LOUISIANA STUDENT
FINANCIAL ASSISTANCE COMMISSION
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LPM NO.: | L2004-1 | Effective Date: | As Indicated |
Pub. Date: | January 20 , 2004 | 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 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 December 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.
Treatment
of Aid That Could Have Been Disbursed in the Return of Title IV Funds
Calculation
The U.S. Department
of Education has recently revised its guidance regarding the treatment of aid
that could have been disbursed in the return of Title IV funds calculation.
In accordance with the revised guidance, there are times when a school may include FFELP funds as aid that could have been disbursed even if the school was prohibited from delivering the funds on or before the date the student withdrew. This includes:
• Loan funds for a first-year, first-time undergraduate borrower who withdraws before completing the 30th day of his or her program of study.
• The second or subsequent disbursement(s) of a loan even if the school was prohibited from delivering the funds on or before the date the student withdrew
However, in all cases, the following conditions for making a late disbursement must be met in order for FFELP funds to be included as aid that could have been disbursed:
• Except in the case of a PLUS loan, the Department processed a valid Student Aid Report (SAR) or Institutional Student Information Record (ISIR) with an official expected family contribution (EFC) on or before the date of the student's withdrawal,
• The school certified a loan on or before the date of the student's withdrawal.
In these cases, although
the loan funds may be included as aid that could have been disbursed in the
return of Title IV funds calculation, under no circumstances may the school
deliver the loan funds to the borrower as a post-withdrawal disbursement.
If a school is completing the return of Title IV funds calculation on a payment
period basis, FFELP funds scheduled for disbursement in a subsequent payment
period may not be included as aid that could have been disbursed.
Affected Sections: | 4.7.A Return Amounts for Title IV Grant and Loan Programs |
Effective Date: | Effective for any student who withdraws on or after July 1, 2003. |
Basis: | 2003-04 Federal Student Aid Handbook, Volume 2, Chapter 6, page 2116; 2003 National Association of Student Financial Aid Administrators (NASFAA) Conference, Return of Title IV Funds session. |
Policy Information: | 726/Batch 109 |
Guarantor Comments: | None. |
Lender
Responsibilities for Processing Borrower Loan Requests
The Common Manual has been updated to align the manual with federal
regulations to include two additional responsibilities a lender must perform
in processing a borrower’s loan request. Specifically, the text has been
amended to add that a lender must ensure that the school has properly completed
the school certification and must determine the correct interest rate applicable
to the loan.
Affected Sections: | 7.3 Processing the Loan Request |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §682.206(b). |
Policy Information: | 727/Batch 109 |
Guarantor Comments: | None. |
Federal
Origination Fee
The Common Manual has been revised to relocate information regarding
a lender's ability to charge a lesser federal origination fee to Stafford loan
borrowers to a more appropriate location in the manual. Also, specific subheadings
have been added to ease the reader’s reference to information about the
lender fees, and reporting and paying the federal origination fee. Finally,
references to the ED Form 799 have been updated to reflect the Lender’s
Interest and Special Allowance Request and Report (LaRS).
Affected Sections: | 3.5.A
Federal Origination Fee and Lender Fees: Payment and Reporting 7.9.A Assessing the Origination Fee |
Effective Date: | Retroactive to the implementation of the Common Manual, except for the ability of a lender to charge a lesser federal origination fee to a borrower who demonstrates a "greater financial need," which is for fees owed by the lender effective on or after July 1, 2000. |
Basis: | §682.202(c). |
Policy Information: | 728/Batch 109 |
Guarantor Comments: | None. |
Exclusions
from Loan Proration
The Common Manual has been been updated to clarify that loan proration
is not required for a student completing coursework necessary for a professional
credential or certification from a state, or for a student completing preparatory
coursework necessary for admission into either an undergraduate or a graduate
program of study.
Affected Sections: | 6.11.A
Stafford Annual Loan Limits 6.11.E Prorated Loan Limits |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §682.204(a)(6) and (7); 2003-04 Federal Student Aid Handbook, Volume 8 Chapter 2, page 8-9. |
Policy Information: | 729/Batch 109 |
Guarantor Comments: | None. |
Request for Additional Loan Funds
The Common Manual has been revised to remove references to the
Stafford loan application and to align the text with the Stafford Master Promissory
Note (Stafford MPN) process. As revised, the policy clarifies that if a student
becomes eligible for additional Stafford loan funds during an academic year
due to a change in his or her enrollment status, the school may certify the
borrower’s eligibility for additional funds under an existing Stafford
MPN. The borrower is no longer required to complete a new application to request
the additional funds for that academic year.
Affected Sections: | 6.11.E Prorated Loan Limits |
Effective Date: | For all loans certified by the school using a Stafford Master Promissory Note (Stafford MPN). |
Basis: | None. |
Policy Information: | 730/Batch 109 |
Guarantor Comments: | None. |
Discretionary Forbearance Encouraged
The Common Manual has been updated to specify that a lender is
encouraged to grant a discretionary forbearance to a borrower or endorser who
intends to repay a loan, but is temporarily unable to make payments due to poor
health or other personal problems and does not qualify for a deferment, mandatory
administrative forbearance, or mandatory forbearance. Cross-references have
been added to guide the reader to additional information about deferment and
mandatory administrative forbearance.
Affected Sections: | 11.3.C Forbearance Option |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §682.211. |
Policy Information: | 731/Batch 109 |
Guarantor Comments: | None. |
Due Diligence - Rolling Delinquency
The Common Manual has been revised to provide a more general example
of a rolling delinquency that requires due diligence activities appropriate
to the new level of delinquency on the loan. The previous example in the text
iterated specific due diligence activities that are required for certain due
diligence time frames. Cross-references have been added to guide the reader
to additional information about due diligence requirements.
Affected Sections: | 11.3.E Rolling Delinquency |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §682.411(d)(3). |
Policy Information: | 732/Batch 109 |
Guarantor Comments: | None. |
Due Diligence - Special Occurrence
The Common Manual has been updated by revising the example of
a “special occurrence” for clarity. The revised example more clearly
iterates that the due diligence requirements on a loan on which a special occurrence
takes place are specific to the type of contact information the lender receives
(valid address or valid telephone number) and the level of delinquency on the
loan at the time the lender receives the new information. Also, cross-references
have been added to guide the reader to additional information about due diligence
requirements in the case of a special occurrence.
Affected Sections: | 11.3.F Special Occurrence |
Effective Date: | Loans on which the first day of delinquency on the oldest outstanding due date is on or after July 1, 2000. |
Basis: | §682.411(i). |
Policy Information: | 733/Batch 109 |
Guarantor Comments: | None. |
ED Form 799 Definition Replaced with “LaRS”
The Common Manual has been updated to remove the outdated definition
of the ED Form 799 and add a definition of the Lender's Interest and Special
Allowance Request and Report (LaRS). The new definition indicates a lender may
submit the LaRS report using the automated Lender Reporting System or the paper
form.
Affected Sections: | appendix G |
Effective Date: | For quarterly billings submitted by a lender on or after October 1, 2002. |
Basis: | June 2002 Department of Education Announcement. |
Policy Information: | 734/Batch 109 |
Guarantor Comments: | None. |
School Definitions
Currently, the Common Manual includes glossary definitions of
"school," "eligible school," "participating school,”
"institution," and "institution of higher education." The
manual has been updated to eliminate the definitions of "institution"
and "eligible school." The definitions of "participating school"
and "institution of higher education" have been updated to align the
text in the manual with text in federal regulations. The definition of "school"
has been updated to align the text with the definition of an "eligible
institution" in federal regulations, because when the Common Manual
includes a reference to a school, the school is presumed to be eligible to participate
in Title IV programs.
Affected Sections: | appendix G |
Effective Date: | Retroactive to the implementation of the Common Manual. |
Basis: | §600.2; §600.4; §668.2. |
Policy Information: | 735/Batch 109 |
Guarantor Comments: | None. |