34 C.F.R. 34 CFR--PART 685
Title 34 - Education
Effective Date(s): September 8, 2006 79. Section 685.220 is amended by: A. In paragraph (a), revising the first sentence to read as set forth below. B. Revising paragraphs (c) and (d). C. In paragraph (e), in the first sentence, removing the words “or borrowers” and removing, in its entirety, the second sentence. D. In paragraph (f)(1)(iii), removing the words “and may impose reasonable limits on collection costs paid to the holder”. E. Revising paragraphs (h) and (i). F. In paragraph (l) introductory text, adding the words “in accordance with the regulations that were in effect for consolidation applications received prior to July 1, 2006” after the word “borrowers”. The revisions read as follows: (a) Direct Consolidation Loans. A borrower may consolidate education loans made under certain Federal programs into a Direct Consolidation Loan. * * * * * * * * (c) Subsidized, unsubsidized, and PLUS components of Direct Consolidation Loans. (1) The portion of a Direct Consolidation Loan attributable to the loans identified in paragraphs (b)(1) through (5) of this section, and to Federal Consolidation Loans under paragraph (b)(15) of this section if they are eligible for interest benefits during a deferment period under Section 428C(b)(4)(C) of the Act, is referred to as a Direct Subsidized Consolidation Loan. (2) Except as provided in paragraph (c)(1) of this section, the portion of a Direct Consolidation Loan attributable to the loans identified in paragraphs (b)(6) through (8) and (b)(13) through (21) of this section is referred to as a Direct Unsubsidized Consolidation Loan. (3) The portion of a Direct Consolidation Loan attributable to the loans identified in paragraphs (b)(9) through (12) of this section is referred to as a Direct PLUS Consolidation Loan. (d) Eligibility for a Direct Consolidation Loan. (1) A borrower may obtain a Direct Consolidation Loan if, at the time the borrower applies for such a loan, the borrower meets the following requirements: (i) The borrower either— (A) Has an outstanding balance on a Direct Loan; or (B) Has an outstanding balance on an FFEL loan and— (1) The borrower is unable to obtain a FFEL consolidation loan; (2) The borrower is unable to obtain a FFEL consolidation loan with income-sensitive repayment terms acceptable to the borrower; or (3) The borrower has an FFEL Consolidation Loan that has been submitted to the guaranty agency by the lender for default aversion, and the borrower wants to consolidate the FFEL Consolidation Loan into the Direct Loan Program for the purpose of obtaining an income contingent repayment plan. (ii) On the loans being consolidated, the borrower is— (A) In a six-month grace period; (B) In a repayment period but not in default; (C) In default but has made satisfactory repayment arrangements, as defined in applicable program regulations, on the defaulted loan; or (D) Except as provided in paragraph (d)(4) of this section, in default but agrees to repay the consolidation loan under the income contingent repayment plan described in §685.208(k) and signs the consent form described in §685.209(d)(5). (E) Not subject to a judgment secured through litigation, unless the judgment has been vacated; or (F) Not subject to an order for wage garnishment under section 488A of the Act, unless the order has been lifted. (iii) The borrower certifies that no other application to consolidate any of the borrower's loans listed in paragraph (b) of this section is pending with any other lender. (iv) The borrower agrees to notify the Secretary of any change in address. (2) A borrower may not consolidate a Direct Consolidation Loan into a new consolidation loan under this section or under §682.201(c) unless at least one additional eligible loan is included in the consolidation. (3) Eligible loans received before or after the date a Direct Consolidation Loan is made may be added to a subsequent Direct Consolidation Loan. (4) A borrower may not consolidate a defaulted Direct Consolidation Loan. * * * * * (h) Repayment plans. A borrower may choose a repayment plan for a Direct Consolidation Loan in accordance with §685.208, except that a borrower who became eligible to consolidate a defaulted loan under paragraph (d)(1)(ii)(D) of this section must repay the consolidation loan under the income contingent repayment plan unless— (1) The borrower was required to and did make a payment under the income contingent repayment plan in each of the prior three (3) months; or (2) The borrower was not required to make payments but made three reasonable and affordable payments in each of the prior three (3) months; and (3) The borrower makes and the Secretary approves a request to change plans. (i) Repayment period. (1) Except as noted in paragraph (i)(4) of this section, the repayment period for a Direct Consolidation Loan begins on the day the loan is disbursed. (2)(i) Borrowers who entered repayment before July 1, 2006. The Secretary determines the repayment period under §685.208(i) on the basis of the outstanding balances on all of the borrower's loans that are eligible for consolidation and the balances on other education loans except as provided in paragraphs (i)(3)(i), (ii), and (iii) of this section. (ii) Borrowers entering repayment on or after July 1, 2006. The Secretary determines the repayment period under §685.208(j) on the basis of the outstanding balances on all of the borrower's loans that are eligible for consolidation and the balances on other education loans except as provided in paragraphs (i)(3)(i) and (ii) of this section. (3)(i) The total amount of outstanding balances on the other education loans used to determine the repayment period under §§685.208(i) and (j) may not exceed the amount of the Direct Consolidation Loan. (ii) The borrower may not be in default on the other education loan unless the borrower has made satisfactory repayment arrangements with the holder of the loan. (iii) The lender of the other educational loan may not be an individual. (4) Borrowers whose consolidation application was received before July 1, 2006. A Direct Consolidation Loan receives a grace period if it includes a Direct Loan or FFEL Program loan for which the borrower is in an in-school period at the time of consolidation. The repayment period begins the day after the grace period ends. * * * * *
Amendment from August 09, 2006
34 CFR--PART 685
Amendment(s) published August 9, 2006, in 71 FR 45716
§ 685.220 Consolidation.
