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

Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulations66975for all but the lowest revenue category, forwhich it is four percent of midpoint revenue.For institutions, an hourly rate of $22.14was used to monetize the burden of theseprovisions. This rate was a blended ratebased on wages of $16.79 for office andadministrative staff and $38.20 for managers,assuming that office staff would perform 75percent of the work affected by theseregulations. For the gainful employmentprovision, an hourly rate of $25.35 was usedto reflect increased management time toestablish new data collection proceduresassociated with that provision.These rates are the same as those used forall institutions in the Costs section of thisanalysis, reflecting the fact that the primarycost of meeting the paperwork burden is inadditional labor and that wages at smallinstitutions should not be systematicallyhigher than those at all institutions. Inresponse to comments that the regulationswould be costly, we reviewed the wage ratesfor more recent information and the share ofwork performed by office workers andmanagement and professional staff. Thisreview increased the general wage rate from$18.63 to $22.14 and the wage rate for gainfulemployment related matters from $20.71 to$25.35.The costs discussed above represent thecost of the regulations in the first year ofimplementation, beginning on July 1, 2011,but several provisions will have a longerperiod to take effect. Most importantly, theregulations contained in subpart E of part668, Verification and Updating of StudentAid Application Information, are effectiveJuly 1, 2012. These regulations account forapproximately 50 percent of the estimatedburden described above. We would expect 30percent of the verification costs to beincurred in 2011 as institutions update theirsystems for the changes, but the main part ofthose costs will occur in the second year.These costs would occur after the otherprovisions had been implemented and, whilewe do not have a split between thedevelopment and ongoing costs of eachprovision, we would expect the costs to taperoff as the institutions become familiar withthe regulations and have the systems in placeto comply. Seventy percent of the estimatedcosts for the Verification regulation wouldnot be realized in the first year, reducing theoverall projected costs for small institutionsduring the first year by approximately onethirdto approximately $8,000. Assuming a10 percent reduction in the costs of otherprovisions from reduced development costsand prior experience, full implementation in2012 would cost approximately $11,000. TheState authorization provision is also subjectto a delayed implementation, but thatimplementation is not expected to have asignificant cost effect on small entities.Additionally, the recurring costs of many ofthe provisions are based on the number ofstudents enrolled. As shown above, schoolswith small revenues have lower enrollmentsthan others classified as small entities andwould have to perform fewer verificationsand reviews on an ongoing basis. Since theyalready have some systems and processes inplace to comply with the existing regulations,once the development changes have beenmade to implement the regulatory changes,we would expect their ongoing costs to belower than the averages estimated above.Where possible, the Department hasallowed institutions flexibility to establishprocesses that fit the institution’sadministrative capabilities. For example, therequirement to distribute funds to Pell Grantrecipients for books and supplies withinseven days of the start of the payment periodallows institutions to use book vouchers ora credit to the student’s account. TheDepartment has also tried to allow more timefor all entities affected by these regulationsto establish procedures for new datacollections, such as the placement rateinformation required in the data collectionrelated to gainful employment. While thesetiming provisions are available to allinstitutions, they should permit smallinstitutions sufficient time to make thenecessary adjustments. Approximately 60percent of the paperwork burden associatedwith these regulations is in OMB 1845–0041,which relates to the updating of FAFSAapplication information and reporting allchanges resulting from verification. Theseupdated requirements will help ensureeligible students receive aid. As detailed inthe Paperwork Reduction Act of 1995 sectionof these final regulations, the increase inburden associated with the FAFSAacceptable documentation provision islargely driven by the increase in studentapplicants since the burden for theserequirements was last calculated. Given theincrease in the number of students applyingfor title IV, HEA aid, the number ofverifications is estimated to have increasedfrom 3.0 million in 2002–03 to 5.1 million in2008–09. Without the regulatory changesreflected in these regulations, which areestimated to reduce the number of items tobe verified, the paperwork burden on smallinstitutions in OMB 1845–0041 wouldincrease by an additional 195,677 hours.Based on these estimates, the Departmentbelieves the new requirements do not imposesignificant new costs on these institutions.We considered whether there would be anybenefit to allowing small institutionsadditional time to come into compliancewith the regulations and concluded that therewould be no benefit to taking such action.First and foremost, we think the risk ofdelaying implementation of these programintegrity regulations and the resultingnegative impact on students and taxpayerswould be far too high.Second, we do not believe the commentsor the facts would support such action. In theNPRM, the Secretary invited comments fromsmall institutions and other affected entitiesas to whether they believed the proposedchanges would have a significant economicimpact on them and requested evidence tosupport that belief. Several commentersindicated that the provisions would be costlyand the Department reviewed the estimatesas described above. However, commentersdid not provide us with evidence to suggestthat small institutions or entities would needadditional time beyond July 1, 2011 to comeinto compliance with the regulations.Additionally, because we did not includesuch a proposal in the NPRM, we do notbelieve we could take this type of actionwithout seeking further public comment.Finally, we note that, where possible, wehave built in additional time or flexibility forall institutions based on the nature of theprovision and the data requested.[FR Doc. 2010–26531 Filed 10–28–10; 8:45 am]BILLING CODE 4000–01–PWReier-Aviles on DSKGBLS3C1PROD with RULES2VerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00145 Fmt 4701 Sfmt 9990 E:\FR\FM\29OCR2.SGM 29OCR2