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

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Department of Education.


Notice inviting proposals for participation in experimental sites.


The Secretary of Education invites institutions of higher education to propose new ways of administering the student financial assistance programs authorized by Title IV of the Higher Education Act of 1965, as amended (HEA). Under section 487A(b) of the HEA, if the Secretary approves an institution as an experimental site as a part of this student aid reform initiative, the institution may receive waivers from specific Title IV statutory or regulatory requirements that would bias experimental results. The Secretary cannot waive provisions in the areas of need analysis, award rules, and grant and loan maximum award amounts. However, the Secretary anticipates approving experiments in a wide variety of other areas.

Instructions for Submitting a Proposal: Elements to be included in the proposal are described in this notice. Proposals should be submitted electronically by electronic mail or in hard copy to the address below. All proposals should clearly designate a contact person, and the telephone number and the e-mail address of the contact person.


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


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

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Jacqulyn S. Bannister, U.S. Department of Education, 400 Maryland Avenue, SW (Room 3925, ROB-3), Washington, DC, 20202-5232, telephone: (202) 708-7438 or via internet:

If you use a telecommunications device for the deaf (TDD), you may call the Federal Information Relay Service (FIRS) at 1-888-877-8339.

Individuals with disabilities may obtain this document in an alternative format (e.g. Braille, large print, audiotape, or computer diskette) by contacting the Alternate Format Center at (202) 260-9895.

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Over the past few years, the Department of Education has undertaken a series of initiatives to simplify regulations and administrative processes for the student financial assistance programs. The Experimental Sites Initiative, authorized by section 487A(b) of the HEA, is one such initiative. Through this initiative, the Secretary seeks to improve service to students and free institutions of higher education from administrative burdens by testing new ways to administer certain SFA statutory and regulatory requirements.

Initially, Congress gave the Department authority under section 487A(d) of the HEA of 1992 to treat select institutions as experimental sites. The first group of experiments became effective July 1, 1996. During the coming months, the Secretary will continue this initiative to give institutions of higher education flexibility to test different procedures to carry out the intent of certain SFA statutory and regulatory requirements. Thus, with this notice, the Secretary invites proposals to reinvent the administration of student financial assistance programs authorized by section 487A(b), Regulatory Improvement and Streamlining Experiments. One purpose of this initiative, as well as the Department's continuing dialogue with the higher education community, is to help the Secretary develop a set of proposals for amendments to the law or regulations pertaining to the administration of student financial aid programs.

The invitation for proposals in this notice is a part of the Secretary's continuing effort to reform Title IV program administration in partnership with the higher education community. The community has given the Department the benefit of its views in a variety of ways over the last several years. The community's views have been integrated in the reforms that the Department has undertaken to date. For example, in the Higher Education Amendments of 1998, two of the areas of experimentation—Thirty Day Delay for First Time First Year Borrowers and Multiple Disbursement for Single Term Loans—were included in reauthorization for a broader group of institutions. Institutions with default rates at or below 10% are eligible for the exemption from these requirements to withhold funds for thirty days for first time, first year borrowers and/or making multiple disbursements for single term loans. In addition, the Department has expanded the Federal Work Study (FWS) payment provisions and the means for certification of FWS time records. It is the Secretary's hope that in the proposals invited by this notice, the community will again address important issues of program administration that remain to be resolved.

Invitation for Proposals

The Secretary invites institutions of higher education that administer one or more Title IV programs to submit one or more proposals to participate as experimental sites under section 487A(b) of the HEA. This section authorizes the Secretary to select institutions for voluntary participation in experiments to test new ways of administering the student financial assistance programs. The Secretary is further authorized to exempt a participating institution from many Title IV statutory or regulatory requirements while conducting the experiment, except areas prohibited in section 487A(b)(3)(C).

The Secretary establishes no regulatory requirements for the proposals invited by this notice. It is the Secretary's hope that this approach will encourage institutions to develop truly innovative strategies that relieve unnecessary burden, maintain program accountability, and provide the Department with data to improve Title IV program administration. The Secretary will consider the outcome of these experimental strategies when making changes in Title IV program regulations or, if appropriate, legislative proposals.

Statutory and Regulatory Provisions That May Not Be Waived

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

Submission of Proposals

An institution that administers a Title IV program, or a group of these Start Printed Page 30178institutions (consortium), may submit a proposal in response to this notice at any time by mailing (including electronic mail) or faxing the proposal to Barbara A. Mroz or Jacqulyn Bannister at 202/708-9485. Each proposal to participate in this initiative should include: the name, address, and web site address, if any, of the institution, or members of the consortium seeking to participate, the OPE Identification number, and the name, title, mailing and e-mail addresses, and telephone number of a contact person for the institution, or consortium.

The Secretary emphasizes that the Department seeks to approve proposals for innovative approaches in a variety of different areas relating to the administration of student financial assistance programs. The Secretary also encourages institutions to collaborate in the development of proposals and to submit proposals as a group of institutions (consortium).

To aid in the Department's review of proposals, the Secretary suggests the proposal answer the following questions in detail:

  • What problem experienced by the institution or its students, or both, does the proposal address?
  • What is the institution's hypothesis?
  • What is the institution's experimental design/proposed solution to that problem?
  • From which specific statutory or regulatory requirements does the institution seek relief in order to test its proposed solution?
  • What alternative actions does the institution propose to achieve the underlying purpose of the requirements from which relief is sought and how will it measure outcomes?
  • How will the institution evaluate its success?
  • For what period is the experiment proposed?

Cited below are the areas of experimentation previously approved and currently being conducted. The higher education community selected the problems addressed by these experiments because they have been the subject of considerable commentary. In other words, the participants identified most of the provisions being modified through these experiments as common problems. A few of the experiments were specifically proposed to address a particular problem or a particular population. In either case, participating institutions have identified solutions that they believe will better address the needs of their student population while maintaining the fundamental legislative intent. A report on this initiative, including a description of each experiment, can be found on SFA's Information for Financial Aid Professionals (IFAP) site at:

Current Areas of Experimentation

1. Overaward Tolerance.

2. Entrance Loan Counseling.

3. Exit Loan Counseling.

4. Multiple Disbursement for Single Term Loans.

5. Thirty-Day Delay for First Time, First Year Borrowers.

6. Loan Fees in Cost of Attendance.

7. Loan Proration for Graduating Borrowers.

8. Credit Title IV Aid to Institutional Charges.

9. Credit Title IV Aid to Prior Term Charges.

10. Academic Term (Definition).

11. Federal Work Study Time Records.

12. Federal Work Study Payment to Students.

13. Ability to Benefit.

With this notice, the Secretary encourages proposals for new experiments, in areas other than those listed above. In addition, the Secretary may develop area(s) of experimentation or modify current experiments and invite participation to test the impact requirements have on different types of institutions and/or populations served.

Selection of Participants

In selecting participants to test alternative approaches, the Secretary may consider the—

1. Department of Education's capacity to oversee and monitor participation in this initiative.

2. Institution's financial responsibility, administrative capability, program review findings, audits, etc. as outlined in the regulations and in the Student Financial Aid Handbook: Institutional Eligibility and Participation section.

3. Necessity of including a diverse group of participating institutions vis-a-vis size, mission, and geographic distribution.

As part of the selection process, the Department will screen the prospective participants to ensure eligibility. A review of the Department's files on the institution will be conducted to determine if the institution meets eligibility requirements and has a demonstrated record of program compliance.

Review Process

The Secretary is prepared to review proposals as soon as they are received. However, early submission (at least sixty days from the date of this notice) is encouraged for consideration of proposals for the 2001-2002 award year.

The Secretary will review each proposal submitted in response to this notice. In reviewing proposals, the Secretary will be guided by the statutory purpose of section 487A(b), namely, to inform future policy choices relating to the administration of Title IV programs. The Secretary may approve a proposal as submitted, reject it, or, if a proposal is not fully approvable but has merit, work with the institution to refine it. However, consultation with Congress is a precondition to granting waivers. After a proposal is approved, the participating institution's Title IV Program Participation Agreement (PPA) will be amended to reflect the terms of the experiment, including the obligations undertaken by the institution, the requirements from which the institution is relieved, the length of the experiment, and the right of either the institution or the Department to terminate the experiment.

Generally, approved experiments will be conducted for five years. The Secretary may extend this period if continuation is in the interest of the Title IV programs and additional experimental data is needed. On the other hand, the Secretary may terminate any experiment if the experiment is no longer providing useful data or is otherwise no longer serving the interest of the Title IV programs.

Reporting Requirements

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


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

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

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Dated: May 31, 2001.

Greg Woods,

Chief Operating Officer, Student Financial Assistance.

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[FR Doc. 01-14059 Filed 6-4-01; 8:45 am]