LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
OFFICE OF STUDENT FINANCIAL ASSISTANCE

LOAN PROGRAM MEMORANDUM
LPM NO.: L2003-8 Effective Date: As Indicated
Pub. Date: October 3 , 2003 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 following summary informs schools, lenders, and servicers of the latest Common Manual policy changes. These changes will appear in the manual’s next annual update in 2003. However, some of these changes are effective before the next paper manual update is scheduled to be delivered.

National Student Loan Data System (NSLDS) Enrollment Reporting
 The National Student Loan Data System (NSLDS) no longer requires a school to report directly to the NSLDS any changes to student identifiers including a student’s name, date of birth, and Social Security Number (SSN), or changes to the student’s permanent address. Instead, the school must report these changes to the guarantor. Common Manual text has also been eliminated indicating that guarantors will forward updated student identifiers or permanent address information received from the NSLDS to lenders or servicers. In addition, a revision was made to clarify that the school must report to the guarantor any change in a parent borrower’s SSN.

Affected Sections: 4.4 Reporting Social Security Number Changes
4.8.A National Student Loan Data System (NSLDS) Enrollment Reporting
Effective Date: March 8, 1999, for address changes and April 1, 2002, for changes to student identifier information.
Basis: U.S. Department of Education Technical Update, GA-1999-03; NSLDS Enrollment Reporting Guide, April 1, 2002, section 3.2.2, page 72.
Policy Information: 699/Batch 106
Guarantor Comments: None.

 

Child Care Provider Loan Forgiveness Forbearance
 The Common Manual has been revised to add forbearance under the Child Care Provider Loan Forgiveness Program to the list of criteria that qualify a borrower for mandatory forbearance. A lender must grant this type of forbearance to a borrower who is performing a service that would qualify the borrower for forgiveness under the Child Care Provider Loan Forgiveness Program, unless the borrower has been granted a deferment for the service period. Before granting this forbearance to a borrower, the lender must receive a completed FFELP Child Care Provider Loan Forgiveness Forbearance Form.

For additional information, refer to pages 39263-39265 of the Federal Register dated July 27, 2001, and pages 55385-55387 of the Federal Register dated August 29, 2002.

General information for this forbearance type is summarized in revisions to Figure 10-2, the Forbearance Eligibility Chart (see attached).

Affected Sections: 10.22.C National Service, Loan Forgiveness, or Department of Defense Repayment
Chapter 10, Figure 10-2 Forbearance Eligibility Chart
Effective Date: Child care provider loan forgiveness forbearance granted by a lender to initial applicants on or after July 27, 2001, and renewal applicants on or after August 29, 2002.
Basis: Eligibility criteria and procedures published in Part IV of the Federal Register, pages 39263-39265, on July 27, 2001, and in Part I of the Federal Register, pages 55385-55387, on August 29, 2002.
Policy Information: 700/Batch 106
Guarantor Comments: None.

 

Definition of Lender Expanded
The Common Manual glossary definition of “lender” has been expanded to include the types of institutions that may be eligible to participate as a lender in the Federal Family Education Loan Program (FFELP). In addition, the redundant definition of “eligible lender” has been eliminated.

Affected Sections: appendix G
Effective Date: Retroactive to the implementation of the Common Manual, with the exception of a consumer finance company subsidiary of a national bank, which is retroactive to October 7, 1998.
Basis: HEA 435(d); §682.200(b).
Policy Information: 702/Batch 106
Guarantor Comments: None.

 

Lender Reporting of Status Changes and Enrollment Changes
The Common Manual has been revised to remove incorrect language from subsection 3.5.D, Reporting Loan Status Changes, regarding lender enrollment reporting requirements. Current guidance on reporting enrollment changes is located in subsection 9.1.B, and specifies that a lender should notify a guarantor of actual changes to a student’s enrollment status or dates of attendance. A lender is not required to report the continued enrollment of a student. In addition, the regulatory reference to 34 CFR 682.414(a)(4)(ii)(E) in subsection 9.1.B has been deleted. This regulation addresses recordkeeping requirements rather than reporting requirements.

Affected Sections: 3.5.D Reporting Loan Status Changes
9.1.B Lender Reporting of Enrollment Changes
Effective Date: Enrollment status changes reported by a lender on or after January 1, 2004.
Basis: None.
Policy Information: 704/Batch 106
Guarantor Comments: None.

 

Forbearance Definitions
The Common Manual glossary definitions of “mandatory administrative forbearance” and “mandatory forbearance” have been revised to clarify that the definitions are not intended to provide an all-inclusive list of cases in which a lender is required to grant those types of forbearance. Revised policy retains the current cross-references to sections 10.21 and 10.22, respectively, and adds a cross-reference in each definition to Figure 10-2 to indicate where comprehensive information may be obtained about each of these forbearances.

Affected Sections: appendix G
Effective Date: Retroactive to the implementation of the Common Manual.
Basis: §682.211.
Policy Information: 704/Batch 106
Guarantor Comments: None.

 

Forbearance Eligibility Chart

 

Type

Length

Discretionary

Financial difficulties due to personal problems when the borrower is unable to make regularly scheduled payments1

The period established in the terms on the written forbearance agreement (not to exceed 12-month increments); no maximum

Reduced Payment Forbearance1

  
Mandatory

Medical or dental Internship/Residency2,3,4

12 month increments (or a lesser period equal to actual period during which the borrower is eligible); no maximum

Department of Defense Student Loan Repayment Programs3,4

  

National Service2,3,4

  

Loan Forgiveness for Child Care Providers Loan Forgiveness 2,9—
Note:  Contingent upon funding by Congress

Note: Procedures for this forbearance type are currently being discussed by the industry and the Department.   Period while borrower maintains forgiveness eligibility.  12-month increments

Debt Exceeds Monthly Income4,5

12 month increments; 3 years maximum

Teacher Loan Forgiveness2,3, 4

 

Period while borrower maintains forgiveness eligibility.  12-month increments; 5 years maximum

Mandatory Administrative

Local or National Emergency7

Period specified by the Department or guarantor plus 30  days following the period

Military Mobilization8

  

Designated Disaster Area7

  

Repayment Accommodation

3-year maximum for variable interest rate; 5-year maximum for income-sensitive repayment

Unpaid Refund Discharge

60 days from date application sent to borrower if application is not received by lender, and from date guarantor receives documentation to date of determination

The period during guarantor review and ending on the date lender receives the guarantor's determination for a borrower who requests a review of a denial determination

Death

Date lender receives reliable notification of death to date lender receives death certificate or other acceptable documentation, not to exceed 60 days

Teacher Loan Forgiveness2, 6

The period while the lender is awaiting a completed forgiveness application, not to exceed 60 days
 

Date lender receives a completed loan forgiveness application to date the lender receives either a denial or the loan forgiveness amount from the guarantor

Administrative

Borrower Ineligible for Deferment6
Beginning date to ending date of the ineligible deferment  
Delinquency before a Deferment or Certain Forbearances6
First date of overdue payment to the day before the beginning date of deferment or other forbearance type  
Late Notification of Out-of-School Dates6

Date borrower should have entered repayment to date first or next payment was established

Bankruptcy Filing6

The earlier of the first date of overdue payment or receipt of reliable information that the borrower has filed bankruptcy to date of discharge determination or repurchase
Total and Permanent Disability6

Date lender receives reliable information to date lender receives acceptable documentation, not to exceed 60 days
 

Date lender receives physician letter requesting additional time to date lender receives acceptable documentation, not to exceed 60 days
Repurchase of a Non-Bankruptcy Claim6

The period that the loan was held by the guarantor due to a claim purchase
Death

Date after mandatory administrative forbearance due to reliable notification of death ends to date lender receives death certificate or other acceptable documentation, not to exceed 60 days
Closed School

Period of unofficial closure notice as specified by guarantor
Closed School or False Certification6
60 days from date application sent to borrower if application is not received by lender, and from date guarantor receives documentation to date of determination
Delinquency after Deferment or Mandatory Forbearance6
Deferment or mandatory forbearance end date to establishment of next due date
Documentation Collection and Processing6

Date borrower requests deferment, forbearance, change in repayment plan, or loan consolidation to date supporting documentation is processed by lender, not to exceed 60 days

Unpaid Refund6
End date of initial 60-day mandatory administrative forbearance to receipt of completed discharge request and during period of determination of discharge eligibility  
New Out-of-School Dates after Conversion6

Original repayment start date to adjusted start date

Loan Sale or Transfer6

First date of delinquency to date loan is sold or transferred, if the loan is less than 60 days delinquent
   
Ineligible Summer Bridge Extension6
Day after expiration of borrower’s last in-school deferment to the 30th day after fall classes begin  
Cure6
Date of earliest unexcused violation to date lender receives a full payment or new signed repayment agreement  
Natural Disasters6
From date borrower affected, not to exceed 3 months for each occurrence
Repayment Alignment-SLS/Stafford4
First payment due date to last day of the longest applicable Stafford Loan grace period

Note:  For detailed information about each forbearance situation, refer to the applicable subsection.

 

1 Lender must document the borrower’s request, the reason for the forbearance, and the terms of the forbearance agreement.

2 For borrowers only.

3 A request, supporting documentation from the authorized official(s) indicating the beginning and ending dates, and written agreement are required.

4 A request is required.

5 A request and supporting documentation of monthly income and monthly payments on Title IV education loan obligations, and written agreement are required.

6 Lender must notify the borrower (or endorser, if applicable) and document the beginning and ending dates and reason for the forbearance in borrower history record.

7 Notice from Department or guarantor is required.

8 Documentation showing borrower is subject to a military mobilization is required.

9 A request and a completed FFELP Child Care Provider Loan Forgiveness Forbearance Form are required.