LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
OFFICE OF STUDENT FINANCIAL ASSISTANCE

LOAN PROGRAM MEMORANDUM

LPM NO.: L2004-3 Effective Date: As Indicated
Pub. Date: March 12 , 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 February 2004 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.

Eligibility Requirements for Home-Schooled Students
The Common Manual has been revised to include information indicating that a student may self-certify that he or she has at least a high school diploma or the recognized equivalent of a high school diploma, or that he or she has completed a secondary school education in a home-school setting. In addition, language was added to clarify that federal regulations do not require a home-schooled student to pass an ability-to-benefit test approved by the Department in order to qualify for Title IV assistance. An underage home-schooled student is considered to be beyond the age of compulsory school attendance in the state in which the postsecondary school is located if that state does not consider the student to be truant once he or she has completed a home-school program, or if that state would not require the student to attend school or continue to be home-schooled.

Affected Sections: 5.1.B Student Eligibility Requirements
Effective Date: Provisions permitting students to self-certify the receipt of a high school diploma or GED are effective for any loan period beginning on or after July 1, 1996. Provisions applicable to home-schooled students are applicable for loans certified by the school on or after November 27, 2002.
Basis: DCL GEN-02-11.
Policy Information: 751/Batch 111
Guarantor Comments: None.

 

Effects of Consolidation Loan on New Stafford Loan Eligibility
The Common Manual is being revised to conform with federal regulations and policy guidance in Dear Colleague Letter GEN 03-12 regarding the treatment of Consolidation loans with respect to Stafford loan aggregate loan limits. The revised policy continues to support that portions of a Consolidation loan that are attributed to subsidized and unsubsidized Stafford loans must be included when calculating the student’s aggregate loan balance. The financial aid administrator (FAA) should use the National Student Loan Data System (NSLDS) or loan records provided by the student to determine the portion of the Consolidation loan that should be applied to the subsidized Stafford loan limit and the portion that should be applied to the unsubsidized Stafford loan limit.

The NSLDS identifies the underlying loans of the Consolidation loan and uses those loan amounts to allocate the current outstanding principal balance between subsidized Stafford, unsubsidized Stafford and combined aggregate Stafford amounts, excluding Perkins and PLUS loans from the aggregate computations. The NSLDS then subtracts the total of the calculated subsidized and unsubsidized outstanding balance amounts from the actual outstanding balance of the Consolidation loan. Any remaining balance is considered to be “unallocated.” Unallocated amounts occur when, with the information that has been provided by data providers, the NSLDS is unable to account for the full amount of the outstanding balance of the Consolidation loan.

If the borrower’s outstanding loan balance is close to the aggregate Stafford loan limits, the FAA must also review any remaining balance of a Consolidation loan that is reported by the NSLDS as unallocated. No additional action is necessary if the FAA can assume that the unallocated amount is from either subsidized or unsubsidized Stafford loans and if, when the unallocated amount is added to the reported aggregate Stafford loan amounts, such an assumption would not affect the amount of a new Stafford loan the student would otherwise be eligible to receive. If this assumption changes the amount of a new Stafford loan for which a student may be eligible, the FAA must verify the unallocated amount. Unallocated amounts may represent any of the following:

After identifying the underlying subsidized and unsubsidized Stafford loans, including amounts previously identified as unallocated, those outstanding principal balance amounts must be allocated to the proper aggregate loan limit for each Stafford loan type (subsidized or unsubsidized) when determining new Stafford loan eligibility. If the FAA has included or excluded all or a portion of an unallocated amount, the school must document its findings and calculations for audit purposes.

A school is only responsible for the financial aid history information that is available from the NSLDS at the time it delivers aid to the student. If the school receives written documentation that confirms that a student is eligible for additional aid, the school may deliver the aid without waiting for the NSLDS to be updated.

Affected Sections: 6.11.F Effects of Consolidation Loan on New Stafford Loan Eligibility
Effective Date: Stafford loans certified by the school based upon information received from NSLDS on or after October 20, 2003.
Basis: §682.204(j); DCL GEN-03-12.
Policy Information: 752/Batch 111
Guarantor Comments: None.

 

Use of Comaker
The manual has been revised to align text with regulatory language and to add, where appropriate, clarification that the term “comaker” refers to one of two parents who were joint borrowers of a PLUS loan made prior to April 16, 1999. The glossary was also updated to reflect the regulatory definition of “comaker.”

Affected Sections: 7.1.B Creditworthiness
10.1.A General Deferment Eligibility Criteria
Introduction to chapter 11
12.8 Discharge
appendix G
Effective Date: Effective for PLUS loans made on or after April 16, 1999.
Basis: §682.200(b); Federal Register, Vol. 64, no. 73, dated April 16, 1999.
Policy Information: 753/Batch 111
Guarantor Comments: None.

 

Delayed Delivery Exemption for Study-Abroad Programs
The Common Manual has been revised to include the delayed delivery exemption for an eligible home school that has students enrolled in a study-abroad program and that has a published cohort default rate of less than 5% for the most recent fiscal year for which information is available. The home school must cease certifying loans based upon this exemption no later than 30 days after the date that it receives notice from the Department of a FFELP cohort default rate, FDLP cohort default rate, or dual-program cohort default rate that causes the school to no longer qualify for this exemption.

Affected Sections: 8.7.D Delayed Delivery
Effective Date: Disbursements received by the school on or after October 1, 1998.
Basis: HEA 428G(e); §682.603(g)(2); §682.604(c)(5)(ii).
Policy Information: 754/Batch 111
Guarantor Comments: None.

 

Special Allowance Chart
The Common Manual has been updated to remove the July 1, 2003, ending effective date for special allowance codes that correspond to variable rate loans.

Affected Sections: appendix A
Effective Date: February 8, 2002.
Basis: HEA 438(b)(2)(I); Public Law 107-139.
Policy Information: 755/Batch 111
Guarantor Comments: None.

 

Borrower Eligibility and Default
The Common Manual has been updated to include the requirement that a lender is responsible, when determining eligibility for a PLUS loan, for confirming that neither the borrower nor the dependent student currently owes on a defaulted loan held by the lender for which a claim has not been filed.

Affected Sections: 7.1.A General Determinations
Effective Date: Retroactive to the implementation of the Common Manual.
Basis: §668.35; §682.201(b)(1)(iv); §682.206(c).
Policy Information: 756/Batch 111
Guarantor Comments: None.

 

Delayed Delivery Requirements
The Common Manual has been been updated to state that the school must not deliver the first disbursement of a Stafford loan to a first-year undergraduate student who is enrolled in the first year of a program of study and who has not previously received a Stafford (FFELP or Direct) or SLS loan until the student completes the first 30 days of his or her program of study. This change is being made to more closely align language in the manual with language in the federal regulations.

Affected Sections: 8.7.D Delayed Delivery
Effective Date: Retroactive to the implementation of the Common Manual.
Basis: §682.604(c)(5).
Policy Information: 757/Batch 111
Guarantor Comments: None.

 

Deferment of Loans in Delinquency or Default
The Common Manual has been revised to provide centralized locations in subsections 10.1.F and 10.1.G for all applicable policy regarding the deferment of delinquent and defaulted loans, respectively. Revised policy in subsection 10.1.F also explains that a lender may grant a discretionary or administrative forbearance when a deferment does not resolve a delinquency and includes cross-references to subsections 10.19.F and 10.19.G for more information. The text of subsection 10.1.A about deferment of a delinquent or defaulted loan has been revised to be consistent with the text in subsections 10.1.F and 10.1.G. Finally, subsection 11.3.B has been enhanced by providing new cross-references to subsections 10.1.F and 10.1.G for policy on the deferment of delinquent and defaulted loans, and subsections 11.4.A and 11.4.B for information about collection activities required for a rolling delinquency.

Affected Sections: 10.1.A General Deferment Eligibility Criteria
10.1.F Deferment of Delinquent Loans
10.1.G Deferment of Defaulted Loans
11.3.B Deferment Eligibility
Effective Date: Retroactive to the implementation of the Common Manual.
Basis: §682.210(a)(7) and (8); §682.211(f)(2) and (9).
Policy Information: 758/Batch 111
Guarantor Comments: None.

 

Mandatory Forbearance for Teacher Loan Forgiveness Program
The Common Manual has been revised to remove the 5-year limit on the length of time a borrower may receive forbearance while performing qualifying teacher service under the Teacher Loan Forgiveness Program.

Affected Sections: Figure 10-2 Forbearance Eligibility
Effective Date: Forbearance granted by the lender under the Teacher Loan Forgiveness Program retroactive to October 1, 1998.
Basis: §682.215(e).
Policy Information: 759/Batch 111
Guarantor Comments: None.

 

Filing Time Frames for Claims and Discharge
Figure 12-3, “Timely Filing Deadlines for Claims and Discharges,” has been added to the Common Manual to provide an at-a-glance summary of all timely filing deadlines for claims and discharges. Each summary statement includes a cross-reference to the subsection that provides comprehensive policy guidance for each claim or discharge type.

Affected Sections: 12.8.F Unpaid Refund Discharge
Effective Date: None.
Basis: §682.402.
Policy Information: 760/Batch 111
Guarantor Comments: None.