| DCLPublicationDate: 9/1/95 DCLID: GEN-95-42 AwardYear: Summary: Loan discharges based on improper determination that a student had the ability- to-benefit (ATB) from the school's training. September 1995 GEN-95-42 SUBJECT: Loan discharges based on improper determination that a student had the ability- to-benefit (ATB) from the school's training. REFERENCE: 34 CFR 682.402(e) and §685.214(a) Dear Colleague: Section 437(c)(1) of the Higher Education Act of 1965, as amended (HEA) provides for the discharge of a borrower's loan obligation under the Federal Family Education Loan (FFEL) Program, and §455(a)(1) makes this relief available under the William D. Ford Federal Direct Loan Program, if the student's eligibility to borrow was falsely certified by the school. In September 1994, initial guidance concerning these loan discharges was provided in "Dear Colleague" Letter 94-L-166/G-256 issued to lenders and guaranty agencies in the FFEL Program. However, in the area of discharges based on a school's defective determination of a student's ability-to-benefit (ATB), the "Dear Colleague" Letter promised more detailed guidance concerning those discharges. This letter addresses some common questions about discharges based on improper ATB determinations that have been asked by borrowers, lenders, guaranty agencies, and other parties. The Department intends to apply the guidance in this letter to similar false certification discharges in the William D. Ford Federal Direct Loan Program. Thank you for ensuring that the intent of the false certification discharge provision is achieved. For further information, you may contact the Department's Customer Support Inquiry Service between the hours of 9:00 AM and 5:00 PM Eastern Time, at 1-800-433-7327. After hours calls will be accepted by an automated voice response system. Callers leaving their name and phone number will receive a return call the next business day. You may FAX your inquiry to the Customer Support Inquiry Service at any time by calling (202) 260-4199. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance.. Attachment |