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Federal Family Education Loan Program - Contents

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

Last Modified: 02/24/1998