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Agency Policy Regarding Penalty on Consolidation |
LOUISIANA
STUDENT FINANCIAL ASSISTANCE COMMISSION
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TO: |
Lenders and Schools |
DATE: |
June 23, 2000 |
TOPIC: |
Agency Policy Regarding Penalty on Consolidation |
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.
Lenders and services are required to report that a Consolidation loan has been made within 60 days of the date on which the loan is initially disbursed. If a lender adds a loan within the 180-day add-on period or makes any other adjustment to the outstanding original balance of a Consolidation loan, the lender must report the new Consolidation loan information to the guarantor within 60 days of the date on which the additional loan funds are disbursed or the adjustment is made. If there is a data discrepancy, the lender will be granted an additional 60 days from the date the guarantor rejects the application (plus five days mail time) to provide additional or corrected information.
The Common Manual, Section 9.1.C, authorizes a guarantor to assess an interest penalty if the lender or servicer does not report a Consolidation loan to the guarantor within these guidelines. Assuming the Consolidation loan is otherwise eligible for a guarantee, lenders who wish to receive a guarantee from the Louisiana Office of Student Financial Assistance on a Consolidation loan which is filed past the time frames mandated by Title IV of the Higher Education Act will be assessed an interest penalty based on the following table:
Interest Penalty |
Consolidation Loan Reporting Time Frame for Initial Disbursement and 180-day Add On Period |
No interest penalty |
Consolidation loans reported to LOSFA within 60 days of the date on which the loan is initially disbursed, additional loan funds are disbursed, or other loan adjustment is made |
1% of the total amount of loans submitted for guarantee |
Consolidation loans reported to LOSFA between 61 and 150 days after the loan is initially disbursed, additional loan funds are disbursed, or other loan adjustment is made |
2% of the total amount of loans submitted for guarantee |
Consolidation loans reported to LOSFA between 151 and 240 days after the loan is initially disbursed, additional loan funds are disbursed, or other loan adjustment is made |
5% of the total amount of loans submitted for guarantee |
Consolidation loans reported to LOSFA on or after 241 days after the loan is initially disbursed, additional loan funds are disbursed, or other loan adjustment is made |
Since this penalty is assessed due to a failure on the part of the lender or servicer it cannot be passed onto the borrower.
The lender is to calculate the amount due by completing the attached worksheet. The check for the amount due should be made payable to the Louisiana Office of Student Financial Assistance. The check and the work sheet should be mailed to the Office of Student Financial Assistance, P. O. Box 91202, Baton Rouge, LA 70821-9202, Attention: John Littell.
Louisiana Office of Student Financial
Assistance
Consolidation Loan Penalty Calculation
(For Consolidations Reported More Than 60 Days After Disbursement)
Lender Name:
___________________
Lender ID Number: ___________________
Borrower Name |
Borrower |
Date of |
Date of Disbursement |
Amount of |
Date Reported to Guarantor |
Number of Days >60 |
Interest Penalty % |
Penalty Amount Due |