34 C.F.R. Subpart E—Federal Guaranteed Student Loan Programs
Title 34 - Education
(a) The Secretary may guarantee all— (1) FISL, Federal SLS, and Federal PLUS loans made by lenders located in a State in which no State or private nonprofit guaranty agency has in effect an agreement with the Secretary under §682.401 to serve as guarantor in that State; (2) Federal Consolidation loans made by the Student Loan Marketing Association and Federal Consolidation loans made by any other lender that has applied for and been denied guarantee coverage on Consolidation loans by the guaranty agency that guarantees the largest dollar volume of FFEL loans made by the lender; and (3) FISL, Federal SLS, Federal PLUS, and Federal Consolidation loans made by lenders located in a State in which a guaranty agency program is operating but is not reasonably accessible to students who meet the agency's residency requirements. (b) The Secretary may guarantee FISL, Federal SLS, Federal PLUS and Federal Consolidation loans made by a lender located in a State where a guaranty agency operates a program that is reasonably accessible to students who meet the residency requirements of that program only for— (1) A student who does not meet the agency's residency requirements; (2) A lender who is not able to obtain a guarantee from the guaranty agency for at least 80 percent of the loans the lender intends to make over a 12-month period because of the agency's residency requirements; (3) With the approval of the guaranty agency, a student who has previously received from the same lender a FISL loan that has not been repaid; or (4) All students at a school located in the State if the Secretary finds that— (i) No single guaranty agency program is reasonably accessible to students at that school as compared to students at other schools during a comparable period of time; and (ii) Guaranteeing loans made in the State to students attending that school would significantly increase the access of students at that school to FFEL Program loans. The Secretary may guarantee loans made to those students by a lender in that State if— (A) The guaranty agency does not recognize the school as being eligible, but the school is eligible under the FISL program; or (B) A majority of the persons enrolled at the school meet the conditions of student eligibility for FISL loans but are not recognized as eligible under the guaranty agency program. (c) For purposes of paragraph (b) of this section, a lender is considered to be located in the same State as a school if the lender— (1) Has an origination relationship with the school; (2) Has a majority of its voting stock held by the school; or (3) Has common ownership or management with the school and more than 50 percent of the loans made by that lender are made to students at that school. (d) As a condition for guaranteeing loans under the Federal FFEL programs, the Secretary may require the lender to submit evidence of circumstances that would justify loan guarantees under the provisions of this section. (e) With regard to a school lender that has entered into an agreement with the Secretary under §682.600, the Secretary denies loan guarantees on the basis of this section only if the Secretary first determines that all eligible students at that school who make a conscientious effort to obtain a loan from another lender will find a loan to be reasonably available. For purposes of this paragraph, the determination of loan availability is based on studies and surveys that the Secretary considers satisfactory. (Authority: 20 U.S.C. 1071, 1073, 1078–1, 1078–2, 1078–3, 1082) (a) General. Except as provided in paragraph (b) of this section, the Secretary's guarantee liability on any Federal GSL loan is 100 percent of the unpaid principal balance and, to the extent permitted under §682.512, accrued interest. (b) Special provisions for State lenders. (1) Except as described in paragraph (b)(2) of this section, the Secretary's guarantee liability is less than 100 percent under the following conditions: (i) If the total of default claims under the Federal GSL programs paid by the Secretary to a State lender during any fiscal year reaches five percent of the amount of the Federal GSL loans in repayment at the end of the preceding fiscal year, the Secretary's guarantee liability on a claim subsequently paid during that fiscal year is 90 percent of the amount of the unpaid principal balance plus accrued interest. (ii) If the total of default claims under the Federal GSL programs paid by the Secretary to a State lender during any fiscal year reaches nine percent of the amount of the Federal GSL loans in repayment at the end of the preceding fiscal year, the Secretary's guarantee liability on a claim subsequently paid during that fiscal year is 80 percent of the amount of the unpaid principal balance plus accrued interest. (iii) For purposes of this paragraph, the total default claims paid by the Secretary during any fiscal year do not include paid claims filed by the lender under the provisions of §682.412(e) or §682.509. (2) The potential reduction in guarantee liability does not apply to a State lender during the first Federal fiscal year of its operation as a Federal GSL Program lender and during each of the four succeeding fiscal years. (3) For the purposes of this section, the term “amount of the Federal GSL loans in repayment” means the original principal amount of all loans guaranteed by the Secretary less— (i) The original principal amount of loans on which— (A) Under the FISL program, the borrower has not yet reached the repayment period; (B) Payment in full has been made by the borrower; (C) The borrower was in deferment status at the time repayment of principal was scheduled to begin and remains in deferment status; or (D) The Secretary has paid a claim filed under section 437 of the Act; and (ii) The amount paid by the Secretary for default claims on loans, exclusive of paid claims filed by the lender under §682.412(e) or §682.509. (4) For the purposes of this paragraph, payments by the Secretary on a loan that the original lender assigned to a subsequent holder are considered payments made to the original lender. (5) State lenders shall consolidate Federal GSL loans for the purpose of calculating the amount of the Secretary's guarantee liability under this section. (Authority: 20 U.S.C. 1077, 1078–1, 1078–2, 1078–3, 1082) (a) To be considered for participation in the Federal GSL programs, a lender shall submit an application to the Secretary. (b) In determining whether to enter into a guarantee agreement with an applicant, and, if so, what the terms of the agreement will be, the Secretary considers— (1) Whether the applicant meets the definition of an “eligible lender” in section 435(d) of the Act and the definition of “lender” in §682.200; (2) Whether the applicant is capable of complying with the regulations in this part as they apply to lenders; (3) Whether the applicant is capable of implementing adequate procedures for making, servicing, and collecting loans; (4) Whether the applicant has had prior experience with a similar Federal, State, or private nonprofit student loan program, and the amount and percentage of loans that are currently delinquent or in default under that program; (5) The financial resources of the applicant; and (6) In the case of a school that is seeking approval as a lender, its accreditation status. (c) The Secretary may require an applicant to submit sufficient materials with its application so that the Secretary may fairly evaluate it in accordance with the criteria in this section. (d)(1) If the Secretary decides not to approve the application for a guarantee agreement, the Secretary's response includes the reason for the decision. (2) The Secretary provides the lender an opportunity for the lender to meet with a designated Department official if the lender wishes to appeal the Secretary's decision. (3) However, the Secretary need not explain the reasons for the denial or grant the lender an opportunity to appeal if the lender submits its application within six months of a previous denial. (Authority: 30 U.S.C. 1078–1, 1078–2, 1078–3, 1079, 1082) (a)(1) To participate in the Federal GSL programs, a lender must have a guarantee agreement with the Secretary. The Secretary does not guarantee a loan unless it is covered by such an agreement. (2) In general, under a guarantee agreement the lender agrees to comply with all laws, regulations, and other requirements applicable to its participation as a lender in the Federal GSL programs. In return, the Secretary agrees to guarantee each eligible Federal GSL loan held by the lender against the borrower's default, death, total and permanent disability, or bankruptcy. (3) The Secretary may include in an agreement a limit on the duration of the agreement and the number or amount of Federal GSL loans the lender may make or hold. (b)(1) Except as otherwise approved by the Secretary, a guarantee agreement with a school lender limits the Federal GSL loans made by that school lender that will be covered by the Federal guarantee to those loans made to students, or to parents borrowing on behalf of students, who are— (i) In attendance at that school; (ii) In attendance at other schools under the same ownership as that school; or (iii) Employees or dependents of employees, or whose parents are employees, of that school lender or other schools under the same ownership, under circumstances the Secretary considers appropriate for loan guarantees. (2) The Secretary may on a school-by-school basis impose limits under paragraph (b)(1)(iii) of this section on a school lender that makes loans to students or to parents of students in attendance at other schools under the same ownership, or to employees, or to dependents or parents of employees, of those other schools. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1079, 1082) (a) A lender having a guarantee agreement shall submit an application to the Secretary for a Federal loan guarantee on each intended loan that the lender determines to be eligible for a guarantee. The application must be on a form prescribed by the Secretary. The Secretary notifies the lender whether the loan will be guaranteed and of the amount of the guarantee. No disbursement on a loan made prior to the Secretary's approval of that loan is covered by the guarantee. (b) The Secretary issues a guarantee on a Federal GSL loan in reliance on the implied representations of the lender that all requirements for the initial eligibility of the loan for guarantee coverage have been met. As described in §682.513, the continuance of the guarantee is conditioned upon compliance by all holders of the loan with the regulations in this part. (Authority: 20 U.S.C., 1078–1, 1078–2, 1078–3, 1079, 1082) (a) General. The Secretary charges the lender an insurance premium for each Federal GSL Program loan that is guaranteed, except that no insurance premium is charged on a Federal Consolidation loan, or on a Federal SLS or Federal PLUS loan made under §682.209(f). (b) Rate. The rate of the insurance premium is one-fourth of one percent per year of the loan principal, excluding interest or other charges that may have been added to the principal. (c) FISL loans—insurance premium calculation. (1) The insurance premium for FISL loans is calculated by— (i) Counting the number of months beginning with the month following the month in which each disbursement on the loan is to be made and ending 12 months after the borrower's anticipated graduation from the school for attendance at which the loan is sought; (ii) Dividing one-fourth of one percent of the principal amount of the loan by 12; and (iii) Multiplying the result obtained in paragraph (c)(1)(i) of this section by that obtained in paragraph (c)(1)(ii) of this section. (2) If the lender disburses the loan in multiple installments, the insurance premium is calculated for each disbursement from the month following the month that the disbursement is made. (d) Federal PLUS and SLS Loans—insurance premium calculation. The insurance premium for a Federal PLUS or SLS loan is calculated by— (1) Using the projected repayment period as a base; (2) Amortizing the loan in equal monthly installments over the repayment period; (3) Determining one-fourth of one percent of each monthly declining principal balance; and (4) Computing the total of monthly amounts calculated under paragraph (d)(3) of this section. (e) Collection from lenders. (1) The Secretary may bill the lender for the insurance premium or may require the lender to pay the insurance premium to the Secretary at the time of disbursement of the loan. At the Secretary's discretion, the Secretary may alternatively collect the insurance premium by offsetting it against amounts payable by the Secretary to the lender. (2) The Secretary's guarantee on a loan ceases to be effective if the lender fails to pay the insurance premium within 60 days of the date payment is due. However, the Secretary may excuse late payment of an insurance premium and reinstate the guarantee coverage on a loan if the Secretary is satisfied that at the time the premium is paid— (i) The loan is not in default and the borrower is not delinquent in making installment payments; or (ii) The loan is in default, or the borrower is delinquent, under circumstances where the borrower has entered the repayment period without the lender's knowledge. (f) Collection from borrowers. The lender may pass along the cost of the insurance premium to the borrower. If it does so, the insurance premium must be deducted from each disbursement of the loan in an amount proportionate to that disbursement's contribution to the premium amount. (g) Refund provisions. The insurance premium is not refundable by the Secretary and need not be refunded by the lender to the borrower, even if the borrower prepays, defaults, dies, becomes totally and permanently disabled, or files a petition in bankruptcy. (Authority: 20 U.S.C. 1077, 1078–1, 1078–2, 1078–3, 1079, 1082) [57 FR 60323, Dec. 18, 1992, as amended at 64 FR 18981, Apr. 16, 1999; 68 FR 75429, Dec. 31, 2003] (a) The Secretary does not guarantee a FISL, Federal SLS, or Federal PLUS loan in an amount that would— (1) Result in an annual loan amount in excess of the student's estimated cost of attendance for the period of enrollment for which the loan is intended less— (i) The student's estimated financial assistance; and (ii) The student's expected family contribution for that period, in the case of a FISL loan; or (2) Result in an annual or aggregate loan amount in excess of the permissible annual and aggregate loan limits described in §682.204. (b) The Secretary does not guarantee a Federal Consolidation loan in an amount greater than that required to discharge loans eligible for consolidation under §682.100(a)(4). (Authority: 20 U.S.C. 1075, 1077, 1078–1, 1078–2, 1079, 1082, 1089) (a) General. (1) Except as provided in paragraph (a)(4) of this section, a lender shall exercise due diligence in the collection of a loan with respect to both a borrower and an authorized endorser. In order to exercise due diligence, a lender shall implement the procedures described in this section if a borrower fails to make an installment payment when due. (2) If two borrowers are liable for repayment of a Federal PLUS or Federal Consolidation loan as co-makers, the lender must follow these procedures with respect to both borrowers. (3) For purposes of this section, the borrower's delinquency begins on the day after the due date of an installment payment not paid when due, except that if the borrower entered the repayment period without the lender's knowledge, the delinquency begins 30 days after the day the lender receives notice that the borrower has entered the repayment period. (4) In lieu of the procedures described in this section, a lender may use the due diligence procedures in §682.411 in collecting a Federal GSL loan. (b) Initial delinquency. If a borrower is delinquent in making a payment, the lender shall remind the borrower within 10 working days of the date the payment was due by means of a letter, notice, telephone call, or personal contact. If payments do not begin or resume, the lender shall attempt to contact the borrower— (1) At last six more times at regular intervals during the remainder of the six-month period that started on the date of delinquency for loans repayable in monthly installments; or (2) At least eight more times during the remainder of the eight-month period that started on the date of delinquency for loans repayable in installments less frequent than monthly. (c) Skip-tracing assistance. (1) If a lender does not know the borrower's current address, the lender promptly shall attempt to locate the borrower through normal commercial collection activities, including contacting all individuals and entities named in the borrower's loan application. If these efforts are unsuccessful, the lender promptly shall attempt to learn the borrower's current address through use of the Department's skip-tracing assistance. (2) If the lender does not know the borrower's address when a borrower is first delinquent in making a payment, but subsequently obtains the borrower's address prior to the date on which the loan goes into default, the lender shall attempt to contact the borrower in accordance with paragraph (b) of this section, with the first contact occurring within 15 days of the date the lender obtained knowledge of the borrower's address, and shall attempt to contact the borrower at least once during each succeeding 30-day period until default. (d) Preclaims assistance. When the borrower is 60 days delinquent in making a payment, the lender shall request preclaims assistance from the Department of Education. This preclaims assistance consists of sending a series of letters to the borrower, urging the borrower to contact the lender and begin or resume payments. (e) Final demand letter. A lender shall send a final demand letter to the borrower at least 30 days before the lender files a default claim. The lender shall allow the borrower at least 30 days to respond to the final demand letter. However, a lender need not send a final demand letter to a borrower whose address is unknown to the lender. (f) Litigation. (1) If a loan is in default and the lender determines that the borrower or an endorser has the ability to repay the loan, the lender may bring suit against the borrower or the endorser to recover the amount of the unpaid principal and interest, together with reasonable attorneys' fees, late charges, and court costs. (2) Prior to bringing suit the lender shall— (i) Obtain the Secretary's approval; and (ii) Notify the borrower or endorser in writing that it has received the Secretary's approval to bring suit on the loan, and that unless the borrower or endorser makes payments sufficient to bring the account out of default the lender will seek a judgment under which the borrower or endorser will be liable for payment of late charges, attorneys' fees, collection agency charges, court costs, and other reasonable collection costs in addition to the unpaid principal and interest on the loan. The lender shall mail the notice to the borrower or endorser by certified mail, return receipt requested. (3) The lender may bring suit if the borrower or endorser does not make payments sufficient to bring the account out of default within 10 days following the date of delivery of the notice described in paragraph (f)(2)(ii) of this section to the borrower or endorser indicated on the receipt. (4) A lender may first apply the proceeds of any judgment against its attorneys' fees, court costs, collection agency charges, and other reasonable collection costs, whether or not the judgment provides for these fees and costs. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1079, 1080, 1081, 1082, 1085) [57 FR 60323, Dec. 18, 1992, as amended at 58 FR 9119, Feb. 19, 1993; 59 FR 33358, June 28, 1994; 64 FR 18981, Apr. 16, 1999; 64 FR 58965, Nov. 1, 1999] (a) General. A Federal GSL loan may not be assigned except to another eligible lender. For the purpose of this paragraph, “assigned” means any kind of transfer of an interest in the loan, including a pledge of such an interest as security. (b)(1) Procedure. If the assignment of a FISL Program loan is to result in a change in the identity of the party to whom the borrower must send subsequent payments, the assignor and the assignee of the loan shall, no later than 45 days from the date the assignee acquires a legally enforceable right to receive payment from the borrower on the assigned loan, provide separate notices to the borrower of— (i) The assignment; (ii) The identity of the assignee; (iii) The name and address of the party to whom subsequent payments must be sent; and (iv) The telephone numbers of both the assignor and the assignee. (2) The assignor and assignee shall provide the notice required by paragraph (b)(1) of this section separately. Each notice must indicate that a corresponding notice will be sent by the other party to the assignment. (c) The Secretary's approval. The approval of the Secretary is required prior to the assignment of a note to an eligible lender that has not entered into a contract of insurance with the Secretary under §682.503. (d) Warranty. (1) Nothing in this section precludes the buyer of a loan from obtaining a warranty from the seller covering certain future reductions by the Secretary in computing the amount of guaranteed loss, if any, on a claim filed on the loan. (2) The warranty may cover only reductions that are attributable to an act or failure to act of the seller or other previous holder. (3) The warranty may not cover matters the buyer is responsible for under the regulations in this part. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1079, 1080, 1082) [57 FR 60323, Dec. 18, 1992, as amended at 58 FR 9120, Feb. 19, 1993; 64 FR 58965, Nov. 1, 1999] (a) A lender shall cease collection activity on a loan and file a claim with the Secretary within the time specified in §682.511(e)(3), if— (1) In the case of a loan that was not made or originated by the school, the lender learns that while the student was enrolled at the school the school terminated its teaching activities for that student during the academic period covered by the loan; or (2) The Secretary directs that the claim be filed. (b) A lender may not as a result of a claim filed with the Secretary under this section report a borrower's loan as in default to any credit bureau or other third party. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1079, 1080, 1082) (a) The procedures in §682.402(a)–(d) for determining whether a borrower has died, become totally and permanently disabled, or filed a bankruptcy petition apply to the Federal GSL programs. (b) For purposes of this section, references to the “guaranty agency” in §682.402(d)(5) shall be understood to refer to the Secretary. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1082, 1087) (a) Filing a claim application. (1) A lender may file a claim against the Secretary's guarantee on a Federal GSL loan for any of the following reasons: (i) The loan is in default, as defined in §682.200. (ii) Any of the conditions exist for filing a claim without collection efforts, as set forth in §682.412(e)(2) or §682.509. (iii) The borrower has died, become totally and permanently disabled, or filed a bankruptcy petition, as determined by the lender in accordance with §682.510. (2) If a Federal PLUS loan was obtained by two eligible parents as co-makers, or a Federal Consolidation loan was obtained jointly by a married couple, the reason for filing a claim must hold true for both applicants, or each applicant must have satisfied a claimable criterion at the time of the request for discharge of the loan. (3) A lender may file a claim against the Secretary's guarantee only on a form provided by the Secretary. The lender shall attach to the claim all documents required by the Secretary. If the lender fails to do so, the Secretary denies the claim. (b) Documentation required for claims. (1) The Secretary requires a lender to submit the following documentation with all claims: (i) The original promissory note. (ii) The loan application. (iii) The repayment instrument. (iv) A payment history, as described in §682.414(a)(3)(ii)(I). (v) A collection history, as described in §682.414(a)(3)(ii)(J). (vi) A copy of the final demand letter if required by §682.507(e). (vii) The original or a copy of all correspondence addressed to, from, or on behalf of the borrower that is relevant to the loan, whether that correspondence involved the original lender, a subsequent holder, or a servicing agent. (viii) If applicable, evidence of the lender's requests to the Department for skip-tracing assistance under §682.507(c) and for preclaims assistance under §682.507(d). (ix) Any additional documentation that the Secretary determines is relevant to a claim. (2) The documentation requirements for death, total and permanent disability, or bankruptcy claims in §682.402(g)(1) apply to the Federal GSL programs. For purposes of this section, references to the “guaranty agency” in §682.402(e)(1) mean the Secretary. (c) Assignment of note. The Secretary's payment of a claim is contingent upon receipt from the lender of an assignment to the United States of America of all rights, title, and interest of the lender in the note underlying the claim. (d) Bankruptcy subsequent to default. If the lender files a default claim on a loan and subsequently receives a notice of the first meeting of creditors in the proceeding of the borrower in bankruptcy, the lender shall promptly forward that notice to the Department of Education. Under these circumstances the lender shall not file a proof of claim with the bankruptcy court. (e) Claim filing deadlines. To obtain payment of a claim, a lender shall comply with the following deadlines: (1) Default claims. Unless the lender has already filed suit against the borrower in accordance with §682.507(f), it shall file a default claim on a loan with the Secretary within 90 days after a default has occurred on the loan. For a claim filed by a lender pursuant to §682.412(e)(2), as directed in §682.208(f)(2), the lender shall file a claim within 90 days following transmission of the final demand letter sent pursuant to §682.411(e) if the borrower failed to comply with the terms of the letter within 30 days of the transmission. (2) Death, total and permanent disability, or bankruptcy claims. The claim filing deadlines in §682.402(e)(2) apply to the Federal GSL programs. For purposes of this section, references to the “guaranty agency” in §682.402(e)(2) mean the Secretary. (3) Special condition claims. In the case of a special condition claim filed pursuant to §682.509, the lender shall file a claim with the Secretary within 45 days of the date the lender determines that the conditions set forth in §682.509(a)(1) exist, or the date the Secretary directs that the claim be filed pursuant to §682.509(a)(2). (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1080, 1082, 1087) [57 FR 60323, Dec. 18, 1992, as amended at 58 FR 9119, Feb. 19, 1993; 59 FR 33358, June 28, 1994; 64 FR 18981, Apr. 16, 1999; 64 FR 58965, Nov. 1, 1999] (a) Default claims—(1) Amount payable. The amount of loss to be paid on a default claim depends upon the date the Secretary received the application for a guarantee commitment on the loan. If the application was received— (i) Prior to July 1, 1972, or from August 19, 1972 through February 28, 1973, the amount payable on a valid claim is equal to the unpaid balance of the original principal loan amount disbursed; or (ii) From July 1 through August 18, 1972, or after February 28, 1973, the amount payable on a valid claim is equal to the unpaid balance of the principal and interest in accordance with paragraph (a)(2) of this section. The unpaid principal amount of the loan may include capitalized interest to the extent authorized by §682.202(b). (2) Payment of interest. If the guarantee covers unpaid interest, the payment of a valid claim covers the unpaid interest that accrues during the following periods: (i) During the period before the claim is filed, not to exceed the period provided for in §682.511(e) for filing the claim. (ii) During a period not to exceed 30 days following the return of the claim to the lender by the Secretary for additional documentation necessary for the claim to be approved by the Secretary. (iii) During the period, after the claim is filed, that is required by the Secretary to approve the claim and to authorize payment or to return the claim to the lender for additional documentation. (3) Recovery of outstanding debts. The Secretary may reduce the amount of loss due to the lender on a claim by the amount the Secretary determines is owed to the Secretary by the lender. (b) Death, total and permanent disability, or bankruptcy claims. (1) In the case of a death or disability claim, the amount to be paid on a valid claim— (i) Is equal to the unpaid balance of the original principal loan amount disbursed if the loan was disbursed prior to December 15, 1968; or (ii) Is calculated in accordance with §682.402(h)(2) and (h)(3) if the loan was disbursed after December 14, 1968. (2) In the case of a bankruptcy claim, the amount of loss is calculated in accordance with §682.402(f)(2) and (f)(3). (3) For purposes of this section, references to the “guaranty agency” in §682.402(f)(3) mean the Secretary. (c) Special rules for a loan acquired by assignment. If a claim is filed by a lender that obtained a loan by assignment, that lender is not entitled to any payment under this section greater than that to which a previous holder would have been entitled. For example, the Secretary deducts from the claim any amounts that are attributable to payments made by the borrower to a prior holder of the loan before the borrower received proper notice of the assignment of the loan. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1080, 1082, 1087) [57 FR 60323, Dec. 18, 1992, as amended at 64 FR 18981, Apr. 16, 1999] (a)(1) In determining whether to approve for payment a claim against the Secretary's guarantee, the Secretary considers matters affecting the enforceability of the loan obligation and whether the loan was made and administered in accordance with the Act and applicable regulations. (2) The Secretary deducts from a claim any amount that is not a legally enforceable obligation of the borrower, except to the extent that the defense of infancy applies. (3) Except as provided in §682.509, the Secretary does not pay a claim unless— (i) All holders of the loan have complied with the requirements of this part, including, but not limited to, those concerning due diligence in the making, servicing, and collecting of a loan; (ii) The current holder has complied with the deadlines for filing a claim established in §682.511(e); and (iii) The current holder complies with the requirements for submitting documents with a claim as established in §682.511(b). (b) Except as provided in §682.509, the Secretary does not pay a death, disability, or bankruptcy claim for a loan after a default claim for that loan has been disapproved by the Secretary or if it would not be payable as a default claim by the Secretary. (c) The Secretary's determination of the amount of loss payable on a default claim under this part, once final, is conclusive and binding on the lender that filed the claim. Note: A determination of the Secretary under this section is subject to judicial review under 5 U.S.C. 706 and 41 U.S.C. 321–322. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1079, 1080, 1082) (a) The Secretary may waive the right to recover or refuse to make an interest benefits, special allowance, or claim payment, or may permit a lender to cure certain defects in a specified manner if, in the Secretary's judgment, the best interests of the United States so require. (b) To receive payment on a default claim or to resume eligibility to receive interest benefits and special allowance on a loan as to which a lender has committed a violation of the requirements of this part regarding due diligence in collection or timely filing of claims, the lender shall meet the conditions described in appendix C to this part. (Authority: 20 U.S.C. 1078–1, 1078–2, 1078–3, 1080, 1082) (a) Records. (1) A lender shall maintain current, complete, and accurate records of each loan that it holds, including, but not limited to, the records described in §682.414(a)(3)(ii). The records must be maintained in a system that allows ready identification of each loan's current status. (2) A lender shall retain the records required for each loan for not less than five years following the date the loan is repaid in full by the borrower or the lender is reimbursed on a claim. However, in particular cases the Secretary may require the retention of records beyond this minimum period. (3)(i) The lender may store the records specified in §682.414(a)(3)(ii)(C)–(K) on microfilm, optical disk, or other machine readable format. (ii) The holder of the promissory note shall retain the original note and repayment instrument until the loan is fully repaid. At that time the holder shall return the original note and repayment instrument to the borrower and retain copies for the prescribed period. (iii) The lender shall retain the original or a copy of the loan application. (b) Reports. A lender shall submit reports to the Secretary at the time and in the manner that the Secretary reasonably may require. (c) Inspections. Upon request, a lender or its agent shall cooperate with the Secretary, the Department's Office of the Inspector General, and the Comptroller General of the United States, or their authorized representatives, in the conduct of audits, investigations, and program reviews. This cooperation must include— (1) Providing timely access for examination and copying to the records (including computerized records) required by applicable regulations and to any other pertinent books, documents, papers, computer programs, and records; and (2) Providing reasonable access to lender personnel associated with the lender's administration of the Title IV, HEA programs for the purpose of obtaining relevant information. In providing reasonable access, the institution may not— (i) Refuse to supply any relevant information; (ii) Refuse to permit interviews with those personnel that do not include the presence of representatives of the lender's management; and (iii) Refuse to permit personnel interviews with those personnel that are not recorded by the lender. (Authority: 20 U.S.C. 1077, 1078–1, 1078–2, 1078–3, 1079, 1080, 1082) [57 FR 60323, Dec. 18, 1992, as amended at 58 FR 9120, Feb. 19, 1993; 64 FR 58965, Nov. 1, 1999]
Title 34: Education
PART 682—FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM
Subpart E—Federal Guaranteed Student Loan Programs
§ 682.500 Circumstances under which loans may be guaranteed by the Secretary.
§ 682.501 Extent of Federal guarantee under the Federal GSL programs.
§ 682.502 The application to be a lender.
§ 682.503 The guarantee agreement.
§ 682.504 Issuance of Federal loan guarantees.
§ 682.505 Insurance premium.
§ 682.506 Limitations on maximum loan amounts.
§ 682.507 Due diligence in collecting a loan.
§ 682.508 Assignment of a loan.
§ 682.509 Special conditions for filing a claim.
§ 682.510 Determination of the borrower's death, total and permanent disability, or bankruptcy.
§ 682.511 Procedures for filing a claim.
§ 682.512 Determination of amount payable on a claim.
§ 682.513 Factors affecting coverage of a loan under the loan guarantee.
§ 682.514 Procedures for receipt or retention of payments where the lender has violated program requirements for Federal GSL loans.
§ 682.515 Records, reports, and inspection requirements for Federal GSL program lenders.
