[Federal Register: June 5, 2001 (Volume 66, Number 108)]
[Page 30177-30179]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Federal Student Financial Assistance Programs under Title IV of 
the Higher Education Act of 1965, as Amended

AGENCY: Department of Education.

ACTION: Notice inviting proposals for participation in experimental 


SUMMARY: The Secretary of Education invites institutions of higher 
education to propose new ways of administering the student financial 
assistance programs authorized by Title IV of the Higher Education Act 
of 1965, as amended (HEA). Under section 487A(b) of the HEA, if the 
Secretary approves an institution as an experimental site as a part of 
this student aid reform initiative, the institution may receive waivers 
from specific Title IV statutory or regulatory requirements that would 
bias experimental results. The Secretary cannot waive provisions in the 
areas of need analysis, award rules, and grant and loan maximum award 
amounts. However, the Secretary anticipates approving experiments in a 
wide variety of other areas.
    Instructions for Submitting a Proposal: Elements to be included in 
the proposal are described in this notice. Proposals should be 
submitted electronically by electronic mail or in hard copy to the 
address below. All proposals should clearly designate a contact person, 
and the telephone number and the e-mail address of the contact person.

DATES: Proposals may be submitted in response to this notice at any 
time after June 4, 2001.

ADDRESSES: Barbara A. Mroz, U.S. Department of Education, 400 Maryland 
Avenue, SW (Room 3925, ROB-3), Washington, DC, 20202-5232.

FOR FURTHER INFORMATION CONTACT: Jacqulyn S. Bannister, U.S. Department 
of Education, 400 Maryland Avenue, SW (Room 3925, ROB-3), Washington, 
DC, 20202-5232, telephone: (202) 708-7438 or via internet: 
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-888-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g. Braille, large print, audiotape, or computer 
diskette) by contacting the Alternate Format Center at (202) 260-9895.



    Over the past few years, the Department of Education has undertaken 
a series of initiatives to simplify regulations and administrative 
processes for the student financial assistance programs. The 
Experimental Sites Initiative, authorized by section 487A(b) of the 
HEA, is one such initiative. Through this initiative, the Secretary 
seeks to improve service to students and free institutions of higher 
education from administrative burdens by testing new ways to administer 
certain SFA statutory and regulatory requirements.
    Initially, Congress gave the Department authority under section 
487A(d) of the HEA of 1992 to treat select institutions as experimental 
sites. The first group of experiments became effective July 1, 1996. 
During the coming months, the Secretary will continue this initiative 
to give institutions of higher education flexibility to test different 
procedures to carry out the intent of certain SFA statutory and 
regulatory requirements. Thus, with this notice, the Secretary invites 
proposals to reinvent the administration of student financial 
assistance programs authorized by section 487A(b), Regulatory 
Improvement and Streamlining Experiments. One purpose of this 
initiative, as well as the Department's continuing dialogue with the 
higher education community, is to help the Secretary develop a set of 
proposals for amendments to the law or regulations pertaining to the 
administration of student financial aid programs.
    The invitation for proposals in this notice is a part of the 
Secretary's continuing effort to reform Title IV program administration 
in partnership with the higher education community. The community has 
given the Department the benefit of its views in a variety of ways over 
the last several years. The community's views have been integrated in 
the reforms that the Department has undertaken to date. For example, in 
the Higher Education Amendments of 1998, two of the areas of 
experimentation--Thirty Day Delay for First Time First Year Borrowers 
and Multiple Disbursement for Single Term Loans--were included in 
reauthorization for a broader group of institutions. Institutions with 
default rates at or below 10% are eligible for the exemption from these 
requirements to withhold funds for thirty days for first time, first 
year borrowers and/or making multiple disbursements for single term 
loans. In addition, the Department has expanded the Federal Work Study 
(FWS) payment provisions and the means for certification of FWS time 
records. It is the Secretary's hope that in the proposals invited by 
this notice, the community will again address important issues of 
program administration that remain to be resolved.

Invitation for Proposals

    The Secretary invites institutions of higher education that 
administer one or more Title IV programs to submit one or more 
proposals to participate as experimental sites under section 487A(b) of 
the HEA. This section authorizes the Secretary to select institutions 
for voluntary participation in experiments to test new ways of 
administering the student financial assistance programs. The Secretary 
is further authorized to exempt a participating institution from many 
Title IV statutory or regulatory requirements while conducting the 
experiment, except areas prohibited in section 487A(b)(3)(C).
    The Secretary establishes no regulatory requirements for the 
proposals invited by this notice. It is the Secretary's hope that this 
approach will encourage institutions to develop truly innovative 
strategies that relieve unnecessary burden, maintain program 
accountability, and provide the Department with data to improve Title 
IV program administration. The Secretary will consider the outcome of 
these experimental strategies when making changes in Title IV program 
regulations or, if appropriate, legislative proposals.

Statutory and Regulatory Provisions That May Not Be Waived

    The Secretary may waive any statute or regulatory requirement 
except those requirements relating to needs analysis, award rules, and 
grant and loan maximum award amounts. Section 487A(b)(3)(C).

Submission of Proposals

    An institution that administers a Title IV program, or a group of 

[[Page 30178]]

institutions (consortium), may submit a proposal in response to this 
notice at any time by mailing (including electronic mail) or faxing the 
proposal to Barbara A. Mroz or Jacqulyn Bannister at 202/708-9485. Each 
proposal to participate in this initiative should include: the name, 
address, and web site address, if any, of the institution, or members 
of the consortium seeking to participate, the OPE Identification 
number, and the name, title, mailing and e-mail addresses, and 
telephone number of a contact person for the institution, or 
    The Secretary emphasizes that the Department seeks to approve 
proposals for innovative approaches in a variety of different areas 
relating to the administration of student financial assistance 
programs. The Secretary also encourages institutions to collaborate in 
the development of proposals and to submit proposals as a group of 
institutions (consortium).
    To aid in the Department's review of proposals, the Secretary 
suggests the proposal answer the following questions in detail:
     What problem experienced by the institution or its 
students, or both, does the proposal address?
     What is the institution's hypothesis?
     What is the institution's experimental design/proposed 
solution to that problem?
     From which specific statutory or regulatory requirements 
does the institution seek relief in order to test its proposed 
     What alternative actions does the institution propose to 
achieve the underlying purpose of the requirements from which relief is 
sought and how will it measure outcomes?
     How will the institution evaluate its success?
     For what period is the experiment proposed?
    Cited below are the areas of experimentation previously approved 
and currently being conducted. The higher education community selected 
the problems addressed by these experiments because they have been the 
subject of considerable commentary. In other words, the participants 
identified most of the provisions being modified through these 
experiments as common problems. A few of the experiments were 
specifically proposed to address a particular problem or a particular 
population. In either case, participating institutions have identified 
solutions that they believe will better address the needs of their 
student population while maintaining the fundamental legislative 
intent. A report on this initiative, including a description of each 
experiment, can be found on SFA's Information for Financial Aid 
Professionals (IFAP) site at: http://www.ifap.ed.gov.

Current Areas of Experimentation

    1. Overaward Tolerance.
    2. Entrance Loan Counseling.
    3. Exit Loan Counseling.
    4. Multiple Disbursement for Single Term Loans.
    5. Thirty-Day Delay for First Time, First Year Borrowers.
    6. Loan Fees in Cost of Attendance.
    7. Loan Proration for Graduating Borrowers.
    8. Credit Title IV Aid to Institutional Charges.
    9. Credit Title IV Aid to Prior Term Charges.
    10. Academic Term (Definition).
    11. Federal Work Study Time Records.
    12. Federal Work Study Payment to Students.
    13. Ability to Benefit.
    With this notice, the Secretary encourages proposals for new 
experiments, in areas other than those listed above. In addition, the 
Secretary may develop area(s) of experimentation or modify current 
experiments and invite participation to test the impact requirements 
have on different types of institutions and/or populations served.

Selection of Participants

    In selecting participants to test alternative approaches, the 
Secretary may consider the--
    1. Department of Education's capacity to oversee and monitor 
participation in this initiative.
    2. Institution's financial responsibility, administrative 
capability, program review findings, audits, etc. as outlined in the 
regulations and in the Student Financial Aid Handbook: Institutional 
Eligibility and Participation section.
    3. Necessity of including a diverse group of participating 
institutions vis-a-vis size, mission, and geographic distribution.
    As part of the selection process, the Department will screen the 
prospective participants to ensure eligibility. A review of the 
Department's files on the institution will be conducted to determine if 
the institution meets eligibility requirements and has a demonstrated 
record of program compliance.

Review Process

    The Secretary is prepared to review proposals as soon as they are 
received. However, early submission (at least sixty days from the date 
of this notice) is encouraged for consideration of proposals for the 
2001-2002 award year.
    The Secretary will review each proposal submitted in response to 
this notice. In reviewing proposals, the Secretary will be guided by 
the statutory purpose of section 487A(b), namely, to inform future 
policy choices relating to the administration of Title IV programs. The 
Secretary may approve a proposal as submitted, reject it, or, if a 
proposal is not fully approvable but has merit, work with the 
institution to refine it. However, consultation with Congress is a 
precondition to granting waivers. After a proposal is approved, the 
participating institution's Title IV Program Participation Agreement 
(PPA) will be amended to reflect the terms of the experiment, including 
the obligations undertaken by the institution, the requirements from 
which the institution is relieved, the length of the experiment, and 
the right of either the institution or the Department to terminate the 
    Generally, approved experiments will be conducted for five years. 
The Secretary may extend this period if continuation is in the interest 
of the Title IV programs and additional experimental data is needed. On 
the other hand, the Secretary may terminate any experiment if the 
experiment is no longer providing useful data or is otherwise no longer 
serving the interest of the Title IV programs.

Reporting Requirements

    Participating institutions will report annually (a specified date 
following each academic year the experiment is in effect) to the 
Department on the results of their experiment(s) using performance 
measures agreed upon by the institution and the Secretary. Institutions 
should gather both qualitative and quantitative information from their 
participation and include it in the annual report. The qualitative 
information should describe improved service to students, and reduced 
institutional burden and costs. The Department also notes that 
quantitative measures are essential for reaching informed decisions 
relative to change. Thus, the Secretary will work with the 
participating institution(s) to develop a standard report format 
designed to capture data based information to evaluate the experiment.

    Note: The Secretary's decision on institutional proposals will 
be final. There is no formal appeal process.

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    Note: The official version of this document is the document 1 
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Regulations is available on GPO Access at: http://

    Program Authority: 20 U.S.C. 1094a.

    Dated: May 31, 2001.
Greg Woods,
Chief Operating Officer, Student Financial Assistance.
[FR Doc. 01-14059 Filed 6-4-01; 8:45 am]