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.

LOSFA provides 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 2001. However, these changes are effective before the next update is scheduled to be delivered.

Loan Disbursement

Section 6.2 of the Common Manual has been updated to reflect regulatory language that prohibits the lender from disbursing loan proceeds prior to the disbursement date certified by the school on the disbursement schedule or any revised disbursement date that the school, or guarantor acting on behalf of the school, subsequently requests. Subsection 6.2.A. of the Common Manual has been updated to reflect that the lender must not disburse loan proceeds before obtaining a valid common application and promissory note or MPN, a disbursement schedule certified by the school, and except with the guarantor's prior approval, a guarantee disclosure from the guarantor.

Prehearing Conferences and Informal Compliance Procedures

The Common Manual has been updated to reflect regulatory language that states that in a Limitation, Suspension, or Termination action, a prehearing conference is available to either a school or, if applicable, a third-party servicer; and an informal compliance procedure is available to either a lender or a servicer.

Deferred Interest Billing Rules Corrected

The Common Manual has been corrected to more accurately reflect the provisions of 34 CFR 682.300(c)(3), which details when the lender may begin billing the Department for interest benefits on a subsidized Federal Stafford loan, and to incorporate clarifications provided in correspondence from the Department of Education. Regulations provide that the earliest date on which the Department will pay interest benefits a Stafford loan is based on when the loan was disbursed with respect to the first day of the period of enrollment and the method of disbursement, as follows:

1. If a loan is disbursed on or before the first day of the period of enrollment and the funds are disbursed—

• By individual borrower check, the lender may begin accrual of interest benefits on the later of 10 days before the first day of the period of enrollment or the date of disbursement.

• By master check or EFT, the lender may begin accrual of interest benefits on the later of 3 days before the first day of the period of enrollment or the date of disbursement.

• If a loan is disbursed after the first day of the period of enrollment, regardless of the disbursement method, the lender may begin accrual of interest benefits 3 days after the date of disbursement.

For second and subsequent disbursements, accrual of interest benefits begins on the date the second or subsequent disbursement is made.

For a subsidized Stafford loan subject to delayed delivery requirements (a first-year, first-time undergraduate Stafford loan borrower attending a school subject to delayed delivery provisions), the lender may begin accrual of interest benefits on the loan as follows:

• 3 days after the date of the first disbursement if the funds are disbursed by either master check or EFT, regardless of when the funds are disbursed.

• On the date the first disbursement is made for funds disbursed by individual check on the first date of the period of enrollment.

• 3 days after the date of the first disbursement if the funds are disbursed by individual check after the first day of the period of enrollment.