34 C.F.R. 34 CFR--PART 682
Title 34 - Education
Effective Date(s): September 8, 2006 50. Section 682.401 is amended by: A. In paragraph (b)(3)(i), removing the word “SLS” and inserting, in its place, the words “PLUS Loan”. B. Amending the first sentence of paragraph (b)(4) by adding the words “and §668.35(i) for a borrower who fraudulently obtained title IV, HEA program assistance” after the word “obtained”. C. In paragraph (b)(4)(iv), removing the figure “six” and inserting, in its place, the figure “three”. D. In paragraph (b)(5)(ii) introductory text, by inserting the word “parent” before the word “PLUS”. E. Revising paragraphs (b)(10)(i), (ii), (iii), (iv), (v), (vi) introductory text, (vi)(A), and (vi)(B) introductory text. F. In paragraph (b)(14)(i), removing the word “and”. G. In paragraph (b)(14)(ii), removing the punctuation “.” and adding the words “and before July 1, 2006; and” immediately after the date “October 1, 1993”. H. Adding a new paragraph (b)(14)(iii). I. In paragraph (b)(19)(i)(F), by adding the words “unpaid refunds, identity theft” after the word “certification,”. J. Revising paragraph (b)(27). K. Adding a new paragraph (b)(29). L. Adding a new paragraph (f). The revisions and additions read as follows: * * * * * (b) * * * (10) Insurance premiums and Federal default fees. (i) Except for a Consolidation Loan or SLS or PLUS loans refinanced under §682.209 (e) or (f), a guaranty agency: (A) May charge the lender an insurance premium for Stafford, SLS, or PLUS loans it guarantees prior to July 1, 2006; and (B) Must collect, either from the lender or by payment from any other non-Federal source, a Federal default fee for any Stafford or PLUS loans it guarantees on or after July 1, 2006, to be deposited into the Federal Fund under §682.419. (ii) The guaranty agency may not use the Federal default fee for incentive payments to lenders, and may only use the insurance premium or the Federal default fee for costs incurred in guaranteeing loans or in the administration of the agency's loan guarantee program, as specified in §682.410(a)(2) or §682.419(c). (iii) If a lender charges the borrower an insurance premium or Federal default fee, the lender must deduct the charge proportionately from each disbursement of the borrower's loan proceeds. (iv) The amount of the insurance premium or Federal default fee, as applicable— (A) May not exceed 3 percent of the principal balance for a loan disbursed on or before June 30, 1994; (B) May not exceed 1 percent of the principal balance for a loan disbursed on or after July 1, 1994; (C) Shall be 1 percent of the principal balance of a loan guaranteed on or after July 1, 2006. (v) If the circumstances specified in paragraph (vi) exist, the guaranty agency shall refund to the lender any insurance premium or Federal default fee paid by the lender. (vi) The lender shall refund to the borrower by a credit against the borrower's loan balance the insurance premium or Federal default fee paid by the borrower on a loan under the following circumstances: (A) The insurance premium or Federal default fee attributable to each disbursement of a loan must be refunded if the loan check is returned uncashed to the lender. (B) The insurance premium or Federal default fee, or an appropriate prorated amount of the premium or fee, must be refunded by application to the borrower's loan balance if— * * * * * (14) * * * (iii) Not more than 97 percent of the unpaid principal balance of each loan guaranteed for loans first disbursed on or after July 1, 2006. * * * * * (27) Consolidation of defaulted FFEL loans. (i) A guaranty agency may charge collection costs in an amount not to exceed 18.5 percent of the outstanding principal and interest on a defaulted FFEL Program loan that is paid off by a Federal Consolidation loan. (ii) Prior to October 1, 2006, when returning the proceeds from the consolidation of a defaulted loan to the Secretary, a guaranty agency may only retain the amount charged to the borrower pursuant to this paragraph. (iii) On or after October 1, 2006, when returning proceeds to the Secretary from the consolidation of a defaulted loan, a guaranty agency that charged the borrower collection costs must remit an amount that equals the lesser of the actual collection costs charged or 8.5 percent of the outstanding principal and interest of the loan. (iv) On or after October 1, 2009, when returning proceeds to the Secretary from the consolidation of a defaulted loan that is paid off with excess consolidation proceeds as defined in paragraph (b)(27)(ii)(D) of this section, a guaranty agency must remit the entire amount of collection costs repaid through the consolidation loan pursuant to paragraph (b)(27)(ii) of this section. (v) The term excess consolidation proceeds means, for any Federal fiscal year beginning on or after October 1, 2009, the amount of Consolidation Loan proceeds received for defaulted loans under the FFEL Program that exceed 45 percent of the agency's total collections on defaulted loans in that Federal fiscal year. * * * * * (29) Plans to Reduce Consolidation of defaulted loans. A guaranty agency shall establish and submit to the Secretary for approval, procedures to ensure that consolidation loans are not an excessive proportion of the guaranty agency's recoveries on defaulted loans. * * * * * (f) College Access Initiative. (1) A guaranty agency shall establish a plan to promote access to postsecondary education by— (i) Providing the Secretary and the public with information on Internet web links and a comprehensive listing of postsecondary education opportunities, programs, publications and other services available in the State, or States for which the guaranty agency serves as the designated guaranty agency; (ii) Promoting and publicizing information for students and traditionally underrepresented populations on college planning, career preparation, and paying for college in coordination with other entities that provide or distribute such information in the State, or States for which the guaranty agency serves as the designated guaranty agency; (2) The activities required by this section may be funded from the guaranty agency's Operating Fund in accordance with §682.423(c)(1)(vii) or from funds remaining in restricted accounts established pursuant to section 422(h)(4) of the HEA. (3) The guaranty agency shall ensure that the information required by this subsection is available to the public by November 5, 2006 and is— (i) Free of charge; and (ii) Available in print. * * * * *
Amendment from August 09, 2006
34 CFR--PART 682
Amendment(s) published August 9, 2006, in 71 FR 45705
§ 682.401 Basic program agreement.
