34 C.F.R. 34 CFR--PART 682
Title 34 - Education
Effective Date(s): September 8, 2006 59. Section 682.601 is revised to read as follows: (a) General. To make or originate loans under the FFEL program, a school— (1) Must employ at least one person whose full-time responsibilities are limited to the administration of programs of financial aid for students attending the school; (2) Must not be a home study school; (3) Must not— (i) Make a loan to any undergraduate student; (ii) Make a loan other than a Federal Stafford loan to a graduate or professional student; or (iii) Make a loan to a borrower who is not enrolled at that school; (4) Must award any contract for financing, servicing, or administration of FFEL loans on a competitive basis; (5) Must offer loans that carry an origination fee or an interest rate, or both, that are less than the fee or rate authorized under the provisions of the Act; (6) Must not have a cohort default rate, as calculated under subpart M of 34 CFR part 668, greater than 10 percent; (7) Must, for any fiscal year beginning on or after July 1, 2006 in which the school engages in activities as an eligible lender, submit a compliance audit conducted in accordance with the requirements of 34 CFR 682.305(c)(2); (8) Must use any proceeds from special allowance payments and interest payments from borrowers, interest subsidy payments, and any proceeds from the sale or other disposition of loans (exclusive of return of principal, any financing costs incurred by the school to acquire funds to make the loans, and the cost of charging origination fees or interest rates at less than the fees or rates authorized under the HEA) for need-based grants which does not include providing origination fees or interest rates at less than the fee or rate authorized under the provisions of the Act; and (9) Must have met the requirements to be an eligible lender as of February 7, 2006, and must have made loans on or before April 1, 2006. (b) An eligible school lender may use a portion of the proceeds described in paragraph (a)(8) of this section for reasonable and direct administrative expenses. Reasonable and direct administrative expenses are those that are incurred by the school and are directly related to the school's performance of actions required of the school under the Act or the regulations in this part. Reasonable and direct administrative expenses do not include financing and similar costs such as costs paid by the school to obtain funding to make FFEL loans, the cost of paying Federal default fees on behalf of borrowers, or the cost of providing origination fees or interest rates at less than the fee or rate authorized under the provisions of the Act. (c) An eligible school lender must ensure that the proceeds described in paragraph (a)(8) of this section are used to supplement, and not to supplant, non-Federal funds that would otherwise be used for need-based grant programs.
(Authority: 20 U.S.C. 1077, 1078–1, 1078–2, 1078–3, 1082, 1085)
Amendment from August 09, 2006
34 CFR--PART 682
Amendment(s) published August 9, 2006, in 71 FR 45708
§ 682.601 Rules for a school that makes or originates loans.
