AwardYear: 1997-98 EnterChapterNo: 10 EnterChapterTitle: Federal Family Education Loan Program SectionNumber: SectionTitle: Contents PageNumbers: The Federal Student Financial Aid Handbook 1997-98 CONTENTS CHAPTER 10 FEDERAL FAMILY EDUCATION LOAN PROGRAM INTRODUCTION . . . . . 1 Recent Changes . . . . . 2 SECTION 1: BORROWER AND INSTITUTIONAL ELIGIBILITY . . . . . 5 Student Eligibility Criteria . . . . . 5 Financial Need . . . . . 6 Eligibility Criteria Specific to Parent Borrowers . . . . . 9 Lender of Last Resort . . . . . 10 Institutional Eligibility . . . . . 10 SECTION 2: MAKING LOANS . . . . . 13 The Loan Application . . . . . 13 Determining the Loan period . . . . . 15 Certifying a Loan Application . . . . . 17 Annual Loan Limits . . . . . 20 Prorated Annual Loan Limits--Subsidized and Unsubsidized Stafford Loans . . . . . 25 Type of Academic Year and Frequency of Annual Loan Limits . . . . . 27 Aggregate Loan Limits . . . . . 30 Increased Loan Limits for Health Education Assistance Loan (HEAL) Students . . . . . 31 SECTION 3: PAYMENT TO THE BORROWER . . . . . 33 Definitions of Delivery and Disbursement . . . . . 33 Financial Aid History and NSLDS . . . . . 34 Methods of Disbursing and Delivering Loan Funds . . . . . 34 Disbursement and Delivery Requirements . . . . . 35 Overawards . . . . . 39 Credit Balances . . . . . 40 Late Disbursement . . . . . 41 Borrower Ineligibility and Return of Funds to Lender . . . . . 42 Reimbursement Payment Method . . . . . 43 SECTION 4: REPAYMENT . . . . . 45 Grace Periods . . . . . 45 Interest Rates . . . . . 46 Additional Costs of Borrowing . . . . . 49 Repayment of Federal Stafford Loans . . . . . 50 Repayment of Federal PLUS Loans . . . . . 53 Capitalization of Interest . . . . . 54 Repayment Disclosure Statement and Billing . . . . . 55 SECTION 5: DEFERMENT & FORBEARANCE . . . . . 57 In-School Deferment . . . . . 58 Unemployment Deferment . . . . . 58 Economic Hardship Deferment . . . . . 58 Additional PLUS Loan Deferment . . . . . 59 Deferment Eligibility Issues . . . . . 60 Deferment Provision Chart Footnotes . . . . . 60 General forbearance provisions . . . . . 65 Mandatory Forbearance . . . . . 65 Administrative Forbearance . . . . . 66 Mandatory Administrative Forbearance . . . . . 67 Interest Accruing During Deferment and Forbearance . . . . . 67 SECTION 6: LOAN DISCHARGE . . . . . 69 Death and Permanent Disability Discharges . . . . . 69 Bankruptcy Discharge . . . . . 69 Other loan cancellation provisions . . . . . 69 Effect on a Borrower's SFA Eligibility . . . . . 71 Payments Made after Discharge . . . . . 72 Repayment by the U.S. Department of Defense . . . . . 72 SECTION 7: DELINQUENCY AND DEFAULT . . . . . 73 Consequences of Default . . . . . 73 Reinstatement of Eligibility after Default . . . . . 75 Loan Rehabilitation . . . . . 76 SECTION 8: CONSOLIDATION LOANS . . . . . 79 Federal Consolidation Loans . . . . . 79 Applying for a Consolidation Loan . . . . . 80 Borrower Eligibility for a Federal Consolidation Loan . . . . . 80 Repayment and Deferment . . . . . 82 SECTION 9: COUNSELING STUDENTS . . . . . 85 Entrance Counseling . . . . . 85 Exit Counseling . . . . . 90 SECTION 10: DEFAULT REDUCTION MEASURES . . . . . 95 Loans Included in a School's Cohort Default Rates . . . . . 95 Calculating Cohort Default Rates . . . . . 96 Changes Occurring after an Official Cohort Default Rate Calculation . . . . . 99 Draft Cohort Default Rates . . . . . 100 Change in Status of a School . . . . . 101 Consequences Associated with High Official Cohort Default Rates . . . . . 103 Appeal Procedures . . . . . 105 General Requirements to Reduce Defaults . . . . . 109 SECTION 11: ADDITIONAL SCHOOL REQUIREMENTS . . . . . 111 Refunds . . . . . 111 Exchange of Information Requirements . . . . . 112 Recordkeeping, Audits, and Reports . . . . . 113 Audit Requirements . . . . . 115 Program Participation Agreement Requirements . . . . . 116 Prohibited School and Lender Activity . . . . . 117 APPENDIX: GUARANTY AGENCY DIRECTORY . . . . . 119 |