FINANCIAL ASSISTANCE COMMISSION
|LPM NO.:||L2001-8||Effective Date:||As Indicated|
|Pub. Date:||October 11, 2001||Distribution:||Lenders and Schools|
|Topic:||Common Manual Correction and 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.
The July 2001 update of the Common Manual contains unapproved language from policy proposal #461. This language was inadvertently included in the 2001 update and affects subsections 8.2.D. Bankruptcy Claims, 8.3.B., Claim File Documentation and corresponding sections in CCI8.2.D. and CCI8.3.B. Policy proposal #461 concerns bankruptcy claim file documentation and requires lenders to include in the claim file, either a copy of the Chapter 12 or 13 bankruptcy plan or a copy of a letter previously sent to the bankruptcy court requesting that the bankruptcy plan be forwarded to the guarantor. Based on the comments received on this proposal last year, the Policy Committee did not recommend the proposal for approval.
Attached is a black-line version of the affected pages to assist readers in identifying the language that is being stricken. Also provided is a clean version of those pages to serve as replacement pages for the paper version of the manual. The affected pages are: Chapter 8, pages 20, 21, and 38, and Chapter CCI8, pages 20, 21, and 38.
The following summaries inform schools, lenders, and servicers of the latest Common Manual policy changes. These changes will appear in the manual's next annual update in 2002. However, these changes are effective before the next update is scheduled to be delivered.
Extended Repayment Terms
Subsection 2.1.B. of the Common Manual has been updated to include language regarding the maximum repayment period of 25 years for an extended repayment schedule. In addition, readers are referred to subsection 7.6.D. for more information regarding extended repayment schedules.
|Effective Date:||Extended repayment schedules disclosed to new borrowers on or after October 7, 1998, who have an outstanding balance of principal and interest in FFELP loans totaling more than $30,000.|
|Basis:||HEA 428(b)(9)(A)(iv); §682.209(a)(7)(ix).|
|Policy Information:||Reference 533|
PLUS Loan Repayment Notification
The Common Manual has been updated to more accurately reflect that a lender must notify a borrower of repayment information in simple and understandable terms at or before the beginning of the repayment period. For PLUS loan borrowers, the repayment period begins on the date of the last disbursement. The time frame for providing repayment information to Stafford or SLS loan borrowers has been removed from section 7.5. References to these time frames are already included in subsections 7.5.A. and 7.5.B. Previous guidance did not include the requirement that the notification be in simple and understandable terms and incorrectly stated that the repayment disclosure must be sent to a PLUS loan borrower before or at the time the funds were first disbursed.
|Affected Sections:||7.5, 7.5.A., 7.5.C.|
|Effective Date:||The requirement to provide repayment information to borrowers in simple and understandable terms is effective July 1, 2000. All other revisions are effective retroactive to the implementation of the Common Manual.|
|Policy Information:||Reference 534|
Consolidation Loans and the Extended Repayment Schedule
The "Maximum Repayment Periods for Consolidation Loans" chart in the Common Manual has been revised to indicate that a new borrower on or after October 7, 1998, with an outstanding balance of principal and interest in FFELP loans totaling more than $30,000, may select an extended repayment schedule that allows for a repayment period not to exceed 25 years.
|Effective Date:||Repayment schedules disclosed to new borrowers on or after October 7, 1998.|
|Policy Information:||Reference 535|
Definition of Disposable Income
The definition of "Disposable Income" is being removed from the Glossary because the term was not used within the text of the Common Manual.
|Affected Sections:||Appendix G|
|Effective Date:||Retroactive to the implementation of the Common Manual|
|Basis:||Final Rule published in the Federal Register on June 29, 1994, pages 33580, 33581, 33594, and 33595; §682.210(s)|
|Policy Information:||Reference 536|
Extended Repayment Schedules
The Common Manual has been revised to state that new borrowers on or after October 7, 1998, may qualify for an extended repayment schedule if they have multiple lenders with an aggregate FFELP loan amount totaling more than $30,000. A lender must retain a record of the basis for determining a borrower's eligibility for an extended repayment schedule, if the total loan amount it holds is not more than $30,000.
|Effective Date:||Extended repayment schedules disclosed on or after January 1, 2002.|
|Policy Information:||Reference 537|