34 C.F.R. Subpart D—Loan Cancellation
Title 34 - Education
Source: 52 FR 45758, Dec. 1, 1987, unless otherwise noted.
The following definitions apply to this subpart: (a) Academic year or its equivalent for elementary and secondary schools and special education: (1) One complete school year, or two half years from different school years, excluding summer sessions, that are complete and consecutive and generally fall within a 12-month period. (2) If such a school has a year-round program of instruction, the Secretary considers a minimum of nine consecutive months to be the equivalent of an academic year. (b) Academic year or its equivalent for institutions of higher education: A period of time in which a full-time student is expected to complete— (1) The equivalent of 2 semesters, 2 trimesters, or 3 quarters at an institution using credit hours; or (2) At least 900 clock hours of training for each program at an institution using clock hours. (c) Title I Children: Children of ages 5 through 17 who are counted under section 1124(c)(1) of the Elementary and Secondary Education Act of 1965, as amended. (d) Children and youth with disabilities: Children and youth from ages 3 through 21, inclusive, who require special education and related services because they have disabilities as defined in section 602(a)(1) of the Individuals with Disabilities Education Act. (e) Early intervention services: Those services defined in section 672(2) of the Individuals with Disabilities Education Act that are provided to infants and toddlers with disabilities. (f) Elementary school: A school that provides elementary education, including education below grade 1, as determined by— (1) State law; or (2) The Secretary, if the school is not in a State. (g) Handicapped children: Children of ages 3 through 21 inclusive who require special education and related services because they are— (1) Mentally retarded; (2) Hard of hearing; (3) Deaf; (4) Speech and language impaired; (5) Visually handicapped; (6) Seriously emotionally disturbed; (7) Orthopedically impaired; (8) Specific learning disabled; or (9) Otherwise health impaired. (h) High-risk children: Individuals under the age of 21 who are low-income or at risk of abuse or neglect, have been abused or neglected, have serious emotional, mental, or behavioral disturbances, reside in placements outside their homes, or are involved in the juvenile justice system. (i) Infants and toddlers with disabilities: Infants and toddlers from birth to age 2, inclusive, who need early intervention services for specified reasons, as defined in section 672(1) of the Individuals with Disabilities Education Act. (j) Local educational agency: (1) A public board of education or other public authority legally constituted within a State to administer, direct, or perform a service function for public elementary or secondary schools in a city, county, township, school district, other political subdivision of a State; or such combination of school districts of counties as are recognized in a State as an administrative agency for its public elementary or secondary schools. (2) Any other public institution or agency having administrative control and direction of a public elementary or secondary school. (k) Low-income communities: Communities in which there is a high concentration of children eligible to be counted under title I of the Elementary and Secondary Education Act of 1965, as amended. (l) Medical technician: An allied health professional (working in fields such as therapy, dental hygiene, medical technology, or nutrition) who is certified, registered, or licensed by the appropriate State agency in the State in which he or she provides health care services. An allied health professional is someone who assists, facilitates, or complements the work of physicians and other specialists in the health care system. (m) Nurse: A licensed practical nurse, a registered nurse, or other individual who is licensed by the appropriate State agency to provide nursing services. (n) Qualified professional provider of early intervention services: A provider of services as defined in section 672(2) of the Individuals with Disabilities Education Act. (o) Secondary school: (1) A school that provides secondary education, as determined by— (i) State law; or (ii) The Secretary, if the school is not in a State. (2) However, State laws notwithstanding, secondary education does not include any education beyond grade 12. (p) State education agency: (1) The State board of education; or (2) An agency or official designated by the Governor or by State law as being primarily responsible for the State supervision of public elementary and secondary schools. (q) Teacher: (1) A teacher is a person who provides— (i) Direct classroom teaching; (ii) Classroom-type teaching in a non-classroom setting; or (iii) Educational services to students directly related to classroom teaching such as school librarians or school guidance counselors. (2) A supervisor, administrator, researcher, or curriculum specialist is not a teacher unless he or she primarily provides direct and personal educational services to students. (3) An individual who provides one of the following services does not qualify as a teacher unless that individual is licensed, certified, or registered by the appropriate State education agency for that area in which he or she is providing related special educational services, and the services provided by the individual are part of the educational curriculum for handicapped children: (i) Speech and language pathology and audiology; (ii) Physical therapy; (iii) Occupational therapy; (iv) Psychological and counseling services; or (v) Recreational therapy. (r) Teaching in a field of expertise: The majority of classes taught are in the borrower's field of expertise. (s) Total and permanent disability: The condition of an individual who is unable to work and earn money because of an injury or illness that is expected to continue indefinitely or result in death. (Authority: 20 U.S.C. 425, 1087ee, 1141, and 1401(1)) [52 FR 45758, Dec. 1, 1987, as amended at 59 FR 61412, Nov. 30, 1994; 65 FR 65690, Nov. 1, 2000] (a) Application for cancellation. To qualify for cancellation of a loan, a borrower shall submit to the institution to which the loan is owed, by the date that the institution establishes, both a written request for cancellation and any documentation required by the institution to demonstrate that the borrower meets the conditions for the cancellation requested. (b) Part-time employment. (1)(i) An institution may refuse a request for cancellation based on a claim of simultaneously teaching in two or more schools or institutions if it cannot determine easily from the documentation supplied by the borrower that the teaching is full-time. However, it shall grant the cancellation if one school official certifies that a teacher worked full-time for a full academic year. (ii) An institution may refuse a request for cancellation based on a claim of simultaneous employment as a nurse or medical technician in two or more facilities if it cannot determine easily from the documentation supplied by the borrower that the combined employment is full-time. However, it shall grant the cancellation if one facility official certifies that a nurse or medical technician worked full-time for a full year. (2) If the borrower is unable due to illness or pregnancy to complete the academic year, the borrower still qualifies for the cancellation if— (i) The borrower completes the first half of the academic year, and has begun teaching the second half; and (ii) The borrower's employer considers the borrower to have fulfilled his or her contract for the academic year for purposes of salary increment, tenure, and retirement. (c) Cancellation of a defaulted loan. (1) Except with regard to cancellation on account of the death or disability of the borrower, a borrower whose defaulted loan has not been accelerated may qualify for a cancellation by complying with the requirements of paragraph (a) of this section. (2) A borrower whose defaulted loan has been accelerated— (i) May qualify for a loan cancellation for services performed before the date of acceleration; and (ii) Cannot qualify for a cancellation for services performed on or after the date of acceleration. (3) An institution shall grant a request for cancellation on account of the death or disability of the borrower without regard to the repayment status of the loan. (d) Concurrent deferment period. The Secretary considers a Perkins Loan, NDSL or Defense Loan borrower's loan deferment under §674.34(c) to run concurrently with any period for which cancellation under §§674.53, 674.54, 674.55, 674.56, 674.57, 674.58, 674.59, and 674.60 is granted. (2) For loans made on or after July 1, 1993, the Secretary considers a borrower's loan deferment under §674.34 to run concurrently with any period for which a cancellation under §§674.53, 674.56, 674.57, or 674.58 is granted. (e) National community service. No borrower who has received a benefit under subtitle D of title I of the National and Community Service Act of 1990 may receive a cancellation under this subpart. (Authority: 20 U.S.C. 425, 1087ee) [52 FR 45758, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 FR 61413, Nov. 30, 1994; 62 FR 50848, Sept. 26, 1997; 64 FR 58313, Oct. 28, 1999] (a) Cancellation for full-time teaching in an elementary or secondary school serving low-income students. (1)(i) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins loan or an NDSL made on or after July 23, 1992, for full-time teaching in a public or other nonprofit elementary or secondary school. (ii) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins, NDSL or Defense loan made prior to July 23, 1992, for teaching service performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note. (2) The borrower must be teaching full-time in a public or other nonprofit elementary or secondary school that— (i) Is in a school district that qualified for funds, in that year, under title I of the Elementary and Secondary Education Act of 1965, as amended; and (ii) Has been selected by the Secretary based on a determination that more than 30 percent of the school's total enrollment is made up of title I children. (3) For each academic year, the Secretary notifies participating institutions of the schools selected under paragraph (a) of this section. (4) (i) The Secretary selects schools under paragraph (a)(1) of this section based on a ranking by the State education agency. (ii) The State education agency shall base its ranking of the schools on objective standards and methods. These standards must take into account the numbers and percentages of title I children attending those schools. (iii) For each academic year, the Secretary notifies participating institutions of the schools selected under paragraph (a) of this section. (5) The Secretary considers all elementary and secondary schools operated by the Bureau of Indian Affairs (BIA) or operated on Indian reservations by Indian tribal groups under contract with BIA to qualify as schools serving low-income students. (6) A teacher, who performs service in a school that meets the requirement of paragraph (a)(1) of this section in any year and in a subsequent year fails to meet these requirements, may continue to teach in that school and will be eligible for loan cancellation pursuant to paragraph (a) of this section in subsequent years. (7) If a list of eligible institutions in which a teacher performs services under paragraph (a)(1) of this section is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make the service determination. (b) Cancellation for full-time teaching in special education. (1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's Federal Perkins loan or NDSL loan made on or after July 23, 1992, for the borrower's service as a full-time special education teacher of infants, toddlers, children, or youth with disabilities, in a public or other nonprofit elementary or secondary school system. (2) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins, NDSL or Defense loan made prior to July 23, 1992, for teaching service performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note. (c) Cancellation for full-time teaching in fields of expertise. (1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's Federal Perkins loan or NDSL made on or after July 23, 1992, for full-time teaching in mathematics, science, foreign languages, bilingual education, or any other field of expertise where the State education agency determines that there is a shortage of qualified teachers. (2) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins, NDSL or Defense loan made prior to July 23, 1992, for teaching service performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note. (d) Cancellation rates. (1) To qualify for cancellation under paragraph (a), (b), or (c) of this section, a borrower shall teach full-time for a complete academic year or its equivalent. (2) Cancellation rates are— (i) 15 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the first and second years of full-time teaching; (ii) 20 percent of the original principal loan amount, plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the third and fourth years of full-time teaching; and (iii) 30 percent of the original principal loan amount, plus the interest on the unpaid balance accruing during the year of qualifying service, for the fifth year of full-time teaching. (e) Teaching in a school system. The Secretary considers a borrower to be teaching in a public or other nonprofit elementary or secondary school system only if the borrower is directly employed by the school system. (f) Teaching children and adults. A borrower who teaches both adults and children qualifies for cancellation for this service only if a majority of the students whom the borrower teaches are children. (Authority: 20 U.S.C 1087ee) [59 FR 61413, Nov. 30, 1994, as amended at 64 FR 58313, Oct. 28, 1999]
Title 34: Education
PART 674—FEDERAL PERKINS LOAN PROGRAM
Subpart D—Loan Cancellation
§ 674.51 Special definitions.
§ 674.52 Cancellation procedures.
§ 674.53 Teacher cancellation—Federal Perkins, NDSL and Defense loans.
§ 674.54 [Reserved]
§ 674.55 Teacher cancellation—Defense loans.
(a) Cancellation for full-time teaching. (1) An institution shall cancel up to 50 percent of the outstanding balance on a borrower's Defense loan for full-time teaching in—
(i) A public or other nonprofit elementary or secondary school;
(ii) An institution of higher education; or
(iii) An overseas Department of Defense elementary or secondary school.
(2) The cancellation rate is 10 percent of the original principal loan amount, plus the interest on the unpaid balance accruing during the year of qualifying service, for each complete year, or its equivalent, of teaching.
(b) Cancellation for full-time teaching in an elementary or secondary school serving low-income students. (1) The institution shall cancel up to 100 percent of the outstanding balance on a borrower's Defense loan for full-time teaching in a public or other nonprofit elementary or secondary school that—
(i) Is in a school district that qualifies for funds in that year under title I of the Elementary and Secondary Education Act of 1965, as amended; and
(ii) Has been selected by the Secretary based on a determination that a high concentration of students enrolled at the school are from low-income families.
(2)(i) The Secretary selects schools under paragraph (b)(1) of this section based on a ranking by the State education agency.
(ii) The State education agency shall base its ranking of the schools on objective standards and methods. These standards must take into account the numbers and percentages of title I children attending those schools.
(3) The Secretary considers all elementary and secondary schools operated by the Bureau of Indian Affairs (BIA) or operated on Indian reservations by Indian tribal groups under contract with BIA to qualify as schools serving low-income students.
(4) For each academic year, the Secretary notifies participating institutions of the schools selected under paragraph (b) of this section.
(5) The cancellation rate is 15 percent of the original principal loan amount, plus the interest on the unpaid balance accruing during the year of qualifying service, for each complete academic year, or its equivalent, of full-time teaching.
(6) [Reserved]
(7) Cancellation for full-time teaching under paragraph (b) of this section is available only for teaching beginning with academic year 1966–67.
(c) Cancellation for full-time teaching of the handicapped. (1) An institution shall cancel up to 100 percent of the outstanding balance on a borrower's Defense loan, plus interest, for full-time teaching of handicapped children in a public or other nonprofit elementary or secondary school system.
(2) The cancellation rate is 15 percent of the original principal loan amount, plus the interest on the unpaid balance accruing during the year of qualifying service, for each complete academic year, or its equivalent, of full-time teaching.
(3) A borrower qualifies for cancellation under this paragraph only if a majority of the students whom the borrower teaches are handicapped children.
(4) Cancellation for full-time teaching under paragraph (c) of this section is available only for teaching beginning with the academic year 1967–68.
(d) Teaching in a school system. The Secretary considers a borrower to be teaching in a public or other nonprofit elementary or secondary school system only if the borrower is directly employed by the school system.
(e) Teaching children and adults. A borrower who teaches both adults and children qualifies for cancellation for this service only if a majority of the students whom the borrower teaches are children.
(Authority: 20 U.S.C. 425(b)(3))
[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 61414, Nov. 30, 1994]
§ 674.56 Employment cancellation—Federal Perkins, NDSL and Defense loans.
(a) Cancellation for full-time employment as a nurse or medical technician. (1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's Federal Perkins or NDSL made on or after July 23, 1992, for full-time employment as a nurse or medical technician providing health care services.
(2) An institution must cancel up to 100 percent of the outstanding balance on a Federal Perkins, NDSL or Defense loan made prior to July 23, 1992, for full-time service as a nurse or medical technician performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the borrower's promissory note.
(b) Cancellation for full-time employment in a public or private nonprofit child or family service agency. (1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's Federal Perkins or NDSL made on or after July 23, 1992, for service as a full-time employee in a public or private nonprofit child or family service agency who is providing, or supervising the provision of, services to high-risk children who are from low-income communities and the families of these children.
(2) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins, NDSL or Defense loan made prior to July 23, 1992, for employment in a child or family service agency on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note.
(c) Cancellation for service as a qualified professional provider of early intervention services. (1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's Federal Perkins or NDSL made on or after July 23, 1992, for the borrower's service as a full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by the lead agency as authorized in section 676(b)(9) of the Individual with Disabilities Act.
(2) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins, NDSL or Defense loan made prior to July 23, 1992 for early intervention service performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note.
(d) Cancellation rates. (1) To qualify for cancellation under paragraphs (a), (b), and (c) of this section, a borrower must work full-time for 12 consecutive months.
(2) Cancellation rates are—
(i) 15 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the first and second years of full-time employment;
(ii) 20 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the third and fourth years of full-time employment; and
(iii) 30 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for the fifth year of full-time employment.
(Authority: 20 U.S.C. 1087ee)
[59 FR 61414, Nov. 30, 1994, as amended at 64 FR 58314, Oct. 28, 1999]
§ 674.57 Cancellation for law enforcement or corrections officer service—Federal Perkins, NDSL and Defense loans.
(a)(1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's Federal Perkins or NDSL made on or after November 29, 1990, for full-time service as a law enforcement or corrections officer for an eligible employing agency.
(2) An institution must cancel up to 100 percent of the outstanding loan balance on a Federal Perkins, NDSL or Defense loan made prior to November 29, 1990, for law enforcement or correction officer service performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note.
(3) An eligible employing agency is an agency—
(i) That is a local, State, or Federal law enforcement or corrections agency;
(ii) That is public-funded; and
(iii) The principal activities of which pertain to crime prevention, control, or reduction or the enforcement of the criminal law.
(4) Agencies that are primarily responsible for enforcement of civil, regulatory, or administrative laws are ineligible employing agencies.
(5) A borrower qualifies for cancellation under this section only if the borrower is—
(i) A sworn law enforcement or corrections officer; or
(ii) A person whose principal responsibilities are unique to the criminal justice system.
(6) To qualify for a cancellation under this section, the borrower's service must be essential in the performance of the eligible employing agency's primary mission.
(7) The agency must be able to document the employee's functions.
(8) A borrower whose principal official responsibilities are administrative or supportive does not qualify for cancellation under this section.
(b)(1) To qualify for cancellation under paragraph (a) of this section, a borrower shall work full-time for 12 consecutive months.
(2) Cancellation rates are—
(i) 15 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the first and second years of full-time employment;
(ii) 20 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the third and fourth years of full-time employment; and
(iii) 30 percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for the fifth year of full-time employment.
(Authority: 20 U.S.C. 465)
[59 FR 61414, Nov. 30, 1994, as amended at 64 FR 58314, Oct. 28, 1999]
§ 674.58 Cancellation for service in a Head Start program.
(a)(1) An institution must cancel up to 100 percent of the outstanding balance on a borrower's NDSL or Federal Perkins loan, for service as a full-time staff member in a Head Start program.
(2) An institution must cancel up to 100 percent of the outstanding balance on a Defense loan for service as a full-time staff member in a Head Start program performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note.
(3) The Head Start program in which the borrower serves must operate for a complete academic year, or its equivalent.
(4) In order to qualify for cancellation, the borrower's salary may not exceed the salary of a comparable employee working in the local educational agency of the area served by the local Head Start program.
(b) The cancellation rate is 15 percent of the original loan principal, plus the interest on the unpaid balance accruing during the year of qualifying service, for each complete academic year, or its equivalent, of full-time teaching service.
(c)(1) “Head Start” is a preschool program carried out under the Head Start Act (subchapter B, chapter 8 of title VI of Pub. L. 97–35, the Budget Reconciliation Act of 1981, as amended; formerly authorized under section 222(a)(1) of the Economic Opportunity Act of 1964). (42 U.S.C. 2809 (a) (1))
(2) “Full-time staff member” is a person regularly employed in a full-time professional capacity to carry out the educational part of a Head Start program.
(Authority: 20 U.S.C. 425)
[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 61415, Nov. 30, 1994; 64 FR 58314, Oct. 28, 1999]
§ 674.59 Cancellation for military service.
(a) Cancellation on a Defense loan. (1) An institution shall cancel up to 50 percent of a Defense loan made after April 13, 1970, for the borrower's full-time active service starting after June 30, 1970, in the U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard.
(2) The cancellation rate is 12
(3) Service for less than a complete year, including any fraction of a year beyond a complete year of service, does not qualify for military cancellation.
(b) Cancellation of an NDSL or Perkins loan. (1) An institution shall cancel up to 50 percent of an NDSL or Perkins loan for service as a member of the U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard in an area of hostilities that qualifies for special pay under section 310 of title 37 of the United States Code.
(2) The cancellation rate is 12
(3) Service for less than a complete year, including any fraction of a year beyond a complete year of service, does not qualify for military cancellation.
(Authority: 20 U.S.C. 425(b)(3) and 1087ee)
[52 FR 45758, Dec. 1, 1987. Redesignated at 59 FR 61413, Nov. 30, 1994]
§ 674.60 Cancellation for volunteer service—Perkins loans, NDSLs and Defense loans.
(a)(1) An institution must cancel up to 70 percent of the outstanding balance on a Perkins loan, and 70 percent of the outstanding balance of an NDSL made on or after October 7, 1998, for service as a volunteer under The Peace Corps Act or The Domestic Volunteer Service Act of 1973 (ACTION programs).
(2) An institution must cancel up to 70 percent of the outstanding balance on an NDSL or Defense loan for service as a volunteer under The Peace Corps Act or The Domestic Volunteer Service Act of 1973 (ACTION programs) performed on or after October 7, 1998, if the cancellation benefits provided under this section are not included in the terms of the borrower's promissory note.
(b) Cancellation rates are—
(1) Fifteen percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the first and second twelve-month periods of service;
(2) Twenty percent of the original principal loan amount plus the interest on the unpaid balance accruing during the year of qualifying service, for each of the third and fourth twelve-month periods of service.
(Authority: 20 U.S.C. 1087ee)
[52 FR 45758, Dec. 1, 1987, as amended at 57 FR 32347, July 21, 1992. Redesignated at 59 FR 61413, Nov. 30, 1994, as amended at 64 FR 58314, Oct. 28, 1999]
§ 674.61 Discharge for death or disability.
(a) Death. An institution must discharge the unpaid balance of a borrower's Defense, NDSL, or Perkins loan, including interest, if the borrower dies. The institution must discharge the loan on the basis of an original or certified copy of the death certificate. Under exceptional circumstances and on a case-by-case basis, the chief financial officer of the institution may approve a discharge based upon other reliable documentation supporting the discharge request.
(b) Total and permanent disability. (1) If the Secretary has made an initial determination that the borrower is totally and permanently disabled, as defined in §674.51(s), the loan is conditionally discharged for up to three years from the date that the borrower became totally and permanently disabled, as certified by a physician. The Secretary suspends collection activity on the loan from the date of the initial determination of total and permanent disability until the end of the three-year conditional period. If the borrower satisfies the criteria for a total and permanent disability discharge during and at the end of the conditional discharge period, the balance of the loan is discharged at the end of the conditional discharge period and any payments received after the date the borrower became totally and permanently disabled as certified under §674.61(b)(3) are returned to the sender.
(2) A borrower satisfies the criteria for a discharge of a loan based on a total and permanent disability if, during and at the end of the three-year conditional discharge period described in paragraph (b)(1) of this section—
(i) The borrower's annual earnings from employment do not exceed 100 percent of the poverty line for a family of two, as determined in accordance with the Community Service Block Grant Act; and
(ii) The borrower does not receive a new loan under the Perkins, FFEL or Direct Loan programs, except for a FFEL or Direct Consolidation Loan that does not include any loans that are in a conditional discharge status.
(3) If a borrower becomes totally and permanently disabled after receiving a Defense, NDSL, or Perkins loan, the institution must assign the loan to the Secretary if the borrower submits a certification by a physician and the institution reviewed the application and determined that it is complete and that it supports the conclusion that the borrower has a total and permanent disability as defined in §674.51(s).
(4) At the time the loan is assigned to the Secretary the institution must notify the borrower that the loan has been assigned to the Secretary for determination of eligibility for a total and permanent disability discharge.
(5) If the Secretary determines that the certification provided by the borrower does not support the conclusion that the borrower meets the criteria for a total and permanent disability discharge, the Secretary notifies the borrower that the application for a disability discharge has been denied, and that the loan is due and payable under the terms of the promissory note.
(6) If the Secretary makes an initial determination that the borrower is totally and permanently disabled, the Secretary notifies the borrower that the loan will be in a conditional discharge status for a period of up to three years after the date the borrower became totally and permanently disabled as certified under §674.61(b)(3). This notification identifies the conditions of the conditional discharge period specified in paragraphs (b)(6) through (b)(9) of this section and specifies that all or part of the three-year period may predate the Secretary's initial determination.
(7) During the conditional discharge period, the borrower—
(i) Is not required to make any payments on the loan;
(ii) Is not considered past due or in default on the loan, unless the loan was past due or in default at the time the conditional discharge was granted;
(iii) Must promptly notify the Secretary of any changes in address or phone number;
(iv) Must promptly notify the Secretary if the borrower's annual earnings from employment exceed the amount specified in paragraph (b)(2)(i) of this section; and
(v) Must provide the Secretary, upon request, with additional documentation or information related to the borrower's eligibility for discharge under this section.
(8) If, during and at the end of the conditional discharge period, the borrower continues to satisfy the eligibility criteria for a total and permanent disability discharge, as described in paragraph (b)(2) of this section, the balance of the loan is discharged.
(9) If, at any time during or at the end of the three-year conditional discharge period, the borrower does not continue to meet the eligibility requirements for total and permanent disability discharge, the Secretary resumes collection activity on the loan. The Secretary does not require the borrower to pay any interest that accrued on the loan from the date of the initial determination described in paragraph (b)(6) of this section through the end of the conditional discharge period.
(10) If the institution receives any payments from or on behalf of the borrower on or attributable to a loan that has been assigned to the Secretary for determination of eligibility for a total and permanent disability discharge, the institution must forward those payments to the Secretary for crediting to the borrower's account. At the same time that the institution forwards the payment, it must notify the borrower that there is no obligation to make payments on the loan while it is conditionally discharged prior to a final determination of eligibility for a total and permanent disability discharge, unless the Secretary directs the borrower otherwise.
(11) When the Secretary makes a final determination to discharge the loan, the Secretary returns to the sender any payments received on the loan after the date the borrower became totally and permanently disabled.
(c) No Federal reimbursement. No Federal reimbursement is made to an institution for cancellation of loans due to death or disability.
(d) Retroactive. Cancellation for death or disability applies retroactively to all Defense, NDSL or Perkins loans.
(Approved by the Office of Management and Budget under control number 1845–0019)(Authority: 20 U.S.C. 425 and 1087dd and sec. 130(g)(2) of the Education Amendments of 1976, Pub. L. 94–482)
[52 FR 45758, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988. Redesignated and amended at 59 FR 61413, 61415, Nov. 30, 1994; 64 FR 58315, Oct. 28, 1999; 65 FR 65690, Nov. 1, 2000; 66 FR 44007, Aug. 21, 2001]
§ 674.62 No cancellation for prior service—no repayment refunded.
(a) No portion of a loan may be cancelled for teaching. Head Start, volunteer or military service if the borrower's service is performed—
(1) During the same period that he or she received the loan; or
(2) Before the date the loan was disbursed to the borrower.
(b) The institution shall not refund a repayment made during a period for which the borrower qualified for a cancellation unless the borrower made the payment due to an institutional error.
(Authority: 20 U.S.C. 425 and 1067ee)
[52 FR 45758, Dec. 1, 1987. Redesignated at 59 FR 61413, Nov. 30, 1994]
§ 674.63 Reimbursement to institutions for loan cancellation.
(a) Reimbursement for Defense loan cancellation. (1) The Secretary pays an institution each award year its share of the principal and interest canceled under §§674.55 and 674.59(a).
(2) The institution's share of cancelled principal and interest is computed by the following ratio:
Where I is the institution's capital contribution to the Fund, and F is the Federal capital contribution to the Fund.
(b) Reimbursement for NDSL and Federal Perkins loan cancellation. The Secretary pays an institution each award year the principal and interest canceled from its student loan fund under §§674.53, 674.54, 674.56, 674.57, 674.58, 674.59(b), and 674.60. The institution shall deposit this amount in its Fund.
(Authority: 20 U.S.C. 428 and 1087ee)
[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 61415, Nov. 30, 1994]
Appendixes A–D to Part 674 [Reserved]
Appendix E to Part 674—Examples for Computing Maximum Penalty Charges (6 Months Unpaid Overdue Payments) on Direct Loans Made for Periods of Enrollment Before January 1, 1986
---------------------------------------------------------------------------------------------------------------- Installment due dates_Missed payments Separate ------------------------------------------------------------------ monthly Monthly repayment schedule maximum Jan. 2 Feb. 2 Mar. 2 Apr. 2 May 2 June 2 penalty charges----------------------------------------------------------------------------------------------------------------1st Past due installment......... $1 ......... ......... ......... ......... ......... $12nd Past due installment......... ......... $1+$2 ......... ......... ......... ......... 33rd Past due installment......... ......... ......... $3+$2 ......... ......... ......... 54th Past due installment......... ......... ......... ......... $5+$2 ......... ......... 75th Past due installment......... ......... ......... ......... ......... $7+$2 ......... 96th Past due installment......... ......... ......... ......... ......... ......... $9+$2 11 ------------------------------------------------------------------------------ Cumulative maximum subtotals. 1 4 9 16 25 36 ...........----------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------- Installment due dates_Missed Separate payments bimonthly Bimonthly repayment schedule --------------------------------- maximum penalty Jan. 2 Mar. 2 May 2 charges----------------------------------------------------------------------------------------------------------------1st Past due installment.......................................... $3 ......... ......... $32nd Past due installment.......................................... ......... $3+$3 ......... 63rd Past due installment.......................................... ......... ......... $6+$3 9 --------------------------------------------- Cumulative maximum subtotals.................................. 3 9 18 ...........----------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------- Installment due dates_Missed payments Quarterly repayment schedule -------------------------------------------------- Separate quarterly Jan. 2 Apr. 2 maximum penalty charges----------------------------------------------------------------------------------------------------------------1st Past due installment............. $6 ....................... $62nd Past due installment............. ....................... $6+$6 12 -------------------------------------------------------------------------- Cumulative maximum subtotals..... 6 18 .......................----------------------------------------------------------------------------------------------------------------Note. In the above table of examples, the Cumulative Maximum Subtotal line contains the maximum penalty charges that can be assessed on an NDSL borrower for any given installment that was missed on its due date. For example, if three borrowers, all on different repayment schedules, owed and missed their first installment payment on January 2 and all three made their next payment on April 10, the maximum penalty charges that could be assessed each individual borrower would be as follows: $16 to the monthly repayment schedule borrower; $9 to the bimonthly repayment schedule borrower; and $18 to the quarterly repayment schedule borrower.
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