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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 682.402c10vii requires a FFEL
lender to return payments after the guaranty agency has paid a disability claim. Section 685.213b4ii and c2i provides for the return of payments for Direct Loans.
The discharge of a loan is also reported to nationwide consumer reporting agencies.
Changes: None.
Tax Implications Comments: One commenter asked that the Department take additional action to ensure that veterans are counseled regarding which States treat loan amounts discharged due to TPD as taxable income.
Discussion: The letter informing borrowers that they are eligible for discharge explains that, although loan amounts discharged due to TPD are no longer considered taxable income for Federal tax purposes, some States still consider discharged loan amounts as income. The letter recommends that borrowers scheduled to receive a TPD
discharge contact their State revenue office or a tax professional before deciding to accept or opt out of the TPD
discharge.
Changes: None.

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Deregulatory Action Comment: One commenter asked why the IFR was not treated as a significant regulatory action under Executive Order E.O. 13771, which requires that for every significant regulatory action proposed by an agency for notice and comment or otherwise promulgated that imposes a cost greater than zero, the agency must repeal two regulatory actions.
Discussion: On January 20, 2021, President Joseph Biden issued E.O.
13992, which revoked E.O. 13771, so the terms of E.O. 13771 no longer apply.
Regardless, the Department identified the IFR as a deregulatory action because it eliminates a regulatory requirement:
In this case, the requirement that a disabled veteran submit an application for a TPD discharge.
Changes: None.
Automatic Discharges for Borrowers With SSA Disability Designations Comments: Several commenters supported the Departments implementation of automatic TPD
discharges for disabled veterans and asked that the Department also allow for automatic TPD discharges for borrowers who are identified as eligible for a TPD
discharge through the existing data match with SSA.
Discussion: We agree. Under 674.61b2iv, 682.402c2iv,
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and 685.213b1, these borrowers are eligible to receive a loan discharge but are currently required to submit an application before they may receive the discharge. Eliminating the application requirement for borrowers who are identified as eligible for a TPD discharge through the data match with SSA, so they can receive an automatic discharge, is a logical extension of the IFR. The rationale for providing borrowers with a TPD discharge based on a disability determination by VA obtained through a data match, thereby eliminating unnecessary documentation burdens on individuals determined by a government agency to qualify for a TPD
discharge, applies equally to individuals who qualify for TPD discharge based on a disability determination by the SSA as obtained through a data match.
The object of the logical outgrowth standard is one of fair notice. Long Island Care at Home, Ltd. v. Coke, 551
U.S. 158, 174 2007. The standard is well described in Mid Continent Nail Corp. v. United States, 846 F.3d 1364, 137376 Fed. Cir. 2017, which states that a final rule is a logical outgrowth of a proposed rule only if interested parties should have anticipated that the change was possible, and thus reasonably should have filed their comments on the subject during the notice-and-comment period. Id. at 1373 quoting Veterans Justice Grp., L.L.C. v. Secy of Veterans Affairs, 818
F.3d 1336, 1344 Fed. Cir. 2016. The Federal Circuit indicated that the logical outgrowth standard is very broad, implying that it would even allow the removal of critical elements of rules so long as the NPRM contains the merest hint of the agencys actions in the final rule. See id. at 1374, 1376.
As supported by public comment on the IFR requesting this expansion of the automatic TPD discharge, the public could reasonably have anticipated that the final rule would apply to borrowers who are identified as eligible for a TPD
discharge through the data match with SSA. The position taken in this final ruleexpanding the automatic TPD
discharge to apply to these borrowers is consistent with and responsive to public comment, including comments from several U.S. Senators, a State Attorney General, legal aid societies, and other non-governmental organizations. The number of comments, the diversity of the commenters, and the universal support for this expansion all demonstrate that this rule is a logical outgrowth of the IFR.
Changes: In 674.61d1ii, 682.402c10iB, and 685.213d1ii, we have provided that
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a borrower who is identified as eligible for TPD discharge through the data match with SSA does not need to submit a TPD application as a condition of receiving a loan discharge.
Additional Proposals Comments: Some commenters suggested that all veterans with a service-related disability should have their loans discharged. One commenter recommended that student loans for all veterans be paid or forgiven, not just veterans who are totally and permanently disabled. Another commenter recommended that all veterans with a disability should qualify for a TPD discharge, regardless of whether their disability is serviceconnected.
Two commenters stated that veterans who have never been deployed can receive a 100 percent disability rating from VA. These veterans would qualify for TPD, while veterans who were deployed, but who are less than 100
percent disabled, would not qualify.
This commenter believed that veterans who have not been deployed should not have priority over veterans who were deployed.
One commenter recommended eliminating the post-discharge monitoring period for all TPD discharge borrowers.
Discussion: The statutory section authorizing a TPD discharge for veterans does not take a veterans deployment status into account and, therefore, deployment status has no bearing on whether a student loan is discharged. In addition, the Department does not have the statutory authority to grant a TPD
discharge to a veteran who is not totally and permanently disabled. A veteran who is totally and permanently disabled, but whose disability is not service connected, may receive a TPD
discharge under the other TPD
discharge processes, which require either an SSA disability determination or a physicians certification.
There is no post-discharge monitoring period for borrowers who received TPD
discharges based on VA disability determinations. Because the IFR only addressed automatic TPD discharges for veterans for whom there are no postdischarge monitoring periods, any changes to the post-discharge monitoring periods for other recipients of TPD discharges are outside the scope of this final rule. However, the Department has heard from the public on ways to improve the rules governing total and permanent disability discharge and may consider these policies through upcoming negotiated rulemaking. See 86 FR 28299 May 26, 2021.

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