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Common Manual Update |
LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
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LPM NO.: | L2000-1 | Effective Date: | As Indicated |
Pub. Date: | January 31, 2000 | Distribution: | Lenders and Schools |
Topic: | Common Manual Update |
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 provides the following summaries to inform schools, lenders, and servicers of the latest Common Manual policy changes. These changes will appear in the manual’s next annual update. However, some changes are effective before the next update is scheduled to be delivered.
Unemployment Deferment Documentation
Current Common Manual language has been revised to clarify that a borrower is required to provide the lender with documentation of at least six attempts to secure employment only when requesting an extension of an existing unemployment deferment. The manual also has been revised to clarify that these attempts must be made during the 6-month period preceding the period to be covered by the deferment extension.
Affected Sections: | 7.10.E. |
Effective Date: | Retroactive to the implementation date of the Common Manual. |
Policy Information: | Reference #280 |
Guarantor Comments: | None |
Additional Eligibility for Unsubsidized Stafford Loans
Current Common Manual policy has been expanded to state that if a parent of a dependent student initially is determined to be eligible for a PLUS loan but subsequently is denied additional PLUS loan funds for the same loan period, the school may choose to certify additional unsubsidized Stafford loan funding for the student, not to exceed the maximum additional unsubsidized loan amounts (see subsection 5.7.H.). Any PLUS funds delivered or eligible future PLUS disbursements for the loan period must be included in the estimated financial assistance (EFA) used in determining eligibility for the additional unsubsidized Stafford loan. The school need not recover or refund PLUS loan proceeds for which the parent was previously determined eligible and that have been released to the parent or student, before the parent was determined ineligible for additional funding.
Affected Sections: | 5.3 |
Effective Date: | Retroactive to the implementation date of the Common Manual. |
Policy Information: | Reference #370 |
Guarantor Comments: | None |
Economic Hardship Deferment
Current Common Manual policy has been revised to clarify that a borrower who is unemployed, incarcerated, disabled, or temporarily on an unpaid leave of absence from work may qualify for an economic hardship deferment if he or she provides the lender with documentation of his or her income. In addition, any borrower who does not have income when applying for an economic hardship deferment must provide a self-certifying statement, either on the deferment form or in a separate statement, to the lender indicating that he or she has no income.
Affected Sections: | 7.10.P. |
Effective Date: | Economic hardship deferment requests received by the lender on or after March 1, 2000. |
Policy Information: | Reference #372 |
Guarantor Comments: | None |
Bankruptcy Claim Filing
Current Common Manual policy requires a lender to file a bankruptcy claim with the guarantor if a borrower files a Chapter 12 or 13 bankruptcy or a petition for undue hardship (adversary complaint) under a Chapter 7 or 11 bankruptcy. This policy has been updated to reflect that a lender must also file a bankruptcy claim if a Chapter 7 or 11 bankruptcy converts to a Chapter 12 or 13 bankruptcy.
Affected Sections: | 8.2.D and CCI 8.2.D. |
Effective Date: | Bankruptcy filing or conversion notifications received by the lender on or after March 1, 2000. |
Policy Information: | Reference #373 |
Guarantor Comments: | None |
Deferment Eligibility for PLUS Borrowers Clarified
The Common Manual has been revised to clarify that if the dependent student for whom a parent borrower obtained one or more PLUS loans meets the conditions required for an in-school or rehabilitation training deferment, the parent borrower may defer all of his or her PLUS loans based on the status of that one student—provided the parent borrower, on the date he or she signed the promissory note, has an outstanding balance on a FFELP loan disbursed before July 1, 1993. Previously, the manual inadvertently limited such eligibility to the borrowers with a loan first disbursed on or after July 1, 1987, but prior to July 1, 1993.
In addition, the current policy has been corrected to eliminate language that permits a PLUS borrower to be eligible for a graduate fellowship deferment based on the status of a dependent student. Prior to the reauthorization of 1992, the definition of "Independent Student" included a scenario where a graduate or professional student was considered dependent if the parent claimed that student as an exemption for tax purposes. For deferment purposes, the parent was considered eligible for graduate fellowship deferment based on the status of a dependent student for whom the parent obtained a PLUS loan. However, effective July 1, 1993, the definition of "Independent Student" changed to include all graduate or professional students as defined in HEA 480(d). This change eliminates a PLUS borrower’s eligibility for graduate fellowship deferment based on the status of the dependent student.
Affected Sections: | 7.9.A., 7.10., 7.10.A., 7.10.C.. |
Effective Date: | Deferments granted by the lender on or after April 1, 2000. |
Policy Information: | Reference #290 |
Guarantor Comments: | None |
Claim Payment Time Frames Clarified
The technical corrections of April 16, 1999 clarify the time frames within which the guarantor will pay or return non-default claims. Based on this change, the Common Manual is being revised to address the claim payment and return time frames for all claim types. Guarantor payment of claims is governed by regulation. Time frames are measured from the date the guarantor receives the claim. Regulations specify that the guarantor is required to purchase an approved claim or return the claim to the lender within a specific number of days from receipt of the claim based on the claim type, as follows:
If the lender fails to provide complete documentation for any claim, or if the lender has committed one or more servicing violations that warrant cancellation of the loan's guarantee (for any claim except a closed school or false certification claim), the claim will be returned to the lender unpaid within the applicable time frame noted above.
The manual has also been updated to clarify that closed school and false certification discharge claims are not subject to a review for servicing violations.
Affected Sections: | 8.4, 8.6, CCI8.4, CCI8.6 |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Policy Information: | Reference # 358 |
Guarantor Comments: | None |
Lender Origination Fees Find a New Home
Information on the lender fee, the 0.5% fee each lender pays on all loans first disbursed on or after October 1, 1993, has been moved from subsection 6.6.G. to subsection 3.5.A. of the Common Manual. This move was made to ensure that lenders will find the material in the most logical location within the manual. There are no substantive changes for lenders associated with the move.
Affected Sections: | 3.5.A. and 6.6.G. |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Policy Information: | Reference #376 |
Guarantor Comments: | None |
Consolidation Loan Subsidies During Deferment
Earlier this year, two sections of the Common Manual were updated to reflect that a portion of a Consolidation loan may be eligible for subsidy during periods of deferment. Now this same update has been added to two more subsections which were overlooked in the original update.
Affected Sections: | 7.9.A, A.1.B. |
Effective Date: | Consolidation loan applications received by the lender on or after November 13, 1997. |
Policy Information: | Reference #377 |
Guarantor Comments: | None |
Consolidation Loan Deferment Eligibility Factors Corrected
Common Manual subsection 9.5.C. has been revised to correct one of the factors affecting a Consolidation loan borrower’s eligibility for deferment, and to align it with guidance presented elsewhere in the manual.
A Consolidation loan borrower’s eligibility for deferment is affected by the date on which the borrower’s Consolidation loan is made ! not by "the date on which the lender received the Consolidation loan application and promissory note, " as was previously stated in subsection 9.5.C. of the manual.
Affected Sections: | 9.5.C. |
Effective Date: | Deferments granted by the lender on or after July 1, 2000. |
Policy Information: | Reference #378 |
Guarantor Comments: | None |