Common Manual Update



LPM NO.: L2000-9 Effective Date: As Indicated
Pub. Date: November 9 , 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 in 2001. However, these changes are effective before the next update is scheduled to be delivered.

Use of the MPN Multi-Year Feature
The Common Manual has been revised to exclude institutions located outside of the United States from using the multi-year feature of the Master Promissory Note (MPN). Also, if an institution has been deemed eligible by the Department to use the multi-year feature, the feature is applicable to all of the institution's students, even those who are not enrolled in four-year, graduate, or professional programs.

Affected Sections:  2.2.A.
Effective Date:  Loans certified by the school on or after March 13, 2000.
Basis: DCL GEN 00-03, March 13, 2000.
Policy Information:  Reference 462
Guarantor Comments: None

Late Disbursement by a Lender
Common Manual policy has been revised to clarify one of the conditions for a lender's late disbursement of loan proceeds. The lender must ensure that the school certified the borrower's loan eligibility before the end of the loan period or the date on which the student ceased to be enrolled at least half time, whichever is earlier. As always, the school must have determined that the loan funds will be used to pay educational costs incurred for the period during which the student was enrolled and eligible.

Affected Sections:  6.2.H.
Effective Date:  Late disbursements made on or after July 1, 2000, unless implemented earlier by the lender.
Basis: §682.207(f)(1)(i) as updated by the Federal Register dated November 1, 1999 - Final Rule; The 1999-2000 Federal Student Financial Aid Handbook, FFEL Program Reference: Payment to the Borrower - Late Disbursement.
Policy Information:  Reference 463
Guarantor Comments: None


Deferment Forms Update
The Common Manual has been revised to align the deferment information with the common deferment forms that were approved by the Department of Education in July 1999. Deferment information has been updated to reflect the use of the Master Promissory Note. The changes include updates to form titles and abbreviations, and revisions to indications regarding the applicability of certain forms to certain borrowers or students. Following are highlights of the changes:

Form Changes							
   • In-School Deferment Request (SCH)
     All student borrowers applying for in-school deferment now use a single deferment form.
     Parent borrowers seeking PLUS loan deferment based on the dependent student's 
     school enrollment no longer use this form, but use the new PLUS Borrower with 
     Dependent Student Deferment Request form instead.

   • Education Related Deferment Request (EDU)
     Parent borrowers seeking PLUS loan deferment based on the dependent student's 
     rehabilitation training no longer use this form, but use the new PLUS Borrower 
     with Dependent Student Deferment Request form instead.

   • Temporary Total Disability Deferment Request (TDIS)
     This form is used only for temporary disabilities. The option for the physician to 
     certify a borrower's permanent disability has been deleted. Borrowers with a 
     permanent disability now use the Total and Permanent Disability Cancellation 
     Request instead.

   • Public Service Deferment Request (PUB)
     The only changes to this form are that the deferment type formerly called 
     "Military" is now called "Armed Forces" and that deferment candidates 
     formerly referred to as "Domestic" program volunteers are now referred to 
     as "ACTION" program volunteers.

   • Parental Leave/Working Mother Deferment Request (PLWM)
     This form previously was called the Family Deferment Request (FAM).

   • PLUS Borrower with Dependent Student (PLUS)
     This new form allows a PLUS borrower with an eligible dependent student 
     to request deferments that were previously requested on the In-School 
     and Education Related deferment forms.

     A PLUS borrower is eligible for deferment while the student for whom he 
     or she borrowed a PLUS loan is dependent and meets one of the 
     following criteria:

      •   Enrolled full time at an eligible school.
      •   Enrolled at least half time at an eligible school.
      •   Engaged full time in a rehabilitation training program.

Discontinued and Renamed Deferment Forms

 The following forms have been discontinued and replaced:
   • The Family Deferment Request (FAM) is now called the Parental 
     Leave/Working Mother Deferment Request (PLWM).
   • The Education Related Deferment Request with the "New EDU" 
     designation has been discontinued. Graduate fellowship and 
     rehabilitation training deferments formerly requested on this form 
     are now requested on the Education Related Deferment Request 
     with the "EDU" designation instead. In-school deferments are 
     now requested on the In-School Deferment Request (SCH) form 

   • The Economic Hardship Deferment Request with the "New HRD" 
     designation has been discontinued. All borrowers now use the 
     Economic Hardship Deferment Request with the "HRD" designation.
   • The Temporary and Permanent Total Disability Certification (DIS) 
     has been replaced with the Temporary Total Disability Deferment 
     Request (TDIS) and the Total and Permanent Cancellation Request forms.
Affected Sections:  7.9.A., 7.9.B., 7.10.A., 7.10.C., 7.10.D., 7.10.F., 7.10.L., 7.10.O., 7.10.P.
Effective Date:  Deferment forms distributed to borrowers no later than November 1, 1999.
Basis: DCL GEN-99-23.
Policy Information:  Reference 464 and 465
Guarantor Comments: None


Paid-in-Full Loans
The Common Manual has been revised to clarify that when a loan is paid in full by the borrower, the lender must either return the original or a true and exact copy of the promissory note to the borrower or notify the borrower that the loan is paid in full.

Affected Sections:  7.13
Effective Date:  Borrower notification by the lender of loans paid in full by the borrower on or after July 1, 2000.
Basis: §682.414(a)(5)(ii).
Policy Information:  Reference 466
Guarantor Comments: None


Untimely Filing of Default Aversion Assistance Request
Revised Common Manual policy clarifies that if the lender fails to file a default aversion request by the 330th day of delinquency, the lender will not be entitled to interest, interest benefits, and special allowance for the most recent 270 days preceding the date on which the loan defaults.

Affected Sections:  8.1.J., CCI8.1.J.
Effective Date:  Loans for which the first day of delinquency on the oldest outstanding due date is on or after July 1, 2000.
Basis: Federal Register dated October 29, 1999, §682.404(a)(2) and (k) and §682.411(i); Federal Register dated August 3, 1999, preamble discussion under §682.411.
Policy Information:  Reference 467
Guarantor Comments: None


Interest Subsidy on Federal Consolidation Loans
Guarantors have removed a reference to Nursing Student Loans (NSL) that may have led some to misinterpret when such loans were eligible for consolidation in the FFELP program. NSL loans first became eligible for FFELP consolidation on October 20, 1994. However, a passing reference to NSL loans in the first paragraph of section 9.6—a paragraph that addresses Consolidation loans made from applications received by the lender in 1993—may have incorrectly implied that NSL loans could be included in pre-1994 Consolidation loans. To avoid any further confusion, this reference to NSL loans has been deleted.

Affected Sections:  9.6
Effective Date:  Retroactive to the implementation of the Common Manual.
Basis: Improving America's Schools Act of 1994 (P.L. 103-382); Dear Guaranty Agency Director Letter dated November 8, 1994.
Policy Information:  Reference 468
Guarantor Comments: None


799 Codes Added to Common Manual
Lenders will find a comprehensive list of ED Form 799 codes and valid code combinations in the next update to the Common Manual. Guarantors have decided to add a two-page chart developed by the NCHELP Regulations Committee to the manual. The chart currently is available on the NCHELP Web site at:

Affected Sections:  A.3.D., A.3.E.
Effective Date:  The codes and combinations detailed on the chart were originally effective upon publication in statute or as specified in statute.
Basis: HEA 438; Self-Instructional Workbook for the ED Form 799.
Policy Information:  Reference 469
Guarantor Comments: None