LOUISIANA STUDENT
FINANCIAL ASSISTANCE COMMISSION
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LPM NO.: | L2002-6 | Effective Date: | As Indicated |
Pub. Date: | May 10 , 2002 | 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.
The following summary informs 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.
Using, Duplicating,
and Reprinting of Portions of the Common Manual
The Common Manual has been revised
to include information about the use, duplication, or reprinting of portions
of the Common Manual. Guarantors, guarantors' subcontractors, and other
members of the higher education and student loan industries may use, duplicate,
or reprint the text, graphics, or other information included in the Common
Manual for purposes of providing information to their clientele without
obtaining the oral or written permission of the Common Manual Governing
Board. All users must include a citation referencing the Common Manual
as the source when using the information in this manner.
An individual or group not directly affiliated with the higher education or student loan industries must obtain permission from the Common Manual Governing Board before using, duplicating, or reprinting any information from the Common Manual. Such an individual or group should contact a guarantor's Governing Board representative for information regarding the procedure for obtaining such permission.
Affected Sections: | 1.4, 1.5 |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | None. |
Policy Information: | Reference 572 |
Guarantor Comments: | None. |
Title
IV Approved Leave of Absence
The Common Manual has been updated
to define an approved leave of absence, for purposes of the manual, as a status
in which the student is considered to be continuously enrolled for Title IV
program purposes. In addition, the manual has been updated to provide information
regarding the requirement that a student must be able to return to school at
the point where the student interrupted his or her training in order for the
leave of absence to be considered an approved leave of absence for Title IV
program purposes. If school policy requires a student to return at the beginning
of a term and repeat some course-work previously completed, the school's leave
of absence policy does not meet the standards required for an approved leave
of absence even if the school does not charge the student for repeating the
course-work.
Finally, the manual has been updated to explain that if a student withdraws after returning from an approved leave of absence, total number of calendar days in the payment period or period of enrollment used for a return of Title IV funds calculation must be adjusted. The number of calendar days in the leave of absence must be excluded from the total number of days in the payment period or period of enrollment to ensure that a student does not earn funds by taking a leave of absence.
Affected Sections: | 4.5, appendix G |
Effective Date: | Official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | §668.22(d); The Federal Student Financial Aid Handbook, Institutional Eligibility Reference. |
Policy Information: | Reference 574 |
Guarantor Comments: | None. |
Determining
Withdrawal Dates
The Common Manual has been updated
to eliminate redundant language and better organize information regarding official
withdrawals and unofficial withdrawals. It also requires a school to describe
its withdrawal process to students including those actions which constitute
the beginning of the withdrawal process in its communications to students. Revised
policy also removes language prohibiting the student from rescinding his or
her official notification to withdraw more than one-time.
In addition, information is being included to explain that when a student withdraws from a standard term-based program comprised of a series of modules, the school must determine if a return of Title IV funds calculation is necessary. The following return of Title IV funds provisions apply to programs meeting these criteria:
1. If the student withdraws after the completion of at least one course in one of the modules within the term, the student is not considered to have withdrawn for return of Title IV funds purposes and a return calculation is not required. However, other regulatory provisions concerning eligibility for awards and recalculation may apply.
2. If the student withdraws prior to the completion of at least one course in the module, the student is considered to have withdrawn for return of Title IV funds purposes and a return calculation is required unless the student provides confirmation to the school - subsequent to his or her withdrawal from the course - that he or she plans to attend a module later in that term. The school may not rely on registration information obtained from the student prior to his or her withdrawal.
3. If the student withdraws prior to the completion of at least one course in the module and provides confirmation that he or she plans to attend a subsequent module within the term but then fails to do so, the student is considered to have withdrawn as of the date that would have applied if the student had not indicated his or her intent to return in a subsequent module within the term.
4. If the student withdraws prior to the completion of at least one course in the module, the payment period used to calculate the return of Title IV funds must include all of the calendar days in all of the modules in the term. The payment period begins on the student's first day of attendance and ends on the last day of classes of the last module that the student was scheduled to attend. (For example, if the school's term consists of 3 modules of 5 weeks each or 35 calendar days and the student only enrolled in 2 modules, the denominator in the calculation of the percentage of the payment period/period of enrollment completed would be 70 days, not 105 days.)
Standard term-based programs offered in modules have also been defined in the manual. For an eligible program that combines a series of modules into a semester, trimester, or quarter and measures progress in credit hours, the payment period includes all of the modules the student was scheduled to attend in the semester, trimester or quarter beginning with the module that included the student's first day of attendance. The following criteria apply to programs offered in modules:
Affected Sections: | 4.6, 5.8.D. |
Effective Date: | Official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | DCL GEN-00-24 |
Policy Information: | Reference 575 |
Guarantor Comments: | None. |
Determining
the Percentage of Payment Period/Period of Enrollment Completed
The Common Manual has been updated
to clarify that the concept of a student earning 100% of his or her Title IV
aid-if the percentage of the payment period or period of enrollment completed
exceeds 60%-does not apply for clock hour programs if scheduled hours are used.
For example, if a student withdraws after completing 248 hours of a 450 hour
payment period, he or she completed 55% of the payment period (248/450 = 55%).
In this case if the student was scheduled to complete 279 hours at the time
he or she withdrew, the student completed at least 70% of the scheduled hours
(248/279 = 89%) and the school may use scheduled hours to determine the percentage
of Title IV aid earned. Therefore, scheduled hours (279) are divided by the
total hours in the payment period (450) to determine the student earned 62%
of his or her Title IV aid for the payment period. Remember that since scheduled
hours were used in the calculation, the student has not earned 100% of his or
her Title IV aid even though the calculation resulted in a quotient of over
60%.
In addition, rounding requirements for calculating the percentage of the payment period or period of enrollment completed have been included in the manual. In this case, percentages are calculated to three decimal places. The third decimal is rounded up if the fourth decimal is 5 or above and rounded down if the fourth decimal is 4 or below. The only exception to this rule is that quotients of .6001 through .6004 are not rounded down. This exception recognizes that students who complete more than 60% of the payment period or period of enrollment have earned 100% of their Title IV aid. If the rounding rules were followed in this exception, the quotient, which is greater than 60% would have been rounded to .60 and the student would not have earned 100% of his or her Title IV aid.
For clarity, information currently included under the subheading "Percentage of Title IV Aid Earned," has been moved under the subheading, "Determining the Percentage of the Payment Period/Period of Enrollment Completed."
Affected Sections: | 4.7.A. |
Effective Date: | Official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | DCL GEN-00-24. |
Policy Information: | Reference 576 |
Guarantor Comments: | None. |
Title
IV Aid That Could Have Been Disbursed
The Common Manual has been updated
to indicate that a school may include funds from a second or subsequent disbursement
of FFELP funds as aid that could have been disbursed when completing return
of Title IV funds calculations if the school would have been permitted to deliver
the funds on or before the date the student withdrew. However, late disbursement
regulations prohibit a student from receiving any amount of a second or subsequent
FFELP loan disbursement if the student has not graduated or successfully completed
the period of enrollment for which the loan was intended. The return of Title
IV funds requirements, including the post-withdrawal disbursement requirements,
do not supercede this provision.
Affected Sections: | 4.7.A. |
Effective Date: | Return of Title IV funds calculations completed on or after December 1, 2000. |
Basis: | DCL GEN-00-24. |
Policy Information: | Reference 577 |
Guarantor Comments: | None. |
Period of
Enrollment
The Common Manual has been revised
to clarify that the maximum (instead of minimum) period of enrollment for which
the school can certify a loan for a defaulted borrower, whose eligibility to
borrow FFELP loans has been reinstated during the current academic year, is
the academic year during which the borrower regained eligibility, unless the
borrower is not eligible for other reasons.
Affected Sections: | 5.7.C. |
Effective Date: | Loans certified by the school on or after June 29, 2001. |
Basis: | Final Rules published in Part III of the Federal Register, pages 34762-34766, dated June 29, 2001. |
Policy Information: | Reference 578 |
Guarantor Comments: | None. |
Forbearance
upon Notification of a Borrower's or Dependent Student's Death
The Common Manual has been revised
to clarify requirements for granting a forbearance when the lender receives
notification of a borrower's or, in the case of a PLUS loan, the borrower's
or dependent student's death. A lender, after the lender receives reliable but
unofficial notification of a borrower's or dependent student's death, must grant
a mandatory administrative forbearance for a period not to exceed 60 days until
the lender receives documentation of the death. This forbearance does not require
a written request nor is the lender required to notify the borrower or endorser
that a mandatory administrative forbearance was granted. The lender may grant
an administrative forbearance for up to an additional 60 days if more time is
needed to obtain this documentation. This forbearance does not require a written
request, but the lender is required to notify the borrower or endorser that
the administrative forbearance was granted.
Affected Sections: | 7.11.B., 7.11.D. |
Effective Date: | Reliable but unofficial notifications of a borrower's or, in the case of a PLUS loan, the borrower's or dependent student's death received by the lender on or after August 21, 2001. |
Basis: | Final Rules published in Part III of the Federal Register, pages 44006-44007, dated August 21, 2001. |
Policy Information: | Reference 579 |
Guarantor Comments: | None. |
Claim Documentation
The Common Manual has been updated
to adjust the claim filing documentation requirements. The lender now must submit
either the original promissory note or a copy of the promissory note certified
by the lender as "true and exact" rather than the previously required "true
and accurate."
Affected Sections: | 8.2.G., CCI8.2.G., 8.2.H, CCI8.2.H., 8.3.B., CCI8.3.B., 8.3.C., CCI8.3.C. |
Effective Date: | Claim documentation submitted by the lender on or after July 1, 2001. |
Basis: | Final Rules published in Part III of the Federal Register, pages 34762-34766, dated June 29, 2001, which revised §682.402(g)(1)(i). |
Policy Information: | Reference 580 |
Guarantor Comments: | None. |
Unpaid Refund Discharge
The Common Manual has been revised
to incorporate a technical correction to the regulations that changes the triggering
event that the guarantor uses to determine when an unpaid refund discharge request
must be approved. If the guarantor and the borrower are unable to resolve the
unpaid refund with an open school and the borrower has ceased to attend the
school that owes the refund, the guarantor must approve the request within 120
days of the date the guarantor receives the completed unpaid refund discharge
request, rather than 120 days from the date the borrower submits the request.
Affected Sections: | 8.2.I.; CCI8.2.I. |
Effective Date: | Completed unpaid refund discharge requests received by the guarantor on or after July 1, 2001. |
Basis: | Final Rules published in Part III of the Federal Register, pages 34762-34766, dated June 29, 2001, which revised §682.402(l)(2)(ii). |
Policy Information: | Reference 581 |
Guarantor Comments: | None. |
Loan Rehabilitation
The Common Manual has been updated
to include information that guarantors will remove the default status from a
borrower's credit history once the loan has been purchased by an eligible lender
at the conclusion of the rehabilitation process.
Affected Sections: | 8.10; CCI8.10 |
Effective Date: | July 1, 2001. |
Basis: | Final Rules published in Part III of the Federal Register, pages 34762-34766, dated June 29, 2001, which revised §682.405(b)(2). |
Policy Information: | Reference 582 |
Guarantor Comments: | None. |
Updates
to Return of Title IV Funds Terminology
Terminology throughout the Common
Manual has been revised to include appropriate references to the provisions
for the return of Title IV funds.
Affected Sections: | 4.1.B., 4.3.C., 4.7.A., 5.7.H., 6.5.B., 7.6.A., 7.10.A., 7.12.A., 8.1.B., CCI8.1.B., 8.3.B., appendix G |
Effective Date: | Effective for official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | None. |
Policy Information: | Reference 583 |
Guarantor Comments: | None. |
Determining
the Amount of Unearned Title IV Aid to be Returned
The Common Manual has been updated
to include a new subheading, "Amount of Title IV Aid Earned by the Student."
The amount of Title IV loan and grant aid earned by the student equals the amount
of aid that was delivered to the student plus the amount of aid that could have
been disbursed or delivered during the payment period or period of enrollment
multiplied by the calculated percentage of Title IV aid earned.
In addition, information under the subheading, "Determining the Amount of Unearned Aid to be Returned" was updated to clarify that the amount of Title IV loan and grant aid that is unearned and must be returned is equal to the total amount of disbursed Title IV aid minus the amount of Title IV aid which has been earned.
Affected Sections: | 4.7.A. |
Effective Date: | Official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | None. |
Policy Information: | Reference 584 |
Guarantor Comments: | None. |
Cost
of Attendance and Institutional Charges
The Common Manual has been updated
to provide information regarding the inclusion of institutional charges in the
return of Title IV funds calculations and the treatment of a waiver of tuition
and fees in calculating the student's cost of attendance. Institutional charges
used in the return of Title IV funds calculations are always the institutional
charges that were initially assessed the student for the payment period or period
of enrollment, unless the school adjusted the student's institutional charges
before the student withdrew (e.g., tuition was adjusted for a change in enrollment
status). Information has also been included to address return calculations in
cases in which Title IV aid is delivered to a student before the institutional
charges are met.
If the school waives all or some of the tuition and fees for certain students, the waiver of tuition and fees under the return of Title IV funds requirements must be consistent with the required treatment of the waiver for purposes of calculating the student's cost of attendance for Title IV purposes.
Affected Sections: | 4.7.A., 5.7.E. |
Effective Date: | Provisions applicable to the Cost of Attendance (COA) are retroactive to the implementation of the Common Manual. Provisions applicable to the return of Title IV funds are effective for official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | DCL GEN-00-24. |
Policy Information: | Reference 585 |
Guarantor Comments: | None. |
Return
of Loan Proceeds
The title of this subsection has been changed
from "Return or Refund of Loan Proceeds" to "Return of Loan Proceeds." The first
subheading in the subsection was changed from "Return of Proceeds" to "Return
of Undelivered Proceeds" and a new subheading was added entitled "Return of
Ineligible Borrower Loan Proceeds." In addition, terminology within the subsection
has been updated to reflect return of Title IV funds requirements.
Affected Sections: | 6.3.G. |
Effective Date: | Official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | None. |
Policy Information: | Reference 586 |
Guarantor Comments: | None. |
Length
of Deferment - Leave of Absence
The Common Manual has been corrected
to align subsection 7.10.A. with current regulations and with changes already
implemented in section 4.5. These changes provide that a borrower on a leave
of absence may maintain eligibility for an in-school deferment if that borrower's
cumulative leaves of absence do not exceed 180 days for any 12-month period,
rather than 60 days as previously indicated in this subsection of the manual.
Affected Sections: | 7.10.A. |
Effective Date: | Title IV recipients who withdraw on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | §668.22(d)(1)(vii). |
Policy Information: | Reference 587 |
Guarantor Comments: | None. |
Bankruptcy
Repurchases
The Common Manual has been revised
to clarify that if the guarantor purchases a default claim and later receives
documentation that the date of the bankruptcy petition preceded the date of
the default (the 270th day of delinquency), the lender will be required to repurchase
the loan unless the loan is determined by the court to be dischargeable in the
bankruptcy action. The lender is not required to repurchase a claim for a loan
that is filed as a default claim and the date of default precedes the petition
date.
Affected Sections: | 8.7, CCI8.7 |
Effective Date: | Bankruptcy petitions received by the guarantor on or after July 1, 2002 |
Basis: | None. |
Policy Information: | Reference 588 |
Guarantor Comments: | None. |
Timely
Filing Deadlines for Bankruptcy Claims
The Common Manual has been revised
by adding language to specify that a bankruptcy claim and proof of claim, if
applicable, must be filed with all required documents within 30 days after the
lender's receipt of the Notice of the First Meeting of Creditors or other confirmation
issued by the debtor's attorney or the bankruptcy court, or within 30 days after
the date the guarantor provides the lender with bankruptcy information and instructs
the lender to file a bankruptcy claim, whichever is earlier. This change clarifies
the time period used to determine if a bankruptcy claim has been filed timely
and coordinates the policy language between subsections 8.2.D. and CCI8.2.D.
Affected Sections: | 8.2.D., CCI8.2.D. |
Effective Date: | Bankruptcy notifications received by the lender on or after July 1, 2002. |
Basis: | §682.402(g)(2)(iv)(A). |
Policy Information: | Reference 571 |
Guarantor Comments: | None. |
Common
Manual Product Update
In section 1.3 of the Common Manual,
guarantors announce a new product-a virtual Integrated Common Manual.
The virtual manual includes monthly revisions to the Common Manual as
they are approved by the Governing Board. Underlines indicate new text, and
strikethroughs show deletions. Unlike previous versions of the Integrated
Common Manual, which only updated sections of the text that were changed,
the virtual manual updates the text, plus indexes and links to other sections
of the manual. The virtual manual is located on the National Council of Higher
Education Loan Programs (NCHELP) web site at www.nchelp.org.
The bulletin language may also be found on the NCHELP web site and copies of reference materials published by the U.S. Department of Education are located on the Information for Financial Aid Professionals (IFAP) web site at www.ifap.ed.gov.
Other revisions to section 1.3 include information on other versions of the Common Manual. These versions are produced annually and may be obtained from a school's or lender's primary guarantor.
Revisions also include a definition of NCHELP, which represents a nationwide network of guarantors, secondary markets, lenders, loan servicers, collectors, and other organizations involved in the administration of the Federal Family Education Loan Program.
Affected Sections: | 1.3, appendix G |
Effective Date: | None. |
Basis: | None. |
Policy Information: | Reference 589 |
Guarantor Comments: | None. |
Removal
of Forms from the Common Manual
The Common Manual has been updated
to provide an overview of the common form development process and has eliminated
the forms from appendix F in the manual. Appendix F will maintain a list of
all forms referenced within the text of the manual. Forms previously contained
in appendix F will be available on the 2002 version of the Common Manual
e-Collection CD-ROM. However, since most forms may be revised at various
times throughout the year, users may not have the most current forms available
in the e-Collection. Current forms may be found on the NCHELP web site
(www.nchelp.org) as well as many guarantor
web sites.
Affected Sections: | 2.3.C. |
Effective Date: | Upon approval by the Governing Board for the Integrated Common Manual. At the time of the 2002 annual update for paper and electronic versions of the Common Manual. |
Basis: | None. |
Policy Information: | Reference 590 |
Guarantor Comments: | None. |
Return
of Undelivered Loan Funds if the Borrower Files Bankruptcy
The Common Manual has been revised
to clarify that if the bankruptcy action will not result in the lender filing
a claim with the guarantor and the lender chooses to make subsequent disbursements
on the loan, then the lender must not ask the school to return any loan funds
not yet delivered by the school to the borrower.
Affected Sections: | 6.2.I. |
Effective Date: | Bankruptcy notices received by the lender on or after July 1, 2002 |
Basis: | None. |
Policy Information: | Reference 591 |
Guarantor Comments: | None. |
Note: The bulletin language for Total and Permanent Disability issues is presented in a logical flow and not by the proposal number.
General
Discharge Requirements for Total and Permanent Disability Claims
The Common Manual has been revised
to incorporate the changes made to the federal regulations governing the general
requirements applicable to total and permanent disability discharges. The revised
policy states that a borrower's obligation to repay a loan may be discharged
if a doctor of medicine or osteopathy, legally authorized to practice in a state,
certifies that the borrower is totally and permanently disabled, and removes
the language that assumes the loan is canceled in this case. In addition, the
criteria for establishing the borrower's eligibility for discharge provide that
the borrower is not considered totally and permanently disabled on the basis
of a condition that existed at the time the loan was made, rather than before
he or she applied for the loan.
Affected Sections: | 8.2.C. and CCI8.2.C. |
Effective Date: | Completed total and permanent disability discharge requests received by the lender on or after July 1, 2002. |
Basis: | Final Rules published in Part X of the Federal Register, pages 65678-65695, dated November 1, 2000, and Part III of the Federal Register, pages 44006-44007, dated August 21, 2001; §682.201(a) and §682.402(c). |
Policy Information: | Reference 599 |
Guarantor Comments: | None. |
Administrative
Forbearance after Total and Permanent Disability Discharge Request
Although technical changes to the regulations
no longer explicitly support a suspension of payments, guarantors will continue
to permit a lender to grant an administrative forbearance if the lender receives
reliable information indicating that a borrower has become totally and permanently
disabled. The lender may grant the borrower an administrative forbearance, not
to exceed 60 days, until the lender receives certification of the borrower's
total and permanent disability.
In addition, if the lender does not grant the borrower an administrative forbearance, the lender must continue collection activity until it receives the certification-or until it receives a physician's "written request," rather than a specific "letter", that additional time is needed to determine whether the borrower is totally and permanently disabled. The change from "letter" to "written request" aligns the policy with the Department's recent interpretations permitting the use of an electronic equivalent for any required written notice.
Affected Sections: | 8.2.C. and CCI8.2.C. |
Effective Date: | Total and permanent disability discharge requests received by the lender on or after July 1, 2002. |
Basis: | None |
Policy Information: | Reference 592 |
Guarantor Comments: | None. |
Suspending
Collection for Total and Permanent Disability Claims
If the lender receives a written request
from the borrower's physician requesting additional time to make a determination
of total and permanent disability, the lender must suspend collection activity
on the loan for up to 60 days or until the certification is received, whichever
is earlier. The manual is revised to clarify that if the lender determines that
a borrower does not meet the definition of totally and permanently disabled,
or if the lender does not receive the physician's certification of total and
permanent disability within 60 days of the receipt of the physician's written
request for additional time, the lender must resume collection activity and
treat the loan as though forbearance had been granted during this period.
Affected Sections: | 8.2.C. and CCI8.2.C. |
Effective Date: | Total and permanent disability discharge requests received by the lender on or after July 1, 2002. |
Basis: | Final Rules published in Part X of the Federal Register, pages 65678-65695, dated November 1, 2000, and Part III of the Federal Register, pages 44006-44007, dated August 21, 2001; §682.402(c)(5). |
Policy Information: | Reference 597 |
Guarantor Comments: | None. |
Conditional
Discharge Due to Total and Permanent Disability
The Common Manual is revised to
add a description of the conditional discharge period as applicable to borrowers
who request a discharge of their loan obligation due to a total and permanent
disability. The manual language explains that completed total and permanent
disability discharge requests received by the lender on or after July 1, 2002,
and subsequently paid as a claim by the guarantor, are permanently assigned
to the Department. The Department then determines if the certification and information
provided by the borrower support the conclusion that the borrower meets the
criteria for total and permanent disability discharge. If the Department determines
that the certification and information provided by the borrower do not support
the conclusion that the borrower meets the criteria for a total and permanent
disability discharge, the Department notifies the borrower that the application
for a disability discharge has been denied and that the loan is due and payable
under the terms of the note.
If the Department makes an initial determination that the borrower is totally and permanently disabled, the Department notifies the borrower that the loan is conditionally discharged and that the conditional discharge period will last for up to 3 years after the date the borrower became totally and permanently disabled, as certified by the physician. The Department's notification specifies that all or part of the 3-year period may predate the Department's initial determination, and identifies the following conditions that apply during the 3-year conditional discharge period:
The Department also notifies the borrower that, if at any time during the 3-year conditional discharge period the borrower does not continue to meet the eligibility requirements for a total and permanent disability discharge, the Department will resume collection activity on the loan but will not require the borrower to pay any interest that accrued on the loan from the date of the initial determination of total and permanent disability through the end of the conditional discharge period.
Affected Sections: | 8.2.C., CCI8.2.C. |
Effective Date: | July 1, 2002. |
Basis: | Final Rules published in Part X of the Federal Register, pages 65678-65695, issued on November 1, 2000, and Part III of the Federal Register, pages 44006-44007, issued on August 21, 2001; §682.201(a); §682.402(c)(1)(ii); §682.402(c)(11) through (16). |
Policy Information: | Reference 601 |
Guarantor Comments: | None. |
Borrower
Notification Requirements after Total and Permanent Disability Claim Filing
The manual has been revised to address the
borrower notification requirements applicable after the lender has filed a total
and permanent disability claim with the guarantor. If the guarantor pays the
claim, the lender must notify the borrower that the loan will be assigned to
the Department for determination of eligibility for a total and permanent disability
discharge. If the guarantor determines that the borrower is not eligible, the
claim will be returned to the lender with an explanation of the reason for the
denial. The lender must notify the borrower that the application for a disability
discharge has been denied. The notification to the borrower must include the
basis for the denial and inform the borrower that the lender will resume collection
on the loan.
Affected Sections: | 8.2.C. and CCI 8.2.C. |
Effective Date: | Completed total and permanent disability discharge requests received by the lender on or after July 1, 2002. |
Basis: | Final Rules published in Part X of the Federal Register, pages 65678-65695, dated November 1, 2000; §682.402(c)(7)and (8). |
Policy Information: | Reference 600 |
Guarantor Comments: | None. |
Borrower Payments
and the Conditional Disability Discharge
The Common Manual has been revised
to support the regulatory changes pertaining to total and permanent disability
claims, beginning with completed total and permanent disability discharge requests
received by the lender on or after July 1, 2002. For those approved completed
requests, the disability discharge is "conditional," meaning that the Department
of Education will hold the loan for 3 years to determine if the borrower continues
to meet the eligibility requirements for a total and permanent disability discharge.
This change affects the way a lender files a claim. Currently, a lender makes adjustments to the outstanding principal balance and the interest-paid-through date by "backing off" payments received from or on behalf of the borrower after the date, certified by the physician, that the borrower became unable to work and earn money. Then, upon receipt of claim purchase notification, the lender is responsible for refunding those payments to the borrower. Under the new regulatory requirements, the borrower will not be eligible for this refund until after the 3-year "conditional" discharge period. In addition, this refund will be made by the Department of Education, rather than the lender or guarantor.
At the time the claim is filed, the lender must provide the guarantor with a record of any payments received after the date, certified by the physician, that the borrower became unable to work and earn money (i.e., the date of total and permanent disability). Lenders and guarantors are encouraged to work together to create an efficient and streamlined process for providing this information.. For example, for claims filed electronically under the Common Claim Initiative (CCI), the amount of payments received after the date of total and permanent disability is not captured and reported. This change is not currently part of the Common Account Maintenance (i.e., CAM-CCI) file specifications and will not be added until the next release of CAM. Therefore, lenders will need to send this information to the guarantor in another format. (The Claim Form will be updated prior to July 1, 2002, to allow lenders the option of reporting the amount of payments received after the date of total and permanent disability on the form.)
Affected Sections: | 8.2.C., CCI8.2.C., and CCI8.3.B. |
Effective Date: | Completed total and permanent disability discharge requests received by the lender on or after July 1, 2002. |
Basis: | §682.402(c); Final Rules published in Part X of the Federal Register, pages 65678-65695, dated November 1, 2000. |
Policy Information: | Reference 598 |
Guarantor Comments: | None. |
Borrower
Eligibility after Conditional Discharge of a Prior Loan Due to Total and Permanent
Disability
The Common Manual is revised to
include the conditions a borrower must meet in order to regain eligibility for
a new PLUS or Stafford loan if the borrower received a conditional discharge
of a prior loan due to a total and permanent disability. As prescribed by federal
regulations, a borrower who has received a conditional discharge of a prior
loan due to an initial determination that the borrower is totally and permanently
disabled must do all of the following to be eligible to receive a new
Stafford or PLUS loan:
The borrower's receipt of a new Stafford or PLUS loan terminates the borrower's conditional discharge and the Department reinstates collection activities on any loan on which collection activity had been previously suspended based on an initial determination of total and permanent disability.
Schools and lenders are strongly encouraged to contact the guarantor if assistance is needed to determine or establish a borrower's eligibility after a total and permanent disability.
Affected Sections: | 5.2.E. |
Effective Date: | Stafford and PLUS loan eligibility determinations made on or after July 1, 2001. |
Basis: | Final Rules published in Part X of the Federal Register, pages 65678-65695, dated November 1, 2000, and Part III of the Federal Register, pages 44006-44007, dated August 21, 2001; §682.201(a). |
Policy Information: | Reference 595 |
Guarantor Comments: | None. |
Borrower
Eligibility after Final Discharge of a Prior Loan Due to Total and Permanent
Disability
The rules regarding a borrower's eligibility
for Stafford and PLUS loans if a prior loan has been discharged due to total
and permanent disability are revised to incorporate the federal technical corrections
published on August 21, 2001. The technical corrections to the federal regulations
and the corresponding revised policy guidance clarify that a borrower who has
had a prior loan discharged due to total and permanent disability on or after
July 1, 2001, but before July 1, 2002, must reaffirm the discharged loan if
the borrower applies for a loan within 3 years from the date the borrower
became totally and permanently disabled, as certified by a physician. In this
case, the borrower must reaffirm the previously discharged loan before receiving
any new Stafford or PLUS loan.
In addition, the revised subheading, "Final Discharge of a Prior Loan Due to Total and Permanent Disability" clarifies the requirements applicable to a borrower's eligibility after a borrower has received a final discharge due to total and permanent disability. Policy language that describes the conditions for regaining Stafford or PLUS loan eligibility in the case of a borrower who has received a "conditional" discharge due to total and permanent disability will be provided under a separate subheading.
Schools and lenders are strongly encouraged to contact the guarantor if assistance is needed to determine or establish a borrower's eligibility after a total and permanent disability.
Affected Sections: | 5.2.E. |
Effective Date: | Stafford and PLUS loan eligibility determinations made on or after July 1, 2001. Basis: Final Rules published in Part III of the Federal Register, pages 44006-44007, dated August 21, 2001, which revised §682.201(a)(6)(iii). |
Policy Information: | Reference 596 |
Guarantor Comments: | None. |
Reporting
Borrower Payments on the Claim Form
The requirements related to claims filed
under the Common Claim Initiative (CCI) are revised to clarify the reporting
of borrower payments. The chart of required data elements under the CCI previously
specified that the lender must provide the total amount of principal and interest
payments made by or on behalf of the borrower on the Claim Form. The revised
policy requires the lender to report the total amount of payments made by or
on behalf of the borrower, without regard to how the lender may have applied
the payment.
The National Council of Higher Education Loan Programs (NCHELP) Program Operations Committee's Default Aversion and Claims Standardization Workgroup, or DACS, is pursuing a coordinating revision to the Claim Form.
Affected Sections: | CCI8.12 |
Effective Date: | Retroactive to claims filed by the lender on the Claim Form. Basis: §682.402(c). |
Basis: | §668.22(d); The Federal Student Financial Aid Handbook, Institutional Eligibility Reference. |
Policy Information: | Reference 593 |
Guarantor Comments: | None. |
Supplemental
Claim Reporting Requirements under the Common Claim Initiative (CCI)
The National Council of Higher Education
Loan Programs (NCHELP) Program Operations Committee's Default Aversion and Claims
Standardization Workgroup (DACS) has revised the Supplemental Claim Form to
coordinate the language with the terminology of the other CCI forms. For lenders
filing supplemental claims under the CCI, the chart of data elements has been
revised to coordinate with the revisions made to the Supplemental Claim Form.
In addition, the "Information to be Provided on the Supplemental Claim Form"
chart of data elements is revised to delete the requirement that a lender must
provide the date the lender or servicer prepared the form. Attached is the newly
revised chart.
Affected Sections: | CCI8.13 |
Effective Date: | Supplemental claims filed under the CCI by the lender on or after July 1, 2002. |
Basis: | None. |
Policy Information: | Reference 594 |
Guarantor Comments: | None. |
Unpaid Refund Discharges
The revised Common Manual policy clarifies that to be considered for an unpaid refund discharge, a borrower must declare that he or she, or the student in the case of a PLUS loan, received at least part of the proceeds of a FFELP loan on or after January 1, 1986.
Affected Sections: | 8.2.I., CCI8.2.I. |
Effective Date: | Completed unpaid refund discharge requests received by the guarantor on or after July 1, 2001. |
Basis: | Final Rules published in Part III of the Federal Register, pages 34762-34766, dated June 29, 2001; §682.402(l)(1); §682.402(l)(2); §682.402(l)(4)(i)(A). |
Policy Information: | Reference 602 |
Guarantor Comments: | None. |
Application
Processes for Federal Stafford, PLUS, and Consolidation Loans
The Common Manual was updated to remove
references to the Stafford common application and promissory note. To obtain
a Stafford loan for any period of enrollment beginning on or after July 1, 2000,
and for any Stafford loan certified by the school on or after July 1, 2000,
regardless of the loan period begin date, the borrower must complete a Free
Application for Federal Student Aid (FAFSA) and Master Promissory Note (MPN).
In addition, the definition of common application was updated to state that
a common application is now used to obtain a Federal Consolidation loan.
Affected Sections: | 6.5, 7.10.A., appendix G |
Effective Date: | Official or unofficial withdrawal determinations made by the school on or after October 7, 2000, unless implemented earlier by the school on or after November 1, 1999. |
Basis: | None. |
Policy Information: | Reference 603 |
Guarantor Comments: | None. |