New Regulation Highlights for Lenders and Schools

As you know, new final regulations were issued by the U.S. Department of Education (ED) in October and November of 1999, incorporating provisions contained in the 1998 Reauthorization of the Higher Education Act (HEA).  These new regulations contain changes to many requirements for participation in and the administration of Title IV programs.  These regulatory changes have been addressed in previous UHEAA Bulletins.  They have also been the subject of ED training sessions and publications. In an effort to highlight some of these new regulations, the Utah Higher Education Assistance Authority (UHEAA) has complied the following brief list of provisions that may need special attention from lenders or schools.

• Notice of availability of income-sensitive repayment options.  Lenders are required to provide notice to borrowers regarding the availability of an income-sensitive repayment option when new loans are offered and when repayment options are provided.    §682.205(h)

• Record retention. Lender requirements for record retention have decreased to three years for loans paid in full by a borrowers.  Record retention requirements remain at five years for loans paid in full from any other source.   §682.414(a)(4)(iii)

• Subsequent disbursements. Lenders may make subsequent disbursements on loans, at the request of the school, even if a prior disbursement was returned by the student or school, unless the lender has knowledge that the student is no longer enrolled.   §682.207(b)(1)(vii)

• Resolution of disputes.  If a borrower disputes the terms of his or her loan in writing and the lender does not resolve the dispute, the lender's response must provide the borrower with a contact at the guaranty agency for resolution.   §682.208(c)(3)(ii)

• Loan certification.  Schools are required to certify loans for the lesser of the amount requested by the borrower or the regulatory loan limits.    §682.602(c)

• Exit counseling and the Student Loan Ombudsman's office.  Schools are required to include information on the availability of the Student Loan Ombudsman's office in exit counseling materials.    §682.604(g)(2)(vii)

Note: ED has provided the following contact information
for the Student Loan Ombudsman.
Telephone:  1-877-557-2575.
Web Site:  http://www.sfahelp.ed.govor  http://www.ombudsman.ed.gov
Address:  Office of the Ombudsman, Student Financial Assistance
U.S. Department of Education
Rm 3012, ROB #3; 7th and D Streets SW
Washington, D.C.  20202