This is the accessible text file for GAO report number GAO-07-11 
entitled 'Higher Education: More Information Could Help Education 
Determine the Extent to Which Eligible Servicemembers Serving on Active 
Duty Benefited from Relief Provided by Lenders and Schools' which was 
released on November 1, 2006. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

November 2006: 

Higher Education: 

More Information Could Help Education Determine the Extent to Which 
Eligible Servicemembers Serving on Active Duty Benefited from Relief 
Provided by Lenders and Schools: 

GAO-07-11: 

GAO Highlights: 

Highlights of GAO-07-11, a report to congressional requesters 

Why GAO Did This Study: 

Since September 11, 2001, over 1.3 million members of the armed forces 
have been deployed in service to the United States. Congress enacted 
the Higher Education Relief Opportunities for Students (HEROES) Act to 
recognize the needs of those servicemembers who are deployed in the 
midst of pursuing postsecondary education or repaying student loans. 
GAO was asked to determine (1) how the Department of Education has 
implemented HEROES, (2) the policies and practices federal student loan 
lenders have in place to assist borrowers serving on active duty, and 
(3) the policies and practices postsecondary schools have to assist 
students who are serving on active duty. To address these objectives, 
GAO interviewed representatives from the nine largest Federal Family 
Education Loan program lenders, surveyed a random sample of 
postsecondary schools, and visited four colleges and universities. 

What GAO Found: 

Education has issued waivers and modifications to certain federal 
student financial aid provisions to minimize the financial impact and 
administrative burden for servicemembers on active duty, for example, 
by making it easier to postpone or suspend loan payment. Students who 
leave school for active duty service are treated as still enrolled to 
ensure that they do not have to begin repaying their student loans. 
Borrowers already repaying their student loans no longer have to 
provide written documentation of active duty service to suspend 
repayment for up to 1 year. However, Education did not complete a study 
to assess the extent to which servicemembers are benefiting from these 
waivers and modifications by March 2005, as required by HEROES, and 
currently has no plans to do so. While HEROES does not specify how 
Education should go about assessing the impact of its waivers and 
modifications, Education officials said that such a study would require 
a rigorous experimental design that would be costly and cannot be 
supported with Education’s data systems. However, Education has not 
explored the possibility of leveraging outside data sources to fulfill 
the requirement. 

Federal student loan lenders have implemented policies and practices, 
many of which are required under Education’s waivers and modifications, 
to provide relief for borrowers serving on active duty. For example, 
lenders reported that they provide options that allow borrowers to 
suspend or postpone repayment of their student loans, often with one 
telephone call. Some lenders are providing additional benefits beyond 
those covered by HEROES. For example, one lender offered to forgive 
$2,500 in loans for servicemembers who have lived or attended college 
in Pennsylvania. 

Most colleges and universities have had students leave for active duty 
service prior to the end of an academic term, and have policies or 
practices to assist them both when they depart and when they return, 
such as providing tuition refunds and allowing them to withdraw from 
their classes. When students return, schools often guarantee their 
readmission and exempt them from changes to degree requirements. 

Figure: Selected Options Available to Ease Departure and Return for 
Students on Active Duty: 

[See PDF for Image] 

Source: GAO analysis. 

[End of Figure] 

What GAO Recommends: 

GAO recommends that the Secretary of Education undertake the 
congressionally mandated study to determine the extent to which 
eligible servicemembers are receiving assistance under HEROES. 

Education agreed with the report’s findings and said the recommendation 
has merit. Education has agreed to explore options for conducting the 
study. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-11]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Cornelia Ashby at (202) 
512-7215 or ashbyc@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Education Has Issued Waivers and Modifications to Provide Relief for 
Aid Recipients Serving on Active Duty, but the Impact of These Changes 
Is Not Known: 

Lenders Are Assisting Borrowers as Required by Education and Some Are 
Providing Additional Benefits: 

Most Schools Have Had Students Leave for Active Duty and Have Policies 
in Place to Aid Their Departure and Return: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Methodology for Survey of Colleges and Universities: 

Appendix II: Waivers and Modifications: 

Appendix III: Comments from the Department of Education: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Responsibility for Interest Payments by Postponement and Loan 
Type: 

Table 2: Survey of Postsecondary Schools: Population, Sample, and 
Survey Respondents by Strata: 

Figures: 

Figure 1: Options Available to Suspend or Postpone Loan Repayment for 
Borrowers Serving on Active duty: 

Figure 2: Timeline for HEROES-Related Activities: 

Figure 3: Estimated Percentage of Schools with Students Who Have Left 
for Active Duty: 

Figure 4: States with Laws to Assist Students Who Leave School for 
Active Duty: 

Figure 5: Selected Options Available to Ease Departure and Return for 
Students Serving on Active Duty: 

Figure 6: Estimated Percentage of Schools with Policies on Tuition 
Refunds for Students Leaving for Active Duty: 

Figure 7: Estimated Percentage of Schools That Offer Campus Housing 
with Room and Board Refund Policies for Students Leaving for Active 
Duty: 

Figure 8: Estimated Percentage of Schools with Policies to Minimize the 
Academic Impact for Students Leaving for Active Duty: 

Figure 9: Estimated Percentage of Schools with Policies to Minimize the 
Academic Impact When Students Return from Active Duty: 

Abbreviations: 

DOD: Department of Defense: 

FFEL: Federal Family Education Loan: 

HEROES: Higher Education Relief Opportunities for Students: 

IPEDS: Integrated Postsecondary Education Data System: 

United States Government Accountability Office: 
Washington, DC 20548: 

November 1, 2006: 

The Honorable Howard P. McKeon: 
Chairman: 
Committee on Education and the Workforce: 
House of Representatives: 

The Honorable Robert E. Andrews: 
House of Representatives: 

The Honorable John A. Boehner: 
House of Representatives: 

The Honorable John Kline: 
House of Representatives: 

The Higher Education Relief Opportunities for Students (HEROES) Act was 
first enacted in January 2002, against the backdrop of one of the most 
tragic events in U.S. history. Since September 11, 2001, more than 1.3 
million members of the armed forces have been deployed--leaving 
families, jobs, and educational pursuits--to serve their 
country.[Footnote 1] HEROES specifically recognizes the needs of active 
duty servicemembers and members of the National Guard and Reserves who 
are deployed in the midst of pursuing their postsecondary education or 
repaying student loans. In some instances, servicemembers may only have 
a few days to prepare for departure and ensure that their affairs are 
in order. They may need to put classes and coursework on hold, notify 
school officials and lenders, and some may not be able to make regular 
payments on their federal student loans while they are gone. The law 
authorizes the Secretary of Education to waive or modify any statutory 
or regulatory provisions relating to federal student financial aid to 
ensure that individuals who are serving on active duty in connection 
with a war, other military operation, or national emergency are not 
placed in a worse position financially because of their military 
service. The law requires the Department of Education (Education) to 
report on the impact of these waivers and modifications on affected 
students and student loan borrowers within 15 months of exercising its 
authority. HEROES also addresses the needs of servicemembers who must 
leave school for active duty service. While the law does not require 
postsecondary schools to assist these students, it encourages schools 
to provide tuition refunds for courses they were unable to complete and 
to minimize reapplication requirements when they return to school. 

To better understand the types of relief students and federal student 
loan borrowers serving on active duty receive, you asked us to 
determine (1) how the Department of Education has implemented HEROES, 
(2) the policies and practices federal student loan lenders have in 
place to assist borrowers serving on active duty, and (3) the policies 
and practices postsecondary schools have to assist students who are 
serving on active duty. 

To learn how Education has implemented HEROES, we reviewed the waivers 
and modifications along with guidance Education communicated through 
Dear Colleague Letters to the higher education community, and 
interviewed agency officials at Education and the Department of 
Defense. We also reviewed summary information about contacts made to 
the Ombudsman at Education's Office of Federal Student Aid to determine 
the extent to which federal student aid recipients experienced 
difficulties with their schools or lenders as a result of active duty 
service.[Footnote 2] To determine what policies and practices lenders 
have in place to assist student loan borrowers serving on active duty, 
we conducted semistructured interviews with representatives of the nine 
largest lenders in the Federal Family Education Loan (FFEL) program 
that hold about two-thirds of the program's $289 billion in outstanding 
federal student loan volume.[Footnote 3] To determine what policies or 
practices colleges and universities have in place to assist students 
serving on active duty, between January and March 2006, we surveyed a 
random sample of 2-year and 4-year public postsecondary schools and 4- 
year private, nonprofit postsecondary schools with enrollments of at 
least 100.[Footnote 4] We excluded other types of schools, such as 
private, for-profit schools, from our sample, as they represent a 
relatively small percentage of postsecondary schools. We received a 
response rate of 77 percent. The survey collected information about the 
types of policies or practices that schools have in place to assist 
students leaving for active duty service, but we did not evaluate their 
effectiveness. To better understand the range of assistance provided to 
students who must leave school for active duty service, we selected 
four postsecondary schools to visit based on their extensive experience 
with military departures. Specifically, we visited two public 
universities from our survey sample that have had more than 100 
students leave for active duty service since the passage of HEROES, 
along with a community college and public university that serve a large 
number of students in the U.S. military at installations throughout the 
world. To gain students' perspectives as they transitioned out of and 
back into academic life and dealt with their student loans, we 
interviewed seven students who experienced an interruption in their 
studies as a result of active duty service. The students represented a 
range of individuals serving in the National Guard and Reserves at 
different stages in their academic careers and personal lives, 
including undergraduate and graduate students, both single and married 
with dependents. The results from these interviews are not 
generalizable to or representative of all students in this affected 
population. Instead, the interviews provide a glimpse into the issues 
this particular student population faces. We conducted our work between 
June 2005 and September 2006 in accordance with generally accepted 
government auditing standards. See appendix I for a detailed 
description of our survey methodology. 

Results in Brief: 

Education has waived and modified certain federal student financial aid 
provisions and issued guidance to the higher education community to 
provide relief for active duty servicemembers, but it has not assessed 
the extent to which servicemembers are taking advantage of the relief. 
These waivers and modifications are designed to help federal student 
financial aid recipients avoid negative financial consequences, such as 
defaulting on their student loans, and ease administrative requirements 
that might delay the provision of assistance. For example, Education 
has expanded opportunities for servicemembers to avoid or postpone 
repayment. Students who leave for active duty service no longer have to 
return or repay federal grant funds for academic terms they were unable 
to complete, and they are treated as still enrolled in school, which 
means that they do not yet have to begin repaying any student loan 
disbursements they have received. Education also waived the requirement 
that borrowers provide written documentation of active duty service in 
order to qualify for certain benefits, allowing lenders to provide 
immediate assistance to borrowers, such as suspending their loan 
payments for up to 1 year, based on verbal notification. Education has 
also issued guidance regarding these changes to the higher education 
community, including postsecondary schools and lenders. However, 
Education has not collected key information that would allow it to 
assess the extent to which eligible servicemembers have received 
assistance from the flexibilities allowed by the waivers and 
modifications, as required by HEROES. Based on the Act's requirements, 
Education should have reported to Congress on the impact of its waivers 
and modifications by March 2005. Education has no plans to complete the 
study because it interpreted the Act as requiring a rigorous 
experimental design that officials say would be costly and cannot 
currently be supported with Education's data systems. However, it has 
not explored the possibility of leveraging outside data sources to 
fulfill the mandate. 

Federal student loan lenders have implemented policies and practices 
that are designed to minimize the financial impact and administrative 
burden for borrowers serving on active duty. Many of these are required 
by Education's waivers and modifications, such as providing options 
that allow borrowers to suspend or postpone repayment of their student 
loans. For borrowers who were making payments on their loans at the 
time they left for active duty service, lenders said they will suspend 
the payments. However, depending on the type of loan they have and the 
type of assistance they are eligible for, borrowers may be responsible 
for paying the interest that continues to accrue on the loans. Some of 
the lenders we interviewed, however, reported practices to minimize the 
financial impact on these borrowers that go beyond the requirements of 
the HEROES waivers and modifications. Specifically, lenders can 
periodically capitalize the interest that continues to accrue during 
periods when a borrower's loan repayment is suspended, but three 
lenders have chosen not to capitalize the interest, which reduces the 
amount of interest that borrowers must pay. Additionally, one lender 
offered to forgive $2,500 in loans for servicemembers who have lived in 
Pennsylvania or attended college there. To minimize the administrative 
burden, lenders have simplified procedures for receiving notification 
about a borrower's active duty service. Specifically, borrowers only 
need to contact the lender once to receive assistance, and lenders will 
also accept notification from someone acting on the borrower's behalf, 
such as a family member or commanding officer. 

We found that most colleges and universities have had students leave 
for active duty service and have policies or practices in place to help 
them when they leave and when they return to school. Specifically, we 
estimate that about 80 percent of colleges and universities have had 
students who departed for active duty service, and nearly three- 
quarters have policies or practices to help them. About two-thirds of 
colleges reported that their policies were in place prior to the 
passage of the HEROES Act of 2001; some schools' policies may have been 
influenced by laws in 26 states that are designed to assist students 
when they leave school for active duty service. Schools reported a 
number of policies or practices to minimize the financial and academic 
impact of active duty service, such as providing tuition refunds and 
options to withdraw from classes or complete coursework later. Five of 
the seven students we interviewed chose to withdraw from their courses, 
often to give them time to put their personal affairs in order. We 
found that a majority of the colleges and universities with policies to 
minimize the academic impact of leaving for active duty service also 
have policies to help students reenroll, including suspending the 
requirement that they reapply for admission and waiving changes to 
degree requirements. 

In this report, we recommend that the Secretary of Education undertake 
the congressionally mandated study to determine the extent to which 
eligible servicemembers are receiving assistance under HEROES. 

We provided copies of a draft of this report to the Department of 
Education and the Department of Defense for review and comment. 
Education agreed with the report's findings and said the recommendation 
has merit. Education has agreed to explore options for conducting the 
congressionally mandated study. Education's written comments are in 
appendix III. The Department of Defense had no comments. 

Background: 

Congress has demonstrated its commitment to providing education 
benefits to members of the armed forces who are interested in pursuing 
postsecondary education since the enactment of the Servicemen's 
Readjustment Act of 1944, also known as the GI Bill of Rights. Since 
that time other programs have been implemented to meet the educational 
needs of servicemembers, including the current Montgomery GI Bill, 
which provides education assistance to veterans and active duty, 
Reserve, and National Guard servicemembers. As of fiscal year 2007, 
active duty servicemembers can receive up to $1,075 monthly for a 
maximum of 36 months, while Reservists can receive up to $309 monthly 
for a maximum of 36 months. In fiscal year 2005, another program, the 
Reserve Educational Assistance Program, was implemented to provide 
benefits for Reservists who are called or ordered to active duty in 
response to a war or national emergency. Those who meet the length of 
service requirement can receive up to $827 toward their education, per 
month for 36 months. Congress has also given the Army, Navy, Marines, 
Air Force, and Coast Guard the ability to provide tuition assistance to 
active duty servicemembers and members of the Reserves and National 
Guard. These servicemembers can currently receive up to $4,500 in 
tuition assistance benefits annually. 

In addition to these targeted programs, servicemembers may be eligible 
to participate in the federal student financial aid programs authorized 
by Title IV of the Higher Education Act, which authorizes federal grant 
and loan programs for all eligible students. Specifically, if their 
military education benefits, income, and assets do not fully cover the 
estimated cost of attendance, servicemembers may be eligible for 
federal Pell grants, which do not have to be repaid, as well as 
federally subsidized Stafford and Perkins student loans, on which the 
federal government pays the interest while the borrower is in school. 
Servicemembers, like other borrowers, may also qualify for unsubsidized 
federal Stafford and PLUS loans if they do not demonstrate financial 
need.[Footnote 5] Because these loans are not subsidized by the federal 
government, borrowers are responsible for paying all of the interest 
that accrues on the loan from the time the loan is disbursed until it 
is paid in full. 

The Higher Education Relief Opportunities for Students (HEROES) Act of 
2003 was enacted to recognize the difficulties that postsecondary 
students and federal student financial aid recipients serving on active 
duty may experience in transitioning in and out of college and repaying 
their student loans.[Footnote 6] The law covers individuals who are 
serving on active duty, during a war, other military operation or 
national emergency, including members of the National Guard serving on 
full-time active duty and Reserves who are called to active 
duty.[Footnote 7] The law extends much of the relief that Congress 
initially provided in the HEROES Act of 2001, following the tragic 
events of September 11, 2001.[Footnote 8] Specifically, the HEROES Act 
of 2003 authorizes the Secretary of Education to waive or modify any 
statutory or regulatory provisions relating to federal student 
financial aid to minimize the financial impact and administrative 
requirements for individuals who are serving on active duty. The law 
requires Education to report to Congress on the impact of its efforts 
within 15 months of exercising its authority. While the law does not 
require postsecondary schools to assist students who leave for active 
duty service, it encourages them to provide tuition refunds for 
incomplete coursework and to minimize reapplication requirements. 

Federal student financial aid provisions include a number of options 
designed to allow any federal student loan borrowers--whether serving 
on active duty in the military or not--to postpone repayment. For 
example, borrowers are not expected to make payments on their loans 
while enrolled in school on at least a half-time basis, while 
completing a graduate fellowship, or for the first 6 or 9 months after 
they have left school, known as the grace period.[Footnote 9] There are 
also options that allow borrowers to postpone repayment if they are 
having difficulty meeting their repayment schedule. Borrowers may 
qualify for a deferment if they have been unable to find full-time 
employment or can demonstrate economic hardship.[Footnote 10] 
Additionally, members of the armed forces may qualify for a military 
deferment while they are serving on active duty during a war, other 
military operation, or national emergency.[Footnote 11] Borrowers who 
are not eligible for any of the deferment options can request 
forbearance, a temporary period during which loan payments are either 
reduced or postponed. While borrowers do not have to make loan payments 
during in-school, grace, deferment, or forbearance periods, whether or 
not they are responsible for paying the interest that continues to 
accrue depends on the type of loan and postponement, as shown in table 
1. 

Table 1: Responsibility for Interest Payments by Postponement and Loan 
Type: 

Type of postponement: In-school; 
Loan type: Subsidized: Federal government; 
Loan type: Unsubsidized: Student. 

Type of postponement: Grace; 
Loan type: Subsidized: Federal government; 
Loan type: Unsubsidized: Student. 

Type of postponement: Deferment; 
Loan type: Subsidized: Federal government; 
Loan type: Unsubsidized: Student. 

Type of postponement: Forbearance; 
Loan type: Subsidized: Student; 
Loan type: Unsubsidized: Student. 

Source: GAO analysis. 

[End of table] 

Education Has Issued Waivers and Modifications to Provide Relief for 
Aid Recipients Serving on Active Duty, but the Impact of These Changes 
Is Not Known: 

Education has implemented HEROES by waiving and modifying certain 
federal student financial aid provisions to ease the financial impact 
and administrative burden of meeting aid obligations for recipients 
serving on active duty. The extent to which servicemembers are 
benefiting from these waivers and modifications is not known, however, 
because Education has not collected key information that would allow it 
to assess the impact of these changes as required by HEROES. 

Education's Waivers and Modifications under HEROES Aimed at Relieving 
Financial and Administrative Burden for Student Financial Aid 
Recipients Serving on Active Duty: 

To help federal student financial aid recipients who are serving on 
active duty avoid negative financial consequences, such as loan 
default, Education has expanded opportunities to avoid or postpone 
repayment of federal student grants and loans. Students who leave 
school for active duty service no longer have to return or repay 
federal grant funds for academic terms they were unable to complete. 
Moreover, students who leave school for active duty service are 
considered to be still enrolled in school, which means that they do not 
yet have to begin repaying their student loans. Similarly, Education 
has expanded opportunities to postpone repayment for borrowers serving 
on active duty who are out of school or enrolled less than half-time. 
Specifically, under the HEROES waivers, if borrowers were in a grace 
period at the time of departure, lenders are required to maintain loans 
in a grace period for up to 3 years while the borrower is performing 
active duty service and provide borrowers with a full 6-month or 9- 
month grace period once they return, depending on the type of 
loan.[Footnote 12] Borrowers in repayment no longer have to provide 
their lender written documentation of active duty service to have loan 
repayment suspended for up to 1 year. Instead, under the HEROES 
waivers, lenders must suspend loan payments based on verbal 
notification from borrowers or another reliable source. Figure 1 
illustrates the options available to suspend or postpone loan repayment 
for federal student loan borrowers serving on active duty. 

Figure 1: Options Available to Suspend or Postpone Loan Repayment for 
Borrowers Serving on Active duty: 

[See PDF for image] 

Source: GAO analysis. 

[End of figure] 

Education's waivers and modifications also cover borrowers who had 
already defaulted on their student loans at the time of 
departure.[Footnote 13] Specifically, Education has waived the 
provisions that require schools and guaranty agencies to attempt to 
collect on defaulted loans while the borrower is performing active duty 
service.[Footnote 14] Education has also waived requirements related to 
getting loans out of default. Specifically, once a borrower has 
defaulted on a loan, he or she can usually "rehabilitate" it by making 
12 consecutive on-time payments. To ensure that borrowers on active 
duty service are not penalized, Education has waived the requirement so 
that any payments that are missed during active duty service or during 
a 3-month transition period upon return will not be treated as an 
interruption. 

The waivers and modifications also encourage schools to use their 
professional judgment in determining financial need for students whose 
family income has been affected by active duty service, regardless of 
whether the student or the student's parent or spouse is serving on 
active duty. Education's waivers and modifications allow financial aid 
administrators to consider more current financial information than what 
students typically submit when applying for federal student financial 
aid if it reduces the amount the student and his or her family would be 
expected to pay toward the cost of attendance. For example, the 
expected family contribution for the 2006-2007 academic year would 
typically be calculated using financial information from the 2005 
calendar year, but the waivers and modifications allow financial aid 
administrators to use financial information from the 2006 calendar year 
for those serving on active duty and their spouses and dependents. 
Financial aid administrators need not make this adjustment if doing so 
will provide no financial benefit to the student, such as in cases in 
which active duty service leads to an increase in income. 

Education's waivers and modifications also ease the administrative, or 
"paperwork," burden federal student financial aid recipients may 
experience when they are serving on active duty. For example, Education 
has made allowances for borrowers who have to depart quickly by 
requiring lenders to accept notification from someone acting on the 
borrower's behalf, such as a spouse or parent. Education has also 
relaxed the requirement that postsecondary schools obtain written 
authorization from a borrower regarding the disbursement of financial 
aid when military service would make complying with this requirement 
difficult. Under the waivers and modifications, borrowers serving on 
active duty also have more time to cancel a student loan. While 
borrowers normally have 14 days from receiving notification from their 
school that their loan has been credited to their account to cancel all 
or a portion of their student loan, borrowers serving on active duty 
have 60 days. 

Education officials told us that when they developed the waivers and 
modifications, they began by considering which federal student 
financial aid provisions could have negative financial consequences for 
individuals eligible for relief under HEROES and then conducted 
internal brainstorming sessions to identify options for relief. The 
officials said the process was guided by the understanding that 
Education was charged with waiving and modifying existing statutory and 
regulatory provisions, not creating new regulations or spending 
additional funds. Prior to issuing the waivers and modifications, 
Education officials reached out to industry groups, such as the 
National Association of Student Financial Aid Administrators and the 
National Council of Higher Education Loan Programs, to discuss the 
changes being considered and elicit additional ideas on how to best 
assist students and federal student financial aid recipients serving on 
active duty. Additionally, Education officials said the Department of 
Defense was instrumental in helping Education understand the deployment 
process, in particular how quickly deployment can occur and how little 
time servicemembers may have to attend to personal matters. One 
Education official said that understanding the nature of deployment was 
important in helping Education work through concerns about program 
integrity. Specifically, there were concerns that if administrative 
requirements were reduced by waiving written documentation requirements 
and allowing someone else to act on the borrower's behalf, program 
integrity might be adversely affected. Education decided that 
minimizing the obstacles to obtaining relief to ensure that borrowers 
did not inadvertently default on their student loans outweighed these 
concerns. Additionally, the official noted that the risks to the 
federal government are minimal since borrowers can only obtain 1 year 
of assistance without additional documentation, and they will 
eventually have to repay the remaining balance of their loans. 

After the passage of HEROES, Education announced limited waivers to 
statutory and regulatory provisions in May 2003 and announced more 
comprehensive waivers and modifications in December 2003. As required 
by HEROES, Education published the waivers and modifications in the 
Federal Register, which also provided guidance to help postsecondary 
schools, lenders, and guaranty agencies understand the changes. The 
waivers and modifications announced as a result of HEROES update and 
expand much of the guidance Education issued to the higher education 
community through Dear Colleague Letters immediately following the 
terrorist attacks of September 11, 2001, and again in March 2003. The 
initial Dear Colleague Letters focused on providing relief for students 
and federal student loan borrowers affected by the terrorist attacks, 
including military personnel. In October 2005, Education extended these 
waivers and modifications through September 2007. (See fig. 2.) 

Figure 2: Timeline for HEROES-Related Activities: 

[See PDF for image] 

Source: GAO analysis. 

[End of figure] 

See appendix II for a full list of the waivers and modifications. 

Education Has Not Assessed the Impact of Waivers and Modifications on 
Students and Federal Student Financial Aid Recipients, as Required: 

Education has not assessed the impact of waivers and modifications on 
federal student financial aid recipients and Title IV federal student 
financial aid programs as mandated by Congress. Specifically, both the 
2001 and 2003 HEROES Acts required Education to report to Congress on 
the impact of its waivers and modifications within 15 months of first 
exercising its authority to waive or modify federal student financial 
aid provisions. Based on Education's issuance of comprehensive waivers 
and modifications in December 2003, a study should have been completed 
no later than March 2005. While HEROES does not specify how Education 
should go about assessing the impact of its waivers and modifications, 
Education officials interpreted the Act as requiring a rigorous 
experimental design that they say would be costly and cannot currently 
be supported with Education's data systems. Therefore, Education 
currently has no plans to complete the required study. 

Currently, Education does not have a mechanism for identifying the 
total number of federal student financial aid recipients who have been 
provided assistance under HEROES within its data systems. Education 
maintains a central database of all federal student loans and Pell 
grants through its National Student Loan Data System, which tracks the 
status of loans and grants through their life cycle. The database 
collects required information on federal student aid recipients' 
enrollment status from schools and the status of their loans from 
lenders and guaranty agencies. Based on current reporting requirements, 
the system can only be used to identify two types of assistance 
provided to borrowers based on their military service, military 
deferment and military grace periods, which are coded uniquely in the 
system and existed prior to HEROES. Education officials told us that 
the system would have to be reengineered to identify other types of 
borrowers who received assistance under HEROES, such as those with 
loans in forbearance, because there are no additional codes in the 
system to explain what made the loan eligible for assistance, such as 
military service or financial difficulty. 

When Education announced waivers and modifications, it included a 
provision requiring postsecondary schools and lenders to document their 
use of the waivers and modifications in such a way that they could 
report on their effect to Education upon request. However, the 
announcement did not include any specific guidance on what types of 
data Education wanted and how schools and lenders should collect it to 
ensure Education could use the data. Education officials told us that 
they thought the requirement went largely unnoticed and that lenders 
generally do not collect information on this population in such a way 
that would be reportable. For example, the officials said that while 
lenders maintain information on the reasons for forbearance in a 
borrower's individual loan record, they would not have a mechanism for 
running a query to identify every borrower granted forbearance based on 
active duty service. In our discussions with lenders we found that 
three of the nine could provide us some data on the number of borrowers 
whose loan payments had been suspended through forbearance as a result 
of military service. Moreover, these lenders could provide some data on 
borrowers whose loans had been maintained in an in-school period while 
serving on active duty. 

Education has not explored other data sources that might be used in 
combination with its data systems to complete the congressionally 
required study. For example, the Department of Defense (DOD) has data 
that may be used in conjunction with Education's data to assess the 
number of federal student financial aid recipients who have been 
assisted by HEROES. DOD told us that it has extensive information on 
servicemembers, including mobilizations and deployments, through its 
Defense Manpower Data Center. DOD officials said it would be possible 
to conduct a match using common data points, such as Social Security 
numbers and dates of birth, with Education's National Student Loan Data 
System, to identify servicemembers who were participating in federal 
student financial aid programs at the time they were deployed. Once the 
target population has been identified, additional analysis to determine 
the extent to which these servicemembers received some relief might be 
possible. Education officials agreed that such a match would be 
possible, but said they would have concerns about being responsible for 
sensitive national security data of this nature. Additionally, they 
thought resources could be another limitation to such a match, since 
Education would likely have to provide funds to cover the work if it 
entered into a memorandum of understanding with DOD. 

Lenders Are Assisting Borrowers as Required by Education and Some Are 
Providing Additional Benefits: 

Lenders have a variety of policies and practices in place designed to 
provide relief for federal student loan borrowers serving on active 
duty, many of which are required under Education's waivers and 
modifications. To minimize the financial impact on borrowers, lenders 
provide them with options to suspend or postpone repayment on their 
student loans. For example, borrowers who were enrolled in school on at 
least a half-time basis before leaving for active duty service are 
eligible to have their loans maintained in an in-school status period, 
which means that they do not enter repayment while they are serving on 
active duty and are provided additional time to reenroll after 
completing their service. For borrowers who are repaying their loans, 
lenders said they will suspend repayment through a military deferment 
or forbearance during active duty service. Because borrowers are 
responsible for paying the interest that accrues on loans in 
forbearance, lenders consider forbearance as the last option for 
suspending repayment on a loan when borrowers are not eligible for any 
other type of assistance. 

Lenders also told us about policies or practices they have to minimize 
the financial impact on borrowers that go beyond the requirements of 
HEROES. Some lenders we interviewed reported practices to minimize the 
amount of interest that accrues while a loan is in forbearance during 
active duty service. While borrowers are not required to make any 
payments during a forbearance period, the interest on these loans 
continues to accrue, and ultimately the borrower is responsible for 
paying it. If the borrower elects not to pay any of the interest that 
has accrued during the forbearance period, the interest will eventually 
be capitalized by adding the accrued interest to the remaining 
principal balance. From that point on, interest will be assessed on the 
new, higher principal balance. Federal student financial aid provisions 
allow lenders to capitalize the interest that accrues on loans in 
forbearance either quarterly or at the end of the forbearance period, 
depending on when the loan was originally disbursed.[Footnote 15] 
However, three lenders told us that they do not capitalize the interest 
on loans in forbearance as a result of active duty service, which 
reduces the total amount of interest that borrowers serving on active 
duty must pay. Additionally, one Pennsylvania-based lender has extended 
benefits beyond the requirements of HEROES by offering loan forgiveness 
for servicemembers who have lived in Pennsylvania or attended college 
there. The program provides a one-time loan-forgiveness benefit of 
$2,500 for members of the armed forces who have been in an active duty 
status between September 11, 2001, and December 31, 2006. 

Lenders also follow Education's waivers and modifications designed to 
reduce the administrative burden for borrowers serving on active duty, 
for example, by providing immediate assistance to borrowers based on 
verbal notification of their active duty service. A representative from 
one of the lenders we interviewed told us that the simplified 
documentation requirements allowed under the HEROES waivers and 
modifications have made it easier for lenders to quickly respond to 
borrower needs. She said that without this assistance, borrowers might 
have become delinquent on their loans--which could adversely affect 
their credit rating--while waiting to be approved for forbearance 
because of the documentation requirements. 

Lenders told us that with these simplified procedures, they could help 
servicemembers with just one short telephone call. For example, all the 
lenders we interviewed have toll-free numbers that borrowers can call 
to obtain information about or request assistance with their loans, and 
borrowers only need to contact the lender once to receive assistance, 
such as military deferment or forbearance. Lenders said the borrower is 
typically the one who contacts the lender about his or her active duty 
service, but they will also accept notification from someone acting on 
the borrower's behalf, such as a spouse, parent, or other reliable 
source. Three lenders explained that individuals who notify the lender 
must have sufficient information about the borrower's account to be 
considered a reliable source. During the initial contact, a customer 
service representative will determine what benefits the borrower is 
eligible for based on his or her individual circumstances. According to 
several lenders, this stage of the process can usually be completed in 
5 to 10 minutes, and any changes that are made to the loan status will 
be processed within 3 to 5 days, at which time a notice is mailed to 
the borrower confirming the changes that were made and the time periods 
these changes will remain in effect. 

The process is similar when borrowers return. However, since borrowers 
may not contact the lender when they return from active duty service, 
lenders said that they rely on information documented in the borrower's 
account to determine the length of the benefit period. Lenders send 
borrowers a notice by mail before the benefits lapse to inform them of 
what will happen to the loans at the end of the period, along with 
contact information should the borrower need additional assistance with 
their loans. For example, a borrower with a loan in forbearance would 
receive a notice indicating when the forbearance period is scheduled to 
end along with repayment terms, such as when the borrower will have to 
begin making payments and how much he or she will have to pay each 
month. The advance notice is designed to allow sufficient time for 
borrowers who are continuing to serve on active duty to submit copies 
of military orders to extend the assistance they are receiving with 
their loans. Borrowers need not take any action when they receive 
notification from the lender if they have returned from active duty 
service and do not require further assistance with their loans. 

While the benefits available to borrowers under HEROES end after the 
borrower has returned from active duty service and used any available 
transition period, most of the lenders we talked to said they would 
continue to work with any borrowers having difficulty making their 
monthly payment after returning from active duty service. For example, 
officials from one lender said they would offer borrowers other 
repayment alternatives, such as income-sensitive repayment to lower 
their monthly payment amount, or additional forbearance time as allowed 
under federal student financial aid provisions. 

Most Schools Have Had Students Leave for Active Duty and Have Policies 
in Place to Aid Their Departure and Return: 

The majority of colleges and universities have had students who left 
school for active duty service before the end of their academic term 
and have policies to assist these students when they leave and when 
they return to school. Schools reported having policies covering 
refunds of tuition and room and board, grading, and changes to 
graduation and degree requirements that might occur while students are 
serving on active duty. 

Most Colleges and Universities Have Had Students Leave for Active Duty: 

The majority of colleges and universities--about 80 percent--have had 
students leave school for active duty service prior to the end of their 
academic term, according to our survey, with a greater percentage of 
public schools having experience with such departures.[Footnote 16] For 
example, we estimate that 66 percent of 4-year private schools had 
students who left for the military compared to 96 percent of 4-year 
public schools (see fig. 3). Although the majority of schools had 
students who left for active duty service, most of these schools could 
not identify the number of students who left since HEROES was first 
enacted in January 2002. Officials at two of the universities we 
visited told us that more than 100 of their students had left and 
partly attributed the large number of departures to their campuses' 
proximity to military bases and National Guard units. 

Figure 3: Estimated Percentage of Schools with Students Who Have Left 
for Active Duty: 

[See PDF for image] 

Source: GAO survey of colleges and universities. 

Note: The 95 percent confidence interval for the estimated percentage 
of 4-year private schools is from 53 to 78 percent. 

[End of figure] 

Most Schools Have Policies in Place to Aid Students When They Leave for 
Active Duty Service and Return to School: 

We estimate that nearly three-quarters of schools have policies or 
practices for students who leave for active duty service prior to the 
end of the academic term.[Footnote 17] Schools with students who have 
left were more likely to report having policies. About two-thirds of 
schools reported that their policies were in place prior to the 
enactment of the first HEROES Act in 2001. For example, officials at 
one university we visited said the institution's policies were 
developed in the 1990s in response to the many students who had to 
leave school for active duty service in Kuwait. Some of these schools' 
policies may have been influenced by state law. Specifically, we 
identified 26 states that have laws to assist students who leave for 
active duty service (see fig. 4). Most of them apply only to public 
colleges and universities, and require schools to have nonpunitive 
withdrawal policies and issue tuition refunds for students who choose 
to withdraw. Both Texas and Florida, for example, require public 
colleges and universities to provide students with the option of 
receiving a full tuition refund for any course they withdraw from or 
completing it at a later date without penalty. Additionally, Texas 
provides professors with the flexibility to assign students a grade 
based on the work completed at the time of departure. 

Figure 4: States with Laws to Assist Students Who Leave School for 
Active Duty: 

[See PDF for image] 

Source: GAO (data); Copyright Corel. All rights reserved (map). 

[End of figure] 

School Policies Address the Broad Range of Issues Confronting Students 
Who Must Leave for Active Duty Service: 

Most schools have policies in place to help students who leave for 
active duty service transition out of and back into school. Figure 5 
illustrates the options that may be available to these students when 
they depart and return. 

Figure 5: Selected Options Available to Ease Departure and Return for 
Students Serving on Active Duty: 

[See PDF for image] 

Source: GAO analysis. 

[End of figure] 

For students who leave for active duty service before completing an 
academic term, the majority of schools offer tuition refunds and 
various options for withdrawing from courses. We estimate that 70 
percent of colleges and universities have tuition refund policies for 
students leaving for active duty service, and most of them provide a 
full tuition refund for these students (see fig. 6). The majority of 
schools that provide a partial refund prorate the refund based on how 
much of the term the student has completed. 

Figure 6: Estimated Percentage of Schools with Policies on Tuition 
Refunds for Students Leaving for Active Duty: 

[See PDF for image] 

Source: GAO survey of colleges and universities. 

Note: One percent of schools that have tuition refund policies reported 
that their policies do not allow for any portion of the tuition to be 
refunded. 

[End of figure] 

Some schools also reported having policies that allow for the refund of 
room and board. Of the schools that offer campus housing, 52 percent 
reported having policies regarding room and board refunds. Of those, 82 
percent reported that they provide a partial refund of room and board, 
usually based on the amount of the term completed, for students leaving 
for active duty (see fig. 7). 

Figure 7: Estimated Percentage of Schools That Offer Campus Housing 
with Room and Board Refund Policies for Students Leaving for Active 
Duty: 

[See PDF for image] 

Source: GAO survey of colleges and universities. 

Note: This analysis includes only colleges and universities that offer 
campus housing based on data in the Integrated Postsecondary Education 
Data System (IPEDS). The 95 percent confidence interval for the 
estimated percentage of schools that offer a full refund is from 10 to 
30 percent, and the 95 percent confidence interval for schools that 
provide a partial refund is from 70 to 90 percent. 

[End of figure] 

Most of the schools require documentation of active duty service, such 
as a copy of military orders, before students can receive a refund of 
tuition or room and board, although in some cases students may not have 
documentation before leaving. For example, officials at one university 
we visited said that their students who left for active duty service 
shortly after September 11, 2001, did not receive their military orders 
before departing, and as a result their tuition refunds could not be 
processed before they left. 

Students may also risk failing courses or delaying graduation when they 
leave school before the term has been completed, but about two-thirds 
of schools have put in place policies to help them minimize the 
academic impact of leaving (see fig. 8). Almost all of these schools 
allow students leaving for active duty service to receive a grade of 
"incomplete"--giving them the option to finish the class later--or 
withdraw from a course without receiving a grade. Of the schools that 
allow a student to receive an incomplete in an unfinished course, 68 
percent require the student to complete the coursework within specific 
time frames--anywhere from less than a month to 36 months--to receive a 
letter grade in the course. In addition, over half of schools that have 
policies to minimize academic impact allow instructors to assign a 
grade based on partially completed coursework. 

Figure 8: Estimated Percentage of Schools with Policies to Minimize the 
Academic Impact for Students Leaving for Active Duty: 

[See PDF for image] 

Source: GAO survey of colleges and universities. 

[End of figure] 

Of the seven students we interviewed, one was able to work with his 
instructors to complete remaining coursework for a grade before leaving 
for active duty service, and five opted to withdraw from their 
classes.[Footnote 18] An undergraduate student in the Army National 
Guard we interviewed said that he withdrew from his classes as soon as 
he received the alert that his military unit would be deployed. He said 
that withdrawing from school allowed him to focus on ensuring that 
health insurance and medical care were in place for his son, who has a 
serious illness. A graduate student in the Marine Reserves who received 
1 week advance notice of deployment withdrew from classes to allow time 
to handle financial obligations. While withdrawing from classes ensures 
that students will not have failing grades to contend with, two 
students expressed concern about how the withdrawals on their 
transcripts would be perceived by other postsecondary schools when 
applying for a transfer or graduate study. The university these 
students attend has since begun allowing students to get these 
withdrawals deleted from their records, which means there would be no 
record of the student having attempted the course on their transcript. 
One undergraduate student we spoke to reported difficulty withdrawing 
from his classes. He told us that while he was deployed multiple times 
for durations of 1 to 3 weeks, his university approved only one of his 
requests to withdraw. Even though his deployments were relatively 
short, he said it was difficult for him to keep up with the coursework 
and his academic performance suffered as a result. 

In addition to allowing students to withdraw or receive a grade of 
incomplete, some of the colleges we visited provided other options for 
students leaving for active duty service to complete classes. Officials 
at one college we visited said that some students who have left school 
for active duty service have been able to complete a course by 
delivering remaining assignments to their professor by Email or 
completing a classroom course via the Internet when it is offered in an 
online version. One university we visited that has a large number of 
military students reported great increases in online course enrollment 
in 7 years, from 20,000 to 150,000 students. Also, a college based in 
Texas with campuses on military bases worldwide offers courses using 
such tools as prerecorded and live lectures displayed over the 
Internet, interactive online discussions that can facilitate student 
participation, and course materials provided on compact disc. 

When students return to school from active duty service, most schools 
also have policies to ease their transition. Specifically, about half 
of schools with policies to minimize the academic impact of leaving for 
active duty service do not require students to reapply for admission 
(see fig. 9). Of those schools that require students to reapply, almost 
all guarantee readmission, and 84 percent waive application 
fees.[Footnote 19] Officials at one college we visited reported that 
students returning from active duty service are required to reapply 
just to ensure that the school has updated contact information for the 
students. Moreover, a student may return from active duty to find that 
degree requirements have been changed, such as courses required for a 
major, which could delay graduation. Sixty percent of schools with 
policies designed to minimize the academic impact of leaving for active 
duty service exempt returning students from changes in degree 
requirements that occurred during their absence (see fig. 9). 
Additionally, the majority of schools with polices to minimize academic 
impact reported having mechanisms that allow returning students to 
appeal failing grades and changes to degree requirements. 

Figure 9: Estimated Percentage of Schools with Policies to Minimize the 
Academic Impact When Students Return from Active Duty: 

[See PDF for image] 

Source: GAO analysis of survey results. 

[End of figure] 

Conclusions: 

Our study showed that most colleges and universities have experienced 
military departures, and schools and lenders have marshaled behind 
servicemembers by putting in place policies and practices to minimize 
the impact of serving their country. Education issued waivers and 
modifications to federal student financial aid provisions to protect 
this population, and states also have laws in place to support them. 
However, critical information to gauge the usefulness of these waivers 
and modifications is missing. Specifically, Education does not have 
very basic information on the extent to which servicemembers are 
benefiting from the waivers and modifications. We know that more than 
1.3 million servicemembers have been deployed since September 11, 2001, 
but information on the extent to which these individuals are college 
students or have federal student loans and are receiving relief under 
HEROES is unknown. While an impact study of HEROES as Education has 
interpreted the congressional requirement would be difficult and costly 
to undertake, important information such as this could be obtained 
without using a rigorous experimental design. Such information would be 
important to gauge the extent to which those eligible are taking 
advantage of HEROES and may provide Education with information about 
issues for future study. 

Recommendation for Executive Action: 

To ensure that Congress knows the extent to which the waivers and 
modifications are being used, we recommend that the Secretary of 
Education undertake the congressionally mandated study to determine the 
extent to which eligible servicemembers are receiving assistance under 
HEROES. 

Agency Comments: 

We provided copies of a draft of this report to the Department of 
Education and the Department of Defense for review and comment. In 
written comments, the Department of Education agreed with our findings. 
With respect to our recommendation, Education said it has merit and 
that it will explore options for completing the congressionally 
mandated study. Education commented that because highly sensitive 
national security data from DOD would be required, DOD should take the 
lead in extracting the data. Education said it would explore this 
possibility following discussions with Congress and DOD. As we stated 
and recommended in our report, the responsibility for conducting the 
study resides with Education. Education's written comments are in 
appendix III. DOD had no comments on the draft report. 

Copies of this report will be sent to the congressional committees and 
subcommittees responsible for the Higher Education Act, the Secretary 
of Education, the Secretary of Defense, and other interested parties. 
Copies will also be made available to others upon request. In addition, 
this report will be available at no charge on GAO's Web site at 
[Hyperlink, http://www.gao.gov]. 

If you have any questions about this report, please contact me on (202) 
512-7215. Key contributors to this report are listed in appendix IV. 

Signed by: 

Cornelia M. Ashby: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Methodology for Survey of Colleges and Universities: 

To determine what policies or practices colleges and universities have 
in place to assist students serving on active duty, we designed a Web- 
based survey and distributed it to school administrators of 2-year 
public, 4-year public, and 4-year private, nonprofit postsecondary 
schools. The survey asked such questions as whether schools had 
students that left for active duty service prior to the end of an 
academic term and what their policies were for refunding tuition and 
room and board for this population of students. The survey included 
questions about the types of grading policies they had in place to 
accommodate students who left prior to the end of the academic term. 
The survey also asked respondents to report on how they assist students 
when they return from active duty service and resume their studies, 
such as whether the student needed to reapply and how the school 
handled changes in degree requirements. The survey was conducted 
between January and March 2006. 

Sample Design and Errors: 

Our sample was drawn using the Department of Education's 2002-2003 
Integrated Postsecondary Education Data System (IPEDS), which contains 
the most comprehensive data on all postsecondary schools.[Footnote 20] 
Our sample consisted of 2-year public, 4-year public and 4-year 
private, nonprofit postsecondary schools that participate in Title IV 
programs and have an undergraduate enrollment of at least 100 students. 
We drew a stratified random sample of 274 schools from the population 
of 2,974 that met our criteria. We selected our sample from four strata 
defined by size (student enrollment) and institution type (2-year 
public, 4-year public, and 4-year nonprofit private schools). Each 
school had a known probability of being selected. We received completed 
surveys from 75 percent of the 274 colleges and universities in our 
sample. Two schools in the sample were considered out of scope because 
of changes to their institutional status. The response rate, adjusted 
for out-of-scope respondents and weighted to reflect the population 
size in each stratum, was 77 percent. The population, sample, and 
survey respondents by strata are shown in table 2. We excluded private, 
for-profit schools from our sample because they represent a relatively 
small percentage of all postsecondary schools. 

Table 2: Survey of Postsecondary Schools: Population, Sample, and 
Survey Respondents by Strata: 

Strata: 4-Year Public, <10K enrollment; 
Population: 427; 
Sample: 40; 
In-Scope schools in sample: 39; 
Survey respondents: 32. 

Strata: 4-Year Nonprofit Private, <10K enrollment; 
Population: 1,208; 
Sample: 71; 
In-Scope schools in sample: 71; 
Survey respondents: 56. 

Strata: 2-Year Public, <10K enrollment; 
Population: 942; 
Sample: 60; 
In-Scope schools in sample: 59; 
Survey respondents: 43. 

Strata: Enrollment 10K; 
Population: 397; 
Sample: 103; 
In-Scope schools in sample: 103; 
Survey respondents: 74. 

Strata: Total; 
Population: 2,974; 
Sample: 274; 
In-Scope schools in sample: 272; 
Survey respondents: 205. 

Source: GAO survey of colleges and universities. 

Note: We stratified the schools in our population into these four 
groups to allow us to estimate either school type or school size. 
Because the population consists mostly of schools with an enrollment of 
less than 10,000 students (small schools), we sampled schools with more 
than 10,000 students (large schools) at a much higher rate. Because of 
the higher sampling rate of large schools and because almost all large 
schools were public, we did not need to further divide the large school 
stratum based on our desired maximum level of sampling error. 

[End of table] 

Our probability sample of colleges and universities is only one of a 
large number of samples that we might have drawn. Because each sample 
could have provided different estimates, we express our confidence in 
the precision of the results from our sample in confidence intervals. 
We are 95 percent confident that each of the confidence intervals for 
the items we examined from our survey includes the population value. 
Unless otherwise noted, all percentage estimates from our sample have 
margins of error of plus or minus 10 percentage points or less. We 
weighted each sampled school in the analysis to represent all the 
members of the population, which allows us to generalize the survey 
responses to the types of higher education schools surveyed. 

Nonsampling Errors: 

In addition to sampling errors, the practical difficulties of 
conducting any survey may introduce nonsampling errors. Examples of 
nonsampling errors include misinterpretation of questions and errors 
associated with manual data entry processes. We took several steps to 
minimize nonsampling errors. A draft of the survey was pretested with a 
number of postsecondary institution administrators to ensure that the 
questions were relevant, clearly stated, and easy to comprehend. On the 
basis of pretest findings, some slight changes were made to the 
instrument. All pretests were conducted between October and November 
2005. Also, using a Web-based survey eliminated the errors associated 
with a manual data entry process by allowing school administrators to 
enter their responses directly into an electronic instrument, 
automatically creating a record in a data file for each respondent. 
While we did not fully verify the extent to which schools adhered to 
their reported policies or practices, we followed up with some 
respondents to obtain additional information about the policies they 
reported. We also contacted respondents, if necessary, to clarify 
answers. Based on these checks, we believe our survey data are 
sufficiently reliable to be used in determining the policies or 
practices schools have in place to assist students who are called to 
active duty. In addition, programs used to analyze the survey data and 
make estimations were independently verified to ensure the accuracy of 
this work. To increase the number of survey respondents, once the Web 
survey was deployed, we followed up with school administrators through 
e-mail and by phone to remind them about the survey. 

To assess the completeness of the IPEDS data, we reviewed the National 
Center for Education Statistics' documentation on how the data were 
collected and performed electronic tests to look for missing or out-of- 
range values. On the basis of these reviews and tests, we found the 
IPEDS data sufficiently reliable for defining our population of 
schools. 

[End of section] 

Appendix II: Waivers and Modifications: 

69312: 

Federal Register/Vol. 68, No. 239 /Friday, December 12, 2003 /Rules and 
Regulations: 

Current section and paragraph: 250.1014 

Redesignated section and paragraph: 1250.1019. 

* 4. The. headings for newly redesignated §§ 250.1010 through 250.1014 
are revised, and headings for newly redesignated §§ 250.1015 through 
250.1019 are added to read as follows: 

§250.1009 Requirements to obtain pipeline right-of-way grants. 

§250.1010 General requirements for pipeline right-of-way holders. 

§250.1011 Bond requirements for pipeline right-of-way holders. 

§250.1012 Required payments for pipeline right-of-way holders. 

§250.1013 Grounds for forfeiture of pipeline right-of-way grants. 

§250.1014 When pipeline right-of-way grants expire. 

§250.1015 Applications for pipeline right-of-way grants. 

§250.1016 Granting pipeline rights-of-way. 

§250.1017 Requirements for construction under pipeline right-of-way 
grants. 

§250.1018 Assignment of pipeline right-of-way grants. 

§250.1019 Relinquishment of pipeline right-of-way grants. 

* 5. Redesignated § 250.1012 is revised to read as follows: 

§250.1012 Required payments for pipeline right-of-way holders. 

(a) You must pay MMS an annual rental of $15 for each statute mile, or 
part of a statute mile, of the OCS that your pipeline right-of-way 
crosses. (b) This paragraph applies to you if you obtain a pipeline 
right-of-way that includes a site for an accessory to the pipeline, 
including but not limited to a platform. This paragraph also applies if 
you apply to modify a right-of-way to change the site footprint. In 
either case, you must pay the, amounts shown in the following table. 

(1) Your accessory site is located in water depths of less than 200 
meters; 
Then: You must pay a rental of $5 per acre per year with a minimum of 
$450 per year. The area subject to annual rental includes the areal 
extent of anchor chains, pipeline risers, and other facilities and 
devices associated with the accessory. 

(2) Your accessory site is located in water depths of 200 meters or 
greater; 
Then: You must pay a rental of $7.50 per acre per year with a minimum 
of $675 per year. The area subject to annual rental includes the areal 
extent of anchor chains, pipeline risers, and other facilities and de-
vices associated with the accessory. 

(c) If you hold a pipeline right-of-way that includes a site for an 
accessory to your pipeline and you are not covered by paragraph (b) of 
this section, then you must pay MMS an annual rental of $75 for use of 
the affected area. 

(d) You may make the rental payments required by paragraphs (a), 
(b)(1), (b)(2), and (c) of this section on an annual basis, for a 5- 
year period, or for multiples of 5 years. You must make the first 
payment at the time you submit the pipeline, right-of-way application. 
You must make all subsequent payments before the respective time 
periods begin. 

(e) Late payments. An interest charge shall be assessed on unpaid and 
underpaid amounts from the date the amounts are due, in accordance with 
the provisions found in 30 CFR 218.54. If you fail to make a payment 
that is late after written notice from MMS, MMS may initiate 
cancellation of the right-of-use grant and easement under 30 CFR 
250.1009(d). 

[FR Doc. 03-30768 Filed 12-11-03; 8:45 am] BILLING CODE 4310-MR-P: 

DEPARTMENT OF EDUCATION: 

34 CFR Parts 668, 674, 682, and 685: 

Federal Student Aid Programs (Student Assistance General Provisions, 
Federal Perkins Loan Program, Federal Direct Loan Program, Federal 
Family Education Loan Program and the Federal Pell Grant Program): 

Agency: Department of Education. 

Action: Notice of waivers and modifications of statutory and regulatory 
provisions pursuant to the Higher Education Relief Opportunities for 
Students Act of 2003, Pub. L. 108-76. 

Summary: The Secretary of Education announces waivers and modifications 
of statutory and regulatory provisions that are appropriate to assist 
individuals (referred to in this notice as "affected individuals") who 
are applicants and recipients of student financial assistance under 
title IV of the. Higher Education Act of 1965, as amended (HEA), and 
who-: 

* Are serving on active duty during a war or other military operation 
or national emergency; 

* Are performing qualifying National Guard duty during a war or other 
military operation or national emergency; 

. Reside or are employed in an area that is declared a disaster area by 
any Federal, State, or local official in connection with a national 
emergency; or: 

* Suffered direct economic hardship as a direct result of a war or 
other military operation or national emergency, as determined by the 
Secretary. 

The Secretary is issuing these waivers and modifications under the 
authority of section 2(a) of the Higher Education Relief Opportunities 
for Students (HEROES) Act of 2003, Pub. L. 108-76. Section 2(b) of the 
HEROES Act requires the Secretary to publish, in a notice in the 
Federal Register, the waivers or modifications of statutory or 
regulatory provisions applicable to the student financial assistance 
programs under title IV of the HEA that the Secretary believes are 
appropriate to ensure that: 

* Individuals who are recipients of student financial assistance under 
title 1V are not placed in a worse position financially in relation to 
that student financial assistance because they are affected 
individuals; 

* Affected individuals who are recipients of student financial 
assistance are not unduly subject to administrative burden or 
inadvertent, technical violations or defaults; 

* Affected individuals are not penalized when a determination of need 
for student financial assistance is calculated; 

. Affected individuals are not required to return or repay an 
overpayment of grant funds based on the HEA's Return of Title IV Funds 
provision; and: 

* Entities that participate in the student financial assistance 
programs under title IV of the HEA and that are located in areas that 
are declared disaster areas by any Federal, State„ or local official in 
connection with a national emergency, or whose operations are 
significantly affected by such a disaster, receive temporary relief 
from administrative requirements. 

Section 2(b)(1) of the HEROES Act further provides that section 437 of 
the General Education Provisions Act (20 U.S.C. 1232) and Section 553 
of the Administrative Procedure Act (5 U.S.C. 553) do not apply to the 
contents of this notice. 

Section 5 of the HEROES Act defines the following terms used in this 
notice: 

Active duty-The term "active duty" has the meaning given that term in 
10 U.S.C. section 101(d)(1), but does not include active duty for 
training or attendance at a service school (e.g., the U.S. Military 
Academy or U.S. Naval Academy). 

Military operation-The term "military operation" means a contingency 
operation as that term is defined in to U.S.C. section 101(a)(13). 

National emergency-The term "national emergency" means a national 
emergency declared by the President of the United States. 

Serving on active duty-The term "serving on active duty during a war or 
other military operation or national emergency" includes service by an 
individual who is-: 

(A) a Reserve member of an Armed Force ordered to active duty under 10 
U.S.C. 12301(a), 12301(8), 12302, 12304, or 12306, or any retired 
member of an Armed Force ordered to active duty under 10 U.S.C. 688, 
for service in connection with a war or other military operation or 
national emergency, regardless of the location at which that active 
duty service is performed; and: 

(B) any other member of an Armed Force on active duty in connection 
with any war, operation, or emergency or subsequent actions or 
conditions who has been assigned to a duty station at a location other 
than the location at which the individual is normally assigned. 

Qualifying National Guard duty-The term "qualifying National Guard duty 
during a war or other military operation or national emergency" means 
service as a member of the. National Guard on full-time National Guard 
duty [as defined in 10 U.S.C. 101(d)(5)) under a call to active service 
authorized by the President or the Secretary of Defense far a period of 
more than 30 consecutive days under 32 U.S.C. 502(f), in connection 
with a war, another military operation, or a national emergency 
declared by the President and supported by Federal funds. 

Section 2(c) of the HEROES Act requires the Secretary to provide an 
impact report to the Committee on Education and the Workforce of the 
U.S. House of Representatives and the Committee on Health, Education, 
Labor, and Pensions of the U.S. Senate not later than 15 months after 
first exercising the authority to issue a waiver or modification under 
section 2(a) of the HEROES Act. The report will describe the impact of 
any waivers or modifications on affected individuals and the programs 
under title IV of the HEA, and the basis for that determination, and 
will include the Secretary's recommendations for changes to the 
statutory or regulatory provisions that were the subject of the waivers 
or modifications. Therefore, a guaranty agency, lender, or institution 
must document its application of a waiver or modification made in 
accordance with this notice in such a manner that the institution can, 
upon request, report to the Secretary on the effect of the waivers and 
modifications. 

Effective Date: December 12, 2003. The provisions of Pub. L. 108-76, 
and the waivers and modifications in this document, expire on September 
30, 2005. 

For Further Information Contact: For provisions related to the title IV 
loan programs (Federal Perkins Loan Program, Federal Family Education 
Loan (FFEL) Program, and Federal Direct Loan (Direct Loan) Program): 
Ms. Gail McLarnon or Mr. George Harris, Office of Postsecondary 
Education, U.S. Department of Education, 1990 K Street, NW., (8th 
Floor), Washington, DC 20006. Internet and Telephone: 
Gail.McLarnon®ed.gov and (202) 219-7048 or GeorgeOPE.Harris@ed.gov and 
(202)502-7521: 

For other provisions: Ms. Wendy Macias, U.S. Department of Education, 
1990 K Street, NW. (8th Floor), Washington, DC 20006. Internet and 
Telephone: Wendy.Macias@ed.gov and (202)502-7526. 

If you use a telecommunications device for the deaf (TED), you may call 
the Federal Information Relay Service (FIRS) at 1-800-877-8339. 
Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the program contact persons listed under For 
Further Information Contact. 

Supplementary Information: Category 1: The Secretary is waiving or 
modifying the following provisions of title IV of the HEA and the 
Department's regulations for ALL affected individuals specified in the 
Summary Section of this notice: 

Need Analysis: 

Section 480 of the HEA provides that, in the calculation of an 
applicant's expected family contribution (EFC), the term "total 
income," which is used in the determination of "annual adjusted family 
income" and "available income," is equal to adjusted gross income plus 
untaxed income and benefits for the preceding tax year minus excludable 
income. The HEROES Act allows an institution to substitute adjusted 
gross income plus untaxed income and benefits received in the first 
calendar year of the award year for which such determination is made 
for any affected individual, and for his or her spouse and dependents, 
if applicable, in order to reflect more accurately the financial 
condition of an affected individual and his or her family. The 
Secretary has determined that an institution has the option of using 
the applicant's original EFC or the EFC based on the data from the 
first calendar year of the award year. 

I^ an institution chooses to use the alternate EFC, it should use the 
administrative Professional judgment procedures established by the 
Secretary as discussed in the following section on "Professional 
Judgement." 

Professional judgment: 

Section 479A of the HEA specifically gives the financial aid 
administrator (FAA) the authority to use professional judgment to make 
adjustments on a case-by-case basis to the cost of attendance or to the 
values of the items used in calculating the EFC to reflect a student's 
special circumstances. The Secretary is modifying this provision by 
removing the requirement that adjustments be made on a case-by-case 
basis for affected individuals. The use of professional judgment in 
Federal need analysis is discussed in the Student Financial Aid 
Handbook. 

The Secretary encourages FAAs to use professional judgment in order to 
reflect more accurately the financial need of affected individuals. To 
that end, the Secretary encourages institutions to determine need for 
any affected individual by determining the most beneficial of: 

* The individual's need as determined using the adjusted gross income, 
plus untaxed income and benefits received in the first calendar year of 
the award year; 

* The individual's need as determined using professional judgment; or: 

* The individual's need as determined making no modifications. (For 
example, in some cases, an individual's income will increase as a 
result of serving on active duty or performing qualifying National 
Guard duty.) 

The FAA must clearly document the reasons for any adjustment. As usual, 
any professional judgment decisions made by an FAA that affect a 
student's eligibility for a Federal Pell Grant must be reported to the 
Central Processing System (CPS). 

Return of Title IV Funds rant Overpayments Owed by the Student: 

Section 484B(b)(2) of the HEA and 34 CFR 668.22(h)(3)(ii) require a 
student to return or repay, as appropriate, 50 percent of any unearned 
grant funds for which the student is responsible under the Return of 
Title N Funds calculation. For a student who withdraws from an 
institution because of his or her status as an affected individual, the 
Secretary is waiving these statutory and regulatory requirements so 
that a student is not required to return or repay an overpayment of 
grant funds based on the Return of Title IV Funds Provisions. For these 
students, the Secretary also waives 34 CFR 668.22(h)(4), which: 

* Requires an institution to notify a student of a grant overpayment 
and the actions the student must take to resolve the overpayment; 

* Denies eligibility to a student who owes an overpayment and does not 
take an action to resolve the overpayment; and: 

* Requires an institution to refer an overpayment to the Secretary 
under certain conditions. 

Therefore, an institution is not required to contact the student, 
notify NSLDS, or refer the overpayment to the Department. Note that 
this is a change from previous guidance that instructed institutions to 
refer these overpayments to the Department. However, the institution 
must document in the student's file the amount of any overpayment as 
part of the documentation of the application of this waiver. The 
student is not required to return or repay an overpayment of grant 
funds based on the Return of Title IV Funds provision; therefore, an 
institution must not apply any title IV credit balance to the grant 
overpayment before paying any amount of the title IV credit balance to 
the student or parent, in the case of a PLUS loan. 

Return of Title IV Funds-Amount of Unearned Funds Owed by the 
Institution: 

If the Return of Title IV Funds calculation results in the institution 
being required to return funds to one or more of the title IV programs, 
the institution must do so as it must for any student who withdraws. In 
many cases a return of funds by the institution will reduce the 
student's loan debt. 

Section 484B(b)(1) of the HEA and 34 CFR 668.22(g) provide that an 
institution must return the lesser of (1) the total amount of unearned 
aid to be returned; or (2) an amount equal to the student's total 
institutional charges for the payment period or period of enrollment 
multiplied by the percentage of unearned aid. The total (initial) 
amount of institutional charges is used even if the institution fully 
refunds or otherwise adjusts the amount of institutional charges after 
the student withdraws. For a student who withdraws because of his or 
her status as an affected individual, the Secretary is modifying this 
provision to exclude from the amount of e student's total institutional 
charges any institutional charges that the institution is required to 
cover, and has covered, with non-title IV sources of aid. For example., 
assume a student receives a state grant of $800 that must be used only 
for tuition charges. The institution applies the state grant toward the 
total institutional charges of $1,000. The student withdraws. The 
institution uses $200, the difference between the hill institutional 
charges and the amount of the state grant the institution was required 
to apply to the institutional charges, as the student's total 
institutional charges for the payment period or period of enrollment 
when determining the amount of unearned title IV funds that the 
institution must return. 

Verification of AGI and U.S. Income Tax Paid: 

34 CFR 668.57(a)(3) provides that when an individual whose income was 
used in the calculation of the EFC of an applicant for title IV 
assistance has not filed an income tax return because he or she has 
been granted a filing extension by the IRS, an institution must accept, 
in lieu of an income tax return for verification of AGI or income tax 
paid: 

* A copy of IRS Form 4868, "Application for Automatic Extension of Time 
to File U.S. Individual Income Tax Return," that the individual filed 
with the IRS for the base year, or a copy of the IRS's approval of an 
extension beyond the automatic four-month extension if the individual 
requested an additional extension of the filing time; and: 

* A copy of each W-2 received for the base year, or for a self-employed 
individual, a statement signed by the individual certifying the amount 
of AGI far the base year. 

The Secretary is modifying this provision so that the submission of a 
copy of IRS Form 4868 or a copy of the IRS extension approval is not 
required if an individual whose income was used in the calculation of 
the EFC: 

* Has not filed and was not required to file an income tax return by 
the filing deadline because he or she was called up for active duty or 
for qualifying National Guard duty during a war or other military 
operation or national emergency; and: 

* Was not required to file for an extension. 

For these individuals, an institution must accept, in lieu of an income 
tax return for verification of AGI or income tax paid: 

* A statement from the individual certifying that he or she has not 
filed and was not required to file an income tax return or a request 
for a filing extension because lie or she was called up for active duty 
or for qualifying National Guard duty during a war or other military 
operation or national emergency; and: 

* A copy of each W-2 received for the base year, or for a self-employed 
individual, a statement signed by the individual certifying the amount 
of AGI for the base year. 

The student must submit the tax return to the. institution once it is 
filed with the IRS for the institution to re-verify the AGI and taxes 
paid. 

Category 2: The Secretary is waiving or modifying the following 
provisions of title I V of the HEA and the Department's regulations for 
affected individuals who are serving on active duty, performing 
qualifying National Guard duty during a war or other military operation 
or national emergency, or who reside or are employed in a disaster area 
as described in the SUMMARY section of this notice: 

Return of Title IV Funds-Postwithdrawal Disbursements: 

Under 34 CFR 668.22(a)(4)(ii)(A)(3) and (B), a student (or parent for a 
PLUS loan) must be provided a postwithdrawal disbursement if the 
student (or parent) responds to an institution's notification of the 
postwithdrawal disbursement within 14 days of the date that the. 
institution sent the notice. If a student or parent submits a late 
response, an institution may, but is not required to, make the 
postwithdrawal disbursement. The Secretary is modifying this 
requirement so that, for a student who withdraws because of his or her 
status as an affected individual in this category and is eligible for a 
postwithdrawal disbursement, the 14-day time period in which the 
student (or parent) must normally respond to the offer of the post- 
withdrawal disbursement is extended to 45 days. If the student or 
parent submits a response after the 45-day period, the institution may, 
but is not required to, make the postwithdrawal disbursement. As 
required under the current regulations, if the student or parent 
submits the timely response instructing the institution to make all or 
a portion of the postwithdrawal disbursement, or the institution 
chooses to make a postwithdrawal disbursement based on receipt of a 
late response, the institution must disburse the funds within 120 days 
of the date of the institution's determination that the student 
withdrew. 

Leaves of Absence: 

34 CFR 668.22(d)(4)(iii)(B) requires a student to provide a written, 
signed, and dated request, which includes the reason for that request, 
for an approved leave of absence prior to the leave of absence, or at a 
later date if the student is prevented from providing a prior written 
request by unforeseen circumstances. It may be appropriate in certain 
limited cases for an institution to provide an approved leave of 
absence to a student who must interrupt his or her enrollment because 
he or she is an affected individual. Therefore, the Secretary is 
waiving the requirement that the student provide a written request for 
affected individuals who would have difficulty providing a written 
request as a result of being an affected individual. The institution's 
documentation of its decision to grant the leave of absence must 
include, in addition to the reason for the leave of absence, the reason 
for waiving the requirement that the waiver be requested in writing. 

Treatment of Title IV Credit Balances When a Student Withdraws: 

Under 34 CFR 668.164(e), an institution must pay any credit balance to 
the student, or parent in the case of a PLUS loan, within 14 days after 
the balance occurred. However, if a student (or parent) has provided 
permission, an institution may use a title IV credit balance to reduce 
the borrower's loan debt. 

Therefore, for students who withdraw because they are, affected 
individuals, the Secretary is modifying 34 CFR 668.164(e) to consider 
an institution to have met the 14-day requirement if, within that 
timeframe, the institution attempts to contact the student to suggest 
that permission he given to the institution allowing it to return the 
credit balance to the loan programs). Based upon the instructions of 
the student (or parent), the institution must promptly return the funds 
to the title IV loan programs or pay the credit balance to the student 
(or parent). 

If an institution chooses to attempt to contact the student (or 
parent), it must allow the student (or parent) 45 days to respond. If 
there is no response within 45 days, the institution must promptly 
return the funds to the title IV programs. The institution may also 
choose to pay the credit balance to the student (or parent) without 
first requesting permission to return the funds to the loan program in 
order to reduce the borrower's debt. 

Cash Management-Borrower Request for Loan Cancellation: 

Under 34 CFR 668.165(a)(4)(ii), an institution must return loan 
proceeds or cancel the loan, or both, if the institution receives a 
loan cancellation request from a borrower within 14 days after the date 
of the institution's notice to the borrower, or by the first day of the 
payment period if the institution sands the notice more than 14 days 
before the first day of the payment period. If an institution receives 
a late loan cancellation request from a borrower, the institution may, 
but is not required to, comply with the request. For a borrower who is 
an affected individual in this category, the Secretary is modifying 
this provision to require an institution to allow at least 60 days, 
rather than at least 14 days, for the borrower to request the 
cancellation of all or a portion of loan proceeds that have been 
credited to the account at the institution. If an institution receives 
a loan cancellation request from a borrower after the 60-day period, 
the institution may, but is not required to, comply with the request. 

Cash Management-Student and Parent Authorizations: 

34 CFR 668.165(b)(1) provides that an institution must obtain a written 
authorization from a student or parent, as applicable, to: 

* Disburse title IV funds to a bank account designated by the student 
or parent; 

* Use title. IV funds to pay for current charges other than tuition, 
fees, room, and board, if the student contracts with the school for 
room and board; and: 

* Hold on behalf of the student or parent any title IV funds that would 
otherwise be paid directly to the student or parent. 

The Secretary is modifying these provisions to permit an institution to 
accept an authorization provided by a student (or parent for a PLUS 
loan) orally, rather than in writing, if the student or parent is 
prevented from providing a written authorization because of his or her 
status as an affected individual in this category. 

Satisfactory Academic Progress: 

Institutions may, in cases where a student failed to meet satisfactory 
academic progress standards as a direct result of being an affected 
individual in this category, apply the exception provision of "other 
special circumstances" contained in 34 CFR 668.34(c)(3) of the 
regulations. 

Borrowers in a Grace Period: 

Sections 428(b)(7)(D) and 464(c)(7) of the HEA and 34 CFR 
674.31(b)(2)(i)(C), 682.209(a)(6), and 685.207(b)(2)(ii) and (c)(2)(ii) 
exclude from a Federal Perkins Loan, FFEL, or Direct Loan borrower's 
(title IV borrower's) initial grace period, any period, not to exceed 
three years, during which a borrower who is a member of an Armed Forces 
reserve component is called or ordered to active duty for a period of 
more than 30 days. The statutory and regulatory provisions further 
require that any single excluded period may not exceed three years and 
must include the time necessary for the borrower to resume enrollment 
at the next available regular enrollment period. Lastly, borrowers are 
entitled to another full six-or nine-month grace period, as applicable, 
upon completion of the excluded period of service. 

The Secretary is modifying these statutory and regulatory provisions to 
exclude from a title IV borrower's initial grace period, any period, 
not to exceed three years, during which a borrower is an affected 
individual in this category. Any excluded period must include the time 
necessary for an affected individual in this category to resume 
enrollment at the next available enrollment period. Affected 
individuals in this category are also entitled to another hill six-or 
nine-month grace period upon completion of the excluded period of 
service. 

Borrowers in an "In-School" Period: 

A title IV borrower is considered to be in an "in-school" status and is 
not required to make payments on a title IV loan that has not entered 
repayment as long as the borrower is enrolled at an eligible school on 
at least a half-time basis. Under sections 428(6)(7) and 464(c)(1)(A) 
of the HEA and 34 CFA 674.31(b)(2), 682.209(a), and 685.267(b), (c), 
and (e)(2) and (3), when a title IV borrower ceases to be, enrolled at 
an eligible institution on at least a half-time basis, the borrower is 
obligated to begin repayment of the loan after a six-or nine-month 
grace period, depending on the title IV loan program and the, terms of 
the borrower's promissory note. The Secretary is modifying the 
statutory and regulatory provisions that obligate an "in-school" 
borrower who has dropped below half-time status to begin repayment if 
the borrower is an affected individual in this category by requiring 
the holder of the loan to maintain the loan in an "in-school" status 
for a period not to exceed three years, including the time necessary 
for the borrower to resume enrollment in the next regular enrollment 
period, if the borrower is planning to go back to school. The Secretary 
will pay interest that accrues on a subsidized Stafford Loan as a 
result of the extension of a borrower's in-school status under this 
modification. 

Borrowers in an In-School or Graduate Fellowship Deferment: 

Under sections 427(a)(2)(C)(i), 428(b)(1)(M)(i), 4285(a)(2), 
428C(b)(4)(C), 455(f)(2)(A), and 464(c)(2)(A)(i)(I) of the, HEA and 34 
CFR 674.34(b)(1), 682.210(b)(1)(i) and (if), 682.210(5)(2), 
682.210(s)(3), and 685.204(b)(1)(i), a title IV borrower is eligible 
for a deferment on the loan during periods after the commencement or 
resumption of the repayment period on the loan when the borrower is 
enrolled and in attendance as a regular student on at least a half-time 
basis (or full-time, if required by the terms of the borrower's 
promissory note) at an eligible institution; enrolled and in attendance 
as a regular student in a course of study that is part of a graduate 
fellowship program; or engaged in graduate or post-graduate fellowship-
supported study outside the United States. The borrower's deferment 
period ends when the borrower no longer meets one of the above 
conditions. The Secretary is waiving the statutory and regulatory 
eligibility requirements for this deferment for title IV borrowers who 
were required to interrupt a graduate fellowship deferment or who were 
in an in-school deferment but who left school because of their status 
as an affected individual in this category. The holder of the loan is 
required to maintain the loan in a graduate fellowship deferment or in-
school deferment status for a period not to exceed three years during 
which the borrower is an affected individual. This period includes the 
time necessary for the borrower to resume his or her graduate 
fellowship program or resume enrollment in the next regular enrollment 
period if the borrower returns to school. The Secretary will pay 
interest that accrues on a subsidized Stafford Loan as a result of 
extending a borrower's eligibility for deferment under this waiver. 

Forbearance: 

Under section 464(e) of the HEA and 34 CFR 674.33(d)(2), there is a 3- 
year cumulative limit on the, length of forbearances that a Federal 
Perkins Loan borrower can receive. To assist Perkins borrowers who are 
affected individuals in this category, the Secretary is waiving these 
statutory and regulatory requirements so that any forbearance based on 
a borrower's status as an affected individual is excluded from the 3- 
year cumulative limit. 

Under section 464(e) of the HEA and 34 CFR 674.33(d)(2) and (3), a 
school must receive a written request and supporting documentation from 
a Federal Perkins Loan borrower before granting the borrower a 
forbearance, the terms of which must be in the form of a written 
agreement. The Secretary is waiving these statutory and regulatory 
provisions to require an institution to grant forbearance based on the 
borrower's status as an affected individual in this category for a one- 
year period, including a 3-month "transition period" that immediately 
follows that period, without supporting documentation or a written 
agreement, based on the written or oral request of the borrower, a 
member of the, borrower's family, or another reliable source. The 
purpose of the. 3-month "transition period" is to assist borrowers so 
that they will not be required to reenter repayment immediately after 
they are no longer affected individuals. 

In order to grant the borrower forbearance beyond the initial period, 
supporting documentation from the borrower, a member of the borrower's 
family, or another reliable source is required. 

34 CFR 682.211(i)(1) requires an FEEL borrower who requests forbearance 
because of a military mobilization to provide the loan holder with 
documentation showing that he or she is subject to a military 
mobilization. The Secretary is waiving this requirement to allow the 
borrower to receive forbearance at the request of the borrower, a 
member of the borrower's family, or another reliable source for a one- 
year period, including a three-month transition period that immediately 
follows that period, without providing the loan holder with 
documentation. In order to grant the borrower forbearance beyond this 
period, documentation supporting the borrower's military mobilization 
must be submitted to the holder of the loan. 

The Secretary will apply the forbearance waivers and modifications in 
this section to loans held by the Department of Education. 

Collection of Defaulted Loans: 

In accordance with 34 CFR Part 674, Subpart C-Due Diligence and 
682.410, schools and guaranty agencies must attempt to recover amounts 
owed from defaulted Perkins and FFEL borrowers. The Secretary is 
waiving the regulatory provisions that require schools and guaranty 
agencies to attempt collection on defaulted loans for the time period 
during which the borrower is an affected individual. The school or 
guaranty agency may stop collection activities upon notification by the 
borrower, a member of the borrower's family, or another reliable source 
that the borrower is an affected individual in this category. 
Collection activities must resume after the borrower has notified the, 
school or guaranty agency that he or she is no longer an affected 
individual and must include the 3-month transition period. The loan 
holder must document in the loan file why it has suspended collection 
activities on the loan, and the loan holder is not required to obtain 
evidence of the borrower's status while. collection activities have 
been suspended. The Secretary will apply the waivers described in this 
paragraph to loans held by the Department of Education. 

Loan Cancellation: 

Depending on the loan program, borrowers may qualify for loan 
cancellation if they are employed full-time in specified occupations, 
such as teaching, childcare, or law enforcement, pursuant to sections 
428)(6)(1), 428K(d)(1), 460(b)(1)(A), and 465(a)(2)(A)-(I) and (a)(3) 
of the HEA, and 34 CFR 674.53(d), 674.55(a)(2), 674.55(6)(5), 
674.55(c)(2), 674.56(d)(1), 674.57(6)(1), 674.58(6), 674.60(6), 
682.215, and 685.217. Generally, to qualify for loan cancellation, 
borrowers must perform uninterrupted, otherwise qualifying service for 
a specified length of time (for example, one, year) or for consecutive 
periods of time, such as 5 consecutive years. For borrowers who are 
affected individuals in this category, the Secretary is waiving the 
requirements that apply to the various loan cancellations that such 
periods of service be uninterrupted and/or consecutive, if the reason 
for the interruption is related to the borrower's status as an affected 
individual. Therefore, the period during which the borrower is an 
affected individual in this category, including the 3-month transition 
period, will not be considered an interruption in the required service 
for the borrower to receive an otherwise eligible loan cancellation. 
The Secretary will apply the waivers described in this paragraph to 
loans held by the Department of Education. 

Rehabilitation of Defaulted Loans: 

A borrower of an HEA, title IV loan must make 12 consecutive, monthly, 
on-time payments to rehabilitate a defaulted loan in accordance with 
sections 428F(a) and 464(h)(1) of the HEA and 34 CPR 674.39(a)(2), 
682.405, and y685.21 I (f)(1). To assist title IV borrowers who are 
affected individuals in this category, the Secretary is waiving the 
statutory and regulatory requirements that payments made to 
rehabilitate a loan be consecutive. Loan holders should not treat any 
payment missed during the time that a borrower is an affected 
individual in this category, or the 3-month transition period, as an 
interruption in the number of consecutive, monthly, on-time payments 
required for loan rehabilitation. When the borrower is no longer 
considered to be an affected individual in this category, the required 
sequence, of qualifying payments may resume, at the point they were 
discontinued as a result of the borrower's status. The Secretary will 
apply the waivers described in this paragraph to loans held by the 
Department of Education. 

Reinstatement of Title IV Eligibility: 

Under sections 428F(b) and 464(h)(2) of the HEA and under the 
definition of "satisfactory repayment arrangement" in 34 CFR 
668.35(a)(2), 674.2(6), 682.260(6), and 685.102(6), a defaulted title 
IV borrower may make six consecutive, monthly, on-time payments to 
reestablish eligibility for title IV student financial assistance. To 
assist title IV borrowers who are affected individuals in this 
category, the Secretary is waiving statutory and regulatory provisions 
that require the borrower to make, consecutive payments in order to 
reestablish eligibility for title IV student financial assistance. Loan 
holders should not treat any payment missed during the time that a 
borrower is an affected individual as an interruption in the six 
consecutive, monthly, on-time payments required for reestablishing 
title IV eligibility. When the borrower is no longer considered to be 
an affected individual or in the 3-month transition period for purposes 
of this notice, the required sequence of qualifying payments may resume 
at the point they were discontinued as a result of the borrower's 
status. The Secretary will apply the waivers described in this 
paragraph to loans held by the Department of Education. 

Consolidation of Defaulted Loans: 

Under the definition of "satisfactory repayment arrangement" in 34 CFR 
682.200(6) and 685.102(6), a defaulted FFEL or Direct Loan borrower may 
establish eligibility to consolidate, a defaulted loan by making three 
consecutive, monthly, on-time payments on the loan. The Secretary is 
waiving the regulatory requirement that such payments be consecutive. 
FFEL loan holders should not treat any payment missed during the time 
that a borrower is an affected individual in this category as an 
interruption in the three consecutive, monthly, on-time payments 
required for establishing eligibility to consolidate a defaulted loan. 
When the borrower is no longer considered to he an affected individual 
in this category or in the 3-month transition period, the required 
sequence of qualifying payments may resume at the point they were 
discontinued as a result of the borrower's status as an affected 
individual. The Secretary will apply the waivers described in this 
paragraph to loans held by the Department of Education. 

Category 3: The Secretary is waiving or modifying the following 
provisions of title IV of the. HEA and the Department's regulations for 
affected individuals who are serving on active duty or performing 
qualifying National Guard duly during a war or other military operation 
or national emergency as described in the Summary section of this 
notice: 

Military Deferment: 

Under section 455(f)(4) of the HEA and 34 CFR 674.35(c)(1), 
674.36(c)(1), 674.37(c)(1), 682.210(b)(2), and 685.204(d), certain 
borrowers are eligible for a deferment on their title IV loans for 
periods, not to exceed 3 years, during which the borrower is on active 
duty status in the United States Armed Forces. This provision includes 
a member of the National Guard or the Reserves serving a period of full-
time active duty in the Armed Forces. The Secretary is modifying the 
statutory and regulatory requirements that limit military deferments to 
a 3-year cumulative period so that the time during which affected 
individuals in this category are serving on active duty is excluded 
from this time limit. The Secretary will pay interest that accrues on 
subsidized Stafford Loans during an extended period of deferment under 
this modification. 

Under 34 CFR 674.38(a)(1) and 682.210(a)(4), a borrower must request 
the deferment and provide the institution or lender with supporting 
documentation to receive a deferment. The Secretary is modifying the 
regulations to allow a loan holder to grant an affected individual in 
this category a military deferment based on a request from a family 
member or another reliable source. The Secretary is also waiving 
documentation requirements to allow a loan holder to grant an affected 
individual in this category a military deferment for a one-year period 
without documentation. In order to grant a military deferment beyond 
the initial period, supporting documentation from the borrower, a 
member of the borrower's family, or another reliable source is 
required. The Secretary will apply the waivers described in this 
paragraph to loans held by the Department of Education. 

Institutional Charges and Refunds: 

The HEROES Act encourages institutions to provide a full refund of 
tuition, fees, and other institutional charges far the portion of a 
period of instruction that a student was unable to complete, or for 
which the student did not receive academic credit, because he or she 
was called up for active duty or for qualifying National Guard duty 
during a war or other military operation or national emergency. 
Alternatively, the Secretary encourages institutions to provide a 
credit in a comparable amount against future charges. 

The HEROES Act also recommends that institutions consider providing 
easy and flexible reenrollment options to such students who are 
affected individuals in this category. Specifically, institutions are 
urged to minimize deferral of enrollment or reapplication requirements 
and to provide the greatest flexibility possible with administrative 
deadlines related to those applications. 

Of course, an institution may provide such treatment to affected 
individuals other than those who are called up to active duty or for 
qualifying National Guard duty during a war or other military operation 
or national emergency. 

However, before an institution makes a refund of institutional charges, 
it must perform the required Return of title IV Funds calculations 
based upon the originally assessed institutional charges. After 
determining the amount that the institution must return to the title IV 
Federal student aid programs, any reduction of institutional charges 
may take into account the funds that the institution is required to 
return. In other words, we do not expect that an institution would bath 
return funds to the Federal programs and also provide a refund of those 
same funds to the student. 

Category 4: The Secretary is waiving or modifying the following 
provisions of the HEA and regulations for dependents and spouses of 
affected individuals who are serving on active duty or performing 
qualifying National Guard duty during a war or other military operation 
or national emergency as described in the Summary section of this 
notice: 

Verification Signature Requirements: 

34 CFR 668.57(b) and (c) require signatures to verify the number of 
family members in the household and the number of family members 
enrolled in postsecondary institutions: 'the Secretary is waiving the 
requirement that a dependent student submit a statement signet/ by one 
of the applicant's parents when no responsible parent can provide the 
required signature because of the parent's status as an affected 
individual in this category. 

Required Signatures on the Free Application for Federal Student Aid 
(FAFSA), Student Aid Report (SAR), and Institutional Student 
Information Record (ISIR): 

Generally, when a dependent applicant for title IV aid submits an 
application (FAFSA) or submits corrections to a previously submitted 
application, at least One parental signature is required. The Secretary 
is waiving this requirement so that an applicant need not provide a 
parent's signature when there is no responsible parent who can provide 
the required signature because, of the parent's status as an affected 
individual in this category. In these situations, a student's high 
school counselor or the FAA may sign on behalf of the, parent as long 
as the applicant provides adequate documentation concerning the 
parent's inability to provide, a signature due to the parent's status 
as an affected individual in this category. 

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 the following site: 
[Hyperlink, http://www.ed.gov/news/fedregister]. 

To use PDF you must have Adobe Acrobat Reader, which is available free 
at this site. 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. 

You may also view this document in PDF at the following site: 
[Hyperlink, http://wwwv.ifap.ed.gov]. 

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: [Hyperlink, 
http://www.gpoaccess.gov/nara/index.html]. 

Catalog of Federal Domestic Assistance Numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant Program; 84.032 Federal 
Family Education Loan Program; 84.032 Federal PLUS Program; 84.033 
Federal Work Study Program; 84,038 Federal Perkins Loan Program; 84.063 
Federal Poll Grant Program and 84.268 William D. Ford Federal Direct 
Loan Program. 

Program Authority: 20 U.S.C. 1071, 1082, 1087x, 1087aa, Pub. L. 108-76. 

Dated: December 8, 2003. Sally L. Stroup, 

Assistant Secretary, Office of Postsecondary Education. 

LFR Doc. 03-30781 Filed 12-11-03; 8:45 am Billing Code 4000-01-P: 

Environmental Protection Agency: 

40 CFR Part 52: 

(CA 296-0427; FRL-7594-2] 

Interim Final Determination To Stay and Defer Sanctions, South Coast 
Air Quality Management District: 

Agency: Environmental Protection Agency (EPA). 

Action: Interim final rule. 

Summary: EPA is making an interim final determination to stay and defer 
imposition of sanctions based on a proposed approval of revisions to 
the South Coast Air Quality Management District (SCAQMD) portion of the 
California State Implementation Plan (SIP) published elsewhere in 
today's. 

Federal Register. The revisions concern SCAQMD Rule 1168. 

Dates: This interim final determination is effective on December 12, 
2003. However, comments will be accepted until January 12, 2004. 

Addresses: Send comments to Andy Steckel, Rulemaking Office Chief (AIR- 
4), U.S. Environmental Protection Agency, Region IX, 75 Hawthorne 
Street, San Francisco, CA 94105 or e-mail to steckel.andrew@epa.gov, or 
submit comments at [Hyperlink, http://www.regulations.gov]. 

You can inspect copies of the submitted rule revisions, EPA's technical 
support document (TSD), and public comments at our Region IX office 
during normal business hours by appointment. You may also see copies of 
the submitted rule revisions by appointment at the following locations: 
Rulemaking Office (AIR-4), Air: Division, U.S. Environmental Protection 
Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 94105. 

California Air Resources Board, Stationary Source Division, Rule 
Evaluation Section, 1001 "I" Street, Sacramento, CA 95814. 

South Coast Air Quality Management District, 21865 E. Copley Drive, 
Diamond Bar, CA 91765. 

A copy of the rule may also be available via the Internet at 
[Hyperlink, http://www.arb.ca.gov/drdb/drdbltxt.htm]. Please be advised 
that this is not an EPA website and may not contain the same version of 
the rule that was submitted to EPA. 

For Further Information Contact: Yvonne Fong, EPA Region IX, (415) 947- 
4117, fong.yvonnew@epa.gov. Supplementary Information: Throughout this 
document, "we," "us" and "our" refer to EPA. 

I. Background: 

On April 26, 2002 (67 FR 20645), we published a limited approval and 
limited disapproval of SCAQMD Rule 1168. Table 1 lists the rule 
addressed by our prior limited approval and disapproval with the dates 
that it was adopted by the local air agency and submitted by the 
California Air Resources Board (GARB). 

[End of section] 

Appendix III: Comments from the Department of Education: 

United States Department Of Education: 
Office Of Postsecondary Education: 

OCT 17 2006:  

Ms. Cornelia M. Ashby: 
Director, Education, Workforce and Income Security Issues: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Ms. Ashby: 

Thank you for the opportunity to review and provide comments on the 
U.S. Government Accountability Office's (GAO) draft report entitled 
"More Information Could Help Education Determine the Extent to Which 
Eligible Servicemembers Serving on Active Duty Benefited from Relief 
Provided by Lenders and Schools" (GAO-07-11). We appreciate GAO's 
examination of the U.S. Department of Education's (Department's) 
efforts to provide relief to students and student loan borrowers called 
to active duty. We also appreciate your suggestion with regard to a 
study to assess the impact of the waivers and modifications provided by 
the Department. 

The report accurately describes the steps that the Department has 
taken, under the Higher Education Relief Opportunities for Students 
(HEROES) Act, to provide relief to members of our nation's armed forces 
who have been called to active duty. Specifically, the Department 
issued waivers and modifications to the federal student aid programs to 
minimize the financial impact and administrative burden for service 
members called to active duty. Under the waivers and modifications, 
institutions and lenders could more easily suspend or postpone loan 
payments. More significantly, under the modifications, borrowers who 
were called to active duty while still enrolled in postsecondary 
education were not required to begin repaying their student loans until 
they returned from active duty. These waivers provided significant 
relief to service members who qualified for these benefits. 

With regard to the mandated study, the Department continues to give 
serious consideration to how to conduct a study of borrowers in 
repayment under the Federal student loan programs to determine the 
extent to which they were eligible for and received the benefits 
provided by HEROES. There are several challenges. If we study a 
nationally representative sample of borrowers in the federal student 
loan programs, the HEROES beneficiaries would represent a relatively 
small subset of student loan borrowers. In addition, the active duty 
service members that are of policy interest in this study are, in many 
cases, difficult to locate and contact, deployed in areas such as Iraq 
or Afghanistan. 

The alternative suggested by GAO has merit. It would require the 
Department to obtain sensitive national security information from the 
Department of Defense (DoD). While we have great confidence and trust 
in our employees and contractors, and believe that our Information 
Technology security measures are of the highest quality, we do not 
believe that the Department should be given this highly sensitive 
information for an analytical purpose. 

If such a study were to be conducted, we believe that it should be 
conducted by DoD with the Department providing a data extract from the 
National Student Loan Data System. DoD could then provide the 
Department with the results of the match recommended by the GAO with 
personally identifying information removed from the data file. We will 
explore this possibility further after discussions with the authorizing 
committees and DoD. 

We appreciate the data that GAO collected from institutions, and we 
would like to receive the data file from GAO, if possible, with 
institutional identifying information removed, to conduct further 
analysis on this and related issues. Please contact David Bergeron, 
Director of Policy and Budget Development, at 202-502-7815, to make 
necessary arrangements to facilitate our receiving the data. 

Again, we appreciate the opportunity to review the draft report. 

Sincerely, 

Signed by: 

James F. Manning: 
Acting Assistant Secretary: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Cornelia M. Ashby, Director, (202) 512-7215, ashbyc@gao.gov: 

Staff Acknowledgments: 

Sherri Doughty, Assistant Director: 

Debra Prescott, Analyst-in-Charge: 

Summer Pachman, Senior Analyst: 

In addition to those named above, Avrum Ashery, Susan Bernstein, Karen 
Burke, Nancy Hess, Kevin Jackson, Jean McSween, John Mingus, Jim Rebbe, 
and Rachael Valliere made significant contributions to this report. 

FOOTNOTES 

[1] Data include active duty, Reserve, and National Guard 
servicemembers deployed through May 2006. 

[2] Education identified 167 cases potentially relating to the 
provisions under HEROES. In most cases the Ombudsman provided general 
assistance to borrowers, such as explaining the types of relief 
available. However, the Ombudsman intervened on the borrower's behalf 
in about 17 percent of these cases, working with lenders, schools, and 
guaranty agencies to resolve problems borrowers had with their federal 
student loans. 

[3] While Education's waivers and modifications also apply to the 
Direct Loan program, we did not review it because it is operated 
directly by Education. Under this loan program, money is borrowed 
directly from the federal government and the Department of Education 
acts as the lender. At the end of fiscal year 2005, the Direct Loan 
portfolio was valued at about $96 billion. Instead, we focused our 
review on the larger FFEL program, also known as the guaranteed student 
loan program. Under this program, money is borrowed from private 
lenders, and the federal government guarantees repayment if the 
borrowers default. 

[4] Percentage estimates are based on the sample and are subject to 
sampling error. Unless otherwise noted, we are 95 percent confident 
that the results we obtained are within +/-10 percentage points of what 
we would have obtained if we had received responses from the entire 
population. Each sample element was subsequently weighted in the 
analysis to account for all members of the population, including those 
that were not selected. 

[5] Stafford loans for students and PLUS loans for parents and graduate 
students are made through two federal student loan programs. Loans in 
the Federal Family Education Loan program are made by private lenders 
and guaranteed by the federal government, while loans in the Direct 
Loan program are made directly by the federal government through a 
student's school. Perkins loans are low-interest loans (5 percent) for 
undergraduate and graduate students with exceptional financial need and 
are made by postsecondary schools that participate in Title IV Campus- 
Based Aid programs. 

[6] Pub L. No. 108-76 (2003). 

[7] In addition to members of the armed forces, individuals who live or 
work in an area that is declared a disaster area in connection with a 
national emergency, as well as those who suffer direct economic 
hardship as a result of a war, other military operation, or national 
emergency are covered by the Act. 

[8] Pub. L. No. 107-122 (2002). The provisions of this Act expired on 
September 30, 2003. 

[9] Federal Stafford loan borrowers are provided a 6-month grace 
period, while those in the Perkins Loan program are provided a 9-month 
grace period. 

[10] Borrowers may be eligible for an economic hardship deferment if 
they are receiving payments under a federal or state public assistance 
program, such as Food Stamps or Supplemental Security Income, or 
serving as a Peace Corps volunteer, among other things. 

[11] Until recently, military deferments were only available for 
borrowers repaying loans that were disbursed prior to July 1, 1993. 
However, enactment of the Higher Education Reconciliation Act of 2005 
created a new military deferment. Pub. L. No. 109-171, Title VIII, 
Subtitle A (2006). Beginning July 1, 2006, borrowers performing 
qualifying active duty service can request a military deferment for 
loans that were first disbursed on or after July 1, 2001. 

[12] Members of the Reserves were already eligible for this benefit 
based on federal student financial aid provisions, but Education has 
modified the provision to ensure coverage for all servicemembers 
eligible for relief under HEROES. Borrowers with federal Stafford loans 
are eligible for a 6-month grace period, while borrowers with federal 
Perkins loans are eligible for a 9-month grace period. 

[13] In the Direct and FFEL loan programs, default occurs when 
borrowers on a monthly payment schedule become 270 days delinquent. In 
the Perkins Loan program default occurs when borrowers miss one 
installment payment. 

[14] Guaranty agencies are state or private not-for-profit agencies 
that guarantee payments to FFEL lenders if students fail to repay their 
loans. Schools are responsible for attempting to collect on defaulted 
Perkins Loans, and guaranty agencies are responsible for collecting on 
defaulted loans in the FFEL loan program. 

[15] For loans disbursed prior to July 1, 2000, lenders can capitalize 
the interest on loans in forbearance as often as quarterly. However, 
loans issued on or after July 1, 2000, can only be capitalized at the 
end of the forbearance period. 

[16] Our survey asked schools if they had any students who left for 
active duty service. 

[17] Policies and practices are referred to as policies here forward in 
the report. 

[18] One student we interviewed had been accepted by the university, 
but had not yet enrolled when called to active duty. He deferred 
enrollment until he returned from service. 

[19] The 95 percent confidence interval for the estimated percentage of 
schools that waive application fees is from 73 to 92 percent. 

[20] IPEDS is a system of surveys designed to collect data from all 
primary providers of postsecondary education. These surveys collect 
institution-level data in such areas as enrollments, program 
completions, faculty, staff, and finances. Data are collected annually 
from approximately 9,600 postsecondary schools, including over 6,000 
schools eligible for the federal student aid programs. 

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