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96-L-186 Appendix A Appendix A: List of Provisions Subject to Delayed Enforcement. These provisions must be fully implemented no later than July 1, 1996 and are subject to enforcement after that date. Summary of Provisions (Regulation cites refers to December 18, 1992 regulations including May 17, 1994 technical corrections.) 682.200(b) - Revises definition of endorser. Previously defined as one who is secondarily liable. 682.200(b) - Revises definition of holder. 682.200(b) - Expands definition of national credit bureau . 682.200(b) - Amends definition of temporarily totally disabled to include "attend school." 682.201(b)(3) - Amends PLUS citizenship requirements. 682.202(b)(5) - Authorizes lender to capitalize interest for a borrower in a deferment or forbearance status after notification to borrower if borrower agreed to make interest payments and failed to do so. 682.202(g)(2) - Prohibits inclusion of long distance calls in lender collection charges. 682.205(a)(2) - Requires initial disclosure statement to include statement that loan may be sold or transferred. 682.205(a)(2) - Lender must disclose that loan will be reported to at least one NATIONAL credit bureau. 682.205(a)(2) - Provides for new items to be included in the initial disclosure -- collection costs, tax-offset, and garnishment. 682.205(a)(2) - Lender must disclose that upon default, borrower will be ineligible for additional aid. 682.206(d)(3) - Requires lender to give endorser and co-maker a copy of the note. 682.207(b)(1) - Checks can be made co-payable at lender or guarantor option -- previously was just guarantor option. 682.207(b)(2) - Permits school with borrower's authorization to present loan check to borrower's bank for deposit. 682.208(b)(1) - Requires lenders to report to credit bureau within 90 DAYS of certain events. 682.208(b)(1) - Requires lender to report to at least one national credit bureau. 682.208(b)(1) - Requires lender who acquires a loan to report to NATIONAL bureau within 90 days of acquisition of loan. 682.208(c)(1) - Requires lender to respond to borrower or endorser inquiries within 30 days of receipt. 682.208(d) - Permits single repayment schedule for loans held by a lender. 682.208(g) - Permits lender to perform skip-training on non- delinquent loans. 682.209(a)(4) - School can only reinstate in-school status once for late filing of assignments in the case of a correspondence school. 682.209(a)(5) - Borrower must provide request for waiver of grace period in writing to enter repayment prior to end of grace period. 682.209(a)(7) - Borrower must provide WRITTEN notice to lenders to rescind previous request to repay in less than 5 years. 682.209(b)(1) and (2) - Changes rules regarding payments and prepayments. 682.209(f) - Original holder has five days to post refinancing payment and send note or letter to new lender. 682.209(g) & (j) - Lender has 10 days to complete consolidation verification certificate and certificate for refinancing and, if lender can't complete, within 10 days lender must inform guarantor of cause of delay. 682.209(h)(6) - Upon receipt of consolidation payoff amount, lender must promptly discharge loan and provide consolidating lender notice that debt has been discharged. 682.209(i) - Lender shall treat school refunds as a credit toward principal rather than amount owed by the borrower. 682.209(i) - Lender shall forward refund to new holder within 30 DAYS of its receipt. 682.210(a) - Permits deferment of certification for in-school status based on loan application. 682.210(a) - Permits AGD to be used as deferment end date in certain instances. 682.210(a) - Permits backdating of unemployment deferments to 6 months; was 60 days. 682.210(c)(1) - Allows financial aid adminstrator's statement or other documentation for half-time students to serve as documentation that the borrower received a loan for the period of enrollment of deferment. 682.210(d)(2) - Adds a provision which states that in the case of foreign study, the program accepts the credits for completion of the fellowship. 682.210(e) - Requires that the rehabilitation program last at least three months. 682.210(f) - Temporary Total Disability Deferment - Requires the physician to provide a statement substantiating that borrower's condition, if present at the time of application, has seriously deteriorated. 682.210(f) and (g) - Extends disability deferment to dependents and limits deferment period to six-month increment. 682.210(h) - Unemployment Deferment - Requires borrower to certify six instead of three attempts to secure employment. 682.210(h) - Unemployment Deferment - Documentation of employer contacts must include name OR TITLES of those contacted. 682.210(h) - Unemployment Deferment - Borrower need not document attempts during initial deferment period. 682.210(h) - Unemployment Deferment - Must include registration with unemployment office if one is accessable-- defined as 50-mile radius of borrower's address. 682.210(h) - Unemployment Deferment - Limits deferment to six month increments; was three months previously. 682.210(h) - Unemployment Deferment - Permits borrower to provide alternative documentation of employer contacts used for Unemployment Insurance Service. 682.210(i) - Military Deferment - Details documentation requirements for military deferment. 682.210(j) - Public Health Service Deferment - Details documentation requirements for public health service deferment. 682.210(k) - Peace Corps Deferment - Adds documentation requirement to provide begin and end dates of deferment. 682.210(l) - Action Deferment - Adds documentation requirement to provide begin and end dates of deferment. 682.210(m) - Volunteer Deferment - Adds documentation requirement to provide begin and end dates of deferment. 682.210(m) - Volunteer Deferment - Earnings cannot exceed minimum wage; previously was limited to Peace Corps and Action rate. 682.210(o) - Parental Leave Deferment - Provides eligibility criteria and documentation requirements. 682.210(p) - NOAA deferment - Provides eligibility criteria and documentation requirements. 682.210(q) - Targeted teacher deferment - Provides eligibility criteria and documentation requirements. 682.210(r) - Working Mother - Provides eligibility criteria and documentation requirements. 682.211(a) - Permits forbearance to endorsers. 682.211(a) - Forbearance - Lender must state its belief in writing and document that the borrower or endorser intends to repay - but is unable to because of poor health or other acceptable reasons. 682.211(d) - Permits lender to grant forbearance after default if new signed repayment agreement is secured from borrower. 682.211(e) - Forbearance - Clarifies that a telephone or written contact with the borrower is required every three months; previously was "contact." 682.211(e) - Exempts forbearance of interest payments during deferment and administrative forbearance from three-month contact requirement. 682.211(f) - Authorizes lender to grant administrative forbearance under specified circumstances. 682.213 - Requires a loan disclosed under the Rule of 78's methodology to be calculated under that methodology for life. 682.300(b)(11) - Clarifies that rules for termination of interest benefits applies to each disbursement rather than entire loan. 682.300(b) - Clarifies that lenders receive interest benefits on eligible loans until the claim is paid by the guarantor. 682.301(a) - Clarifies that a student is not eligible for interest benefits if borrower is a member of a religious order. 682.302(d) - SAP ceases 60 days after default unless a claim has been filed with the guarantor. 682.302(d) - SAP ceases 30 days after a claim is returned based on incomplete documentation unless refiled with the guarantor. 682.302(e) - Defines new rules for payment of SAP when loans funded with the proceeds of a tax-exempt financing are then transferred to another debt. 682.304(b) - Eliminates authority to use 365.25 for leap year calculation for the average daily balance. 682.304 - Requires rounding in certain cases when computing interest benefits and special allowance. 682.305(b)(5) - A lender's ED 799 is not complete if it does not include all of the information required by ED or is not in the format defined by ED. 682.401(b)(4) - Requires borrower to provide lender changes in employer or employer address. 682.401(b)(4) - Borrower shall provide school with change in local address. 682.401(b)(6),(7) and (8) - Adds area of service provisions to regulations. 682.401(b)(11) - Includes consolidation loan insurance premium cap of $50. 682.401(b)(15) - Permits loans to be assigned to the school if the school was cause of ineligible loan. 682.401(b)(13) - Allows loans to be assigned to a conservator, liquidator, or receiver of an eligible lender. 682.401(b)(16) - Defines conditions under which a guarantee can be transferred and limits such transfers to ED approved cases. 682.401(b)(17) - Adds Emergency Action procedures to guarantor dissemination requirements. 682.401(b)(18) - Adds requirement for guarantor to use SSCR approved by ED and requires SSCR to include student of parent borrower. 682.401(b)(21) - Requires guarantor to provide information requested from another guarantor about the requesting agency's residents. 682.401(d)(3) - Requires guarantor to use common application, note and other forms. 682.401(d)(4) - Requires guarantors to develop and implement student deferment procedures and require their lenders to use them.. 682.401(d)(5) - Adds requirement that all materials must comply with HEA and regulations. 682.402(b) - Endorser is released if borrower dies. 682.402(c) - Consolidation borrower eligible for disability discharge if condition did not exist before each of the underlying loans were obtained unless it deteriorated. 682.402(d)(4) - Proof of claim not required in no asset cases. 682.402(e)(2) - Lender must file bankruptcy claim within 15 days of hardship. 682.402(f)(1) - Guarantor must pay death, disability, and bankruptcy claims within 45 days. 682.402(g) - Defines conditions under which guarantor must contest discharge of loan in bankruptcy. 682.402(h) - Defines conditions for mandatory lender repurchase of loans claimed as bankruptcy. 682.402(k) - Expands definition of period of suspension. 682.404(a)(2) - Defines preclaims and number of activities. 682.404(a)(2) - Defines supplemental preclaims and "account" for purposes of SPCA payment. 682.404(f) - Changes application of borrower payments after default. 682.404(g) - Requires agency to pay ED equitable share within 45 days of agency's receipt of payments. 682.406(a)(2) Clarifies that 120-day check cashing period applies to each loan disbursement. 682.406(a)(3) Lender claim must include accurate collection and payment history. 682.406(a)(6) - Returned claims must be resubmitted within 60 days. 682.406(a)(8) - Interest accruing beyond the 60th day of a guarantor's receipt is ineligible for reinsurance unless the claim has been paid or returned on or before the 60th day. 682.406(a)(10) - Adds requirment that loans must be legally enforceable for loan to be eligible for reinsurance. 682.406(a)(13) - Requires agency to assign a loan to ED if directed by Secretary. 682.406(b) - Secretary's right to waive violations of timely filing and due diligence provided for under Appendix D. 682.409(a) and(b) Details conditions surrounding mandatory assignment of loans. 682.409(c)(4) - Mandatory loan assignment - Lists the loan documents that must be included. 682.409(d)(3) - ED may charge agency for reinsurance if ED determines that ability to collect has been impaired by guarantor's efforts. 682.410(b)(2) - Provides formula for computing collection costs for defaulted borrowers. 682.410(b)(3) - Agency shall charge defaulted borrower greater of interest rate on prommisory note or applicable rate under state law if there is judgment on the loan. 682.410(b)(4) - Agency must upon default capitalize alll unpaid interest on the loa including interest not paid to the lender. 682.410(b) - Outlines extensive administrative review process for post default. 682.410(b)(5) - Requires credit bureau reporting for defaulted borrowers following the administrative review process. 682.410(b)(6) - Defines three periods in which post-default collection requirements are suspended. 682.410(b)(6) - Authorizes agency to begin civil suit against defaulted borrower if before 181st day of delinquency and suspend other collection activities. 682.410(b)(6) - Modifies written notice sent to borrowers during the 1-45 day post-default period. 682.410(b)(6) - Codifies 88-G-138 telephone due diligence requirements. Expands definition of diligent attempt. 682.410(b)(6) - Removes diligence buckets and institutes gap- sensitive activities. 682.410(b)(6) - Requires at least two diligent telephone efforts and at least 3 written notices in the 46-180 period. 682.410(b)(6)(vii) - Requires agency to initiate civil suit between 181-to 545-day period. 682.410(b)(6) - Implements standard of no gap in collection activities of more than 60 days in the first 180 days. 682.410(b) - Requires the guarantor to capitalize all outstanding costs upon claim payment, defines the administrative review process on defaulted loans, and modifies the post-default collection process. 682.410(b) - Defines post default collection activity. 682.410(b)(6) - Exempts agency from skip tracing on accounts on which the agency has declined to file suit or has suspended semi- annual inquiry. 682.410(b)(7) - Provides alternative post-default due diligence activities. 682.410(b)(9) - Preempts state law if conflicts with sections 682.410(b)(2), (5), (6), and (7). 682.410(c)(1) - Requires agency to use statistically valid technique to calculate liabilities owed to the Secretary. 682.410(c) - Implements new lender review requirements for guaranty agencies. 682.410(c) - Limits school reviews to some schools with high cohort default rates not subject to default measures in §668.15. 682.410(c)(3) - Requires referral to the Department if agency assesses a liability to a school or lender and the school or lender does not pay within 60 days. 682.410(c)(5)-(8) - Requires agency to notify the proper authorities if there are problems with a school or lender. 682.410(c)(9) - Requires agency to notify the Secretary if a school or lender files for bankruptcy, receivership, corporate dissolution, etc. 682.410(c)(11) - Agency must take prompt action if school or holder is experiencing problems that threaten solvency. 682.411 - Amends the loan collection procedures for lenders; Appendix D was modified to incorporate the required changes to Dear Colleague Letter 88-G-138 based on the new provision included in section 682.411. 682.411(a) - Permits letters in lieu of certain calls, if such calls are required. 682.411(b) - Codifies 88-G-138 rule to set first due date within 45 days or 75 days for late notification of early withdrawal. 682.411(b)- Permits $5 payment tolerance to advance the due date. 682.411(c) - Establishes deadline for first delinquency letter no later than day 10. 682.411(c) - 10-day first delinquency letter exempted in certain cases -- (e.g. rolling delinquency, expiration of deferment period, etc.) 682.411(d) - Replaces 30 day buckets with new 11-180 day due diligence window. 682.411(d) - Establishes collection rules for rolling delinquency and certain other conditions if less than 91 days delinquent; 91-120 days delinquent; and more than 120 days delinquent. 682.411(b)(2) - Implements a 45-day gap rule and provides for cure of due diligence violation if one payment or a signed repayment agreement received from borrower. 682.411(e) - Timeframe for final demand letter is 151 (was 151-180) days or later with borrower given 30 days to bring the loan out of default. 682.411(f) and (g) - Defines telephone skip-tracing requirements and establishes timeframes. 682.411(i) - Defines gap collection activity. 682.411(l) - Defines diligent effort for telephone contact. 682.411(m) - Prescribes due diligence for endorsers. 682.411(n) - Preempts any state law conflicting with collection requirements. 682.412 - Modifies ineligible borrower provisions - lender must be able to substantiate information; expands to include students who withdraw or are expelled prior to the first day of period of enrollment; requires borrower to pay interest and special allowance on the loan; requires any payment to be treated as a principal prepayment; and requires lender to reimburse interest benefits to Secretary even if the borrower does not pay. 682.414(a) - Clarifies that agency is required to keep current, complete, and accurate records. 682.414 (a) - Requires records to be maintained in a system that is updated at least every 10 days. 682.500(a) - Made some minor changes to the FISL rules. 682.600(a) - School Participation Agreement - Requires that agreement must be in compliance with Part 600 and CEO must sign agreement. 682.602(b)(2) and (4) - Correspondence school - School must provide information on options for altering lesson sequence and on additional location of any residential training to be included in program. 682.603(f) - Minimum period of enrollment for loan certification specified. 682.604(b)(2) - Extends eligibility if borrower delays enrollment for a period of time. 682.604(b)(2) - School may transmit second and subsequent disbursement if after first disbursement, student became ineligible due to loss of school eligibility. 682.604(b)(2) - Allows school to deliver proceeds to student that temporarily ceases to be enrolled at least half-time in certain conditions. 682.604(c)(2) - Defines prompt delivery of loan proceeds as 45 days. 682.604(c)(3) - Requires written notification to student if funds were disbursed via EFT. 682.604(d)(2)- Permits a school to hold onto loan funds for more than 45 days if necessary for beginning of next term. 682.604(d)(3) - If student does not begin attendance, school must return funds within 30 days of the first day of the period of enrollment. 682.604(d)(4) - School has 30 days to notify lender of withdrawal, expulsion, or failure to attend and return loan proceeds. 682.604 (f) - Permits schools to mail initial counseling materials to students studying abroad. 682.604(g) - Requires borrower exit counseling materials to be revised to include information about the option to defer based on volunteer service. 682.609(e) - A school is required to repay funds to the Secretary or other party or purchase loans if improperly received or retained. 682.610(b) - School must be able to produce hard copies of data it is required to maintain. 682.610(b)(5) - Adds a new record requirement to retain sources of financial aid used to determine estimated financial assistance as defined in §682.200(b). 682.610(b)(9) - Adds a new record requirement to retain EFT authorization. 682.610(d) - Adds a new record requirement to retain any record involved in unresolved audit. 682.610(d) - Modifies the 5-year retention period to be five years from last date of attendance rather than five years from last day of loan period. 682.610(e) - Expanded requirement to provide access to school records to guaranty agency, OIG, independent auditor, and Comptroller General. 682.610(f) - School must report changes of permanent address of enrolled borrowers to lender. 682.700 - 713 - Modifies LST provisions. 682.800 - 830 - Modifies issues relating to tax-exempt authorities and the plan for doing business. Appendix C - Minor revisions to old L-77A Appendix D. Modification to old 88-G-138 |