LOUISIANA STUDENT
FINANCIAL ASSISTANCE COMMISSION
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LPM NO.: | L2003-5 | Effective Date: | As Indicated |
Pub. Date: | April 4 , 2003 | 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 2003. These changes will also be incorporated into the March 2003 Integrated Common Manual, available on the NCHELP website at www.NCHELP.ORG in the e-library. However, all of the following changes are effective before the next paper manual update is scheduled to be delivered.
Reissuing
a Loan Disbursement
A school may request
that a lender reissue a loan disbursement for a variety of reasons, such as
when a check is lost. The Common Manual policy for the reissue of disbursements
has been revised to state that, upon the receipt of a school's request, the
lender may reissue a disbursement no later than 120 days after the earlier of
the last day of the period of enrollment for which the loan is intended or the
student's last date of at least half-time enrollment. For proceeds originally
disbursed as a late disbursement, the lender must reissue a disbursement no
later than 120 days after the date on which the original late disbursement was
made.
In exceptional cases, the lender may reissue a loan disbursement more than 120 days after the last date of the student's eligible enrollment or more than 120 days after the date on which the original late disbursement was made, so that the student will not be harmed by circumstances beyond his or her control. The request for reissue under this exception should come from both the student and the school, and the lender should document the exceptional circumstances.
Affected Sections: | 6.2.G |
Effective Date: | Disbursements reissued by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | None. Coordinates with 34 CFR 668.164(g) and private letter to the Student Loan Marketing Association from the Department, dated July 15, 1994. |
Policy Information: | 647/Batch 102 |
Guarantor Comments: | None. |
Eligible
Lender Definition
The Common
Manual has been revised to clarify that loans held in trust by a trustee
lender are not considered part of the trustee lender's consumer credit function
when determining if a lender meets the definition of an eligible lender as prescribed
by federal regulations.
Affected Sections: | 3.1 |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §682.200(b). |
Policy Information: | 648/Batch 102 |
Guarantor Comments: | None. |
Leave of Absence
The Common
Manual has been updated to reflect revised regulations regarding leave of
absence. The regulations now allow a school to grant multiple leaves of absence
as long as the total number of days for all leaves does not exceed 180 days
in a 12-month period. The student's request for the leave of absence must include
the reason for the leave. A student enrolled in a clock-hour or nonterm credit-hour
program who returns from a leave of absence is not required to complete the
same coursework she or he began prior to the leave of absence.
Affected Sections: | 4.5, Appendix G |
Effective Date: | For leaves of absence granted by the school on or after July 1, 2003, unless implemented earlier by the school. Schools may implement these provisions no earlier than November 1, 2002. |
Basis: | §668.22(d)(1)(vi-vii); §668.22(d)(3)(iii)(B). |
Policy Information: | 649/Batch 102 |
Guarantor Comments: | None. |
Late
Delivery and Post-Withdrawal Disbursement
The Common
Manual has been revised to delete redundant late disbursement policy language
from the description of aid that could have been disbursed and to clarify that,
before making a post-withdrawal disbursement of FFELP funds, the school must
determine that the borrower is eligible for a late delivery under the provisions
in subsection 6.3.H. If the borrower is determined eligible for a late delivery,
the school must offer a post-withdrawal disbursement of FFELP funds and, if
accepted, must deliver the funds to the borrower. Revised policy states that
a school must make the post-withdrawal disbursement of a credit balance within
120 days of the date the school determined that the student withdrew.
Affected Sections: | 4.7.A |
Effective Date: | Post-withdrawal disbursements made by the school on or after July 1, 2003, unless implemented earlier by the school. Schools may implement the post-withdrawal determination time frame change no earlier than November 1, 2002. |
Basis: | §668.164(g). |
Policy Information: | 650/Batch 102 |
Guarantor Comments: | None. |
Multiple
Disbursement and Delayed Delivery Exemptions
The Common
Manual has been revised to eliminate references to the statutory exemptions
authorized in HEA 428G(a)(3) and (b)(1). These exceptions waive, for schools
with low cohort default rates, the multiple disbursement requirement for a single
term loan and the 30-day delayed delivery requirement for a first-year undergraduate
student who is a first-time borrower. The statutory authority for these exemptions
expired on September 30, 2002. The information being deleted will be incorporated
into appendix H of the manual.
Affected Sections: | 5.8.D, 6.2.B, 6.3.E, 6.3.I |
Effective Date: | For loans certified on or after October 1, 2002. |
Basis: | HEA 428G(a)(3) and (b)(1); Dear Colleague Letter (DCL) GEN-02-06. |
Policy Information: | 651/Batch 102 |
Guarantor Comments: | None. |
Late Delivery of
Loan Proceeds by the School
The Common
Manual has been updated to reflect the regulatory changes applicable to
some of the requirements for the late delivery of loan proceeds by the school,
including:
1. Except in the case of a PLUS loan, the Department must have processed a Student Aid Report (SAR) or Institutional Student Information Record (ISIR) with an official expected family contribution (EFC) before the student became ineligible. The requirement that the school receive a valid SAR or ISIR prior to the date the student became ineligible is eliminated.
2. In the case of a second or subsequent disbursement, the student graduated or successfully completed the period of enrollment for which the loan was intended. In this circumstance, the school must offer the borrower the amount of Stafford or PLUS funds the student (or parent) was eligible to receive while the student was enrolled at the school.. The school may credit the student's account to pay for current and allowable charges (as currently described in subsection 6.3.E of the manual), but must pay or offer any remaining amount to the student or, in the case of a PLUS loan, to the parent.
3. The time frame in which the school may deliver the funds is extended from 90 days to 120 days from the date the school determines the student has withdrawn. If the student has not withdrawn, the school may make a late delivery of loan funds up to 120 days after the earlier of the end of the loan period or the date on which the student ceased to be enrolled at least half time.
4. On an exception basis, and with the approval of the Department, the school may make a late delivery of loan funds after the applicable 120-day period, if the reason the late delivery was not made within the 120-day period was not the fault of the student.
A comprehensive summary of all the criteria that must be met in order for the school to make a late delivery of loan proceeds is provided in subsection 6.3.H of the manual.
Affected Sections: | 6.3.E, 6.3.H |
Effective Date: | Late delivery of FFELP loan proceeds by the school on or after July 1, 2003, unless implemented earlier by the school. Schools may implement these provisions no earlier than November 1, 2002. |
Basis: | §668.164(g). |
Policy Information: | 652/Batch 102 |
Guarantor Comments: | None. |
Requesting
an Extension of the Repayment Period
The Common
Manual has been updated to remove the requirement that the borrower request
in writing an extension of the repayment period if the borrower's repayment
is scheduled for less than 5 years. The borrower still must request the repayment
extension but no longer needs to supply a written request.
Affected Sections: | 7.6.B |
Effective Date: | Borrower requests received by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | §682.209(a)(8)(iv). |
Policy Information: | 653/Batch 102 |
Guarantor Comments: | None. |
Changes
in Unemployment Deferment Requirements
Federal regulations
published in November 2002 amend the unemployment documentation requirements
and the time frames for which a lender may process an unemployment deferment.
Based on final rules, borrowers may provide evidence of eligibility for unemployment
benefits or may certify that they are currently seeking full-time employment
and making all required attempts to obtain full-time employment. Borrowers are
no longer required to provide information regarding potential employers contacted
during the job search or to document the employment agency with which they are
registered. Borrowers must certify-in writing or in a format approved by the
Department-that they are registered with an employment agency if one is available
within 50 miles of their current address, and that they have made six diligent
attempts in the preceding 6-month period to find full-time employment. Borrowers
applying for an initial period of unemployment deferment are not required to
certify that they have made attempts to obtain full-time employment.
Lenders should also note changes to the permissible unemployment deferment time frames. An initial period of unemployment deferment based on the borrower's self-certification may be back dated up to 6 months prior to the date the lender receives the necessary documentation from the borrower, and must be scheduled to end not later than 6 months after the date the lender receives required documentation. An extension to an unemployment deferment and any unemployment deferment based on the borrower's eligibility for unemployment benefits is not subject to the 6-month backdating limitation. An extension of a deferment may be granted for up to 6 months following the date the borrower provides the lender with evidence or certification of deferment eligibility.
Affected Sections: | 7.10.E |
Effective Date: | Borrower requests processed by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | §682.210(h)(2)(I) and (h)(4). |
Policy Information: | 654/Batch 102 |
Guarantor Comments: | None. |
Changes
to Economic Hardship Deferment Eligibility Calculation
Federal regulations
revise the calculations to determine a borrower's eligibility for economic hardship
deferment. If the borrower's loans are scheduled to be repaid in 10 years or
less, the lender must use the actual repayment amount in determining the borrower's
federal postsecondary education debt burden. If the borrower's loans are scheduled
to be repaid in more than 10 years, the lender must use the monthly payment
amounts that would have been owed on federal postsecondary education loans based
on a 10-year repayment schedule. As always, lenders must count a proportional
share of any payments due-or that would have been due-less frequently than monthly,
and must include payments due on a defaulted loan if the borrower has made repayment
arrangements satisfactory to the holder of the defaulted loan.
Affected Sections: | 7.6.B |
Effective Date: | Borrower requests processed by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | §682.210(s)(6)(vii). |
Policy Information: | 655/Batch 102 |
Guarantor Comments: | None. |
Verbal
Forbearance Agreements
New federal regulations
remove the requirement that the forbearance agreement between a borrower or
endorser and a lender for a discretionary forbearance be in writing. Regulations
permit the lender to negotiate a verbal agreement with the borrower or endorser.
If the forbearance agreement is verbal, the lender is required to send, within
30 days of that agreement, a notice to the borrower or endorser confirming the
terms of the agreement. The lender must document the borrower's request for
forbearance, the reason for the forbearance, and the terms of the forbearance
agreement.
Affected Sections: | 7.8.C, 7.9.E, 7.11.A, 7.11.B, 7.11.F, 7.11.G |
Effective Date: | Borrower requests processed by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | §682.211(b). |
Policy Information: | 656/Batch 102 |
Guarantor Comments: | None. |
New
Administrative Forbearance Provisions
Previously, lenders
were permitted to grant forbearance to a borrower or endorser who requested
forbearance due to the borrower being adversely affected by a natural disaster.
New federal regulations expand the lender's options to grant an administrative
forbearance based solely on the lender's determination that the borrower's or
endorser's ability to make payments has been adversely affected by a natural
disaster, a local or national emergency (declared by the appropriate government
agency), or a military mobilization. The lender may grant the administrative
forbearance for a 3-month period and must document in the borrower's loan file
the reason for the forbearance. To grant an extension of the administrative
forbearance for the same situation, the lender must document an agreement with
the borrower or endorser and obtain documentation supporting the borrower's
reason for extending the forbearance period.
Affected Sections: | 7.11.B |
Effective Date: | Borrower requests processed by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | §682.211(f)(11). |
Policy Information: | 657/Batch 102 |
Guarantor Comments: | None. |
Forbearance
Contact
New federal regulations
eliminate the 3-month forbearance contact requirement and replace it with new
forbearance contact provisions. If the lender grants a forbearance that involves
postponing all payments on the loan, the lender must contact the borrower or
endorser at least once every 6 months during the forbearance period. The lender
must inform the borrower or endorser of all the following information in each
such contact:
This notification requirement does not apply for postponement of interest payments during a deferment period, a period of forbearance for an internship or residency, or a period of mandatory administrative forbearance.
Affected Sections: | 7.11.G |
Effective Date: | Borrower requests processed by the lender on or after July 1, 2003, unless implemented earlier by the lender. Lenders may implement these provisions no earlier than November 1, 2002. |
Basis: | §682.211(e). |
Policy Information: | 658/Batch 102 |
Guarantor Comments: | None. |
Post-Withdrawal
Disbursement and PLUS Loans
The Common
Manual has been revised to clarify that if the student is eligible for a
post-withdrawal disbursement, it must be offered to the student or, in the case
of a PLUS loan, the parent, within 30 days of the date of determination of the
student's withdrawal.
Affected Sections: | 4.6 |
Effective Date: | Post-withdrawal disbursements made by the school on or after October 7, 2000, unless implemented earlier by the school. Schools may implement these provisions no earlier than July 1, 2000. |
Basis: | §668.22(a)(4)(ii)(A); §668.164(g). |
Policy Information: | 659/Batch 102 |
Guarantor Comments: | None. |
Correction
to Bankruptcy Information
Subsection 5.2.F
has been corrected to be consistent with information in section 5.4 regarding
the impact of a bankruptcy filing on the PLUS applicant's credit. Section 5.4
has been revised to more clearly state that loans discharged in bankruptcy must
be considered adverse credit for purposes of determining a PLUS borrower's creditworthiness.
However, the lender may not deny a PLUS loan solely on the basis of any previous
or pending bankruptcy filing.
Affected Sections: | 5.2.F, 5.4 |
Effective Date: | May 21, 2001. |
Basis: | Taylor v. United States of America, Department of Education (appeal); §682.201(b)(1)(vii). |
Policy Information: | 660/Batch 102 |
Guarantor Comments: | None. |
New
Borrower Deferment Eligibility Updates
The Common
Manual has been revised to clarify borrower eligibility for certain deferments.
Based on the revised and updated deferment forms recently published by the Department,
"new borrower" definitions throughout the manual have been updated to coincide
with the new, more inclusive deferment form text. The two general categories
of "new borrowers" are defined as follows:
A "new borrower" from July 1, 1987 to June 30, 1993, is defined as a borrower whose first FFELP loan was made on or after July 1, 1987, and before July 1, 1993, or who had an outstanding balance on a loan obtained on or after July 1, 1987, and before July 1, 1993, when he or she obtained a loan after July 1, 1993; or a borrower who had no outstanding balance on a Federal Consolidation loan that was made before July 1, 1993, that repaid a loan first disbursed before July 1, 1987.
A "new borrower" on or after July 1, 1993, is defined as a borrower whose outstanding FFELP loans were all made on or after July 1, 1993, and when his or her first FFELP loan was made on or after July 1, 1993, had no outstanding FFELP loans that were made before July 1, 1993.
Affected Sections: | 7.9.A, 7.10.A, 7.10.F, 7.10.G, 7.10.H, 7.10.I, 7.10.J, 7.10.K, 7.10.L, 7.10.M, 7.10.N, 7.10.O, 7.10.P, 7.10.Q |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §682.210(b)(7); §682.210(S)(1); Dear Colleague Letter (DCL) GEN 02-08, published October 2002. Additional clarification is provided in the newly approved deferment forms from the Department of Education. |
Policy Information: | 661/Batch 102 |
Guarantor Comments: | None. |