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 nation’s guarantors provide 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 July 2004. These changes will also be incorporated into the November 2003 Integrated Common Manual. The Integrated Common Manual is available on several guarantor websites, and it is also available on NCHELP’s website at www.NCHELP.org in the e-library. Please carefully note the effective date of each policy change.

Borrower Confirmation Requirement When a Prior Loan Is Written Off
The Common Manual has been revised to clarify that a borrower who has had a FFELP loan partially or totally written off must reaffirm the written-off portion of the loan and provide confirmation of that reaffirmation to the school to become eligible to receive a new FFELP loan. In addition, the language style has been revised to coordinate with the convention established by other policy language in this section.

CAM Usage
The Common Manual has been revised to state that a lender must request default aversion assistance through the Default Aversion Assistance Request Form or an equivalent electronic process, such as the Common Account Maintenance (CAM) reporting process.

Collection Costs vs Collection Charges
The Common Manual has been revised by changing the glossary entry of “collection charges” to “collection costs” since there is only one occurrence of the term “collection charges” within the text of the manual. Instead, the manual contains more than 30 occurrences of the term “collection costs.” The definition has also been revised to provide a clearer description of this type of cost charged to the borrower, as follows:

Collection Costs: Costs incurred in the collection of the loan by the loan holder and charged to the borrower. These costs may include, but are not limited to, attorney’s fees, court costs, and telegrams; they may not include routine costs associated with preparing letters or notices or making telephone calls to the borrower.

Also, a corresponding change has been made in subsection 12.8.D to change the single occurrence of the term “collection charges” to “collection costs.”

Federal Consolidation Loan Death Discharge
The Common Manual has been been revised to reflect changes in the regulations regarding the discharge of an underlying portion of a Federal Consolidation loan under the following circumstances:

•    The underlying portion of a Consolidation loan attributable to a PLUS loan obtained for a dependent student is eligible for discharge if that student dies. The borrower of the Consolidation loan (or both comakers in the case of a joint Consolidation loan made to a married couple) is obligated to repay the remaining Consolidation loan balance.
•    Upon the death of one of the comakers of a joint Consolidation loan made to a married couple, the portion of the Consolidation loan attributable to the comaker who has died is eligible for discharge. The surviving comaker is obligated to repay the remaining Consolidation loan balance.
  

Bankruptcy and Creditworthiness
The Common Manual has been revised to correct an inadvertent omission of the time frame applicable to the consideration of a prior bankruptcy when determining a PLUS loan applicant’s creditworthiness and to change the reference from loans discharged in bankruptcy to the more comprehensive standard of “any debt” discharged in bankruptcy. The revised policy confirms that, among other conditions, a PLUS loan applicant is considered to have adverse credit if the applicant had any debt discharged in bankruptcy during the 5-year period before the date of the applicant’s credit report.

Dependency Overrides
The Common Manual has been updated to incorporate the guidance provided by the Department in Dear Colleague Letter GEN-03-07 regarding dependency overrides. Dependency override determinations made by a financial aid administrator (FAA) due to unusual circumstances must be made each award year. In the case of a transfer student, each school must make its own determination regarding a dependency override and each school must retain documentation to support its decision. Unusual circumstances in which a FAA may make a dependency override may include, but are not limited to, an abusive family situation or abandonment by parents. Conditions that, individually or in combination with one another, do not qualify as unusual circumstances are:

•    A parent's refusal to contribute to the student's education.
•    A parent's unwillingness to provide information on the FASFA or for verification.
•    A parent not claiming the student as a dependent for income tax purposes.
•    A student’s demonstration of total self-sufficiency.

An FAA is generally required to acquire third-party documentation to support a student’s unusual circumstances. If the only documentation available to the FAA is a statement by the student, the student's statement must include the facts related to the unusual circumstances. The FAA must also prepare a written statement regarding the dependency determination, including the identification of the specific unusual circumstance upon which the FAA is basing the determination. If the only documentation available to the FAA is a statement by the student, the student's statement must include the facts related to the unusual circumstances and the school must include any other pertinent facts in writing.

Child Care Provider Loan Forgiveness
Subsection 12.9.A of the Common Manual has been updated to clarify that loan forgiveness under the Loan Forgiveness Demonstration Program for Child Care Providers is contingent upon annual appropriations. The manual has also been revised to add to the list of eligibility requirements that the borrower’s eligible loans must have been made prior to the beginning of qualifying child care service. Revised policy also clarifies that a borrower’s degree must be an associate’s or bachelor’s degree in early childhood education, child care, or any other educational area related to child care that the Department deems appropriate, and provides additional information as to the particular forms necessary for a borrower to apply to the Department for loan forgiveness and to the lender for forbearance. Finally, the italicized note at the end of subsection 12.9.A, that indicated that processes and procedures for applying for loan forgiveness have not been defined, but are being addressed by the community in its discussions with the Department, has been deleted.

Teacher Loan Forgiveness
The Common Manual has been revised to clarify that after completing the qualifying teaching service, a borrower may request loan forgiveness by completing a Teacher Loan Forgiveness Application and forwarding it to the lender or guarantor. The lender must forward the borrower’s completed application, including any supporting documentation, to the guarantor no later than 60 days after its receipt. After the guarantor notifies the lender of its determination of the borrower’s eligibility for loan forgiveness, the lender must inform the borrower of the determination within 30 days. If loan forgiveness is granted and a loan balance remains, the lender must also provide the borrower with information regarding new repayment terms. If the lender files a request for payment later than 60 days after it receives the completed Teacher Loan Forgiveness Application, the lender must repay all interest and special allowance received on the forgiven loan amount for periods after the expiration of the 60-day filing period. The lender is prohibited from collecting this interest from the borrower.

Defining an Academic Year
The Common Manual has been updated to provide additional information regarding the two different types of academic years—scheduled academic years (SAY) and borrower-based academic years (BBAY). Figure 6-2 has been updated to state that for a student enrolled in a term-based program, the total of all Stafford loans borrowed within a BBAY may not exceed the annual loan limit for a student’s grade level. After the original loan is made, additional loans are permissible during the BBAY only if the student has remaining eligibility or the student progresses to a grade level with a higher annual loan limit.

Information has also been added regarding transfer students and overlapping loan periods. If a student borrows Stafford funds to attend one school and then transfers to a new school, the new school cannot certify a loan until it determines whether the student’s new loan period will overlap with the loan period at the prior school. This requires the new school to determine the student’s academic year at the prior school. The school may use either of the following methods to make this determination:

•    Obtain documentation from the prior school about its academic year.
•    Make assumptions about the prior school’s academic year based on information obtained from the National Student Loan Data System (NSLDS). Schools that use this method must determine that the academic year at the prior school ended on the later of the following:
  

   –     30 weeks after the first day of the most recent loan period listed.

   S    The end date of the loan period for all loans made in the academic year.

If the loan periods overlap, the new school must subtract the gross amount of the loan (less any refunds or cancellations for that loan period) that the student received at the prior school from the student’s current annual loan limit to determine the amount that the student is eligible to borrow. If the loan periods do not overlap, the new school may process a loan up to the amount of the student’s current annual loan limit.

Dependency Status
The Common Manual has been updated to clarify that a student's dependency status is determined from information provided on the Free Application for Federal Student Aid (FAFSA). In addition, the criteria for a student to be considered independent have been aligned with language on the FAFSA.

Specifically, the following criteria that also qualify a student as independent have been added to the manual:

• The student has at least one child who receives more than half of his or her support from the student.
• The student has a dependent, other than a spouse or a child, who lives with the student and receives more than half of his or her support from the student at the time the FAFSA is completed and through June 30 of the award year.

In addition, the bullets regarding the criteria for determining whether the student is a veteran and whether the student is a graduate or professional student have been updated to mirror language on the FAFSA.

The last bullet in section 6.8 that states that a financial aid administrator may make a student independent based on special circumstances has been deleted. However, the sentence immediately following the bullets has been updated to indicate that the Financial Aid Administrator (FAA) may determine that the student is independent on the basis of special circumstances. In addition, a separate proposal was developed to add a new subheading titled “Dependency Overrides” immediately following this text. See bulletin titled “Dependency Overrides,” proposal 716.

Disbursements to Transfer Students
The Common Manual has been updated to remove redundant language and to clarify loan disbursement and delivery provisions for lenders and schools when a student transfers to a different school before a Stafford or PLUS loan is fully disbursed or delivered. Under these circumstances, unless the student is eligible for a late disbursement or a post-withdrawal disbursement, neither the student nor the parent borrower is eligible to receive the undisbursed or undelivered loan funds that were guaranteed for the student’s attendance at the previous school. The student or parent borrower seeking additional Stafford or PLUS loan funds must reapply at the new school.

When Disbursements Exceed Loan Eligibility
The Common Manual has been updated to clarify that the total amount of a late disbursement and all prior disbursements may not exceed the student’s loan eligibility as determined by the financial aid administrator. If the total amount of all disbursements exceeds the borrower’s eligibility, the school must return the balance to the lender with a notice certifying the beginning and ending dates of the loan period or payment period during which the eligible student was enrolled, and the amount of loan funds the student or parent borrower is eligible to receive for that loan period or payment period.

Due Diligence Violations for Death or Total and Permanent Disability Claims
The Common Manual has been revised to clarify that any due diligence activities normally required before the lender determined that the borrower (or, in the case of a PLUS loan, the dependent student) died, or that the borrower became totally and permanently disabled, are reviewed and penalties are assessed according to subsection 13.3.A, Default Claims. If there are violations that are sufficient to result in the loss of the loan’s guarantee and the guarantee is not reinstated before the date the lender determined that the borrower (or, in the case of a PLUS loan, the dependent student) died or that the borrower became totally and permanently disabled, the lender must discharge the loan even though the loan balance will not be reimbursed by the guarantor.

Unverified Social Security Numbers
The Common Manual has been revised by moving information regarding the delivery of loan funds to a student with an unverified Social Security number from subsection 5.2.B to subsection 8.7.F. This change congregates similar information (regarding circumstances in which a school may be restricted from delivering funds to a student) within the same subsection.

Resolving Delinquency that Precedes Mandatory Administrative Forbearance
Existing policy in the Common Manual that provides that any prior delinquency is not resolved by a mandatory administrative forbearance has been relocated from subsection 10.21.C to the more appropriate section 10.21. The placement of the language in subsection 10.21.C erroneously implied that it applied only to a mandatory administrative forbearance granted for the purpose of repayment accommodation. Further, the phrase “prior delinquency” has been replaced with language that more clearly describes the period for which the borrower is past due: "any outstanding delinquency that precedes the beginning date of a mandatory administrative forbearance period." Section 10.21 has also been updated with cross-references to subsections 10.18.F and 10.19.F for more information about resolving a delinquency that precedes a mandatory administrative forbearance