Modifies Policies on
LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
OFFICE OF STUDENT FINANCIAL ASSISTANCE
LOAN PROGRAM MEMORANDUM
To assure that your Common Manual
remains current, please record this document on your LPM/LPB index, and retain it in
Appendix E of your manual.
LOSFA has modified its policies on
Consolidation Loans effective December 16, 1996, in order to protect borrowers and the
federal fiscal interest from the consequences of a second default:
- Federal regulations and Common Manual
policy effective July 1, 1996 permit a Consolidation loan borrower to establish
eligibility for his defaulted loans without having made satisfactory repayment
arrangements on the loan by agreeing to repay the new Consolidation loan under an
income-sensitive repayment plan. LOSFA requires that the lender insure that the
borrower has made satisfactory repayment arrangements with the loan holder before applying
for the Consolidation loan. For these purposes, satisfactory repayment
arrangements are defined as three consecutive, on-time, voluntary monthly payments which
at least satisfy the interest accruing on each defaulted loan and do not result in
- In addition, LOSFA will guarantee a
Consolidation loan for an otherwise eligible borrower who certifies that he or she has
been unable to obtain a Consolidation loan with income sensitive repayment terms
satisfactory to him or her from the holders of the borrower's outstanding loans, provided
that the lender will not assign any Consolidation loans where the borrower
requested income sensitive repayment terms on his or her application if none of the
borrower's underlying loans were held by the lender.
- LOSFA will not guarantee a Consolidation
loan made jointly to a married couple.
These requirements will be included in
the Appendix C Guarantor-Specific Information of the next update of the Common Manual.