Office of Postsecondary Education - U.S. Department of Education

Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulations66973rates reflecting the net present value of allfuture Federal costs associated with awardsmade in a given fiscal year. Values arecalculated using a ‘‘basket of zeros’’methodology under which each cash flow isdiscounted using the interest rate of a zerocouponTreasury bond with the samematurity as that cash flow. To ensurecomparability across programs, thismethodology is incorporated into thecalculator and used governmentwide todevelop estimates of the Federal cost ofcredit programs. Accordingly, theDepartment believes it is the appropriatemethodology to use in developing estimatesfor these regulations. That said, however, indeveloping the following AccountingStatement, the Department consulted withOMB on how to integrate our discountingmethodology with the discountingmethodology traditionally used indeveloping regulatory impact analyses.Absent evidence of the impact theseregulations would have on student behavior,budget cost estimates were based on behavioras reflected in various Department data setsand longitudinal surveys listed underAssumptions, Limitations, and Data Sources.Program cost estimates were generated byrunning projected cash flows related to eachprovision through the Department’s studentloan cost estimation model. Student loan costestimates are developed across five riskcategories: Two-year proprietary institutions,two-year public and private, not-for-profitinstitutions; freshmen and sophomores atfour-year institutions, juniors and seniors atfour-year institutions, and graduate students.Risk categories have separate assumptionsbased on the historical pattern of behavior—for example, the likelihood of default or thelikelihood to use statutory deferment ordischarge benefits—of borrowers in eachcategory.The Department estimates no budgetaryimpact for most of these regulations as thereis no data indicating that the provisions willhave any impact on the volume orcomposition of the title IV, HEA programs.Assumptions, Limitations, and Data SourcesThe impact estimates provided in thepreceding section reflect a pre-statutorybaseline in which the HEOA changesimplemented in these regulations do notexist. Costs have been quantified for fiveyears.In developing these estimates, a wide rangeof data sources were used, including datafrom the National Student Loan Data System;operational and financial data fromDepartment of Education systems, includingespecially the Fiscal Operations Report andApplication to Participate (FISAP); and datafrom a range of surveys conducted by theNational Center for Education Statistics suchas the 2008 National Postsecondary StudentAid Survey, the 1994 National EducationLongitudinal Study, and the 1996 BeginningPostsecondary Student Survey. Data fromother sources, such as the U.S. CensusBureau, were also used. Data onadministrative burden at participatinginstitutions are extremely limited;accordingly, in the NPRM, the Departmentexpressed interest in receiving comments inthis area. No comments were received.Elsewhere in this SUPPLEMENTARYINFORMATION section we identify and explainburdens specifically associated withinformation collection requirements. See theheading Paperwork Reduction Act of 1995.Accounting StatementAs required by OMB Circular A–4(available at http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 2, wehave prepared an accounting statementshowing the classification of theexpenditures associated with the provisionsof these regulations. This table provides ourbest estimate of the changes in Federalstudent aid payments as a result of theseregulations. Expenditures are classified astransfers from the Federal Government tostudent loan borrowers.TABLE 2—ACCOUNTING STATEMENT:CLASSIFICATION OF ESTIMATED EX-PENDITURES[In millions]CategoryAnnualized MonetizedCosts.Annualized MonetizedTransfers.From Whom ToWhom?Transfers$126.1.Cost of compliancewith paperwork requirements.$0.Federal GovernmentTo Student LoanBorrowers.Regulatory Flexibility Act CertificationThe Secretary certifies that theseregulations will not have a significanteconomic impact on a substantial number ofsmall entities. These regulations will affectinstitutions that participate in title IV, HEAprograms, ATB test publishers, andindividual students and loan borrowers. TheU.S. Small Business Administration SizeStandards define for-profit institutions as‘‘small businesses’’ if they are independentlyowned and operated and not dominant intheir field of operation with total annualrevenue below $7,000,000, and defines nonprofitinstitutions as small organizations ifthey are independently owned and operatedand not dominant in their field of operation,or if they are institutions controlled bygovernmental entities with populationsbelow 50,000.Data from the Integrated PostsecondaryEducation Data System (IPEDS) indicate thatroughly 4,379 institutions participating in theFederal student assistance programs meet thedefinition of ‘‘small entities.’’ The followingtable provides the distribution of institutionsand students by revenue category andinstitutional control.RevenuecategoryNumber ofschoolsPublic Private NFP Proprietary TribalNumber ofstudentsNumber ofschoolsNumber ofstudentsNumber ofschoolsNumber ofstudentsNumber ofschoolsNumber ofstudentsWReier-Aviles on DSKGBLS3C1PROD with RULES2$0 to $500,000 43 2,124 103 13,208 510 38,774 ...................... ......................$500,000 to $1million ........... 44 7,182 81 9,806 438 61,906 1 137$1 million to $3million ........... 98 29,332 243 65,614 745 217,715 3 555$3 million to $5million ........... 75 65,442 138 60,923 303 182,362 ...................... ......................$5 million to $7million ........... 49 73,798 99 62,776 224 185,705 5 2,525$7 million to $10million ........... 78 129,079 110 84,659 228 235,888 9 4,935$10 million andabove ............ 1,585 18,480,000 1,067 4,312,010 383 1,793,951 14 18,065Total .......... 1,972 18,786,957 1,841 4,608,996 2,831 2,716,301 32 26,217Approximately two-thirds of theseinstitutions are for-profit schools subject tothe disclosure and reporting requirementsrelated to programs leading to gainfulemployment. Other affected smallinstitutions include small communitycolleges and tribally controlled schools. Forthese institutions, the new disclosure andVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2administrative requirements imposed underthe regulations could impose some new costsas described below. The impact of the