriction on the use of subsidized loans. The department further stated that there will be an increase in the transfer of subsidized loans to eligible students. The amount of transfers will be $ 96.2 million at a 7 percent discount rate and $ 98.7 million at a 3 percent rate. Finally, the Department stated that reinstating subsidized loan benefits to affected borrowers would result in a transfer of US $ 85.4 million at a 7 percent discount rate and US $ 82.7 million at a 3 percent discount rate.

(ii) Agency Actions Relating to the Regulatory Flexibility Act (RFA), 5 USC §§ 603-605, 607 and 609

The Department stated that the RFA does not apply to this final regulatory action as there were compelling reasons to waive the notification and comment procedures under 5 USC § 553.

(iii) Agency Actions Relating to Sections 202-205 of the Unfunded Mandates Reform Act 1995, 2 USC §§ 1532-1535

In its submission to us, the Department indicated that it considers the preparation of a cost-benefit analysis of this final regulatory action not applicable.

(iv) Other Relevant Information or Requirements as Required by Laws and Regulations

Administrative Procedure Act, 5 USC §§ 551 et seq.

In the Department’s view, there is good reason to opt out of the notification and comment procedures in this case, as this final regulatory order supersedes the rules over which statutory authority has been revoked. The Department stated that this final regulatory action does not provide for new regulations and does not establish or affect the underlying policy. The Department noted that there is no need to rule-set notices and comments, as the Department has no right to maintain these regulations or otherwise apply them, regardless of public opinion and opinion. Therefore, according to the Department, the Secretary, pursuant to 5 USC §553 (b) (B) (3), determined that the proposed rules were unnecessary and thus refused to develop rules with notices and comments.

The Department also clarified that, pursuant to Section 492 of the Higher Education Act 1965 (HEA), all rules proposed by the Department for programs approved under Section IV of the HEA are subject to agreed rulemaking requirements. See in general 20 USC § 1098a. However, according to the Department, Section 492 (b) (2) of the HEA provides that agreed rulemaking may be waived for good reason when it would be inappropriate, unnecessary, or contrary to the public interest to use it. The Department argues that there is a good reason for abandoning the agreed rulemaking requirement in this case because, as explained above, rulemaking with notifications and comments is not necessary.

Paperwork Reduction Act (PRA), 44 USC §§ 3501-3520

The department said that this final regulatory action does not introduce any new information collection requirements. The Department noted that this final regulatory order removes the requirements related to the subsidized credit limit, which was repealed by section 705 (a) of the Consolidated Appropriations Act 2021. Pub. L. No. 116-260 § 705 (a), 134 Stat. 1182, 3200 (December 27, 2020). According to the Department, the total number of working hours will be reduced by $ 188,079, while the total cost savings are estimated at $ 4,742,901. This burden was associated with a collection of information called William D. Ford’s Federal Direct Loan Program – 150% cap, Office and Budget Control Number (OMB).
1845-0116.

Legislative authorization for the rule

The Department promulgated this final regulatory action pursuant to Section 2401 of Section 28; sections 1070g, 1087a, and further., titles 20; and Section 3702 of Title 31, United States Code.

Ordinance No. 12866 (Regulatory planning and analysis)

The department said the OMB has determined that this final regulatory action is economically significant and will have an annual economic impact of more than $ 100 million.

Decree No. 13132 (Federalism)

The Department did not specifically refer to the Order, but stated that it determined that this final regulatory action would not unduly interfere with state governments, local authorities or tribes in the performance of their government functions.



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