| PublicationDate: 11/19/98 Summary: New guidance for completing the Federal Direct Consolidation Loan Verification Certificate. Author: ODAS - Office of the Deputy Assistant Secretary - SFA Posted November 19, 1998 Summary: New guidance for completing the Federal Direct Consolidation Loan Verification Certificate. Dear Loan Holder: This letter provides guidance about a new data element that must be reported by all loan holders on the Federal Direct Consolidation Loan Verification Certificate (verification certificate). Effective October 1, 1998, amendments to the Higher Education Act of 1965 changed the interest rate for Direct Consolidation Loans and established a temporary limitation on applications from some borrowers who are in school. Change to Information Reported on the Verification Certificate Effective immediately, loan holders must inform the Department of borrowerswho have in-school deferments on their loans. If a borrower has an in-school deferment on a loan(s) when you complete the verification certificate, please print or type "In-School Deferment" in Item 21 of the verification certificate. Temporary Limitation on Eligibility Between October 1, 1998 and January 31, 1999, borrowers who are enrolled or accepted for enrollment in an institution of higher education AND who have outstanding balances on Federal Family Education Loan (FFEL) Program or Federal Perkins Loan Program loans are not eligible to apply for a Direct Consolidation Loan. Borrowers who are enrolled or accepted for enrollment in an institution of higher education who have only Direct Loans or loans made under the Public Health Service Act ARE eligible to apply for a Direct Consolidation Loan. Borrowers who applied before October 1, 1998, or who apply after January 31, 1999, are not subject to this limitation. Using information provided by the borrower and the loan holder, the Department will determine borrower eligibility for a Direct Consolidation Loan. A loan holder may not refuse to complete the verification certificate on the basis of loan type or status. Further, loan holders are responsible for completing and returning each verification certificate within 10 business days of the date received. Thank you for your continued compliance and cooperation with the Direct Consolidation Loan process and for the service you provide to borrowers. If you have questions concerning the completion of the verification certificate, please call the Direct Loan Origination Center at 1-800-557-7392 Sincerely, Diane E. Rogers Acting Chief Operating Officer Office of Student Financial Assistance Programs |