The Common Manual Governing Board recently approved changes that modify policies in the Common Manual.

The items outlined in this publication provide you with interim updates regarding the policy changes that will be incorporated in the Common Manual when the next annual update is published.

 

If you have questions regarding information contained in this bulletin, please contact the OGSLP Policy Implementation, Training and Communications Division at (405) 234-4440 or 1-800-247-0420.

 

Chapter 15: Federal Consolidation Loans

Eligibility for a Subsequent Consolidation Loan

The Common Manual has been revised to incorporate HERA and the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery provisions.  Revised policy clarifies that a borrower who currently has either a Federal or Direct Consolidation loan is not eligible for a subsequent Federal or Direct Consolidation loan unless one of the following conditions apply:

·         The borrower has obtained a new eligible loan after the date the existing Consolidation loan was made.

·         The borrower is consolidating an existing Consolidation loan with at least one other eligible loan, regardless of whether it was made before or after the date the existing Consolidation loan was made.

Revised policy also adds that a borrower may obtain a subsequent Direct Consolidation loan for the purpose of securing an income-contingent repayment schedule if the consolidation loan holder has requested default aversion assistance from the guarantor.

Affected Sections:                  15.2 Borrower Eligibility and Underlying Loan Holder Requirements

Effective Date:                        Federal Consolidation loan applications received by the lender on or after July 1, 2006.

Basis:                                      Higher Education Act of 1965, Sections 428C(a)(3)(B)(I), as amended by the Higher Education Reconciliation Act (HERA) of 2005 and the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery 2006; Dear Colleague Letter GEN-06-02.