B-210733 L/M, FEB 25, 1983

B-210733 L/M, FEB 25, 1983

PRECIS-UNAVAILABLE

PAUL SIMON, HOUSE OF REPRESENTATIVES:

THIS IS IN RESPONSE TO YOUR LETTER DATED JANUARY 26, 1983, REQUESTING A LEGAL OPINION FROM OUR OFFICE IN CONNECTION WITH TWO PROVISIONS CONTAINED IN REGULATIONS RECENTLY PROPOSED BY THE DEPARTMENT OF EDUCATION (DEPARTMENT).

ON JANUARY 27, 1983, THE DEPARTMENT PUBLISHED IN THE FEDERAL REGISTER A NOTICE OF PROPOSED RULEMAKING (NPRM), 48 FED.REG. 3920, TO IMPLEMENT THE PROVISIONS OF SECTION 1113 OF THE DEPARTMENT OF DEFENSE AUTHORIZATION ACT, 1983, PUB.L. NO. 97-252, 96 STAT. 718, 748, APPROVED SEPTEMBER 8, 1982. SECTION 1113 OF PUB.L. NO. 97-252 AMENDED SECTION 12 OF THE MILITARY SELECTIVE SERVICE ACT, 50 U.S.C. APP. SEC. 462, TO PROVIDE THAT ANY STUDENT WHO IS REQUIRED TO REGISTER WITH THE SELECTIVE SERVICE AND WHO FAILS TO DO SO IS INELIGIBLE FOR STUDENT FINANCIAL ASSISTANCE PROVIDED UNDER TITLE IV OF THE HIGHER EDUCATION ACT OF 1965, 20 U.S.C. SEC. 1070 ET SEQ.

SPECIFICALLY YOU ASK US WHETHER THE SECRETARY OF EDUCATION HAS THE AUTHORITY TO ISSUE REGULATIONS THAT WOULD:

(1) "*** DENY INTEREST PAYMENTS ON GUARANTEED STUDENT LOANS IF STUDENTS REFUSE TO COMPLY WITH REGISTRATION REQUIREMENTS AS IMPLEMENTED BY THE PROPOSED REGULATION; (SEC. 668.24(B)(3)(II) OF THE NPRM) AND

(2) "*** DIRECT HIGHER EDUCATION INSTITUTIONS TO INFORM LENDERS IF STUDENTS WHO HAVE GUARANTEED STUDENT LOANS FAIL TO COMPLY WITH THE REGULATIONS." (SEC. 668.26(E)(5)(II)(A) OF THE NPRM).

IN ACCORDANCE WITH OUR GENERAL POLICY IN SUCH MATTERS WE REQUESTED THE DEPARTMENT TO FURNISH US WITH ITS VIEWS AND COMMENTS CONCERNING THE QUESTIONS YOU RAISE. BASED ON THE INFORMATION CONTAINED IN THE DEPARTMENT'S RESPONSE, A COPY OF WHICH IS ENCLOSED, TOGETHER WITH OUR OWN ANALYSIS OF THE LEGISLATION AND REGULATIONS INVOLVED, IT APPEARS TO US THAT THE PROPOSED REGULATIONS WOULD, IF ISSUED, BE WITHIN THE AUTHORITY OF THE SECRETARY. HOWEVER, WE BELIEVE THAT THE INTENDED MEANING AND APPLICABILITY OF SECTION 668.24(B)(3)(II) OF THE NPRM IS NOT ENTIRELY CLEAR ON THE QUESTION OF THE CONTINUED EXISTENCE OF THE GUARANTEE IN THE EVENT OF A STUDENT'S DEFAULT AFTER A DETERMINATION OF INELIGIBILITY. THEREFORE SOME ADDITIONAL MODIFICATIONS OF THE PROPOSED REGULATIONS BY THE DEPARTMENT MIGHT BE DESIRABLE TO CLARIFY THEIR INTENDED MEANING.

YOUR QUESTIONS RELATE TO THE IMPACT OF THE PROPOSED REGULATIONS ON THE GUARANTEED STUDENT LOAN PROGRAM. THAT PROGRAM WAS ESTABLISHED BY TITLE IV OF THE HIGHER EDUCATION ACT OF 1965, AS AMENDED, 20 U.S.C. SECS. 1070 ET SEQ., TO MAKE LOW INTEREST LOANS AVAILABLE TO POST SECONDARY STUDENTS TO HELP THEM MEET THEIR EDUCATIONAL EXPENSES. LOANS ARE GUARANTEED EITHER BY STATE AGENCIES (AND REINSURED BY THE FEDERAL GOVERNMENT) OR BY THE DEPARTMENT DIRECTLY. IN EITHER CASE THE DEPARTMENT WILL PAY THE INTEREST ON THE LOAN TO THE LENDER WHILE THE STUDENT IS ATTENDING A POST-SECONDARY INSTITUTION IF THE STUDENT QUALIFIES UNDER THE INTEREST SUBSIDY PROVISION OF THE LEGISLATION. SEE 20 U.S.C. SEC. 1078. YOUR FIRST QUESTION CONCERNS THE AUTHORITY OF THE DEPARTMENT UNDER THE PROPOSED REGULATION TO TERMINATE THESE INTEREST PAYMENTS TO INSURED LENDERS.

SECTION 1113 OF PUB.L. NO. 97-252 AMENDED SECTION 12 OF THE MILITARY SELECTIVE SERVICE ACT, 50 U.S.C. APP. SEC. 462 BY ADDING THE FOLLOWING NEW SUBSECTION:

"(F)(1) ANY PERSON WHO IS REQUIRED UNDER SECTION 3 TO PRESENT HIMSELF FOR AND SUBMIT TO REGISTRATION UNDER SUCH SECTION AND FAILS TO DO SO IN ACCORDANCE WITH ANY PROCLAMATION ISSUED UNDER SUCH SECTION, OR IN ACCORDANCE WITH ANY RULE OR REGULATION ISSUED UNDER SUCH SECTION, SHALL BE INELIGIBLE FOR ANY FORM OF ASSISTANCE OR BENEFIT PROVIDED UNDER TITLE IV OF THE HIGHER EDUCATION ACT OF 1965.

"(2)IN ORDER TO RECEIVE ANY GRANT, LOAN, OR WORK ASSISTANCE UNDER TITLE IV OF THE HIGHER EDUCATION ACT OF 1965 (20 U.S.C. 1070 ET SEQ.), A PERSON WHO IS REQUIRED UNDER SECTION 3 TO PRESENT HIMSELF FOR AND SUBMIT TO REGISTRATION UNDER SUCH SECTION SHALL FILE WITH THE INSTITUTION OF HIGHER EDUCATION WHICH THE PERSON INTENDS TO ATTEND, OR IS ATTENDING, A STATEMENT OF COMPLIANCE WITH SECTION 3 AND REGULATIONS ISSUED THEREUNDER.

"(3) THE SECRETARY OF EDUCATION, IN AGREEMENT WITH THE DIRECTOR, SHALL PRESCRIBE METHODS FOR VERIFYING SUCH STATEMENTS OF COMPLIANCE FILED PURSUANT TO PARAGRAPH (2). SUCH METHODS MAY INCLUDE REQUIRING INSTITUTIONS OF HIGHER EDUCATION TO PROVIDE A LIST TO THE SECRETARY OF EDUCATION OR TO THE DIRECTOR OF PERSONS WHO HAVE SUBMITTED SUCH STATEMENTS OF COMPLIANCE.

"(4) THE SECRETARY OF EDUCATION, IN CONSULTATION WITH THE DIRECTOR, SHALL ISSUE REGULATIONS TO IMPLEMENT THE REQUIREMENTS OF THIS SUBSECTION. SUCH REGULATIONS SHALL PROVIDE THAT ANY PERSON TO WHOM THE SECRETARY OF EDUCATION PROPOSES TO DENY ASSISTANCE OR BENEFITS UNDER TITLE IV FOR FAILURE TO MEET THE REGISTRATION REQUIREMENTS OF SECTION 3 AND REGULATIONS ISSUED THEREUNDER SHALL BE GIVEN NOTICE OF THE PROPOSED DENIAL AND SHALL HAVE A SUITABLE PERIOD (OF NOT LESS THAN THIRTY DAYS) AFTER SUCH NOTICE TO PROVIDE THE SECRETARY WITH INFORMATION AND MATERIALS ESTABLISHING THAT HE HAS COMPLIED WITH THE REGISTRATION REQUIREMENT UNDER SECTION 3. SUCH REGULATIONS SHALL ALSO PROVIDE THAT THE SECRETARY MAY AFFORD SUCH PERSON AN OPPORTUNITY FOR A HEARING TO ESTABLISH HIS COMPLIANCE OR FOR ANY OTHER PURPOSE."

SUBSECTION (B) OF SECTION 1113 FURTHER PROVIDES THAT THE ABOVE-QUOTED AMENDMENT TO THE MILITARY SELECTIVE SERVICE ACT "SHALL APPLY TO LOANS, GRANTS, OR WORK ASSISTANCE UNDER TITLE IV OF THE HIGHER EDUCATION ACT FOR PERIODS OF INSTRUCTION BEGINNING AFTER JUNE 30, 1983."

THE REGULATIONS PROPOSED BY THE DEPARTMENT TO IMPLEMENT THIS LEGISLATION REQUIRE THAT UNLESS THE STUDENT APPLYING FOR AID FILES A STATEMENT OF REGISTRATION COMPLIANCE WITH THE EDUCATIONAL INSTITUTION, THE INSTITUTION MAY NOT DISBURSE ANY FUNDS TO THE STUDENT UNDER ANY TITLE IV AID PROGRAM OR CERTIFY THE INSTITUTIONAL PORTION OF THE GUARANTEED STUDENT LOAN APPLICATION OR ANY OTHER APPLICATION FOR TITLE IV AID. HOWEVER, IN RECOGNITION OF THE LIKELIHOOD THAT BEFORE THE DEPARTMENT WOULD BE ABLE TO PUBLISH FINAL REGULATIONS IMPLEMENTING THE LEGISLATION SOME STUDENTS MAY HAVE APPLIED FOR AND/OR RECEIVED OR BENEFITED FROM A LOAN INTENDED FOR A PERIOD OF INSTRUCTION AFTER JUNE 30, 1983, THE PROPOSED REGULATIONS HAVE CERTAIN PROVISIONS THAT APPLY ONLY TO THOSE SITUATIONS. THE PROPOSED REGULATIONS (SEC. 668.24(B)) PROVIDE AS FOLLOWS IN THIS RESPECT:

"(3)(I) AN INSTITUTION SHALL NOTIFY THE LENDER AND THE SECRETARY IF IT DETERMINES THAT A STUDENT WHO HAS ALREADY RECEIVED OR BENEFITED FROM A LOAN INTENDED FOR A PERIOD OF INSTRUCTION BEGINNING ON OR AFTER JULY 1, 1983 FAILS TO FILE AND VERIFY A STATEMENT OF REGISTRATION COMPLIANCE IN ACCORDANCE WITH THIS SECTION AND SECS. 668.26 AND 668.27.

"(II) A STUDENT WHO FAILS TO FILE AND VERIFY THE REQUIRED STATEMENT FORFEITS THE RIGHT TO RECEIVE OR RETAIN THE LOAN CHECK OR ITS BENEFITS, AS WELL AS THE RIGHT TO THE PAYMENT OF INTEREST BENEFITS ON THAT LOAN. THE BORROWER SHALL, IF DEMANDED BY THE LENDER, IMMEDIATELY REPAY THAT DISBURSEMENT."

YOUR LETTER POSES THE FOLLOWING QUESTIONS IN CONNECTION WITH SECTION 668.24(B)(3)(II):

"A POSSIBLE INTERPRETATION OF THAT PROVISION IS THAT IF A STUDENT HAS ALREADY RECEIVED THE LOAN AND FAILS TO REGISTER FOR THE DRAFT, THE FEDERAL GOVERNMENT CAN HALT INTEREST PAYMENTS TO LENDING INSTITUTIONS. WERE THAT THE CASE, WOULD THE FEDERAL GOVERNMENT BE VIOLATING A CONTRACT WITH THE LENDING INSTITUTION? WHAT WOULD BE THE LEGAL RAMIFICATIONS FOR THE FEDERAL GOVERNMENT?"

IN OUR VIEW, THE INTENDED MEANING OF SECTION 668.24(B)(3)(II) AS IT RELATES TO THE RIGHTS OF THE LENDER WHO DISBURSES THE GUARANTEED STUDENT LOAN AND WHO WOULD OTHERWISE RECEIVE INTEREST PAYMENTS FROM THE DEPARTMENT IS UNCLEAR. HOWEVER, WE HAVE BEEN ADVISED BY THE DEPARTMENT THAT THE INTERPRETATION SUGGESTED IN YOUR LETTER IS IN FACT THE INTENDED ONE. THAT IS, THE LENDER WOULD LOSE ITS RIGHT TO RECEIVE THE INTEREST SUBSIDY PAYMENT FROM THE DEPARTMENT SINCE THE STUDENT WHO RECEIVED THE LOAN WAS INELIGIBLE UNDER THE NEW LEGISLATION BY REASON OF THE STUDENT'S FAILURE TO DEMONSTRATE COMPLIANCE WITH THE DRAFT REGISTRATION REQUIREMENT. HOWEVER, IT IS THE DEPARTMENT'S POSITION THAT THE INELIGIBLE STUDENT WOULD BE FULLY LIABLE FOR REPAYING THE LOAN AND INTEREST TO THE LENDER AND THAT IN THE EVENT OF THE STUDENT'S DEFAULT, THE LENDER WOULD BE ENTITLED TO PAYMENT OF THE FULL LOAN AMOUNT, INCLUDING INTEREST, UNDER THE TERMS OF ITS GUARANTEE EITHER FROM THE DEPARTMENT OR THE GUARANTEE AGENCY.

WE AGREE WITH THE DEPARTMENT THAT UNDER SECTION 1113(B) OF PUB.L. NO. 97-252, A STUDENT WHO RECEIVES A GUARANTEED STUDENT LOAN, OR OTHER FEDERAL AID UNDER TITLE IV, FOR A PERIOD OF INSTRUCTION AFTER JUNE 30, 1983, IS NOT ELIGIBLE TO RECEIVE SUCH ASSISTANCE IF HE IS REQUIRED TO REGISTER FOR THE DRAFT AND FAILS TO PROVIDE EVIDENCE THAT HE HAS DONE SO. THIS IS TRUE EVEN IF THE STUDENT RECEIVED THE LOAN PRIOR TO THAT DATE UNDER THE CURRENT REGULATIONS THAT DO NOT REQUIRE THE STUDENT TO SHOW THAT HE HAS REGISTERED FOR THE DRAFT (ASSUMING, OF COURSE, THAT THE LOAN HAD NOT BEEN MADE BEFORE SEPTEMBER 8, 1982, WHEN PUB.L. NO. 97-252 WAS APPROVED). THIS INTERPRETATION OF THE LEGISLATION IS MANDATED BY THE EXPRESS LANGUAGE OF SECTION 1113(B) AND IS NOT CONTRADICTED BY ANYTHING IN THE LEGISLATIVE HISTORY. OBVIOUSLY, THEREFORE, IF THE STUDENT WAS NOT ELIGIBLE FOR THE LOAN FROM ITS INCEPTION, HE WOULD NOT BE ELIGIBLE FOR THE FEDERAL SUBSIDY PAYMENT PROVIDED FOR IN 20 U.S.C. SEC. 1078(A).

THE QUESTION REMAINS, HOWEVER, WHETHER THE SAME THING CAN BE SAID WITH RESPECT TO THE RIGHTS OF THE LENDER TO RECEIVE INTEREST SUBSIDY PAYMENTS FROM THE DEPARTMENT. IN THIS RESPECT A PROVISION SET FORTH IN 20 U.S.C. SEC. 1078(A)(3)(A) MUST BE CONSIDERED. THAT PROVISION READS AS FOLLOWS:

"*** THE HOLDER OF A LOAN WITH RESPECT TO WHICH PAYMENTS ARE REQUIRED TO BE MADE UNDER THIS SECTION SHALL BE DEEMED TO HAVE A CONTRACTUAL RIGHT, AS AGAINST THE UNITED STATES, TO RECEIVE FROM THE SECRETARY THE PORTION OF INTEREST WHICH HAS BEEN SO DETERMINED. ***"

WHILE IT MIGHT BE ARGUED THAT UNDER THIS PROVISION THE LENDER HAS A VESTED RIGHT TO COLLECT INTEREST PAYMENTS FROM THE UNITED STATES THAT IS INDEPENDENT OF THE RIGHT OF THE STUDENT TO RECEIVE THE BENEFITS OF THE FEDERAL SUBSIDY AND THEREFORE CANNOT BE TERMINATED BY THE PROPOSED REGULATIONS, WE WOULD NOT BE INCLINED TO AGREE WITH THIS INTERPRETATION FOR SEVERAL REASONS.

FIRST, FROM A PURELY LOGICAL ANALYSIS IT MAKES LITTLE SENSE, IN OUR VIEW, TO HOLD THAT WHILE THE STUDENT LOSES HIS RIGHT TO RECEIVE A GUARANTEED STUDENT LOAN AND THE BENEFITS OF THE FEDERAL INTEREST PAYMENT BECAUSE OF HIS FAILURE TO REGISTER FOR THE DRAFT, THE LENDER THAT IS RECEIVING THE INTEREST PAYMENT FROM THE DEPARTMENT ON BEHALF OF THE STUDENT HAS AN INDEPENDENT RIGHT TO CONTINUE TO RECEIVE SUCH PAYMENTS. IN THIS RESPECT 20 U.S.C. SEC. 1078(A)(1) SPECIFICALLY STATES THAT THE INTEREST SUBSIDY IS BEING PAID ON THE STUDENT'S "BEHALF AND FOR HIS ACCOUNT." THEREFORE WHEN THE STUDENT LOSES HIS ELIGIBILITY OR IS DETERMINED NEVER TO HAVE BEEN ELIGIBLE FOR THE SUBSIDY PAYMENTS, THE LENDER CANNOT REMAIN ENTITLED TO RECEIVE THOSE PAYMENTS FROM THE DEPARTMENT.

THIS SITUATION IS VERY SIMILAR TO WHAT HAPPENS WHEN A LENDER LEARNS AFTER DISBURSING A LOAN THAT THE STUDENT IS NOT ELIGIBLE BECAUSE HE HAS NOT BEEN OR WILL NOT BE A STUDENT ENROLLED IN A PARTICIPATING SCHOOL ON AT LEAST A HALF-TIME BASIS. IN THIS SITUATION, THE REGULATIONS CURRENTLY IN EFFECT PROVIDE THAT "THE LENDER SHALL *** CEASE BILLING THE SECRETARY FOR INTEREST PAYMENTS ON THE BORROWER'S BEHALF, SINCE NO FURTHER INTEREST BENEFITS ON THAT LOAN ARE PAYABLE ***." SEE 34 C.F.R. SEC. 682.507(E).

SECOND, AND PERHAPS MORE IMPORTANTLY, IT APPEARS, BASED ON THE INFORMATION PROVIDED TO US BY THE DEPARTMENT AND ON OUR OWN ANALYSIS OF THE RELEVANT STATUTES AND REGULATIONS, THAT THE ULTIMATE RIGHTS OF THE LENDER WOULD BE PROTECTED IF THE PROPOSED REGULATION IS ADOPTED. WHEN THE STUDENT, BY REASON OF HIS FAILURE TO FILE AND VERIFY THE REQUIRED STATEMENT OF REGISTRATION COMPLIANCE, LOSES HIS RIGHT TO RECEIVE OR RETAIN THE LOAN AS WELL AS PAYMENT OF THE INTEREST SUBSIDY BY THE DEPARTMENT, HE REMAINS OBLIGATED TO REPAY THE FULL AMOUNT OF THE LOAN TO THE LENDER. THIS RESPECT, THE PROPOSED REGULATION SECIFICALLY STATES THAT THE "BORROWER SHALL IF DEMANDED BY THE LENDER, FULLY REPAY THAT DISBURSEMENT." PRESUMABLY THIS WOULD INCLUDE ANY ACCRUED INTEREST, ALTHOUGH IN OUR OPINION, THE PROPOSED REGULATION AND THE ACCOMPANYING LOAN AGREEMENT SHOULD BE AMENDED TO MAKE THIS CLEAR AS WELL AS THE BORROWER'S LIABILITY TO REPAY ANY INTEREST THAT HAD ALREADY BEEN PAID TO THE LENDER BY THE DEPARTMENT. FURTHERMORE, IF THE INELIGIBLE STUDENT DOES NOT REPAY THE LOAN UPON DEMAND BY THE LENDER, HE CAN BE DECLARED IN DEFAULT. SEE THE DEFINITION OF DEFAULT IN 34 CFR SEC. 682.200. AT THAT TIME, THE INSURED LENDER CAN FILE A CLAIM EITHER WITH THE GUARANTEE AGENCY OR THE DEPARTMENT, DEPENDING ON THE TYPE OF LOAN INVOLVED. THE DEPARTMENT'S RESPONSE SPECIFICALLY STATES THAT UNDER THE PROPOSED REGULATIONS, THE INSURANCE WOULD REMAIN IN EFFECT EVEN IF THE STUDENT WAS INELIGIBLE BECAUSE OF HIS FAILURE TO REGISTER. WE UNDERSTAND THAT THIS IS THE PROCEDURE CURRENTLY FOLLOWED IN THE CASE OF STUDENTS DETERMINED INELIGIBLE FOR NOT ENROLLING FOR THE REQUIRED NUMBER OF COURSES.

WHEN THE DEFAULT CLAIM IS PAID THE LENDER WOULD RECEIVE ALL OF THE ACCRUED UNPAID INTEREST IN ADDITION TO THE OUTSTANDING BALANCE DUE ON THE LOAN. IN FACT, IT IS THE DEPARTMENT'S POSITION THAT UNDER 20 U.S.C. SECS. 1078-1(A)(1)(B) AND 1080(A) THE LENDER COULD FILE A DEFAULT CLAIM IF THE STUDENT DOES NOT PAY THE REQUIRED INTEREST AFTER THE STUDENT BECOMES INELIGIBLE FOR THE FEDERAL INTEREST PAYMENTS. ACCORDINGLY, THE ULTIMATE RIGHTS OF THE LENDER TO RECOVER THE FULL AMOUNT OF THE LOAN PLUS ANY UNPAID INTEREST WOULD BE PRESERVED. ALTHOUGH THE PROPOSED REGULATIONS DO NOT CLEARLY SET FORTH THE LENDER'S RIGHTS IN THIS RESPECT, WE BELIEVE THAT WHERE A LENDER MAKES A LOAN THAT UNDER THE REGULATIONS AND LOAN AGREEMENTS IN EFFECT AT THE TIME IS A VALID ONE, A CONTRARY RESULT WOULD NOT BE REASONABLE AND IN ALL LIKELIHOOD COULD NOT BE SUSTAINED IN COURT. NEVERTHELESS, WE WOULD RECOMMEND THAT THE PROPOSED REGULATION BE CLARIFIED SO THAT IT EXPRESSLY SETS FORTH THE LENDER'S RIGHTS TO RECOVER THE FULL AMOUNT OF THE LOAN PLUS INTEREST BY FILING A CLAIM WITH THE APPROPRIATE AGENCY ONCE THE STUDENT-BORROWER DEFAULTS.

YOUR SECOND QUESTION CONCERNS THE VALIDITY OF SECTION 668.26(E)(5)(II)(A) OF THE NPRM WHICH PROVIDES AS FOLLOWS:

"IF THE INSTITUTION CERTIFIES THE INSTITUTIONAL PORTION OF AN APPLICATION UNDER THE GUARANTEED STUDENT LOAN OR PLUS PROGRAM FOR A STUDENT WHO FAILS TO SUBMIT THE REQUIRED DOCUMENTATION WITHIN ONE HUNDRED TWENTY (120) DAYS, THE INSTITUTION SHALL NOTIFY THE LENDER AND THE SECRETARY."

SPECIFICALLY YOU ASK WHETHER THAT PROVISION CONFLICTS WITH THE TERMS OF THE FAMILY EDUCATIONAL RIGHTS AND PRIVACY ACT OF 1974, AS AMENDED, 20 U.S.C. SEC. 1232G "WHICH OUTLINES TO WHOM HIGHER EDUCATION INSTITUTIONS MAY RELEASE INFORMATION ON STUDENTS." WE DO NOT BELIEVE ANY SUCH CONFLICT EXISTS.

AS YOU INDICATE, 20 U.S.C. SEC. 1232G PROVIDES THAT NO FEDERAL FUNDS SHOULD BE MADE AVAILABLE TO ANY EDUCATIONAL INSTITUTION WHICH PERMITS "THE RELEASE OF EDUCATION RECORDS (OR PERSONALLY IDENTIFIABLE INFORMATION CONTAINED THEREIN ***") OF STUDENTS WITHOUT THE WRITTEN CONSENT OF THEIR PARENTS TO ANY INDIVIDUAL, AGENCY, OR ORGANIZATION, ***" OTHER THAN THOSE SPECIFIED IN THE STATUTE. INCLUDED WITHIN THE LIST OF EXCEPTIONS TO THE STATUTORY PROHIBITION, HOWEVER, IS ANY INFORMATION RELEASED "IN CONNECTION WITH A STUDENT'S APPLICATION FOR, OR RECEIPT OF, FINANCIAL AID." SEE 20 U.S.C. SEC. 1232GB)(1)(D).

ACCORDINGLY, IT IS CLEAR THAT THIS LEGISLATION DOES NOT PREVENT A SCHOOL FROM INFORMING A LENDER THAT A STUDENT IS NOT ELIGIBLE FOR FEDERAL AID BECAUSE HE FAILED TO VERIFY HIS COMPLIANCE WITH THE DRAFT REGISTRATION LAWS.

WE TRUST THAT THE FOREGOING INFORMATION WILL BE HELPFUL TO YOU.