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.

Clarification of Reissue Requirements
The Common Manual currently details an exception to the 120-day loan disbursement reissue policy. The exception permits a lender to reissue a loan disbursement more than 120 days after the last date of the student’s eligible enrollment or more than 120 days after the date on which the original late disbursement was made, so that the student will not be harmed by circumstances beyond his or her control. The location in the manual’s text of this exception implies that is only applicable to the reissue of a late disbursement, which is not the intent of the policy. To correct this, a new subheading has been added to separate the exception to the 120-day reissue limitation from the policy regarding late disbursement, thereby clarifying that the exception applies both to timely disbursements and to late disbursements. In addition, a new requirement has been added that stipulates that the lender must document the reason for the reissue of the loan disbursement in all reissue situations.

Origination of Stafford and PLUS Loans
The Common Manual has been updated to remove references to the common PLUS application and promissory note. In addition, redundant text was removed from 2.2.A and the subheading titled “Origination of Stafford Loans” was deleted. The paragraphs under this subheading were updated and generic information was retained that is applicable to the origination of both Stafford and PLUS loans using a Master Promissory Note (MPN).

PLUS Loan Application and Master Promissory Note (PLUS MPN)
The Common Manual has been updated to remove references to the common PLUS loan application and promissory note because parent borrowers must use the PLUS Application and Master Promissory Note to obtain PLUS loan funds for loan periods beginning on or after July 1, 2004, or for any loan certified by the school on or after July 1, 2004, regardless of the loan period.

Applying for Federal Stafford and PLUS Loans
The Common Manual has been updated to remove references to the common PLUS application and promissory note. Parent borrowers must use the PLUS Application and Master Promissory Note (PLUS MPN) to obtain PLUS loan funds for loan periods beginning on or after July 1, 2004, or for any loan certified on or after July 1, 2004, regardless of the loan period. In addition, information in section 6.16 was reorganized. Subsections 6.16.A and 6.16.B were deleted and new subheadings were added to section 6.16 that provide information regarding “Federal Stafford Loans,” “Federal PLUS Loans,” and “Processes Applicable to Both the Stafford and PLUS MPN.”

Disbursing Loan Proceeds Through An Escrow Agent
The Common Manual has been revised to reflect a regulatory technical correction published in the Federal Register on December 31, 2003, that aligns 34 CFR §682.207(b)(1)(iv) with 34 CFR §682.408(c). A lender that disburses loan proceeds through an escrow agent must require the agent to disburse loan proceeds no later than 21 days after the agent receives the proceeds from the lender.

Maximum Repayment Period for Rehabilitated Consolidation Loans
The Common Manual has been updated based on the technical corrections published December 31, 2003, that require a lender to use the loan's balance at the time it is rehabilitated when establishing the maximum repayment period for a rehabilitated Consolidation loan. The loan balance is considered to be the amount paid to the guarantor to purchase the loan.

Loan Forgiveness and Unpaid Refund Discharge
The Common Manual has been revised to add unpaid refund discharge and loan forgiveness to the list of circumstances under which a lender may be eligible for payment from the guarantor or reimbursement from the Department. In order to receive a payment, revised policy states that the lender must submit to the guarantor or the Department, as applicable, the borrower’s loan forgiveness application or unpaid refund discharge application, if received. To provide consistency with regulatory language, the term “payment” has been used to refer to transactions between guarantors, and lenders or servicers, and the term “reimbursement” has been used to refer to transactions between the Department, and lenders or servicers.

Valid Source Documents for Reporting SSN Changes
The Common Manual has been updated to state that if a lender becomes aware of a Social Security number (SSN) discrepancy that resulted from a data input error, the guarantor may consider a loan application, Master Promissory Note (MPN), or loan certification to be a valid source reference for initiating and reporting an SSN change.

Reinstatement of Title IV Eligibility after Default
The Common Manual has been revised to remove redundant language pertaining to documentation needed for the reinstatement of Title IV eligibility after default.

Federal Interest Benefits
The Common Manual has been revised to clarify when a lender can begin billing the Department for interest benefits for borrowers who qualify for a deferment. For any deferment other than an initial period of unemployment deferment based on the borrower’s self-certification of eligibility, the lender may begin billing the Department on the date the borrower's eligibility for the deferment began. For an initial period of unemployment deferment based on the borrower’s self-certification of eligibility, the lender may begin billing for interest benefits on the later of the first date the borrower qualifies for the deferment (as determined by the lender), the begin date requested by the borrower, or 6 months before the date on which the lender receives any required borrower request and documentation of eligibility for the deferment.

Rehabilitation Training Program Deferment
The Common Manual has been revised to move information regarding the eligibility criteria for PLUS loan borrowers with dependent students for a rehabilitation training program deferment from subsection 10.5.A to section 10.12. This change congregates similar information for rehabilitation training program deferments within one section of the manual.

Cures and Reinstatement of the Guarantee
The Common Manual has been revised to more readily identify specific cure types and activities by regrouping existing language under three new subheadings within section 13.5. The new subheadings are “Receipt of a Curing Payment,” “Receipt of a New Signed Repayment Agreement,” and “Reinstating the Guarantee.” Additional organizational changes have also been made to language in subsection 13.5.B to coordinate it with similar language in 13.5.D.

First and Next Payment Due Dates for a Consolidation Loan
The Common Manual 's existing subsections 14.5.A through 14.5.F have been redesignated as subsections 14.5.B through 14.5.G. Current Consolidation loan policy that requires a lender to establish a first payment due date that is no more than 60 days after the date of the last disbursement discharging underlying loans has been relocated from section 14.5 to new subsection 14.5.A. Additionally, new subsection 14.5.A states that a lender must establish a first payment due date that is no more than 60 days after the last day of a deferment or forbearance period, unless the borrower makes prepayments during that period that cause the due date to be advanced. Redesignated subsection 14.5.B states that when a lender is required to re-disclose repayment terms because of the addition of a loan(s) during the 180-day add-on period, the lender may establish a new effective date for a revised payment amount that is no more than 60 days after the date of the last disbursement that discharged the add-on loan(s).

Date of Determination of a Student's Withdrawal at Schools Required to Record Attendance
The Common Manual has been updated to include more complete information about schools that are required to record attendance for a limited period of time or for a specific group of students. In addition, the manual has been updated to state that except in unusual cases, if a student is absent without explanation, a school that is required to record attendance is expected to make a determination that the student withdrew no later than one week after the student’s last date of academic attendance as determined from the school’s attendance records. The school does not have to make a withdrawal determination if during that one week period, the student verifies that he or she plans to return to school.

Treatment of Title IV Credit Balances under Return of Title IV Funds Requirements
The Common Manual has been updated to incorporate guidance for schools regarding the treatment of Title IV credit balances under the return of Title IV funds requirements. If a student withdraws and has a Title IV credit balance on his or her account, the school must not deliver any portion of the credit balance to the student or return any portion to the Title IV student aid programs before it completes a return of Title IV funds calculation. The school must hold the funds even if it results in the school not being in compliance with the 14-day payment requirement for credit balances. In this case, the school does not need the student’s or parent’s authorization to hold the Title IV credit balance beyond the original 14-day period. However, within 14 days of the date that the school performs the return of Title IV funds calculation, the school must pay any remaining Title IV credit balance. The school must first allocate the Title IV credit balance to repay any grant overpayment owed by the student as a result of the current withdrawal. If there is no grant overpayment owed or if an additional credit balance exists on the account after the grant overpayment is repaid, it must be paid in one or more of the following ways:

•   In accordance with cash management regulations, the school may use the credit balance to pay authorized charges at the school (including previously paid charges that are now unpaid due to a return of Title IV funds by the school).
•   With the student’s authorization, the school may use the credit balance to reduce the student’s Title IV loan debt (not limited to loan debt incurred for the payment period or period of enrollment during which the student withdrew).
•   The school may deliver the credit balance to the student, or the parent in the case of a PLUS loan.

If the school cannot locate the student or parent to whom a Title IV credit balance is due, the school must return the credit balance to the Title IV programs. In this case, there is no specific order of return to the Title IV programs, but schools are encouraged to make determinations that are in the best interest of the individual student.

Verification Not Completed before the Student's Withdrawal
The Common Manual has been updated to include guidance regarding return of Title IV funds requirements for students subject to verification. If a student is selected for verification but withdraws prior to providing all required verification documentation, the school must complete the return of Title IV funds calculation in time to comply with the 30-day return of Title IV funds deadlines. If the student did not provide the required verification documentation, the school must include as disbursed aid or aid that could have been disbursed only those funds not subject to verification (i.e., PLUS loans and unsubsidized Stafford loans) in the return of Title IV funds calculation. However, if the student subsequently provides the documentation before the verification deadline, the school is required to perform a new return of Title IV funds calculation and make the appropriate adjustments.

If the school is unable to offer the post-withdrawal disbursement to the student, or parent in the case of a PLUS loan, within the required 30 days after the date that the school determined that the student withdrew, the school must offer the funds as soon as possible. Also, whenever possible, the school must provide the student or parent with the minimum 14-day period to respond to the offer of a post-withdrawal disbursement.

Percentage of Title IV Aid Earned for Withdrawal from a Non-term-based Credit-hour Program
The Common Manual has been revised to provide consistency in the explanation of filing time frames for default claims by aligning the text in subsection 12.6.A with text in subsections 11.4.A and 11.4.B. Revised policy states that a lender is strongly encouraged to file a default claim on or after the 300th day of delinquency and may not file a default claim before the 271st day of delinquency for loans with monthly installments. For loans with installments due less frequently than monthly (e.g., quarterly), a lender is strongly encouraged to file a default claim on or after the 360th day of delinquency and may not file a default claim before the 331st day of delinquency.

Disbursements for Students Enrolled in Foreign Schools
The Common Manual has been updated to state that prior to disbursing Stafford funds directly to a student attending a foreign school, the lender must receive confirmation from the guarantor that the school the student plans to attend is eligible to participate in the FFELP and that the student has been accepted for enrollment at the school. In addition, the lender must notify the foreign school when it actually disburses the FFELP funds directly to the student.

Payment Rules for Modular Programs and Mini-Sessions
The Common Manual has been revised to include payment rules for students enrolled in modular programs and mini-sessions. A student who is enrolled in a modular program is not eligible to receive Stafford loan funds until the first module that he or she will actually attend. For example, the earliest that a school may deliver loan funds to a student who begins enrollment in the second of three five-week modules that comprise a payment period is 10 days prior to the first day of the second module (or 30 days after the date the second module begins if the borrower is subject to delayed delivery). A borrower subject to delayed delivery who is enrolled in a summer or winter mini-session that is less than 30 days in length is not eligible to receive Stafford loan funds until the student completes the first 30 days of his or her program of study. This may result in the school delivering the funds during a subsequent mini-session or during the next full term.

LaRS Report
The Common Manual has been revised to provide more detailed information on the Lender's Interest Billing and Special Allowance Request and Report (LaRS report), including electronic submission of the LaRS report via the Lender Reporting System. Also, information related to the outdated ED Form 799 has been deleted.

Blanket Guarantees
The Common Manual has been updated to state that loan funds are not insured if any amount that is disbursed under an individual agreement with a guarantor (i.e., a blanket guarantee) exceeds the amount for which the borrower is eligible. The loss of insurance applies only if the lender knew or had reason to know that the borrower did not qualify for the loan or some part of the loan prior to the disbursement of loan funds.

Return of Unearned Loan Funds
The Common Manual has been revised to reorganize existing language and remove redundant information pertaining to the return of unearned FFELP funds by a school for a student who does not return from an approved leave of absence. If a student does not return from an approved leave of absence, the school must perform a return of Title IV funds calculation and return unearned loan funds to the lender within 30 days of the date the leave of absence ended or within 30 days of the date the student notified the school that he or she would not be returning, whichever is earlier.

Deferment Eligibility Chart
The Deferment Eligibility Chart (Figure 10-1) has been revised by changing the category heading "Borrower Consolidates Before 7/1/93" to "Pre 7/1/93 Borrower." This change clarifies that borrowers who consolidate on or after July 1, 1993, but have an outstanding balance on non-consolidated FFELP loans that were made before July 1, 1993, are eligible for the deferments available to pre-July 1, 1993, borrowers. In addition, footnote #7 on the chart has been revised and relocated to clarify that a borrower who obtains a Federal Consolidation loan that repaid a loan(s) made before July 1, 1987, or who has an outstanding balance on a loan obtained prior to July 1, 1987, when the Federal Consolidation loan was obtained, is eligible for an in-school deferment only if the borrower is attending school full time.

Due Diligence for Loans with a Rolling Delinquency or Special Occurrence
Current policy may inadvertently imply that, in the case of a rolling delinquency or a special occurrence, a lender need only mail the final demand letter if the account is more than 120 days delinquent for loans with monthly repayment obligations (180 days delinquent for loans with repayment obligations less frequent than monthly).

The manual has been revised to clarify that, while no further diligent efforts to contact the borrower by telephone are required, a lender must mail the final demand letter and ensure that no gap of greater than 45 days in collection activity occurs. Also, a regulatory citation for language regarding “gaps” has been added to the text of the manual in subsections 11.4.A and 11.4.B.

Due Diligence Figures Added to the Common Manual
Three new figures have been added to chapter 11 of the Common Manual to provide quick references to the required due diligence time frames and activities. While these activities continue to be described in the manual's text, primarily in subsections 11.4.A and 11.4.B, the new figures provide an enhanced tool for easy reference.