Oklahoma Guaranteed Student Loan Program
Common Manual Update - 103
Unified Student
Loan Policy
(Click here to download PDF version.)
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 3: Lender Participation &
Chapter 7: Loan Origination &
Reduction of the Origination Fee
The Common Manual has been revised to state that the maximum origination fee that may be charged to a Stafford loan borrower will be reduced, and eventually eliminated, beginning July 1, 2006, as follows:
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For a
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For a
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For a
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For a
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For a
These reductions are not applicable to PLUS loans made either to parents or to graduate and professional students. The lender must charge the full 3% origination fee to any PLUS borrower.
Affected Sections: 3.5.A Federal Origination Fee
and Lender Fee
7.9.A
Collecting the Origination Fee
Figure
7-4 Examples of Calculating Guarantee
Fee Refunds
Effective Date: Stafford loans first disbursed by the lender on or after July 1, 2006, July 1, 2007, July 1, 2008, July 1, 2009, and July 1, 2010, respectively.
Basis: Higher Education Act of 1965, Section 438(c)(2)(B), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02.
Chapter 5: Borrower Eligibility
Fraud Charges and Title IV Eligibility
The Common Manual has been revised to state that a student or parent borrower who has been convicted of, or pleaded guilty or has nolo contendere to, a crime involving fraud in obtaining Title IV assistance is ineligible for additional Title IV funds until the student or parent, as applicable, repays the funds that were obtained fraudulently. Title IV grant funds that were obtained fraudulently must be repaid to the Department; Title IV loan funds obtained fraudulently must be repaid to the holder of the loan. The student or parent borrower’s eligibility under this provision based on the certification provided in the Master Promissory Note (MPN). Regardless of the MPN certification, if either the school or the lender has conflicting information regarding the eligibility of the student or parent borrower, this discrepancy must be resolved before additional Title IV funds may be disbursed or delivered.
Affected Sections: 5.1.A General Borrower and
Student Eligibility Requirements
5.7 Effect of Drug Conviction on
Eligibility
5.8 Required High School diploma or
Equivalent
5.9 Ability-to-Benefit Provisions
5.9.A Testing ATB Students with Special Needs
5.9.B School Liability in ATB Testing
5.10 Student Enrollment Requirements
5.11 Use of Telecommunications and
Correspondence in Programs of Study
5.12 Foreign Schools and Study-Abroad
Programs
5.12.A Study at Participating Foreign
Schools
5.12.B Study-Abroad Programs
5.13 Eligibility Requirements Specific
to Transfer Students
5.13.A Financial Aid History for Transfer
Students
5.13.B Students Who Transfer after Full
Disbursement of the Loan
5.14 Multiple School Enrollment
5.15 Ineligible Borrowers
5.15.A Ineligibility Based on Borrower
Error
5.15.B Ineligibility Based on School Error
5.15.C Ineligibility Based on Lender Error
Effective Date: Loan periods beginning on or after July 1, 2006.
Basis: Higher Education Act of 1965, Sections 428B(a)(1)and 484(a)(6), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05.
Chapter 6: School Certification
Academic Year Definition
The Common Manual has been updated to incorporate changes derived from the HERA of 2005. This change reduces the minimum academic year requirement for a program of study measured in clock hours from 30 weeks to 26 weeks.
Affected Sections: 6.1 Defining an Academic Year
6.11.E Prorated Loan Limits
Effective Date: Loan periods beginning on or after July 1, 2006.
Basis: Higher Education Act of 1965, Section 481(a)(2), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05.
Cost of Attendance
The Common Manual has been updated to give a school the option to include a cost of attendance (COA) component for the one-time cost of obtaining the first professional credential, as determined by the school, for a student enrolled in a program that requires professional licensure or certification. The license or certification must be required by a state or must be commonly accepted as required to practice or be employed in the profession. In addition, the cost must be incurred while the student is enrolled in school and must not include costs associated with preparing the student for a test required for licensing or certification unless the preparation is part of the eligible program.
Affected Sections: 6.5.A COA Components
Effective Date: Loan periods beginning on or after July 1, 2006.
Basis: Higher Education Act of 1965, Section 472(13), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05 and GEN-06-10.
Independent Student Definition
The Common Manual has been updated to add a new circumstance under which a student may be considered to be independent for Title IV purposes. For the purpose of determining a student’s dependency status, a student is considered to be independent if he or she is currently serving on active duty in the U.S. Armed Forces or is a National Guard or Reserves enlistee and is called to active duty for purposes other than training. In this case, active duty does not include a call into active duty for state purposes.
Affected Sections: 6.8 Determining the Student’s Dependency Status
Effective Date: Loan periods beginning on or after July 1, 2006.
Basis: Higher Education Act of 1965, Section 480(d)(3), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letters GEN-06-05 and GEN-06-10.
Treatment of Qualified Education Benefits
The Common Manual has been updated to remove qualified education benefits from the calculation of a student's estimated financial assistance.
The manual has also added the definition of “qualified education benefit” to the glossary, as follows:
Qualified Education Benefit - Refers to qualified tuition programs (e.g., 529 prepaid tuition plans and savings plans), prepared tuition plans offered by a state, and Coverdell education savings accounts.
Affected Sections: 6.7 Determining the Amount of Estimated Financial Assistance
appendix G
Effective Date: Loan periods beginning on or after July 1, 2006.
Basis: Higher Education Act of 1965, Sections 480(f)(3) and (4), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letters GEN-06-05 and GEN-06-10.
Assistance from States
The Common Manual has been updated to state that any non-Title IV state assistance that the state specifies must be used to pay a specific component of the cost of attendance (COA) may be excluded from the EFA if the costs paid by those state funds are also excluded from the COA.
Affected Sections: 6.5 Determining the Student’s Cost of Attendance (COA)
6.7 Determining the Amount of Estimated Financial Assistance (EFA)
Effective Date: Loan periods beginning on or after July 1, 2006.
Basis: Higher Education Act of 1965, Section 480(j)(3), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05.
Chapter 7: Loan Origination &
Appendix G: Glossary
Federal Default Fee
The Common Manual has been updated to reflect the change from guarantee fee to federal default fee as made to the HEA through the HERA of 2005. A definition was added to the glossary that states that the federal default fee is collected either by deduction from the proceeds of the loan or from other nonfederal sources. The HEA requires that this fee equal one percent of the loan’s principal. In addition, the glossary has been revised to define “guarantee fee” as a fee the guarantor was permitted to charge on a loan disbursed on or after July 1, 1994, and for which the date of guarantee of principal was before July 1, 2006.
Affected Sections: 7.8 Processing Guarantee Fees
appendix G
Effective Date: Federal
Basis: Higher Education Act of 1965, Section 428(b)(1)(H)(i) and (ii) and Section 428H(h), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02.
Chapter 8: Loan Delivery &
Chapter 9: School Reporting Responsibilities and the Return of Title IV Funds
Return of Title IV Funds
The Common Manual has been updated to incorporate changes to the return of Title IV funds requirements derived from the HERA, as follows:
· The method for computing the percentage of the payment period or period of enrollment completed for a student who withdraws from a clock-hour program has been simplified. That percentage is now determined by dividing the total number of clock hours comprising the payment period or period of enrollment for which assistance is awarded into the number of clock hours scheduled to be completed by the student in that period as of the day the student withdrew.
· The return of Title IV funds requirements no longer apply to LEAP, SLEAP, GEAR UP, and SSS funds. Federal Work-Study funds and the nonfederal share of an FSEOG award (if the school meets its matching share by the individual recipient method or the aggregate method) continue to be excluded from the calculation.
· The time frame in which the school must return funds under the return of Title IV calculation has been lengthened from 30 days to 45 days after the date the school determines that the student has withdrawn.
· The amount of a grant overpayment due from a student as a result of the return of Title IV funds calculation is limited to the amount by which the original grant overpayment amount exceeds half of the total Title IV grant funds that the student received. A student is not required to repay a grant overpayment of $50 or less resulting from the return of Title IV funds calculation.
Affected Sections: 8.9.C
Return of Unearned Loan Funds
9.4 Withdrawal Dates
9.5.A Return Amounts for Title IV Grant and Loan Programs
9.5.B Processing Returned Funds
9.5.D Return of Title IV Funds Calculations for Students Subject to
Verification
Effective Date: Withdrawals that occur on or after July 1, 2006.
Basis: Higher Education Act of 1965, Sections 484B(a)(3)(B)(ii), 484B(b)(1), 484B(b)(2)(C), and 484B(d)(2), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-05.
Chapter 10: Loan Servicing
Elimination of Request for Early Repayment
The Common Manual has been revised to reflect statutory changes derived from the HERA that eliminate a Stafford borrower’s option of waiving all or a portion of his or her grace period in order to enter repayment early.
Affected Sections: 10.3 Grace Period
Effective Date:
Basis: Higher Education Act of 1965, Section 428(b)(7)(A), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02.
Chapter 11: Deferment and Forbearance &
Chapter 13: Claim Filing, Discharge, and Forgiveness
False Certification Due to Identity Theft
The Common Manual is being revised to add information about loan discharge for false certification due to a crime of identify theft. Until the date that the Department’s applicable discharge regulations are effective, a lender may provide administrative forbearance on a borrower’s potentially eligible loan(s) if a borrower presents evidence, on or after July 1, 2006, that the lender believes to be reasonably persuasive, showing that the borrower’s loan(s) may have been falsely certified due to a crime of identity theft.
Affected Sections: Figure 11-2 Forbearance Eligibility Chart
11.19.C Closed School or False Certification
13.8.D False Certification
Effective Date: False certification due to identity theft documentation provided to a lender on or after July 1, 2006.
Basis: Higher Education Act of 1965, Section 437(c)(1), as amended by the Higher Education Reconciliation Act (HERA) of 2005; Dear Colleague Letter GEN-06-02.