LOUISIANA STUDENT
FINANCIAL ASSISTANCE COMMISSION
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LPM NO.: | L2006-6 | Effective Date: | As Indicated |
Pub. Date: | August 15, 2006 | Distribution: | Lenders; College, University and LAICU Financial Aid and Business Offices and Registrars; Tech School Personnel and Campus Deans; and Proprietary 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. These changes will also be incorporated into the June 2006 Integrated Common Manual. The Integrated Common Manual is available on several guarantor Web sites, and it is also available on NCHELP’s Web site at www.NCHELP.org in the e-library. Please carefully note the effective date of each policy change.
Eligibility
for a Subsequent Consolidation Loan
The Common Manual has been revised to incorporate HERA and the Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane
Recovery provisions. Revised policy clarifies that a borrower who currently
has either a Federal or Direct Consolidation loan is not eligible
for a subsequent Federal or Direct Consolidation loan unless one of
the following conditions apply:
· The borrower has
obtained a new eligible loan after the date the existing Consolidation loan
was made.
· The borrower is
consolidating an existing Consolidation loan with at least one other eligible
loan, regardless of whether it was made before or after the date the existing
Consolidation loan was made.
Revised policy also adds
that a borrower may obtain a subsequent Direct Consolidation loan for the purpose
of securing an income-contingent repayment schedule if the consolidation loan
holder has requested default aversion assistance from the guarantor.
Affected Sections: |
15.2 Borrower Eligibility and Underlying Loan Holder Requirements |
Effective Date: | Federal Consolidation loan applications received by the lender on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Sections 428C(a)(3)(B)(I), as amended by the Higher Education Reconciliation Act (HERA) of 2005 and the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery 2006; Dear Colleague Letter GEN-06-02. |
Policy Information: | 869/Batch 131 |
Guarantor Comments: | None. |
PLUS
Loans for Graduate and Professional Students
The Common Manual
has been updated to include information about graduate and professional student
PLUS (Grad PLUS) loans. A school that participates in the Federal PLUS Loan
Program and offers both undergraduate and graduate or professional programs
must offer PLUS loans both to parents who wish to borrow on behalf of their
dependent undergraduate students and the school’s graduate and professional
students. Schools are not permitted to exclude either category of borrower from
participation in the Federal PLUS Loan Program.
Before applying for a PLUS loan, the graduate or professional student is required to complete a Free Application for Federal Student Aid (FAFSA) and the school is required to determine the student’s maximum eligibility for subsidized and unsubsidized Stafford loan funds. However, the student may decline the Stafford loan funds and the school may not require the student to accept Stafford loan funds as a condition of applying for a Grad PLUS loan.
The PLUS MPN may be used by a graduate or professional student borrower to obtain one or more Grad PLUS loans. The graduate or professional student borrower completes both the student and the parent sections of the PLUS MPN with information about the graduate or professional student, and submits it to the school, the lender, or the guarantor, depending on the process established by the school. A school may certify a Grad PLUS loan for a graduate or professional student only if the student meets the eligibility criteria for both a student and a Grad PLUS loan borrower.
A school determines a graduate or professional student borrower’s maximum eligibility for a Grad PLUS loan by subtracting from the cost of attendance (COA) the estimated financial assistance (EFA) that the student is expected to receive for the loan period.
In addition, the following glossary definitions have been added to the manual:
Grad PLUS Loan: A PLUS loan made to a graduate or professional student.
Parent PLUS Loan: A PLUS loan made to the parent of a dependent undergraduate student.
Affected Sections: |
2.1.B Types of Loans Available |
Effective Date: | Loans certified by the school on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Section 428(B), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02/FP-06-01; Dear Colleague Letter FP-06-05. |
Policy Information: | 893/Batch 133 |
Guarantor Comments: | None. |
Program
Eligibility Using Direct Assessment
The Common Manual
has been updated to include direct assessment as a means of measuring student
learning, in addition to the existing measures of clock and credit hours. Direct
assessment must be consistent with the accreditation of the school or program
utilizing the results of the assessment. The Department must determine whether
such a program is an eligible program for Title IV purposes.
Affected Sections: |
4.1.C Maintaining Eligibility |
Effective Date: | Loan periods beginning on or after July 1, 2006, for programs that are approved by the Department. |
Basis: | Higher Education Act of 1965, Section 481(b)(4), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05. |
Policy Information: | 894/Batch 133 |
Guarantor Comments: | None. |
Expansion
of Eligibility to Telecommunications and Correspondence Programs
The Common Manual
has been updated to expand the definition of “eligible programs”
as it relates to the use of telecommunications in programs of study. Revised
policy clarifies that courses offered by telecommunications are no longer considered
to be correspondence courses, and students enrolled in telecommunications courses
are no longer considered to be correspondence students. As a result, an otherwise
eligible school that offers over 50 percent of its courses by telecommunications,
or has 50 percent or more of its regular students enrolled in telecommunications
courses, is now eligible to participate in the Title IV programs. Revised policy
also reflects that a student enrolled in a short-term certificate program of
less than one year offered by telecommunications is now eligible for Title IV
program assistance. A program of study offered at a foreign school that includes
a telecommunications course is ineligible for Title IV program assistance. Telecommunications
technologies may be used in the foreign school classroom to supplement and support
instruction offered as part of an otherwise eligible program.
The 50-percent limitations continue to apply to correspondence courses and the students enrolled in those courses
Affected Sections: |
5.11 Use of Telecommunications and Correspondence in Programs
of Study; appendix G |
Effective Date: | Loan periods beginning on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Sections 481(b)(3) and 484(l)(1), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letters GEN-06-05 and GEN-06-11; 2006-2007 Federal Student Aid Handbook. |
Policy Information: | 895/Batch 133 |
Guarantor Comments: | None. |
Exceeding
Loan Limits
The Common Manual
is updated to provide additional clarification regarding satisfactory repayment
arrangements in situations where a student inadvertently exceeds the annual
or aggregate loan limit. If a Stafford borrower inadvertently exceeds an annual
or aggregate loan limit under a Title IV program, the loan holder may allow
the student to sign an agreement acknowledging the debt and affirming the borrower’s
intention to repay the excess amount as part of the normal repayment process.
Additionally, consolidation of the loan(s) that exceeded the annual or aggregate
loan limit is considered a satisfactory repayment arrangement
Affected Sections: |
6.11.D Exceeding Loan Limits |
Effective Date: | Satisfactory repayment arrangements for overpayments created by inadvertent over borrowing made on or after July 1, 2005, unless implemented earlier by the lender. |
Basis: | §668.35(d)(2); 2005-06 Federal Student Aid Handbook, Volume 5, Chapter 1, Page 5-7. |
Policy Information: | 896/Batch 133 |
Guarantor Comments: | None. |
Change
in PLUS Interest Rate
The Common Manual has been amended to reflect the statutory change
made by the HERA to require a FFELP PLUS loan first disbursed on or after July
1, 2006, to carry a fixed interest rate of 8.5%.
Affected Sections: |
5.A Current PLUS Interest Rate |
Effective Date: | PLUS loans first disbursed by the lender on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Section 427A(l)(2), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letters GEN-06-02/FP-06-01, FP-06-04, and FP-06-05. |
Policy Information: | 897/Batch 133 |
Guarantor Comments: | None. |
Late
Disbursement and Post-Withdrawal Disbursement of FFELP Funds
The Common Manual
has been updated to incorporate changes derived from the HERA as follows. Prior
to delivering a late disbursement or post-withdrawal disbursement of loan funds
to the borrower, the school must explain that the borrower is obligated to repay
any loan funds that the school delivers , and confirm that the borrower still
requires the loan funds. The school is also required to document the student's
file regarding the result of the contact and the final determination concerning
the late disbursement or post-withdrawal disbursement.
Affected Sections: |
8.2.A Initial Notice of Funds |
Effective Date: | Effective for withdrawals that occur on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Section 484B(a)(4)(A), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05. |
Policy Information: | 898/Batch 133 |
Guarantor Comments: | None. |
New
Military Deferment
The Common Manual has been revised by changing the name of the current
military deferment to the Armed Forces deferment and moving the information
from section 11.7 to 11.3 to maintain consistency by providing information about
deferment types in alphabetical order. Several sections and subsections in chapter
11 have been renumbered to accommodate the movement of existing text and the
insertion of new text in section 11.8 about the new military deferment created
by the HERA .
The new military deferment covers a borrower’s loan(s) that are first disbursed on or after July 1, 2001, while a borrower is serving on active duty during a war or other military operation, or a national emergency, or while a borrower is performing qualifying National Guard duty during a war or other military operation, or a national emergency.
The military deferment is loan-specific. This deferment is available only for a borrower’s Stafford and PLUS loans first disbursed on or after July 1, 2001, and Consolidation loans when all Title IV loans included in the Consolidation loan are loans that were first disbursed on or after July 1, 2001. The borrower must meet the qualifications after July 1, 2001.
This deferment is available only for periods during which a borrower is performing one of the following services:
· Serving on active duty during a war or other military operation, or a national emergency.
· Performing qualifying National Guard duty during a war or other military operation, or a national emergency.
· In the context of the new military deferment, the following definitions apply:
· Active duty means serving in full-time duty in the active military service of the U.S., not including training or attendance at a service school.
· Military operation means a contingency operation in which a member of the Armed Forces is, or may become, involved in military actions, operations, or hostilities against an enemy of the U.S. or against an opposing military force; or results in the call or order to, or retention on, active duty of members of the uniformed services under 10 U.S.C. 688, 12301(a), 12302, 12304, 12305, or 12406, 10 U.S.C. chapter 15, or any other provision of law during a war or during a national emergency declared by the president or Congress.
· National emergency means a national emergency by reason of certain terrorist attacks declared by the president on September 14, 2001, or subsequent national emergencies declared by the president by reason of terrorist attacks.
· Qualifying National Guard duty means training or other duty, other than inactive duty, performed by a member of the U.S. Army National Guard or the Air National Guard on full-time National Guard duty as called to service authorized by the president or the secretary of defense. The training or other duty must be performed for more than 30 consecutive days in connection with a war or other military operation, or a national emergency as declared by the president and supported by federal funds.
· Serving in active duty means service by an individual who is a Reserve of an Armed Force ordered to active duty under 10 U.S.C. 12301(a), 12301(g), 12302, 12304, or 12306, or any retired member of an Armed Force ordered to active duty under 10 U.S.C. 688 of such title, for service in connection with a war or other military operation or national emergency, regardless of the location at which the active duty service is performed. This also includes any other member of an Armed Force on active duty in connection with such emergency or subsequent actions of conditions who has been assigned to a duty station at a location other than where the member is normally assigned.
Not all active duty military personnel are eligible for the new military deferment. Borrowers who do not qualify for this deferment may be eligible for the Armed Forces deferment.
A borrower is not eligible for a refund of any loan payments made prior to the time the deferment is granted.
A borrower must request the deferment and provide the lender with the documentation of his or her duty status. This documentation must include a copy of the borrower’s military orders, or a written statement from the borrower’s commanding or personnel officer that the borrower is serving on active duty during a war or other military operation, or a national emergency, or performing qualifying National Guard duty during a war or other military operation, or a national emergency, as those terms are defined.
The deferment begins on
the date the condition entitling the borrower to the deferment first existed,
as
determined by the lender. The deferment ends on the earlier of the date that
is no later than 3 years after the date on which it began, or the date on which
the borrower’s qualifying service is certified to end or actually ends.
Affected Sections: |
11.3 Economic Hardship Deferment |
Effective Date: | Military deferments granted on or after July 1, 2006, for loans for which the first disbursement is made on or after July 1, 2001. |
Basis: | Higher Education Act of 1965, Section 428(b)(1)(M), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02. |
Policy Information: | 899/Batch 133 |
Guarantor Comments: | None. |
Forbearance
Agreements
The Common Manual has been revised to comply with statutory changes
derived from the Higher Education Reconciliation Act (HERA) of 2005. In all
cases when a forbearance agreement is required, a lender and the borrower may
agree to the terms of forbearance verbally or in writing. A lender that grants
a forbearance based on a verbal agreement with the borrower must record the
forbearance terms in the borrower’s file and send a notice to the borrower
confirming the terms of the forbearance agreement.
Affected Sections: |
11.18.B Documentation Required for Authorized Forbearance |
Effective Date: | Forbearance agreements granted or renegotiated by the lender on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Sections 428(c)(3)(A) and 428(c)(10), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02. |
Policy Information: | 900/Batch 133 |
Guarantor Comments: | None. |
Ineligible
Borrower Claims
The Common Manual
has been updated to provide that an ineligible borrower claim of a loan first
disbursed on or after July 1, 2006, is eligible for payment of 100% of principal
and eligible interest.
Affected Sections: |
12.4.F Ineligible Borrower Due Diligence |
Effective Date: | Ineligible borrower claims filed by the lender on loans first disbursed on or after July 1, 2006. |
Basis: | Higher Education Act of 1965, Section 428(c)(1)(G), as amended by the Higher Education Reconciliation Act (HERA) of 2005, Dear Colleague Letters GEN-06-02 and FP-06-07. |
Policy Information: | 901/Batch 133 |
Guarantor Comments: | None. |
Special
Allowance Rates
The Common Manual has been revised to reflect statutory changes derived
from the HERA that make permanent the temporary special allowance maximum/minimum
income provisions of the Taxpayer-Teacher Protection Act of 2004. These provisions
state that loans financed with proceeds from tax-exempt obligations originally
issued prior to October 1, 1993, revert to the regular special allowance rates
paid on other loans if certain actions occur after September 30, 2004. The manual
has also been revised to reflect statutory changes derived from the HERA that
prohibit loans from being subject to the minimum/maximum special allowance rates
for certain tax-exempt bond issues if the loan was made or purchased on or after
February 8, 2006, or is not earning the minimum quarterly special allowance
as of February 8, 2006. However, certain holders of these loans remain subject
to the maximum/minimum special allowance rates until December 31, 2010, if all
of the following apply:
· The holder was a unit of the state or local government or a nonprofit private entity as of February 8, 2006, and during the quarter for which the special allowance is paid.
· The holder is not owned or controlled by, or under the common ownership or control with, a for-profit entity as of February 8, 2006, and during the quarter for which special allowance is paid.
· The holder held, directly or through any subsidiary, affiliate, or trustee, a total unpaid balance of principal equal to or less than $100 million on loans for which maximum/minimum special allowance was paid in the most recent quarterly payment prior to September 30, 2005.
Affected Sections: |
A.2.A Special Allowance Rates |
Effective Date: | Provisions
relating to the Taxpayer-Teacher Protection Act of 2005 are effective October
1, 2004, for loans financed by tax-exempt obligations originally issued
prior to October 1, 1993. Provisions relating to the Higher Education Reconciliation Act (HERA) of 2005 are effective February 8, 2006. |
Basis: | Taxpayer-Teacher Protection Act of 2005, as amended by the Higher Education Reconciliation Act (HERA) of 2005; Higher Education Act of 1965, Section 438(b)(2)(B)(iv) through (vi), as amended by the HERA; Dear Colleague Letter FP-06-04. |
Policy Information: | 902/Batch 131 |
Guarantor Comments: | None. |