Common Manual Updates
LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
|LPM NO.:||L98-12||Effective Date:||As Indicated|
|Pub. Date:||November 30, 1998||Distribution:||Lenders and Schools|
|Topic:||Common Manual Updates|
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.
Determination of Prior Default Clarified
The Common Manual has been updated to reflect that schools now use NSLDS financial aid history information in determining whether borrowers have prior defaults. Subsection 5.2.E.* now indicates that, in determining whether the student or parent borrower has ever defaulted on any Title IV loan, a school may rely on the information provided by the student or parent borrower during the application process and on NSLDS financial aid history information (or transcripts from other schools in the case of a mid-year transfer student), unless the school receives conflicting information. The new policy also clarifies that the school must reconcile all conflicting information before delivering any funds. A reference to Dear Colleague Letter GEN-96-13 has been added to the revised policy, from which schools may obtain additional, procedural information.
Common Manual subsection 5.2.E. has been revised to reflect this clarification, effective for financial aid transcript information requested by schools for the 1996-97 award year and thereafter.
* The subsection that has been revised appears as subsection 5.2.D. in the July 1998 version of the Common Manual. However, subsection 5.2.D. was redesignated 5.2.E. shortly after publication of the July 1998 version, as part of a reorganization of material throughout section 5.2. of the Manual.
Delivery Restrictions Clarified
Current Common Manual language does not clearly specify the regulatory requirement that a school must confirm student eligibility before delivering each disbursement of a FFELP loan. Subsection 6.3.E. has been revised to clarify that the school must confirm - prior to delivering each disbursement - that the student has maintained continuous eligibility for the loan from the beginning of the loan period certified on the application and promissory note.
This clarification reflects federal requirements in effect since 1986, and is effective retroactively to the implementation of the Common Manual.
Economic Hardship Deferment for Peace Corps Volunteers
The Common Manual has been updated to reflect the new economic hardship deferment provisions for Peace Corps volunteers, as outlined in the Department's recent Dear Colleague Letter GEN-98-16.
A new borrower whose first disbursement on his or her oldest outstanding loan is on or after July 1, 1993, is now eligible to receive an economic hardship deferment by providing the lender with documentation from the Peace Corps showing that he or she is or will be serving as a Peace Corps volunteer. A lender may grant an economic hardship deferment for up to the full 36-month maximum deferment period from a single request. A borrower who qualifies for deferment based on his or her Peace Corps service is not required to submit income documentation.
Subsection 7.10.P. of the Common Manual has been revised to reflect this change, which is effective for economic hardship deferment requests submitted by eligible Peace Corps volunteers and received by lenders on or after August 5, 1998.
Capitalization Notices - Language Clarified
Subsections 8.1.D. and CCI8.1.D. of the Common Manual have been revised to clarify that for loans on which payments of interest are due, the lender may schedule interest-only payments only at the borrower's request. Specific servicing requirements regarding interest-only payments during periods of authorized deferment (for loans with no interest subsidy) have been removed and replaced with a new statement clarifying that the only servicing activities required in such situations are those outlined in subsection 7.7.B. This change is effective retroactively to the implementation of the Common Manual.
Delayed Disbursement Provisions Updated and Defined
Outdated language regarding delayed disbursement time frames has been deleted from subsection A.1.B. of the Common Manual. The deleted language, which indicated that a lender is prohibited from disbursing a loan to a borrower before the 24th day of the enrollment period under delayed disbursement requirements, has been replaced by a cross-reference to subsection 6.2.A., which outlines current delayed disbursement provisions.
In addition, the following definition of "Delayed Disbursement" has been added to Appendix G:
Delayed Disbursement: The federally mandated delay of the first disbursement of loan funds for first-year, first-time undergraduate Stafford loan borrowers. The school is prohibited from scheduling the first disbursement of the loan earlier than:
- The 28th day of the first payment period if the loan is disbursed by EFT or master check.
- The first day of the first payment period if the loan is disbursed by individual check.
These changes to subsection A.1.B. and appendix G are effective for loan periods beginning on or after July 1, 1997.
Delayed Delivery Definition
The definition of "Delayed Delivery" has been revised to clarify that the delivery of funds is made by the school:
Delayed Delivery: The federally mandated delay in the school's delivery of the first disbursement of loan funds for first-year, first-time undergraduate Stafford loan borrowers. Delivery of the first disbursement must be delayed until the 31st day of the student's first payment period.
This change is effective for loan proceeds received by the school on or after July 1, 1997.