| AwardYear: 1995-1996 EnterChapterNo: 10 EnterChapterTitle: Federal Family Education Loan Programs SectionNumber: SectionTitle: Table of Contents PageNumbers: INTRODUCTION.....1 Summary of New Requirements and Initiatives.....2 The William D. Ford Federal Direct Loan Program.....3 Recent FFEL Program Changes.....3 General Topic Summary of Each Section.....8 SECTION ONE: ELIGIBILITY.....9 Borrower Eligibility for Federal Stafford and Federal PLUS Loans.....9 Institutional Eligibility.....12 SECTION TWO: FEDERAL STAFFORD LOANS.....17 Loan Limits.....17 Proration of Loans.....19 Interest Rates and Grace Periods.....21 Grace Period.....21 Interest Rates.....22 Loans Subject to a Rebate of Excess Interest.....24 Rebate of Excess Interest - "Windfall Profits".....24 Variable Interest Rates of Loans Subject to Rebate of Excess Interest.....25 Additional Costs of Borrowing.....26 Repayment.....26 The Income-Sensitive Repayment Plan.....29 Other Repayment Provisions.....30 Deferment.....30 SECTION THREE: UNSUBSIDIZED FEDERAL STAFFORD LOANS.....37 Loan Limits.....38 Interest Rates and Grace Periods.....40 Additional Costs of Borrowing.....40 Repayment.....41 Deferment.....41 SECTION FOUR: FEDERAL PLUS LOANS.....43 Loan Limits.....43 Interest Rates.....45 Additional Costs of Borrowing.....45 Repayment.....46 Deferment.....47 SECTION FIVE: LOAN REFINANCING AND CONSOLIDATION.....51 Loan Refinancing.....51 Consolidation Loans.....52 Consolidation Loan Eligibility.....53 Applying for a Consolidation Loan.....55 Deferment and Repayment.....55 SECTION SIX: COMPARING LOAN PROGRAMS.....57 Provisions Common to All Loans.....59 Capitalization.....59 Forbearance.....60 Cancellation.....62 Other Loan Cancellation Provisions.....64 Loan Forgiveness.....65 Repayment by the Department of Defense.....65 Default.....66 Loan Rehabilitation.....68 Program Differences.....69 Family Contribution.....70 Beginning of Repayment Period.....70 Deferment.....70 SECTION SEVEN: THE LOAN APPLICATION PROCESS.....75 The Student's (Borrower's) Portion.....76 The School's Portion.....76 Dependency Status.....77 Loan Period or Period of Enrollment.....77 Cost of Attendance.....79 Expected Family Contribution.....79 Estimated Financial Assistance.....80 Change in Definition of Estimated Financial Assistance.....81 Additional Factors in Determining Loan Eligibility.....82 Loan Certification Requirements.....83 Handling Overawards.....86 The Lender's Portion.....88 SECTION EIGHT: PAYMENT TO THE STUDENT.....93 Requirements for Disbursement.....93 Late Disbursement.....98 SECTION NINE: DEFAULT REDUCTION MEASURES.....101 Draft Cohort Default Rates.....102 Official Cohort Default Rates.....102 Change in Status of a School.....105 Treatment of Cohort Default Rates for Schools that Change Status.....106 Consequences Associated with Official Cohort Default Rates Above Certain Thresholds.....108 Cohort Default Rates Greater than 20 Percent.....108 Cohort Default Rates of 25.0 Percent or Greater for FY 1991, FY 1992, and FY 1993.....109 Cohort Default Rates that Exceed 40.0 Percent.....110 Appeal Procedures for Schools with High Official Cohort Default Rates.....111 General Requirements to Reduce Defaults.....114 Consumer Disclosure Requirements.....114 Default Reduction Initiatives.....115 SECTION TEN: COUNSELING STUDENTS.....119 Entrance Counseling.....120 Exit Counseling.....126 SECTION ELEVEN: ADDITIONAL REQUIREMENTS AND RESPONSIBILITIES OF SCHOOLS.....129 Refund Policy.....129 State Postsecondary Review Entities.....131 Exchange of Information Requirements.....131 Recordkeeping, Audits, and Reports.....132 Verification Requirements.....137 Prohibited Activity by Schools and Lenders.....137 Appendix A - Guaranty Agencies.....139 Appendix B - "Dear Guaranty Agency Directors" Letter and Attachment: Annual Loan Limits: Minimum Standards for Federal Family Education Loans in Guaranty Agency Policies, and for Federal Direct Student Loans |