-
August 2017
Dear Partner:
On behalf of the federal student loan guarantors, I am pleased
to present you with the 2017 Common Manual: Unified Student Loan
Policy. Throughout the past year, The Common Manual Policy
Development and Maintenance Contractor worked diligently to
complete necessary updates to existing policies and finalize new
policies that were published in the November 1, 2016, Final Rule.
This resulted in the Governing Board approving ten policy proposals
during the year. In the June 16, 2017, Federal Register (82 27621),
the Department of Education announced the delay of certain
regulations that were to take effect on July 1, 2017. Because of
this announcement, three policy proposals were not added to the
2017 Common Manual. The remaining seven policy proposals not
affected by the June 16, 2017, Federal Register have been
incorporated into the 2017 Common Manual. Updates were also made to
the History of the Common Manual in Appendix H. In addition, there
are recent changes to both the Guarantor Contact Information in
Chapter 1 and to the Guarantor-Specific Information in Appendix
C.
I would like to thank the members of the Policy Development and
Maintenance Contractor for their extraordinary effort in working on
these policy proposals. Further, I would like to thank the numerous
Federal Family Education Loan (FFEL) program participants who are
active in the Common Manual proposal review process and who
continue to review and provide comments.
The Common Manual website, www.commonmanual.org, remains the
best resource for the most updated information regarding the
administration of the FFEL program. The website contains the
current Common Manual as well as previous electronic versions and
previous integrated versions of the Common Manual. The previous
versions can be located under the Archives section. The Archives
section also contains previously Approved Policies with the
correlated Common Bulletin language since 2006.
I encourage you to review the latest updates to the Common
Manual. We look forward to working with all of our partners in the
upcoming year.
Sincerely,
Michelle HansenChair, Common Manual Governing Board (2012-2014
and 2017-2018)
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COMMON MANUALUnified Student Loan Policy
2017 Annual Update
©2017 Common Manual Guarantors
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Summary of Changes Approved through April 2017 i
Summary of Changes Approved through April 2017
This summary lists changes made since the 2016 Annual Update of
the Common Manual. Changes made before the 2016 Annual Update are
noted in Appendix H.
Common Manual Section Description of Change Effective
Date/Triggering Event Policy/Batch
Chapter 2: About the FFELP
2.3.C Common Forms Accounts for the Department discontinuing the
Public Service Deferment Request (PUB), the Parental Leave/Working
Mother Deferment Request (PLWM), and the Education Related
Deferment Request (EDU) deferment forms. Also, the Department
eliminated the Student in Rehabilitation Training deferment type
from the Parent PLUS Borrower Deferment Request (PLUS). The
Department created two new deferment request forms, Graduate
Fellowship Deferment Request (GFL) and Rehabilitation Training
Deferment Request (RHT), and provided guidance on the documentation
that the lender must collect should a borrower request to defer
loan repayment based on a deferment for which there is no longer an
OMB-approved form. They also provided guidance on requirements to
consider a deferment form complete. Incorporates revisions to the
Deferment Eligibility Chart, Figure 11-1 to align with these
changes.
For deferments, revised forms provided to borrowers on or after
June 1, 2016.
1316/207
Chapter 6: School Certification
6.11.E Exceeding Loan Limits Incorporates mention of the
Reaffirmation Agreement, the new OMB-approved form that a borrower
uses to reaffirm any debt that exceeds Stafford annual and/or
aggregate loan limits.
For reaffirmation agreements provided to borrowers after March
30, 2016.
1314/206
Chapter 7: Loan Origination
7.4.A Current Stafford Interest Rates
Figure 7-1 Stafford Loan Interest Rates
Revised policy removes the fixed interest rates for FFELP
Stafford loans first disbursed on or after July 1, 2010, as no new
FFELP loans could be first disbursed on or after July 1, 2010.
Revised policy adds the effective variable interest rates for FFELP
Stafford loans from July 1, 2012 through June 30, 2017.
Changes in FFELP variable interest rates on July 1, 2011 and
thereafter.
1319/208
-
ii Summary of Changes Approved through April 2017
Chapter 11: Deferment and Forbearance
11.1.B Documentation Required for Authorized Deferment
Figure 11-1 Deferment Eligibility Chart
11.2.B Deferment Documentation—ACTION Program
11.3.B Deferment Documentation—Armed Forces
11.5.B Deferment Documentation—Graduate Fellowship
11.7.B Deferment Documentation—Internship/Residency
11.9.B Deferment Documentation—NOAA
11.10.B Deferment Documentation—Parental Leave
11.11.B Deferment Documentation—Peace Corps
11.13.B Deferment Documentation—Public Health Service
11.14.B Deferment Documentation—Rehabilitation Training
Program
11.15.B Deferment Documentation—Tax-Exempt Organization
Volunteer
11.16.B Deferment Documentation—Teacher Shortage Area
11.17.B Deferment Documentation—Temporary Total Disability
11.19.B Deferment Documentation—Working Mother
Accounts for the Department discontinuing the Public Service
Deferment Request (PUB), the Parental Leave/Working Mother
Deferment Request (PLWM), and the Education Related Deferment
Request (EDU) deferment forms. Also, the Department eliminated the
Student in Rehabilitation Training deferment type from the Parent
PLUS Borrower Deferment Request (PLUS). The Department created two
new deferment request forms, Graduate Fellowship Deferment Request
(GFL) and Rehabilitation Training Deferment Request (RHT), and
provided guidance on the documentation that the lender must collect
should a borrower request to defer loan repayment based on a
deferment for which there is no longer an OMB-approved form. They
also provided guidance on requirements to consider a deferment form
complete. Incorporates revisions to the Deferment Eligibility
Chart, Figure 11-1 to align with these changes.
For deferments, revised forms provided to borrowers on or after
June 1, 2016.
1316/207
11.20.B Documentation Required for Authorized Forbearance
Figure 11-2 Forbearance Eligibility Chart
11.22 Discretionary Forbearance
Explains the Department’s guidance related to the completion of
OMB-approved common forbearance request forms, and incorporates the
forms into the Forbearance Eligibility Chart.
For mandatory forbearance forms distributed on or after June 1,
2016, and discretionary (general) forbearance forms distributed on
or after July 1, 2016.
1317/207
11.21.F Death
11.23.A Death
Allows two additional types of documentation for a death
discharge. Those are an accurate and complete original or certified
copy of the death certificate that is scanned and submitted
electronically or by facsimile transmission, or verification of the
borrower’s or student’s death through an authoritative Federal or
State electronic database approved for use by the Department.
For death discharge applications and claims received on or after
July 1, 2017.
1321/209
Common Manual Section Description of Change Effective
Date/Triggering Event Policy/Batch
-
Summary of Changes Approved through April 2017 iii
11.23.D Teacher Loan Forgiveness
11.24.C National Service, Loan Forgiveness, Department of
Defense Repayment, or Active Military State Duty
Revised policy adds to Subsection 11.23.D an additional
cross-reference to Subsection 11.24.C where the other TLF
forbearance type is explained. In addition, revised policy in
Subsection 11.24.C includes reference to the OMB-approved mandatory
forbearance request forms, and new subheadings provide clarity on
which eligibility criteria pertain to each forbearance type.
Revisions also include additional regulatory citations.
For mandatory forbearance forms distributed on or after June 1,
2016.
1318/208
Chapter 13: Claim Filing, Discharge, and Forgiveness
13.1.D Claim File Documentation
13.1.E Missing Claim File Documentation
13.8.C Death
Figure 13-4 Timely Filing Deadlines for Claims and
Discharges*
Allows two additional types of documentation for a death
discharge. Those are an accurate and complete original or certified
copy of the death certificate that is scanned and submitted
electronically or by facsimile transmission, or verification of the
borrower’s or student’s death through an authoritative Federal or
State electronic database approved for use by the Department.
For death discharge applications and claims received on or after
July 1, 2017.
1321/209
13.8.A Bankruptcy Removes the cross-reference about not yet
disbursed or partially disbursed loans when the lender receives a
bankruptcy notice.
Retroactive to July 1, 2010. 1315/206
Appendix H: History of the FFELP and the Common Manual
Figure H-1 Summary of Variable-Rate Conversion Provisions
Revised policy removes the fixed interest rates for FFELP
Stafford loans first disbursed on or after July 1, 2010, as no new
FFELP loans could be first disbursed on or after July 1, 2010.
Revised policy adds the effective variable interest rates for FFELP
Stafford loans from July 1, 2012 through June 30, 2017.
Changes in FFELP variable interest rates on July 1, 2011 and
thereafter.
1319/208
Common Manual Section Description of Change Effective
Date/Triggering Event Policy/Batch
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Table of Contents
Chapter 1: Overview
1.1 Introduction
.......................................................................................................................................................
11.2 About the Manual
..............................................................................................................................................
11.3 Using, Duplicating, and Reprinting of Portions of the Common
Manual
...............................................................
21.4 Disclaimer
.........................................................................................................................................................
21.5 FFELP Guarantors and Contact Information
........................................................................................................
3
Chapter 2: About the FFELP
2.1 The Federal Family Education Loan Program (FFELP)
.........................................................................................
12.1.A Overview
...........................................................................................................................................................
12.1.B Types of Loans Available
...................................................................................................................................
12.2 The Life of a FFELP Loan
...................................................................................................................................
22.2.A
Origination.........................................................................................................................................................
62.2.B The Interim Period
.............................................................................................................................................
82.2.C Repayment
........................................................................................................................................................
92.3 Other FFELP
Resources....................................................................................................................................
112.3.A Federal Statute, Regulations, and Dear Colleague
Letters/Dear Partner Letters
................................................ 112.3.B U.S.
Department of Education Publications
......................................................................................................
122.3.C Common Forms
...............................................................................................................................................
13
Chapter 3: Lender Participation
3.1 Eligible Lenders
.................................................................................................................................................
13.2 Schools Acting as Lenders and Eligible Lender Trustee
Relationships
................................................................
23.3 Participation and Guarantees
.............................................................................................................................
43.3.A Approval for
Participation...................................................................................................................................
43.3.B Agreement to Guarantee
Loans..........................................................................................................................
43.3.C Transfer of Loan Guarantee
...............................................................................................................................
53.4 Lender Responsibilities and
Standards...............................................................................................................
53.4.A Recordkeeping Requirements
............................................................................................................................
63.4.B Loan Assignment, Sale, or Transfer
...................................................................................................................
83.4.C Permitted and Prohibited
Activities.....................................................................................................................
93.4.D Borrower Defenses
..........................................................................................................................................
123.4.E Charges to Borrowers
......................................................................................................................................
133.5 Lender Reporting
.............................................................................................................................................
133.5.A Federal Origination Fee and Lender Fee
...........................................................................................................
133.5.B Interest Benefits and Special Allowance Reporting
...........................................................................................
153.5.C Reporting to Nationwide Consumer Reporting Agencies
...................................................................................
153.5.D Reporting Loan
Information..............................................................................................................................
163.5.E Reporting Loan Assignments, Sales, and Transfers
..........................................................................................
163.5.F Reporting Social Security Number, Date of Birth, and First
Name Changes or Corrections ................................
173.5.G NSLDS Reporting
.............................................................................................................................................
183.5.H Reporting Loans Paid in
Full.............................................................................................................................
183.5.I Reporting Information Relating to Preferred Lender
Arrangements
...................................................................
183.6 Third-Party Servicers
.......................................................................................................................................
193.6.A Administrative Capability
.................................................................................................................................
203.6.B Financial
Responsibility....................................................................................................................................
203.7 Lender of Last
Resort.......................................................................................................................................
223.7.A Eligible Lenders
...............................................................................................................................................
223.7.B Benefits of Participation
...................................................................................................................................
223.7.C How the LLR Program Works
...........................................................................................................................
22
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ii Table of Contents—2017 Annual Update
3.8 Independent Audits
..........................................................................................................................................233.8.A
Annual Compliance
Audits................................................................................................................................233.8.B
Third-Party Servicer
Audits...............................................................................................................................24
Chapter 4: School Participation
4.1 School Eligibility
.................................................................................................................................................24.1.A
Establishing
Eligibility.........................................................................................................................................24.1.B
Written Agreements between Schools
................................................................................................................64.1.C
Maintaining Eligibility
.........................................................................................................................................74.1.D
Loss of Eligibility
..............................................................................................................................................214.1.E
School Misrepresentation
.................................................................................................................................224.1.F
School Code of Conduct
...................................................................................................................................234.2
Administrative Capability Standards
.................................................................................................................244.2.A
Financial Aid Administrator
Responsibilities......................................................................................................254.2.B
Financial Aid Administrator Training
.................................................................................................................264.3
Financial Responsibility Standards
...................................................................................................................264.3.A
General School Financial Responsibility
Requirements......................................................................................274.3.B
Specific Criteria for Determining School Financial Responsibility
......................................................................294.3.C
Sufficient Cash Reserve Requirements
.............................................................................................................294.3.D
Composite Score
..............................................................................................................................................314.4
Providing Information to
Students.....................................................................................................................334.4.A
Preferred Lender Arrangements and
Lists.........................................................................................................334.4.B
Student Consumer Information
.........................................................................................................................354.4.C
Entrance Counseling
........................................................................................................................................444.4.D
Exit Counseling
................................................................................................................................................464.4.E
Private Education Loan Information
..................................................................................................................484.5
Recordkeeping
Requirements...........................................................................................................................494.6
Third-Party
Servicers........................................................................................................................................514.7
Quality Assurance Program
..............................................................................................................................524.8
Independent Audits
..........................................................................................................................................52
Chapter 5: Borrower Eligibility
5.1 Eligibility Requirements for Stafford and PLUS
Loans..........................................................................................15.1.A
General Borrower and Student Eligibility Requirements
......................................................................................15.1.B
Student Eligibility Requirements
.........................................................................................................................25.1.C
Graduate or Professional Student and Parent PLUS Loan Borrower
Eligibility Requirements ................................35.2
Federal Data Matches
........................................................................................................................................35.2.A
Citizenship Data
Match.......................................................................................................................................45.2.B
Social Security Number Data Match
...................................................................................................................55.2.C
Selective Service Registration Data
Match..........................................................................................................65.2.D
Exceeding Loan Limits and Prior Overpayments Data
Match...............................................................................65.2.E
Prior Default Data Match
....................................................................................................................................75.2.F
Department of Justice Data Match
.....................................................................................................................85.2.G
Department of Veterans Affairs Data Match
........................................................................................................85.3
Reinstatement of Title IV Eligibility after
Default..................................................................................................85.4
Prior Loan Written
Off.........................................................................................................................................95.5
Prior Loan Discharge Due to Total and Permanent Disability
.............................................................................105.5.A
Prior Loan or TEACH Grant Service Obligation in a Post-Discharge
Monitoring Period Based on a
Determination of Total and Permanent Disability
..............................................................................................105.5.B
Final Discharge of a Prior Loan Based on a Determination of Total
and Permanent Disability ............................115.6 Effect
of Exceeding Loan Limits on Eligibility
....................................................................................................135.7
Effect of Bankruptcy on Eligibility
.....................................................................................................................135.8
Effect of Fraud on Eligibility
..............................................................................................................................135.9
Effect of Drug Conviction on Eligibility
..............................................................................................................135.10
Required High School Diploma or Equivalent
....................................................................................................145.11
Ability-to-Benefit Provisions
.............................................................................................................................15
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Table of Contents—2017 Annual Update iii
5.12 Student Enrollment
Requirements....................................................................................................................
155.13 Use of Distance Education and Correspondence in Programs of
Study .............................................................
165.13.A Distance Education Program of Study
..............................................................................................................
165.13.B Correspondence Program of
Study...................................................................................................................
175.14 Foreign Schools and Study-Abroad Programs
..................................................................................................
175.14.A Study at Participating Foreign Schools
.............................................................................................................
175.14.B Study-Abroad
Programs...................................................................................................................................
175.15 Eligibility Requirements Specific to Transfer Students
......................................................................................
175.15.A Financial Aid History for Transfer
Students.......................................................................................................
175.15.B Students Who Transfer after Full Disbursement of the Loan
.............................................................................
185.16 Multiple School Enrollment
..............................................................................................................................
185.17 Ineligible Borrowers
.........................................................................................................................................
195.17.A Ineligibility Based on Borrower Error
................................................................................................................
195.17.B Ineligibility Based on School Error
....................................................................................................................
205.17.C Ineligibility Based on Lender
Error....................................................................................................................
21
Chapter 6: School Certification
6.1 Defining an Academic Year
................................................................................................................................
16.1.A Minimum Length for an Academic Year
.............................................................................................................
16.1.B Academic Year Categories
.................................................................................................................................
26.2 Determining the Loan
Period..............................................................................................................................
86.3 Determining Payment
Periods..........................................................................................................................
106.3.A Credit-Hour Programs Offered in
Modules........................................................................................................
106.3.B Credit-Hour Programs with Standard Terms or with
Nonstandard Terms That Are Substantially Equal in Length116.3.C
Credit-Hour Programs with Nonstandard Terms That Are Not
Substantially Equal in Length ............................. 116.3.D
Clock-Hour Programs or Non-Term-Based Credit-Hour Programs
....................................................................
126.3.E Excused Absences in Clock-Hour Programs
.....................................................................................................
136.3.F Students Returning to a Non-Term-Based Credit-Hour or
Clock-Hour Program after a Withdrawal ................... 136.4
Determining the Disbursement Schedule
.........................................................................................................
146.4.A Multiple Disbursements and Low Cohort Default Rate
Exemptions
...................................................................
146.4.B When Disbursements May Be Scheduled
.........................................................................................................
156.5 Determining the Student’s Cost of Attendance
(COA)........................................................................................
196.5.A COA
Components.............................................................................................................................................
196.5.B COA Exceptions for Correspondence and Distance Education
Programs of Study .............................................
206.5.C COA Documentation Requirements
..................................................................................................................
206.5.D Use of Professional Judgment to Determine COA
.............................................................................................
206.6 Determining the Expected Family Contribution (EFC)
........................................................................................
206.6.A Performing Verification Requirements
..............................................................................................................
216.6.B Use of Professional Judgment to Determine
EFC..............................................................................................
226.7 Determining the Amount of Estimated Financial Assistance
(EFA).....................................................................
226.8 Determining the Student’s Dependency Status
................................................................................................
246.9 Defining Enrollment
Status...............................................................................................................................
266.10 Determining the Student’s Grade Level
............................................................................................................
276.11 Loan
Limits......................................................................................................................................................
286.11.A Stafford Annual Loan Limits
.............................................................................................................................
286.11.B Stafford Aggregate Loan
Limits........................................................................................................................
386.11.C PLUS Loans for Graduate and Professional Students
........................................................................................
396.11.D Increased Unsubsidized Stafford Loan Limits for Health
Profession
Students....................................................
396.11.E Exceeding Loan Limits
.....................................................................................................................................
416.11.F Prorated Loan
Limits........................................................................................................................................
426.11.G Effects of a Consolidation Loan on New Stafford Loan
Eligibility
.......................................................................
466.12 Determining the Eligible Loan Amount
.............................................................................................................
466.13 Determining the Loan Amount at Schools with Credit-Hour
Programs
..............................................................
476.14 Determining a Student’s Eligibility for Interest Subsidy on
Stafford
Loans.........................................................
476.14.A Subsidized Stafford Loans
...............................................................................................................................
476.14.B Unsubsidized Stafford
Loans............................................................................................................................
486.14.C Nonsubsidized Stafford
Loans..........................................................................................................................
48
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iv Table of Contents—2017 Annual Update
6.15 School Certification of the Loan
........................................................................................................................486.15.A
Preventing Overawards
....................................................................................................................................496.15.B
Stafford Loan
Certification................................................................................................................................496.15.C
PLUS Loan Certification
....................................................................................................................................506.15.D
Additional Unsubsidized Stafford Loan Certification for a Dependent
Student....................................................516.15.E
Refusing to Certify a Loan or Reducing Borrower Eligibility
...............................................................................526.16
Applying for Federal Stafford and PLUS Loans
..................................................................................................536.17
Forwarding the Loan
Information......................................................................................................................556.18
Facilitating Guarantee
Processing.....................................................................................................................556.19
Guarantee of the
Loan......................................................................................................................................566.20
Adjusting the Guaranteed Loan
Amount............................................................................................................566.21
NCHER Standards and Operations
....................................................................................................................56
Chapter 7: Loan Origination
7.1 Reviewing the Loan Request
..............................................................................................................................17.1.A
General
Determinations......................................................................................................................................17.1.B
Credit Standards and Determining Adverse Credit
..............................................................................................17.1.C
Effect of Bankruptcy on the Lender’s Determination of Adverse
Credit................................................................27.2
Reviewing the Promissory Note
..........................................................................................................................27.2.A
Lender Responsibilities under a Master Promissory
Note....................................................................................37.2.B
Transfer Students and Master Promissory Notes
................................................................................................47.3
Processing the Loan Request
.............................................................................................................................47.4
Establishing Stafford Loan Interest
Rates............................................................................................................57.4.A
Current Stafford Interest Rates
...........................................................................................................................57.4.B
Reduced Stafford Interest Rates
.........................................................................................................................57.4.C
Previous Stafford Interest Rates
.........................................................................................................................67.4.D
Resolving Interest Rate Discrepancies on Stafford Loans
....................................................................................87.5
Establishing PLUS Loan and SLS Loan Interest Rates
.........................................................................................87.5.A
Current PLUS Interest Rate
.................................................................................................................................87.5.B
Reduced PLUS Interest Rates
.............................................................................................................................87.5.C
Previous PLUS and SLS Interest
Rates..............................................................................................................107.6
Borrower Disclosures
.......................................................................................................................................117.6.A
General Initial Disclosure
Requirements............................................................................................................117.6.B
Income-Sensitive and Income-Based Repayment Disclosure
Requirements......................................................127.6.C
Guarantee Disclosure
.......................................................................................................................................127.7
Disbursing the Loan
.........................................................................................................................................137.7.A
Earliest Date for Disbursement
.........................................................................................................................137.7.B
Multiple Disbursement
.....................................................................................................................................147.7.C
Disbursement by Individual
Check....................................................................................................................147.7.D
Disbursement by Electronic Funds Transfer (EFT) or Master
Check...................................................................157.7.E
Disbursement for Students in Study-Abroad Programs or Foreign
Schools........................................................157.7.F
Reissuing Disbursements
.................................................................................................................................167.7.G
Late Disbursement
...........................................................................................................................................177.7.H
Effect of Loss of School Eligibility on Disbursement
..........................................................................................177.7.I
Effect of Bankruptcy on
Disbursement..............................................................................................................177.7.J
Disbursement to Transfer Students
..................................................................................................................187.7.K
Disbursement
Cancellation...............................................................................................................................187.7.L
Consummated and Unconsummated Disbursements
........................................................................................197.8
Processing the Federal Default Fee (Formerly the Guarantee
Fee).....................................................................207.8.A
Paying the Federal Default Fee (Formerly the Guarantee Fee)
...........................................................................207.8.B
Recalculating the Federal Default Fee (or Guarantee Fee)
.................................................................................207.8.C
Refunding the Federal Default Fee (or Guarantee Fee)
......................................................................................207.9
Processing Federal Origination
Fees.................................................................................................................237.9.A
Collecting the Origination
Fee...........................................................................................................................237.9.B
Reporting the Origination Fee
...........................................................................................................................237.9.C
Refunding the Origination Fee
..........................................................................................................................24
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Table of Contents—2017 Annual Update v
Chapter 8: Loan Delivery
8.1 Managing Loan Funds
.......................................................................................................................................
18.2 Required Notices
...............................................................................................................................................
28.2.A Initial Notice of Funds
........................................................................................................................................
28.2.B Confirmation Requirements for the Multi-Year Feature of the
MPN.....................................................................
28.2.C School’s Notice of Credit to Student’s
Account...................................................................................................
38.2.D School’s Notice of Borrower's Right to Cancel Loan Disbursed
by EFT or Master Check ..................................... 38.2.E
Notification of Late Disbursement or Post-Withdrawal Disbursement
of Loan Funds........................................... 48.3
Required Authorizations
.....................................................................................................................................
48.3.A Authorization Modifications and
Cancellations....................................................................................................
58.3.B Authorization for Release of EFT/Master Check Disbursements
..........................................................................
58.4 Assessing Satisfactory Academic Progress
........................................................................................................
78.5 Completing Verification
......................................................................................................................................
98.6 Managing Overawards
.......................................................................................................................................
98.7 Delivering Loan Funds at Eligible Schools
........................................................................................................
108.7.A Delivery Time Frames
......................................................................................................................................
108.7.B Delivering Second and Subsequent
Disbursements..........................................................................................
138.7.C Early
Delivery...................................................................................................................................................
148.7.D Delayed
Delivery..............................................................................................................................................
158.7.E Late
Delivery....................................................................................................................................................
168.7.F Delivery in Credit-Hour Programs Offered in
Modules.......................................................................................
178.7.G Delivery to Borrowers in Special
Circumstances...............................................................................................
178.7.H Delivery to Transfer
Students...........................................................................................................................
188.7.I Delivery
Methods.............................................................................................................................................
198.8 Managing Credit Balances
...............................................................................................................................
218.8.A Timeframes for Paying Credit
Balances............................................................................................................
218.8.B How to Pay Credit Balances
.............................................................................................................................
218.8.C Holding Credit
Balances...................................................................................................................................
238.8.D Treatment of a Title IV Credit Balance When a Student
Withdraws
...................................................................
238.8.E Treatment of a Title IV Credit Balance When a Student Dies
.............................................................................
248.9 Return of Loan
Funds.......................................................................................................................................
248.9.A Return of Undelivered Loan Funds
...................................................................................................................
248.9.B Return of Ineligible Borrower Loan
Funds.........................................................................................................
258.9.C Return of Unearned Loan
Funds.......................................................................................................................
268.9.D Return of Loan Funds for a Deceased Borrower
...............................................................................................
278.10 Delivery When Department Approval Is
Required..............................................................................................
318.11 Delivering Loan Funds in Cases of Lost School Eligibility
..................................................................................
318.11.A Exceptions to Delivery Restrictions at Ineligible Schools
...................................................................................
318.11.B Delivery of Second or Subsequent Disbursements after a
School Loses
Eligibility............................................. 31
Chapter 9: School Reporting Responsibilities and the Return of
Title IV Funds
9.1 Reporting Social Security Number, Date of Birth, and First
Name Changes or Corrections .................................. 19.2
Student Enrollment Status
Reporting..................................................................................................................
29.2.A National Student Loan Data System (NSLDS) Enrollment
Reporting
....................................................................
39.2.B Ad Hoc
Reporting...............................................................................................................................................
59.2.C Information Sharing with the Department, a Lender, or a
Guarantor
...................................................................
69.3 Leave of Absence
..............................................................................................................................................
69.4 Withdrawal Dates
..............................................................................................................................................
79.5 Return of Title IV
Funds....................................................................................................................................
139.5.A Return Amounts for Title IV Grant and Loan
Programs......................................................................................
139.5.B Processing Returned Funds
.............................................................................................................................
209.5.C Responsibilities for Unpaid Refunds
.................................................................................................................
229.5.D Return of Title IV Funds Calculations for Students Subject
to
Verification..........................................................
22
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vi Table of Contents—2017 Annual Update
Chapter 10: Loan Servicing
10.1 Verifying Enrollment
...........................................................................................................................................110.1.A
Lender Processing of Enrollment
Changes..........................................................................................................210.1.B
Lender Reporting of Enrollment
Changes............................................................................................................310.2
In-School
Period.................................................................................................................................................410.3
Grace Period
......................................................................................................................................................410.3.A
Length of the Grace Period
.................................................................................................................................410.3.B
Payment of Interest during the Grace
Period.......................................................................................................510.3.C
Military Extension of the Grace Period
................................................................................................................510.4
Establishing the Repayment Start
Date...............................................................................................................510.4.A
Stafford Loan Repayment Start
Date...................................................................................................................510.4.B
PLUS and SLS Loan Repayment Start Date
.........................................................................................................610.4.C
Aligning Repayment Start Dates for Stafford and SLS
Loans...............................................................................610.5
Establishing the First Payment Due Date
............................................................................................................610.5.A
Stafford Loan First Payment Due Date
................................................................................................................610.5.B
PLUS and SLS Loan First Payment Due Date
......................................................................................................710.5.C
Aligning First Payment Due Dates for Stafford and SLS Loans
............................................................................710.5.D
Revised Out-of-School Dates before Conversion to
Repayment...........................................................................710.5.E
Revised Out-of-School Dates after Conversion to Repayment
.............................................................................810.6
Establishing Repayment Terms
..........................................................................................................................910.6.A
Determining the Borrower’s Indebtedness
........................................................................................................1010.6.B
Length of the Repayment
Period.......................................................................................................................1010.6.C
Repayment Options
..........................................................................................................................................1110.6.D
Minimum Payment
Requirements.....................................................................................................................1110.6.E
Adjusting the Borrower’s Repayment Terms
.....................................................................................................1210.7
Disclosing Repayment Terms
...........................................................................................................................1210.7.A
Time Frame for Disclosure
...............................................................................................................................1410.7.B
Dispute of Loan Terms
.....................................................................................................................................1510.8
Establishing a Repayment Schedule
.................................................................................................................1510.8.A
Standard Repayment
Schedule.........................................................................................................................1610.8.B
Graduated Repayment
Schedule.......................................................................................................................1610.8.C
Income-Sensitive Repayment
Schedule............................................................................................................1610.8.D
Income-Based Repayment Schedule
................................................................................................................1710.8.E
Extended Repayment Schedule
........................................................................................................................2110.9
Interest
Charges...............................................................................................................................................2110.9.A
Annual Variable Interest Rate Charges
..............................................................................................................2110.9.B
Reduced Interest Rates
....................................................................................................................................2210.9.C
Excess Interest Rebates
...................................................................................................................................2310.9.D
Payment of Accrued Interest on Loans Not Eligible for Federal
Interest
Benefits................................................2310.10
Capitalizing Accrued Interest
............................................................................................................................2310.10.A
Permitted Capitalization
...................................................................................................................................2310.10.B
Capitalization Frequency
..................................................................................................................................2410.10.C
Capitalization of Delinquent Interest Payments
.................................................................................................2510.11
Applying Borrower Payments and Funds Returned by the
School......................................................................2510.11.A
Applying Regular Borrower
Payments...............................................................................................................2510.11.B
Applying
Prepayments......................................................................................................................................2610.11.C
Changing the Borrower’s Payment Due Date
....................................................................................................2710.11.D
Applying Payments during Deferment or Forbearance
......................................................................................2710.11.E
Applying Funds Returned by the
School............................................................................................................2710.12
Lender Disclosures during Repayment
.............................................................................................................2810.13
Paid-in-Full Loans
............................................................................................................................................29
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Table of Contents—2017 Annual Update vii
Chapter 11: Deferment and Forbearance
11.1 Authorized Deferment
........................................................................................................................................
111.1.A General Deferment Eligibility
Criteria..................................................................................................................
111.1.B Documentation Required for Authorized
Deferment............................................................................................
311.1.C Deferment
Length..............................................................................................................................................
311.1.D Payment of Interest during
Deferment................................................................................................................
411.1.E Reporting
Deferments........................................................................................................................................
411.1.F Deferment of Loans in Delinquency
...................................................................................................................
411.1.G Deferment of Loans in Default
...........................................................................................................................
411.1.H Post-Deferment Grace
Period.............................................................................................................................
511.1.I Establishing Repayment after Deferment
...........................................................................................................
511.1.J Disclosure When Granting a Deferment on Unsubsidized
Stafford or PLUS
Loan................................................. 511.2 ACTION
Program
Deferment...............................................................................................................................
711.2.A Eligibility Criteria—ACTION
Program..................................................................................................................
711.2.B Deferment Documentation—ACTION Program
...................................................................................................
811.2.C Length of Deferment—ACTION
Program............................................................................................................
811.3 Armed Forces Deferment
...................................................................................................................................
811.3.A Eligibility Criteria—Armed Forces
......................................................................................................................
811.3.B Deferment Documentation—Armed Forces
.......................................................................................................
911.3.C Length of Deferment—Armed Forces
................................................................................................................
911.4 Economic Hardship
Deferment...........................................................................................................................
911.4.A Eligibility Criteria—Economic Hardship
..............................................................................................................
911.4.B Deferment Documentation—Economic Hardship
.............................................................................................
1011.4.C Length of Deferment—Economic Hardship
......................................................................................................
1011.4.D Simplified Deferment Processing
.....................................................................................................................
1111.5 Graduate Fellowship Deferment
.......................................................................................................................
1111.5.A Eligibility Criteria—Graduate Fellowship
..........................................................................................................
1111.5.B Deferment Documentation—Graduate Fellowship
...........................................................................................
1111.5.C Length of Deferment—Graduate Fellowship
....................................................................................................
1111.5.D Simplified Deferment Processing
.....................................................................................................................
1211.6 In-School Deferment, Summer Bridge Extension, and
Post-Enrollment Deferment
........................................... 1211.6.A Eligibility
Criteria—In-School
...........................................................................................................................
1211.6.B Deferment Documentation—In-School
............................................................................................................
1311.6.C Length of Deferment—In-School
.....................................................................................................................
1411.6.D Summer Bridge
Extension................................................................................................................................
1411.6.E Post-Enrollment
Deferment..............................................................................................................................
1511.7 Internship/Residency Deferment
......................................................................................................................
1511.7.A Eligibility Criteria—Internship/Residency
.........................................................................................................
1511.7.B Deferment
Documentation—Internship/Residency...........................................................................................
1611.7.C Length of Deferment—Internship/Residency
...................................................................................................
1611.8 Military Service
Deferment...............................................................................................................................
1611.8.A Eligibility Criteria—Military
Service..................................................................................................................
1611.8.B Deferment Documentation—Military Service
...................................................................................................
1711.8.C Length of Deferment—Military Service
............................................................................................................
1811.8.D Simplified Deferment Processing
.....................................................................................................................
1811.9 National Oceanic and Atmospheric Administration Corps
Deferment
................................................................
1811.9.A Eligibility
Criteria—NOAA.................................................................................................................................
1811.9.B Deferment Documentation—NOAA
..................................................................................................................
1911.9.C Length of
Deferment—NOAA...........................................................................................................................
1911.10 Parental Leave
Deferment................................................................................................................................
1911.10.A Eligibility Criteria—Parental
Leave...................................................................................................................
1911.10.B Deferment Documentation—Parental Leave
....................................................................................................
1911.10.C Length of Deferment—Parental
Leave.............................................................................................................
2011.11 Peace Corps Deferment
...................................................................................................................................
2011.11.A Eligibility Criteria—Peace Corps
......................................................................................................................
2011.11.B Deferment Documentation—Peace
Corps........................................................................................................
2011.11.C Length of Deferment—Peace Corps
................................................................................................................
20
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viii Table of Contents—2017 Annual Update
11.12 Post-Active Duty Student Deferment
................................................................................................................2011.12.A
Eligibility Criteria—Post-Active Duty
Student....................................................................................................2111.12.B
Deferment Documentation—Post-Active Duty Student
.....................................................................................2111.12.C
Length of Deferment—Post-Active Duty
Student..............................................................................................2211.12.D
Simplified Deferment
Processing......................................................................................................................2211.13
Public Health Service Deferment
......................................................................................................................2211.13.A
Eligibility Criteria—Public Health
Service..........................................................................................................2211.13.B
Deferment Documentation—Public Health
Service...........................................................................................2211.13.C
Length of Deferment—Public Health
Service....................................................................................................2311.14
Rehabilitation Training Program Deferment
......................................................................................................2311.14.A
Eligibility Criteria—Rehabilitation Training
Program..........................................................................................2311.14.B
Deferment Documentation—Rehabilitation Training
Program...........................................................................2311.14.C
Length of Deferment—Rehabilitation Training
Program....................................................................................2411.14.D
Simplified Deferment
Processing......................................................................................................................2411.15
Tax-Exempt Organization Volunteer
Deferment.................................................................................................2411.15.A
Eligibility Criteria—Tax-Exempt Organization
Volunteer....................................................................................2411.15.B
Deferment Documentation—Tax-Exempt Organization Volunteer
.....................................................................2511.15.C
Length of Deferment—Tax-Exempt Organization Volunteer
..............................................................................2511.16
Teacher Shortage Area or Targeted Teacher Deferment
...................................................................................2511.16.A
Eligibility Criteria—Teacher Shortage
Area.......................................................................................................2511.16.B
Deferment Documentation—Teacher Shortage Area
........................................................................................2611.16.C
Length of Deferment—Teacher Shortage
Area.................................................................................................2611.17
Temporary Total Disability
Deferment...............................................................................................................2611.17.A
Eligibility Criteria—Temporary Total Disability
..................................................................................................2611.17.B
Deferment Documentation—Temporary Total Disability
...................................................................................2711.17.C
Length of Deferment—Temporary Total Disability
............................................................................................2711.18
Unemployment
Deferment................................................................................................................................2711.18.A
Eligibility Criteria—Unemployment
...................................................................................................................2711.18.B
Deferment Documentation—Unemployment
....................................................................................................2811.18.C
Length of Deferment—Unemployment
.............................................................................................................2811.18.D
Simplified Deferment
Processing......................................................................................................................2811.19
Working Mother Deferment
..............................................................................................................................2911.19.A
Eligibility Criteria—Working
Mother..................................................................................................................2911.19.B
Deferment Documentation—Working
Mother...................................................................................................2911.19.C
Length of Deferment—Working
Mother............................................................................................................2911.20
Forbearance.....................................................................................................................................................3011.20.A
Forbearance
Types...........................................................................................................................................3011.20.B
Documentation Required for Authorized Forbearance
.......................................................................................3111.20.C
Forbearance Length
.........................................................................................................................................3111.20.D
Payment of Interest during Forbearance
...........................................................................................................3211.20.E
Reporting Forbearances
...................................................................................................................................3211.20.F
Forbearance of Defaulted Loans
.......................................................................................................................3211.20.G
Borrower Contact during Forbearance
..............................................................................................................3311.20.H
Establishing Repayment after
Forbearance.......................................................................................................3311.21
Administrative
Forbearance..............................................................................................................................3611.21.A
Bankruptcy Filing
.............................................................................................................................................3611.21.B
Borrower Ineligible for
Deferment.....................................................................................................................3611.21.C
Closed School or False Certification by the School
............................................................................................3611.21.D
False Certification as a Result of the Crime of Identity
Theft..............................................................................3711.21.E
Cures
...............................................................................................................................................................3711.21.F
Death
...............................................................................................................................................................3711.21.G
Delinquency before a Deferment or an Authorized Period of
Forbearance
.........................................................3811.21.H
Delinquency after a Deferment or Mandatory Forbearance
...............................................................................3811.21.I
Delinquency under Income-Based Repayment (IBR)
.........................................................................................3811.21.J
Documentation Collection and Processing
........................................................................................................3811.21.K
Forgiveness under Income-Based Repayment (IBR)
..........................................................................................3811.21.L
Late Notification of Out-of-School
Dates...........................................................................................................3811.21.M
Loan Sale or Transfer
.......................................................................................................................................39
-
Table of Contents—2017 Annual Update ix
11.21.N Natural Disasters, Local or National Emergency, or
Military Mobilization
..........................................................
3911.21.O New Out-of-School Dates after Conversion to
Repayment................................................................................
3911.21.P Repayment
Alignment......................................................................................................................................
3911.21.Q Repurchase of a Non-Bankruptcy
Claim...........................................................................................................
4011.21.R Spouses and Parents of Victims of September 11, 2001
..................................................................................
4011.21.S Total and Permanent
Disability.........................................................................................................................
4011.21.T Unpaid Refund
Discharge.................................................................................................................................
4111.21.U Repayment Plan
Change..................................................................................................................................
4111.22 Discretionary Forbearance
...............................................................................................................................
4211.22.A Reduced-Payment Forbearance
.......................................................................................................................
4211.23 Mandatory Administrative Forbearance
............................................................................................................
4311.23.A Death
..............................................................................................................................................................
4311.23.B Exceptional Circumstances
..............................................................................................................................
4311.23.C Repayment Accommodation
............................................................................................................................
4411.23.D Teacher Loan Forgiveness
...............................................................................................................................
4411.24 Mandatory Forbearance
...................................................................................................................................
4411.24.A Student Loan Debt
Burden...............................................................................................................................
4511.24.B Medical or Dental Internship or Residency
.......................................................................................................
4511.24.C National Service, Loan Forgiveness, Department of Defense
Repayment, or Active Military State Duty ............. 4611.24.D
Applying a Mandatory Forbearance Retroactively
.............................................................................................
47
Chapter 12: Due Diligence in Collecting Loans
12.1 Collection Philosophies, Goals, and Minimum
Standards....................................................................................
112.1.A Lender Disclosure Requirements
.......................................................................................................................
112.2 Situations Requiring Collection
Activities............................................................................................................
212.3 Factors Relating to Collection
Activities..............................................................................................................
212.3.A Bankruptcy Petition Filing
..................................................................................................................................
212.3.B Deferment of Loans in Delinquency or Default
...................................................................................................
212.3.C Forbearance Option
...........................................................................................................................................
312.3.D Payment Application during Delinquency
...........................................................................................................
312.3.E Rolling Delinquency
...........................................................................................................................................
312.3.F Special
Occurrence............................................................................................................................................
312.3.G Collection Costs and Late Charges
.....................................................................................................................
412.4 Due Diligence
Requirements..............................................................................................................................
412.4.A Due Diligence Requirements for Loans with Monthly Repayment
Obligations .....................................................
512.4.B Due Diligence Requirements for Loans with Repayment
Obligations Less Frequent Than Monthly.................... 1112.4.C
Written Notices and Collection
Letters..............................................................................................................
1312.4.D Contact by Telephone
......................................................................................................................................
1312.4.E Endorser Due
Diligence....................................................................................................................................
1412.4.F Ineligible Borrower Due Diligence
....................................................................................................................
1512.5 Default Aversion
Assistance.............................................................................................................................
1612.5.A Default Aversion Assistance Request
(DAAR)....................................................................................................
1612.5.B Default Aversion Assistance Request Form
......................................................................................................
1712.5.C Default Aversion Assistance and Bankruptcy Filing
..........................................................................................
2012.6 Final Demand Letter
........................................................................................................................................
2012.7 Address Skip
Tracing.......................................................................................................................................
2112.7.A Timing of Address Skip Tracing
Activities.........................................................................................................
2112.7.B Address Skip Tracing When the Loan Is Not Delinquent
...................................................................................
2112.7.C Required Address Skip Tracing Activities
.........................................................................................................
2212.7.D Endorser Address Skip Tracing
Requirements..................................................................................................
2212.7.E Address Skip Tracing Exceptions
.....................................................................................................................
2212.8 Telephone Skip Tracing
...................................................................................................................................
2312.8.A Telephone Skip Tracing Activities
....................................................................................................................
2412.8.B Endorser Telephone Skip Tracing Requirements
..............................................................................................
2412.9 Resuming Loan Servicing after Claim Return
...................................................................................................
24
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x Table of Contents—2017 Annual Update
Chapter 13: Claim Filing, Discharge, and Forgiveness
13.1 Claim Filing
........................................................................................................................................................113.1.A
Claim Filing
Requirements..................................................................................................................................113.1.B
Claim File Receipt
..............................................................................................................................................413.1.C
Claim Review Process
........................................................................................................................................413.1.D
Claim File
Documentation...................................................................................................................................413.1.E
Missing Claim File
Documentation......................................................................................................................613.1.F
Missing Payment History
....................................................................................................................................713.1.G
Additional Documentation Requested by the
Guarantor.......................................................................................713.2
Claim Returns
....................................................................................................................................................713.2.A
Refiling the Returned
Claim................................................................................................................................813.2.B
Claim Recalls
.....................................................................................................................................................813.3
Claim Purchase or Discharge Payment
...............................................................................................................913.3.A
Claim Payment Amount
......................................................................................................................................913.3.B
Amount of Interest Purchased on Eligible Claims
..............................................................................................1013.3.C
Amount of Interest Purchased on Returned Claims
...........................................................................................1013.3.D
Amount of Interest Purchased on Cured Loans
.................................................................................................1113.3.E
Receipt of Payments after Claim Purchase
.......................................................................................................1113.4
Requests for Increase/Decrease in Claim Payment
...........................................................................................1113.5
Claim Repurchase
............................................................................................................................................1313.6
Default
.............................................................................................................................................................1413.6.A
Default
Claims..................................................................................................................................................1413.6.B
Ineligible Borrower
Claims................................................................................................................................1513.7
Rehabilitation of Defaulted FFELP
Loans...........................................................................................................1513.8
Discharge.........................................................................................................................................................1713.8.A
Bankruptcy.......................................................................................................................................................1913.8.B
Closed School
..................................................................................................................................................2113.8.C
Death
...............................................................................................................................................................2813.8.D
False Certification by the
School.......................................................................................................................3013.8.E
False Certification as a Result of the Crime of Identity
Theft..............................................................................3713.8.F
Spouses and Parents of Victims of September 11,
2001...................................................................................4213.8.G
Total and Permanent Disability
.........................................................................................................................4713.8.H
Unpaid Refund
...........................................................................................