[Federal Register Volume 64, Number 73 (Friday, April 16, 1999)]
[Rules and Regulations]
[Pages 18974-18982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9260]



[[Page 18973]]

_______________________________________________________________________

Part II





Department of Education





_______________________________________________________________________



34 CFR Part 682



Federal Family Education Loan Program; Final Rule

  Federal Register / Vol. 64, No. 73 / Friday, April 16, 1999 / Rules 
and Regulations  

[[Page 18974]]



DEPARTMENT OF EDUCATION

34 CFR Part 682

RIN 1840-AC55


Federal Family Education Loan Program

AGENCY: Department of Education.

ACTION: Final regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains corrections and other technical changes 
to the final regulations for the Federal Family Education Loan Program 
in 34 CFR Part 682. The regulations govern the Federal Stafford Loan 
Program, the Federal Supplemental Loans for Students (Federal SLS) 
Program, the Federal PLUS Program and the Federal Consolidation Loan 
Program, collectively referred to as the Federal Family Education Loan 
Programs.

EFFECTIVE DATE: April 16, 1999.

FOR FURTHER INFORMATION CONTACT: Pamela Moran or Patricia Beavan, 
Policy Section, Loans Branch, Division of Policy Development, Policy, 
Training, and Analysis Service, Department of Education, 400 Maryland 
Avenue, SW (Room 3053, ROB-3) Washington, DC 20202. Telephone 202-708-
8242. Individuals who use a telecommunications device for the deaf 
(TDD) may call the Federal Information Relay Service (FIRS) at 1-800-
877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: The regulations that are the subject of 
these corrections incorporate self-implementing statutory changes made 
to the Higher Education Act, as amended, by the Higher Education 
Amendments of 1992 (the 1992 Amendments), the Omnibus Budget 
Reconciliation Act of 1993 (OBRA), and the Higher Education Technical 
Amendments of 1993 (1993 Amendments). These regulations do not 
implement the Higher Education Amendments of 1998. Those amendments 
will be addressed by other regulations as needed. However, some 
technical changes have been modified to ensure that they do not 
conflict with those amendments.

Waiver of Proposed Rulemaking

    It is the practice of the Secretary to offer interested parties the 
opportunity to comment on proposed regulations. However, the provisions 
in these final regulations reflect needed technical corrections and 
changes to the Federal Family Education Loan Program (FFEL) 
regulations. These corrections and changes do not affect the 
substantive rights or obligations of individuals or institutions. 
Therefore, the Secretary has concluded that these regulations are 
technical in nature and do not necessitate public comment. Therefore, 
the Secretary finds that such a solicitation would be unnecessary and 
contrary to the public interest under 5 U.S.C. 553(b)(B).
    For the same reasons, the Secretary has determined, under section 
492(b)(2) of the Higher Education Act of 1965, as amended, that these 
regulations should not be subject to negotiated rulemaking.

Regulatory Flexibility Act Certification

    The Secretary certifies that these final regulations will not have 
significant economic impact on a substantial number of small entities. 
Small entities affected by these regulations are small institutions of 
higher education. These regulations contain technical corrections to 
current regulations. The changes will not have a significant economic 
impact on the institutions affected.

Paperwork Reduction Act of 1995

    These regulations have been examined under the Paperwork Reduction 
Act of 1995 and have been found to contain no information collection 
requirements.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. The objective of the 
Executive order is to foster an intergovernmental partnership and a 
strengthened federalism by relying on processes developed by State and 
local governments for coordination and review of proposed Federal 
financial assistance.
    In accordance with the order, this document is intended to provide 
early notification of the Department?s specific plans and actions for 
this program.

Assessment of Educational Impact

    Based on its own review, the Department has determined that the 
regulations in this document do not require transmission of information 
that is being gathered by or is available from any other agency or 
authority of the United States.

Electronic Access to This Document

    Anyone may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text of 
portable document format (pdf) on the World Wide Web at either of the 
following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html

    To use the pdf you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the pdf, call the U.S. Government Printing 
Office at (202) 512-1530 or, toll free at 1-888-293-6498.
    Anyone may also view these documents in text copy only on an 
electronic bulletin board of the Department. Telephone: (202) 219-1511 
or, toll free, 1-800-222-4922. The documents are located under Option 
G--Files/Announcements, Bulletins, and Press Releases.

    Note: The official version of a document is the document 
published in the Federal Register.

List of Subjects in 34 CFR Part 682

    Administrative practice and procedures, Colleges and universities, 
Education, Loan programs-education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

    Dated: April 8, 1999.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Number: 84.032, Federal 
Family Education Loan Program)

    The Secretary amends part 682 of Title 34 of the Code of Federal 
Regulations as follows:

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

    1. The authority citation for part 682 continues to read as 
follows:

    Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.


Sec. 682.100  [Amended]

    2. Section 682.100(a)(2) is amended by removing the word 
``beginning'' and adding, in its place, ``that began''; paragraph 
(a)(4) is amended by removing the phrase ``their repayment obligations 
with respect to loans received while they were students,'', and by 
adding in its place, ``other loans including loans:''; by removing 
``and'', after ``PLUS''; and at the end of the paragraph, before the 
period, is amended by adding ``, and existing loans obtained under the 
Consolidation Loan Program, and William D. Ford Direct Loan (Direct 
Loan) program

[[Page 18975]]

loans, if the application for the Consolidation loan was received on or 
after November 13, 1997''.
    3. Section 682.100(b)(2)(i)(C) is amended by adding, after the 
semi-colon, ``as in effect for periods of enrollment that began prior 
to July 1, 1994,''; and paragraph (b)(2)(iii) is amended by adding, 
after ``SLS'', ``(as in effect for periods of enrollment that began 
prior to July 1, 1994)''.


Sec. 682.101  [Amended]

    4. Section 682.101(b) is amended by removing ``Eligible educational 
institutions'', and by adding, in its place, ``Institutions of higher 
education''.
    5. Section 682.101(c) is amended by adding, after ``and,'' ``for 
periods of enrollment that began''.


Sec. 682.102  [Amended]

    6. Section 682.102(e)(1) is amended by removing in the fourth 
sentence after the italicized heading, ``borrower'' and by adding, in 
its place, ``student''; and after ``borrower's'', by adding, ``or 
student's'' both times it appears; and in the last sentence, by adding 
``Stafford loan'' after ``for''.
    7. Section 682.102(e)(2) is amended by removing ``Generally'' and 
by adding, in its place, ``In the case of a subsidized Stafford 
loan,''; in the second sentence, by removing ``In most cases, the'' and 
by adding, in its place, ``The''; by adding a new sentence after the 
third sentence to read, ``In the case of an unsubsidized Stafford loan, 
the borrower is responsible for interest during these periods.''; and 
in the last sentence, after ``repayment period'', by adding, ``for the 
subsidized and unsubsidized Stafford loan,''.
    8. Section 682.102(e)(4), first sentence, is amended by adding 
``fully'' after ``is''.


Sec. 682.103  [Amended]

    9. Section 682.103(a) is amended by adding ``and Federal GSL 
programs'' after ``FFEL''; in paragraph (c), after ``FFEL'', by adding, 
``and Federal GSL''; and in paragraph (d), after ``FFEL'', by adding, 
``and Federal GSL''.


Sec. 682.200  [Amended]

    10. Section 682.200(a)(1) is amended by removing ``College Work-
Study (CWS) Program''; by removing ``Consolidation'' and by adding, in 
alphabetical order, ``Federal Consolidation''; by adding in 
alphabetical order, after the term ``Enrolled'', ``Federal Pell Grant 
Program'', ``Federal Perkins Loan Program'', ``Federal PLUS Program'', 
``Federal Work-Study (FWS) Program'', and ``Full-time student''; by 
removing ``Guaranteed Student Loan (GSL) Program'', ``Pell Grant 
Program'', ``Perkins Loan Program'', and ``PLUS Program''; and by 
removing the term ``State''.
    11. Section 682.200 is amended in paragraph (a)(2) by adding after 
``Educational program'', a new term ``Federal Family Education Loan 
Program (formerly known as the Guaranteed Student Loan (GSL) 
Program)''; by removing ``or association'' after ``Nationally 
recognized accrediting agency''; by removing ``Program of study by 
correspondence'' and by adding, in alphabetical order ``Correspondence 
course''; by adding ``State'' after ``Secretary''; by removing 
``Vocational school'', and by adding, in alphabetical order, 
``Postsecondary Vocational Institution''; by adding a new paragraph 
(a)(3); in paragraph (b), in the definition of ``Borrower'', after 
``FFEL'', by adding ``Program''; by revising the definitions of ``Co-
maker'' and ``Subsidized Stafford Loan''; in the definition of 
``Default'', by adding after ``promissory note,'', ``the Act, or 
regulations as applicable,''; in the definition of ``Disbursement'', 
after ``to'', by adding, ``a holder, in the case of a Consolidation 
loan, or to''; after ``master check'', by adding ``or by electronic 
funds transfer''; by removing ``represents'', and by adding, in its 
place, ``may represent'', by removing ``more than one borrower,'', and 
by adding, in its place, ``borrowers'', and by removing ``or by 
electronic funds transfer''; in the definition of ``Disposable 
income'', in the first sentence, by removing ``a borrower's'', and by 
adding, in its place, ``an individual's''; after ``source'', by adding, 
``, including spousal income,''; in the second sentence, after 
``Federal'', by removing ``and State'', and by adding, in its place, 
``, State, and local''; in the definition of ``Estimated financial 
assistance'', in paragraph (2)(ii), by adding ``Federal'' before 
``Perkins''; by removing ``College'', and by adding, in its place, 
``Federal''; and by removing ``for an acceptable reason''; removing the 
definition of ``Full-time student''; in the definition of ``Grace 
period'', in the first sentence, by removing ``eligible institution'', 
and by adding, in its place, ``institution of higher education''; in 
the third sentence, by removing ``eligible institution'', and by 
adding, in its place, ``institution of higher education''; in the 
definition of ``Half-time student'', in the first sentence, by removing 
``eligible institution'', and by adding, in its place, ``institution of 
higher education,''; and by adding before the period ``as defined in 34 
CFR 668.2''; and in the second sentence, by removing ``program of study 
by correspondence'', and by adding, in its place, ``correspondence 
course''; in the definition of ``Satisfactory repayment arrangement'', 
in paragraph (1), by removing the reference to ``section 428F(b) of the 
HEA'' and by adding, in its place, ``Sec. 682.401(b)(4)''; after 
``consecutive'' by adding ``,on-time,''; in paragraph (2), after 
``consecutive'' by adding, ``, on-time,''; in the definition of 
``School'', in paragraph (1), by removing ``section 481 of the Act'' 
and by adding, in its place, ``34 CFR 600.4''; by removing paragraphs 
(2) through (4) and redesignating paragraph (5) as paragraph (2); in 
the redesignated paragraph (2), by removing ``eligible institution'', 
and by adding, in its place, ``institution of higher education''; in 
the definition of ``Unsubsidized Stafford loan'', before the period, by 
adding ``but do qualify for special allowance under Sec. 682.302'' to 
read as follows:


Sec. 682.200  Definitions.

* * * * *
    (a) * * *
    (3) The definition for cost of attendance is set forth in section 
472 of the Act, as amended.
    (b) * * *
    (2) * * *
Co-Maker: One of two married individuals who jointly borrow a 
Consolidation loan, each of whom are eligible and who are jointly and 
severally liable for repayment of the loan. The term co-maker also 
includes one of two parents who are joint borrowers as previously 
authorized in the PLUS Program.
* * * * *
Subsidized Stafford Loan: A Stafford loan that qualifies for interest 
benefits under Sec. 682.301(b) and special allowance under 
Sec. 682.302.
* * * * *


Sec. 682.201  [Amended]

    12. Section 682.201(a)(3) is amended by adding after ``(e.g.,'', 
``denial of a PLUS loan to a parent based on adverse credit,''.
    13. Section 682.201(a)(4)(i) is amended by removing ``and interest 
that has'', and by adding, in its place,'', interest, collection costs, 
legal costs, and late charges that have''.
    14. Section 682.201(a)(4)(ii)(A) is amended by adding after 
``note'', ``that includes the same terms and conditions as the original 
note signed by the borrower''.
    15. Section 682.201(a)(5) is amended by removing the paragraph 
designation

[[Page 18976]]

``(i)''; by removing paragraph (a)(5)(ii); by redesignating paragraphs 
(i)(A) and (B) as paragraphs (a)(5)(i) and (ii), respectively; and by 
removing the semi-colon at the end of redesignated paragraph 
(a)(5)(ii), and by adding, in its place, a period.
    16. Section 682.201(a)(6) is amended by removing the cross 
reference to ``668.7(b)'' and by adding, in its place, ``668.32(e)''.
    17. Section 682.201(b)(1)(iii) is amended by removing the cross 
reference to ``668.7'' and by adding, in its place, ``668.33''.
    18. Section 682.201(b)(1)(iv) is amended by removing the cross 
reference to ``668.7'' and by adding, in its place, ``668.35 and meets 
the requirements of judgment liens that apply to the student under 34 
CFR 668.32(g)(3)''.
    19. Section 682.201(c)(1)(i) is amended by removing ``a 
Consolidation loan made'', and by adding, in its place, ``an 
application received by a consolidating lender'', by removing ``but'', 
and by adding, in its place, ``, and for which the loan was made''; by 
removing ``are'', and adding, in its place ``is''.
    20. Section 682.201(c)(1)(ii) is amended by removing ``, or, in the 
case of a PLUS borrower, the dependent student on whose behalf the 
parent is borrowing has ceased,''.
    21. Section 682.201(c)(1)(iii)(C) is amended by adding, after 
``status'', ``on a Title IV loan''.


Sec. 682.202  [Amended]

    22. Section 682.202 is amended by adding a new paragraph (h) to 
read as follows:
* * * * *
    (h) Special allowance. Pursuant to Sec. 682.412(c), a lender may 
charge a borrower the amount of special allowance paid by the Secretary 
on behalf of the borrower.


Sec. 682.204  [Amended]

    23. Section 682.204 is amended, in paragraph (a)(1) by removing, 
``a dependent'' and by adding, in its place, ``an''; in paragraph 
(a)(2), after ``Stafford Loan'', by adding, ``and Direct Stafford 
Loan''; in paragraph (a)(3), before ``academic'', by adding, ``an''; in 
paragraph (a)(4), after ``admission in the program'', by adding, ``and 
who is not a graduate or professional student''; in paragraph (b) by 
revising the introductory text; in paragraph (b)(2), by removing 
``$65,000'', and by adding, in its place, ``$65,500''; in paragraph (c) 
by adding ``(1)'' after the italicized paragraph heading; removing the 
word ``graduate'', and by adding, in its place, ``undergraduate''; by 
removing, after ``study'', the word ``for'' and by adding, in its 
place, ``under''; by adding a new paragraph (c)(2); in paragraph (d) by 
removing in the first sentence, ``paragraph (b)'', and by adding, in 
its place, ``paragraphs (a) and (c)''; in the second sentence, by 
removing ``in combination with Unsubsidized Stafford Loans'', and by 
adding, in its place, ``in addition to the amounts allowed under 
paragraphs (a) and (c) of this section''; in paragraph (d)(3), after 
``admission into the program'', by adding, ``and who is not a graduate 
or professional student''; in paragraph (e) in the italicized heading 
preceding the introductory text by removing, ``Unsubsidized Stafford 
Loan Program'' and by adding, in its place, ``Combined Federal Stafford 
and SLS and Federal Direct Stafford''; in paragraph (f)(2)(i)(C) by 
adding, after ``length is'', the word, ``at''; in paragraph (f)(4)(ii), 
by removing ``study'' and by adding, in its place, ``student''; in 
paragraph (h) by removing ``may borrow for enrollment in an eligible 
program of study''; and in paragraph (j) by removing ``HPSL'', and by 
adding, in its place, ``or HEAL'', to read as follows:


Sec. 682.204  Maximum loan amounts.

* * * * *
    (b) Stafford Loan Program aggregate limits. The aggregate unpaid 
principal amount of all loans made under the Stafford Loan and Direct 
Stafford Loan Programs may not exceed--
* * * * *
    (c) * * *
    (2) In the case of an independent undergraduate student, a graduate 
or professional student, or certain dependent undergraduate students, 
the total amount the student may borrow for any period of enrollment 
under the Unsubsidized Stafford Loan and Direct Unsubsidized Stafford 
Loan Programs may not exceed the amounts determined under paragraph (a) 
of this section less any amount received under the Federal Stafford 
Loan Program, in combination with the amounts determined under 
paragraph (d) of this section.
* * * * *


Sec. 682.205  [Amended]

    24. Section 682.205(a)(2)(xiii) is amended by removing after 
``wages'', the word, ``will'', and by adding, in its place, ``may''.


Sec. 682.206  [Amended]

    25. Section 682.206(e)(2) is amended by removing ``Federal PLUS 
Program loan and''; and by adding, before the period, ``,or may be made 
to an eligible borrower with an endorser who is secondarily liable for 
repayment of the loan''.


Sec. 682.207  [Amended]

    26. Section 682.207 is amended in paragraph (a)(1) by removing ``, 
SLS,'' and ``, Federal SLS,''; by removing ``other than'' after 
``loans''; and by adding, in its place, ``. This section does not 
prescribe procedures for''; in paragraph (b)(1)(i)(B) by removing 
``SLS'' and by adding, in its place, ``PLUS''; in paragraph 
(b)(1)(ii)(A), by removing ``if required by the guarantor or lender,'' 
and by adding, in its place, ``that''; in paragraph (b)(1)(ii)(C), by 
removing ``eligible institution'', and by adding, in its place, 
``institution of higher education''; in paragraph (b)(1)(v)(B)(1), by 
removing ``to the eligible institution'', and by adding, in its place, 
``in accordance with the disbursement schedule provided by the 
school'', in paragraph (b)(1)(v)(B)(2), by removing ``eligible 
institution'', and by adding, in its place, ``institution of higher 
education''; by adding a new paragraph (b)(1)(v)(B)(3); in paragraph 
(c) introductory text, by removing ``A'', and by adding, in its place, 
``Except for a borrower attending an eligible foreign institution, a''; 
and in paragraph (d)(2)(i)(C) by adding, ``and has not previously 
received a loan under this part'' after ``intended'' to read as 
follows:


Sec. 682.207  Due diligence in disbursing a loan.

* * * * *
    (b) * * *
    (1) * * *
    (v) * * *
    (B) * * *
    (3) In the case of a student enrolled in a foreign institution, a 
check from the lender that is made co-payable to the institution and 
sent directly to either the parent or the eligible institution.
* * * * *


Sec. 682.208  [Amended]

    27. Section 682.208(b)(1)(iii) is amended by removing ``within'', 
and by adding, in its place, ``no less frequently than every''; and by 
adding ``or quarterly'' after ``days''.
    28. Section 682.208(c)(2) is amended by removing ``eligible 
school'' and by adding, in its place, ``institution of higher 
education''.
    29. Section 682.208 is amended in paragraph (e)(1) by removing 
``or'' before ``SLS''; by adding ``, or Consolidation'' after ``SLS''; 
and in paragraph (e)(3) by removing the cross reference to ``(15)(ii)'' 
and adding, in its place, ``(17)(ii)''.

[[Page 18977]]

Sec. 682.209  [Amended]

    30. Section 682.209 is amended in paragraph (a)(1) by removing 
``fully''; in paragraph (a)(2)(i), in the third sentence, removing 
``last'', and by adding, in its place, ``first''; in paragraph 
(a)(2)(ii), after the reference to ``(a)(2)(iii)'', by adding ``, 
(a)(2)(iv), and (a)(2)(v); by adding new paragraphs (a)(2)(iv) and 
(a)(2)(v); and adding ``; and'' at the end, and removing ``and'' at the 
end of paragraph (a)(3)(i)(A); in paragraph (a)(3)(i)(B), before ``6'', 
by adding ``the day after''; by removing ``eligible school'' and by 
adding, in its place, ``institution of higher education and''; by 
adding a new paragraph (a)(3)(i)(C); in paragraph (a)(3)(ii)(B), before 
the semi-colon, by adding, ``unless the borrower during this period has 
submitted payments with instructions that those payments are intended 
for future installment payments''; in paragraph (a)(3)(ii)(C), after 
``the'', by adding ``post deferment''; in paragraph (a)(4)(ii) by 
removing ``,according to the schedule required in Sec. 682.602''; in 
paragraph (a)(4)(iii) by removing, ``required under Sec. 682.602''; in 
paragraph (a)(6)(iii), in the third sentence, after ``includes'', 
removing the remainder of the sentence, and by adding, in its place, 
``any borrower whose Consolidation loan application is received by the 
lender on or after January 1, 1993.''; paragraph (a)(6)(vii)(A) is 
revised; paragraph (a)(6)(viii)(A) is revised; in paragraph 
(a)(6)(viii)(C), by removing ``If'', and by adding, in its place, 
``Except in the case of a Consolidation loan, if''; in paragraph 
(a)(6)(ix) by removing ``may'', and adding, in its place, ``shall, to 
the extent practicable''; in paragraph (a)(7)(ii), before ``12-'', by 
adding ``10-,''; removing the cross reference to ``Sec. 682.208(h)'' 
and adding, in its place, ``Sec. 682.209(h)''; in paragraph (e)(2)(i) 
by removing the cross reference to ``Sec. 682.202(a)(2)(iv)'' and by 
adding, in its place, ``Sec. 682.202(a)(2)(ii) and (3)(ii)''; in 
paragraph (f)(2)(i) by removing the cross reference to 
``Sec. 682.202(a)(2)(iv)'' and by adding, in its place, 
``Sec. 682.202(a)(2)(ii) and (3)(ii), as appropriate''; in paragraph 
(g)(1) by adding ``Federal'' before ``PLUS''; in paragraph (h)(2) by 
redesignating paragraphs (i) through (v) as paragraphs (ii) through 
(vi); by adding a new paragraph (h)(2)(i); in paragraph (h)(3) by 
removing ``In'' and by adding, in its place, ``Except for a 
Consolidation loan disbursed on or after July 1, 1994, in''; in 
paragraph (h)(5)(ii) by removing ``for'' and adding, in its place, 
``the borrower the option of a'' to read as follows:


Sec. 682.209  Repayment of a loan.

* * * * *
    (a) * * *
    (2) * * *
    (iv) If the lender first learns after the fact that an SLS borrower 
has entered the repayment period, the repayment begins no later than 75 
days after the date the lender learns that the borrower has entered the 
repayment period.
    (v) The lender may establish a first payment due date that is no 
more than an additional 30 days beyond the period specified in 
paragraphs (a)(2)(i)--(a)(2)(iv) of this section in order for the 
lender to comply with the required deadline contained in 
Sec. 682.205(c)(1).
* * * * *
    (3) * * *
    (i) * * *
    (C) For a borrower with a loan with a variable interest rate, the 
day after 6 months following the date on which the borrower is no 
longer enrolled on at least a half-time basis at an institution of 
higher education.
* * * * *
    (6) * * *
    (vii) * * *
    (A)(1) The amount of the borrower's installment payment is 
scheduled to change (usually by increasing) during the course of the 
repayment period; or
    (2) If the loan has a variable interest rate that changes annually, 
the lender may establish a repayment schedule that may have adjustments 
in the payment amount as provided under paragraph (a)(6)(i) of this 
section; and
* * * * *
    (viii) * * *
    (A)(1) The amount of the borrower's installment payment is adjusted 
annually, based on the borrower's expected total monthly gross income 
received by the borrower from employment and from other sources during 
the course of the repayment period; or
    (2) If the loan has a variable interest rate that changes annually, 
the lender may establish a repayment schedule that may have adjustments 
in the payment amount as provided under paragraph (a)(6)(i) of this 
section; and
* * * * *
    (h) * * *
    (2) * * *
    (i) Is less than $7,500, the borrower shall repay the Consolidation 
loan in not more than 10 years;
* * * * *


Sec. 682.210  [Amended]

    31. Section 682.210 is amended by adding ``on that loan'' after 
``deferment'' in paragraph (a)(8); and by removing ``(r)'', and adding, 
in its place ``(s)'', in paragraph (a)(10).
    32. Section 682.210 is amended by removing ``eligible 
institution'', and by adding, in its place, ``institution of higher 
education'' in paragraph (b)(3) introductory text,; by adding ``, a 
Direct Stafford,'' after ``received a Stafford'' in paragraph (b)(4); 
and by adding ``of paragraph (b)(5)'' after ``purposes'' in paragraph 
(b)(7), introductory text.
    33. Section 682.210 is amended by adding, ``of paragraphs (s)(2) 
through (s)(6)'' in the second sentence, after ``purposes'' in 
paragraph (s)(1); and by removing ``for'' the first time it appears, 
and adding, in its place, ``based on the borrower's'' in paragraph 
(s)(2).


Sec. 682.211  [Amended]

    34. Section 682.211 is amended by removing ``(h)'', and adding, in 
its place, ``(g)'' in paragraph (a)(2); and by adding, ``based on the 
same or differing condition'', after ``impaired'' in paragraph (a)(3).
    35. Section 682.211(d) is amended by adding, in the first sentence, 
``but prior to claim payment'' after ``default''; and by removing 
``repayment obligation'' and adding, in its place, ``agreement to repay 
the debt'' in the second sentence.
    36. Section 682.211(e) is amended by removing ``or a forbearance 
granted under paragraph (g) of this section'' in the first sentence.
    37. Section 682.211 is amended by removing paragraph (f)(4); 
redesignating paragraphs (f)(5) through (f)(9) as paragraphs (f)(4) 
through paragraph (f)(8), respectively; removing ``682.402(d)'', and 
adding, in its place, ``682.402(f)'' in redesignated paragraph (f)(4); 
and by removing ``is established in accordance with 
Sec. 682.209(a)(3)(ii)(B)'', and adding, in its place, ``, which can be 
no later than 45 days after the period ends'' in redesignated paragraph 
(f)(8).
    38. Section 682.211 is further amended by removing paragraph (g); 
redesignating paragraphs (h) through (j) as paragraphs (g) through (i), 
respectively; removing ``paragraph (j)(5)'' and adding, in its place, 
``paragraph (i)(5) of this section'', in redesignated paragraph (g); 
removing ``paragraph (i)(1)'' and adding, in its place, ``paragraph 
(h)(1)'' in redesignated paragraph (h)(2); removing ``paragraph 
(i)(2)(i)'' and adding, in its place, ``paragraph (h)(2)(i)'' in 
redesignated paragraph (h)(3)(i); removing ``paragraph (i)(2)(ii)(B)'' 
and adding, in its place, ``paragraph (h)(2)(ii)(B)'' in redesignated 
paragraph (h)(3)(ii); removing ``paragraph (i)(2)(ii)(C)'', and adding, 
in its place, ``paragraph (h)(2)(ii)(C)'' in redesignated paragraph 
(h)(3)(iii); removing ``paragraph (j)(2)'', ``paragraph

[[Page 18978]]

``(j)(2)(ii)'', and ``paragraph (j)(4)'', and adding, in their place, 
``paragraph (i)(2)'', ``paragraph (i)(2)(ii)'', and ``paragraph 
(i)(4)'', respectively, in redesignated paragraph (i)(1); removing 
``paragraph (j)(2)(i)'', and adding, in its place, ``paragraph 
``paragraph (i)(2)(i)'' in redesignated paragraph (i)(4).


Sec. 682.215  [Amended]

    39. Section 682.215 is amended by adding ``or other non-profit 
private'' after ``public'' in paragraph (e)(2)(i).


Sec. 682.300  [Amended]

    40. Section 682.300 is amended by adding ``except as provided in 
paragraph (c)(4) of this section'' before the word ``if'' in paragraph 
(b)(2)(ii); by removing ``restricted'' in paragraph (b)(2)(ii)(B); by 
removing ``or'' after the semicolon in paragraph (b)(2)(vi); by 
removing the period at the end of paragraph (b)(2)(vii), and by adding, 
in its place, ``; or''; and by adding a new paragraph (b)(2)(viii) to 
read as follows:


Sec. 682.300  Payment of interest benefits on Stafford and 
Consolidation loans.

* * * * *
    (b) * * *
    (2) * * *
    (viii) The date the lender determines that the borrower is eligible 
for loan discharge under Sec. 682.402(d) or (e).''
* * * * *


Sec. 682.301  [Amended]

    41. Section 682.301 is amended by removing, ``academic period'' and 
adding, in its place, ``period of enrollment'' in paragraph (b)(1); and 
by removing, ``academic period'' and adding, in its place, ``period of 
enrollment'' in paragraph (b)(2).


Sec. 682.302  [Amended]

    42. Section 682.302 is amended by removing, ``prior to'' and 
adding, in its place, ``on or before'' in paragraph (d)(1)(v); by 
removing ``guaranty agency returns a claim'' and adding, in its place, 
``lender received a returned claim from the guaranty agency on a loan'' 
in paragraph (d)(1)(vii); by redesignating paragraph (d)(2) as 
paragraph (d)(3); and by adding a new paragraph (d)(2) to read as 
follows:


Sec. 683.302  Payment of special allowance on FFEL loans.

* * * * *
    (d) * * *
    (2) In the case of a loan disbursed on or after October 1, 1992, 
the Secretary does not pay special allowance on a loan if--
    (i) The disbursement check is returned uncashed to the lender or 
the lender is notified that the disbursement made by electronic funds 
transfer or master check will not be released from the restricted 
account maintained by the school; or
    (ii) The check for the disbursement has not been negotiated before 
the 120th day after the date of disbursement or the disbursement made 
by electronic funds transfer or master check has not been released from 
the restricted account maintained by the school before that date.
* * * * *
    43. Section 682.305 is amended by revising paragraph (a)(3)to read 
as follows:


Sec. 682.305  Procedures for payment of interest benefits and special 
allowance.

    (a) * * *
    (3)(i)(A) The Secretary reduces the amount of interest benefits and 
special allowance payable to the lender by--
    (1) The amount of origination fees the lender was authorized to 
collect during the quarter under Sec. 682.202(c), whether or not the 
lender actually collected that amount; and
    (2) The amount of lender fees payable under paragraph (a)(3)(ii) of 
this section.
    (B) The Secretary increases the amount of interest benefits and 
special allowance payable to the lender by the amount of origination 
fees refunded to borrowers during the quarter under Sec. 682.202(c).
    (ii) For any FFEL loan made on or after October 1, 1993, a lender 
shall pay the Secretary a loan fee equal to 0.50% of the principal 
amount of the loan.
* * * * *


Sec. 682.400  [Amended]

    44. Section 682.400 is amended by removing ``GSL'' and adding, in 
its place ``FFEL'' in paragraph (a); and by removing ``and'' before 
``bankruptcy'' and adding ``, closed school and false certification 
discharge'' after ``bankruptcy'' in paragraph (b)(1)(ii).


Sec. 682.401  [Amended]

    45. Section 682.401 is amended by removing the comma after 
``Stafford'', and by adding, in its place, ``and'', removing ``, 
PLUS'', and removing ``(h)'', and adding, in its place, ``(g)'' in 
paragraph (b)(1); removing ``(g)'', and adding, in its place, ``(h)'' 
in paragraph (b)(2); removing ``or'' at the end of paragraph 
(b)(2)(ii)(A); removing the period at the end of paragraph 
(b)(2)(ii)(B), and adding, in its place, ``; or''; by adding a new 
paragraph (b)(2)(ii)(C); by removing ``Sec. 682.204(i)'' and adding, in 
its place, ``Sec. 682.204(k)'' in paragraph (b)(2)(iii); by adding a 
new paragraph (b)(4)(v); by removing ``, SLS,'' in paragraph 
(b)(5)(ii); by removing ``sections 428A(a)(2) or'', and adding, in its 
place, ``section'' in paragraph (b)(6)(i)(C); revising paragraph 
(b)(10)(iv); removing ``Sec. 682.401(b)(9)(vi)(A) and (B)'' and adding, 
in its place, ``Sec. 682.401(b)(10)(vi)(A) and (B)'' in paragraph 
(b)(10)(v); and revising paragraphs (b)(15) through (b)(28) to read as 
follows:


Sec. 682.401  Basic program agreement.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (C) A period that does not exceed 12 months.
* * * * *
    (4) * * *
    (v) A guaranty agency must inform the borrower that he or she may 
only obtain reinstatement of borrower eligibility under this section 
once.
* * * * *
    (10) * * *
    (iv) The amount of the insurance premium may not exceed--
    (A) For a loan disbursed on or before June 30, 1994, 3 percent of 
the principal balance of the loan; or
    (B) For a loan disbursed on or after July 1, 1994, 1 percent of the 
principal balance of the loan.
* * * * *
    (15) Guarantee agency verification of default data. A guaranty 
agency shall respond to an institution's written request for 
verification of its default rate data for purposes of an appeal 
pursuant to 34 CFR 668.17(c)(1)(i) within 15 working days of the date 
the agency receives the institution's written request pursuant to 34 
CFR 668.17(c)(8), and simultaneously provide a copy of that response to 
the Secretary's designated Department official.
    (16) Guaranty agency administration. In the case of a State loan 
guarantee program administered by a State government, the program must 
be administered by a single State agency, or by one or more private 
nonprofit institutions or organizations under the supervision of a 
single State agency. For this purpose, ``supervision'' includes, but is 
not limited to, setting policies and procedures, and having full 
responsibility for the operation of the program.
    (17) Loan assignment. (i) Except as provided in paragraph 
(b)(17)(iii) of this section, the guaranty agency must allow a loan to 
be assigned only if the loan is fully disbursed and is assigned to--
    (A) An eligible lender;
    (B) A guaranty agency, in the case of a borrower's default, death, 
total and

[[Page 18979]]

permanent disability, or filing of a bankruptcy petition, or for other 
circumstances approved by the Secretary, such as a loan made for 
attendance at a school that closed or a false certification claim;
    (C) An educational institution, whether or not it is an eligible 
lender, in connection with the institution's repayment to the agency or 
to the Secretary of a guarantee or a reinsurance claim payment made on 
a loan that was ineligible for the payment;
    (D) A Federal or State agency or an organization or corporation 
acting on behalf of such an agency and acting as a conservator, 
liquidator, or receiver of an eligible lender; or
    (E) The Secretary.
    (ii) 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.
    (iii) The guaranty agency must allow a loan to be assigned under 
paragraph (b)(17)(i) of this section, following the first disbursement 
of the loan if the assignment does not result in a change in the 
identity of the party to whom payments must be made.
    (18) Transfer of guarantees. Except in the case of a transfer of 
guarantee requested by a borrower seeking a transfer to secure a single 
guarantor, the guaranty agency may transfer its guarantee obligation on 
a loan to another guaranty agency, only with the approval of the 
Secretary, the transferee agency, and the holder of the loan.
    (19) Standards and procedures. (i) The guaranty agency shall 
establish, disseminate to concerned parties, and enforce standards and 
procedures for--
    (A) Ensuring that all lenders in its program meet the definition of 
``eligible lender'' in section 435(d) of the Act and have a written 
lender agreement with the agency;
    (B) School and lender participation in its program;
    (C) Limitation, suspension, termination of school and lender 
participation;
    (D) Emergency action against a participating school or lender;
    (E) The exercise of due diligence by lenders in making, servicing, 
and collecting loans; and
    (F) The timely filing by lenders of default, death, disability, 
bankruptcy, closed school, false certification, and ineligible loan 
claims.
    (ii) The guaranty agency shall ensure that its program and all 
participants in its program at all times meet the requirements of 
subparts B, C, D, and F of this part.
    (20) Monitoring student enrollment. The guaranty agency shall 
monitor the enrollment status of a FFEL program borrower or student on 
whose behalf a parent has borrowed that includes, at a minimum, 
reporting to the current holder of the loan within 60 days any change 
in the student's enrollment status reported that triggers--
    (i) The beginning of the borrower's grace period; or
    (ii) The beginning or resumption of the borrower's immediate 
obligation to make scheduled payments.
    (21) Submission of interest and special allowance information. Upon 
the Secretary's request, the guaranty agency shall submit, or require 
its lenders to submit, information that the Secretary deems necessary 
for determining the amount of interest benefits and special allowance 
payable on the agency's guaranteed loans.
    (22) Submission of information for reports. The guaranty agency 
shall require lenders to submit to the agency the information necessary 
for the agency to complete the reports required by Sec. 682.414(b).
    (23) Guaranty agency transfer of information. (i) A guaranty agency 
from which another guaranty agency requests information regarding 
Stafford and SLS loans made after January 1, 1987, to students who are 
residents of the State for which the requesting agency is the principal 
guaranty agency as defined in Sec. 682.800(d) shall provide--
    (A) The name and social security number of the student; and
    (B) The annual loan amount and the cumulative amount borrowed by 
the student in loans under the Stafford and SLS programs guaranteed by 
the responding agency.
    (ii) The reasonable costs incurred by an agency in fulfilling a 
request for information made under paragraph (b)(23)(i) of this section 
must be paid by the guaranty agency making the request.
    (24) Information on defaults. The guaranty agency shall upon the 
request of a school, furnish information with respect to students, 
including the names and addresses of such students, who were enrolled 
at that school and who are in default on the repayment of any loan 
guaranteed by that agency.
    (25) Information on loan sales or transfers. The guaranty agency 
must, upon the request of a school, furnish to the school last attended 
by the student, information with respect to the sale or transfer of a 
borrower's loan prior to the beginning of the repayment period, 
including--
    (i) Notice of assignment;
    (ii) The identity of the assignee;
    (iii) The name and address of the party by which contact may be 
made with the holder concerning repayment of the loan; and
    (iv) The telephone number of the assignee or, if the assignee uses 
a lender servicer, another appropriate number for borrower inquiries.
    (26) Third-party servicers. The guaranty agency may not enter into 
a contract with a third-party servicer that the Secretary has 
determined does not meet the financial and compliance standards under 
Sec. 682.416. The guaranty agency shall provide the Secretary with the 
name and address of any third-party servicer with which the agency 
enters into a contract and, upon request by the Secretary, a copy of 
that contract.
    (27) Collection charges and late fees on defaulted FFEL loans being 
consolidated. (i) A guaranty agency may add collection costs in an 
amount not to exceed 18.5 percent of the outstanding principal and 
interest to a defaulted FFEL Program loan that is included in a Federal 
Consolidation loan.
    (ii) When returning the proceeds from the consolidation of a 
defaulted loan to the Secretary, a guaranty agency may only retain the 
amount added to the borrower's balance pursuant to paragraph (b)(27)(i) 
of this section.
    (28) Change in agency's records system. The agency shall provide 
written notification to the Secretary at least 30 days prior to placing 
its new guarantees or converting the records relating to its existing 
guaranty portfolio to an information or computer system that is owned 
by, or otherwise under the control of, an entity that is different than 
the party that owns or controls the agency's existing information or 
computer system. If the agency is soliciting bids from third parties 
with respect to a proposed conversion, the agency shall provide written 
notice to the Secretary as soon as the solicitation begins. The 
notification described in this paragraph must include a concise 
description of the agency's conversion project and the actual or 
estimated cost of the project.
* * * * *


Sec. 682.402  [Amended]

    46. Section 682.402 is amended by adding ``unless that borrower 
would qualify for discharge of the loan under these regulations'' 
before the period at the end of paragraph (a)(2); by removing ``, on or 
after July 23, 1992'' in paragraph (b)(1); by removing ``the'' before 
``light'' in paragraph (d)(6)(ii)(G); by adding ``, the Secretary'' 
after ``lender'' in paragraph (e)(6)(v); by removing 
``(e)(10)(iii)(C)'' and adding, in its place, ``(e)(10)(ii)(C)'' in 
paragraph (e)(10)(ii)(D)(2); by removing ``(e)(10)(iii)(C)'', and 
adding, in its place,

[[Page 18980]]

``(e)(10)(ii)(C)'' in paragraph (e)(10)(ii)(E); by removing 
``(e)(10)(iv)(B)'', and adding, in its place, ``(e)(10)(iv)'' in 
paragraph (e)(11); by removing the first paragraph designated as 
(e)(13); by removing ``(d) through (i)'', and adding, in its place, 
``(f) through (m)'' in paragraph (f)(1); by adding, ``debtor's attorney 
or the'' after ``issued by the'' in paragraph (f)(3); by removing 
``(e)'', and adding, in its place, ``(g)'' in paragraph (f)(5)(i); by 
removing ``(d)(5)(i)'', and adding, in its place, ``(f)(5)(i)'' in 
paragraph (f)(5)(ii); by removing ``(d)(2)'', and adding, in its place, 
``(f)(3)'' in paragraph (g)(2)(iv)(A); by removing ``(f)'', and adding, 
in its place, ``(g)'' in paragraph (h)(1)(i); by removing ``(g)'', and 
adding, in its place, ``(i)'' in paragraph (h)(1)(ii); by revising 
paragraph (h)(2)(i); by adding ``closed school or false certification'' 
after ``of a'' in paragraph (h)(2)(iii); by removing ``Federal'' in 
paragraph (h)(2)(v); by revising paragraph (h)(3)(iii); by removing 
``(h)(2)'', and adding, in its place, ``(i)(2)'' in paragraph 
(i)(3)(ii); by revising paragraph (m)(1); and by adding ``as provided 
in Sec. 682.210(a)(5)'' after the word ``deferment'' in paragraph 
(m)(2) to read as follows:


Sec. 682.402  Death, disability, closed school, false certification, 
and bankruptcy payments.

* * * * *
    (h) * * *
    (2)(i) The amount of loss payable--
    (A) On a death or disability claim is equal to the sum of the 
remaining principal balance and interest accrued on the loan, 
collection costs incurred by the lender and applied to the borrower's 
account within 30 days of the date those costs were actually incurred, 
and unpaid interest up to the date the lender should have filed the 
claim.
    (B) On a bankruptcy claim is equal to the unpaid balance of 
principal and interest determined in accordance with paragraph (h)(3) 
of this section.
* * * * *
    (3) * * *
    (iii) During the period required by the guaranty agency to approve 
the claim and to authorize payment or to return the claim to the lender 
for additional documentation not to exceed--
    (A) 45 days for death, disability or bankruptcy claims; or
    (B) 90 days for closed school and false certifications.
* * * * *
    (m) * * *
    (1) Includes any period during which the lender does not require 
the borrower to make a payment on the loan.
* * * * *


Sec. 682.403  [Amended]

    47. Section 682.403 is amended by removing ``eligible educational 
institution'' both times it appears, and by adding, in its place, 
``institution of higher education'' in paragraph (a)(2)(iii)(D); by 
revising paragraph (d); by removing ``sections 422(c) and (d)'' and 
adding, in its place, ``section 422'' in paragraph (f) to read as 
follows:


Sec. 682.403  Federal advances for claims payments.

* * * * *
    (d) The Secretary makes an advance to a guaranty agency--
    (1) On terms and conditions specified in an agreement between the 
Secretary and the guaranty agency;
    (2) To ensure that the agency will fulfill its lender-of-last 
resort obligation; and
    (3) To meet the agency's immediate cash needs and to ensure the 
uninterrupted payment of claims when the Secretary has terminated the 
agency's agreement and assumed its functions.
* * * * *


Sec. 682.404  [Amended]

    48. Section 682.404 is amended by removing ``$50'', and by adding, 
in its place, ``an amount equal to one percent of the total unpaid 
principal and accrued interest on the loan as of the date the lender 
transmits its request to the guaranty agency'' in paragraph (a)(3)(i); 
by adding ``and all loans guaranteed on or after October 1, 1993,'' 
after ``(h),'' in paragraph (d)(1); and by removing ``30'' and adding, 
in its place, ``27'' in paragraph (g)(2)(ii).


Sec. 682.405  [Amended]

    49. Section 682.405 is amended by adding ``on-time'' in the second 
sentence, after ``one'' in paragraph (b)(1) introductory text,; by 
removing ``consequences'', and by adding, in its place, ``effects'' in 
the second sentence in paragraph (b)(1)(iv); and by removing ``10-year 
maximum'', and by adding in its place, ``applicable maximum repayment 
term, as defined under sections 682.209(a) or (h)'' in the second 
sentence in paragraph (b)(3).


Sec. 682.406  [Amended]

    50. Section 682.406 is amended by removing the first comma and by 
adding, in its place, a semi-colon, and by removing the remainder of 
the paragraph in paragraph (a)(9); and by revising paragraph (a)(12) to 
read as follows:


Sec. 682.406  Conditions of reinsurance coverage.

    (a) * * *
    (12) The agency and the lender, if applicable, complied with all 
other Federal requirements with respect to the loan including--
    (i) Payment of origination fees;
    (ii) For Consolidation loans disbursed on or after October 1, 1993, 
payment, on a monthly basis, of an interest payment rebate fee 
calculated on an annual basis and equal to 1.05 percent of the unpaid 
principal and accrued interest on the loan;
    (iii) Compliance with all preclaims assistance requirements in 
Sec. 682.404(a)(2)(ii).
* * * * *


Sec. 682.408  [Amended]

    51. Section 682.408(a) is amended by removing ``,SLS,''.


Sec. 682.409  [Amended]

    52. Section 682.409(a) is amended by removing ``Secs. 682.402(d), 
682.402(i)'' and by adding, in its place, ``Secs. 682.402(f), 
682.402(k)''.


Sec. 682.410  [Amended]

    53. Section 682.410 is amended by removing ``Administrative Cost 
Allowance payments received under Sec. 682.407 and transitional'', and 
by adding, in its place, ``Transitional'' in paragraph (a)(1)(vi); by 
removing the word ``or'' after ``bankruptcy,'' and adding, before the 
period, ``, or closed school or false certification'' in paragraph 
(b)(5)(i)(E); by removing ``promptly'',, and adding, in its place, ``, 
within the timeframe specified in paragraph (b)(6)(ii) of this 
section,'' after the word ``shall'' in paragraph (b)(5)(ii); by 
removing ``during the period specified in paragraph (5)(iv)(B) of this 
section'' in the second sentence in paragraph (b)(6)(ii)(A), and adding 
at the end of the sentence, before the period, ``during the period 
specified for this review in paragraph (b)(5)(iv)(B)''; removing ``or'' 
at the end of paragraph (b)(6)(vi)(A)(2); by removing ``and'', and 
adding, in its place, ``or'' at the end of paragraph (b)(6)(vi)(A)(3); 
by adding a new paragraph (b)(6)(vi)(A)(4); by removing ``(1) through 
(3)'', and by adding, in its place, ``(1), (2), (3), and (5)'' in 
paragraph (b)(6)(vi)(B)(2); revising paragraph (b)(6)(vii)(B); by 
removing ``(B)(6)(vii)(D)(2)'', and adding, in its place, 
``(b)(6)(vii)(B)'', removing ``institute a civil suit'', and adding, in 
its place, ``initiate administrative wage garnishment'', adding ``and 
the loan has not been assigned to the Department for a civil suit to be 
filed'' after ``loan'', removing ``a judgment on'', and adding, before 
the period, ``through administrative wage garnishment'' in paragraph

[[Page 18981]]

(b)(6)(viii)(A); by removing ``that the cost of litigation would not 
exceed the amount likely to be obtained if litigation were begun'', and 
removing ``shall institute a civil suit'', and adding, in its place, 
``initiate administrative wage garnishment'' in paragraph 
(b)(6)(viii)(B); by removing ``a'' in the first sentence, after 
``enforce'', and by adding, in its place, ``an administrative wage 
garnishment order or a'', by adding ``administrative wage garnishment 
order or'' after ``ensure that the'', removing ``judgment'' in the 
second sentence, and adding, in its place, ``debt'', adding ``income 
or'' after ``sufficient'' both times it appears, removing ``or income'' 
after ``assets'' both times it appears, adding ``the administrative 
wage garnishment order or'' after ``satisfy'', removing ``the remainder 
of the'' after ``to satisfy'', and by adding, in its place, ``an 
administrative wage garnishment order or a'' in paragraph 
(b)(6)(ix)(A); by adding ``income or'' after ``sufficient'', removing 
``or income'', removing ``judgment and that the cost of enforcing the 
judgment would not exceed the likely recovery'', and by adding, in its 
place, ``debt'', adding ``initiate administrative wage garnishment or'' 
after ``intention to'', and removing ``on the judgment'' before 
``unless'' in paragraph (b)(6)(ix)(B); by adding ``administrative wage 
garnishment or'' before ``remainder of the judgment'' in paragraph 
(b)(6)(ix)(C); removing and reserving paragraph (b)(6)(xi); by removing 
``sue'', and adding, in its place ``initiate administrative wage 
garnishment'' in paragraph (b)(6)(xii); by removing, ``(b)(7)(iii)-
(vi)'' in the first sentence, and adding, in its place, ``(b)(7)(iii)-
(v)'', removing ``(b)(7)(iii)-(vi)'' in the second sentence, and by 
adding, in its place, ``(b)(7)(iii)-(v)'' in paragraph (b)(7)(ii); and 
by removing ``refer'', and adding, in its place, ``make the initial 
referral of'' in paragraph (b)(7)(iv)(B) to read as follows:


Sec. 682.410  Fiscal, administrative, and enforcement requirements.

* * * * *
    (b) * * *
    (6) * * *
    (vi) * * *
    (A) * * *
    (4) The day on which the agency received a payment on a loan that 
remains in default notwithstanding the payment; and
* * * * *
    (vii) * * *
    (B) The agency need not initiate administrative wage garnishment if 
the agency determines and documents in the borrower's file that the 
borrower does not have sufficient income to satisfy the debt or a 
substantial portion thereof.
* * * * *


Sec. 682.411  [Amended]

    54. Section 682.411 is amended by removing, ``no later than 45 days 
following the end of the grace period'', and by adding, in its place, 
``by the deadlines specified in Sec. 682.209(a)'' and adding 
``(a)(2)(v) and'' after ``provided in (682.209'' in paragraph (b)(1); 
by removing, in the last sentence, ``notice or collection letter'' and 
adding, in its place, ``collection letters'' in paragraph (d)(1); by 
adding, ``correct telephone number,'' after ``correct address,'' in 
paragraph (d)(3)(i); by adding ``correct telephone number,'' after 
``correct address,'' in paragraph (d)(3)(ii); by adding ``,or correct 
telephone number'' after ``correct address'' in paragraph 
(d)(4)(iv)(B); and by adding, in the third sentence, before the period, 
``and may be in writing or by phone calls'' in paragraph (g).


Sec. 682.413  [Amended]

    55. Section 682.413 is amended by removing ``that violate 
(682.206(f)(1)'' and by adding, in its place, ``for which the 
certification required under (682.206(f)(1) is not available'' in 
paragraph (c)(1)(vi); and by removing ``that violate (682.206(f)(1)'', 
and by adding, in its place, ``as specified in (682.413(c)(1)(vi)'' in 
paragraph (c)(2),.


Sec. 682.415  [Amended]

    56. Section 682.415 is amended by removing ``682.402(e)(2)'' and by 
adding, in its place, ``682.402(g)(2)'' in paragraph (b)(1)(iv); by 
removing ``(a)(2)(ii)'', and adding, in its place, ``(a)(2)(iii)'' and 
removing ``682.402(e)(2)'', and adding, in its place, ``682.402(g)(2)'' 
in paragraph (b)(3); by removing ``or'' after ``disability,'' and 
adding, ``, or closed school and false certification discharges'' after 
``bankruptcy'' in paragraph (b)(5)(i); by removing ``682.402(e)(2)'', 
and adding, in its place, ``682.402(g)(2)'' in paragraph (b)(6)(i); by 
removing ``(a)(3)(iii)(A)'', and adding, in its place, 
``(a)(2)(iii)(A)'' in paragraph (b)(9); by removing ``(a)(2)(ii)'', and 
adding, in its place, ``(a)(2)(iii)'' in paragraph (c)(4); and by 
removing ``servicer'', and adding, in its place, ``service'' in 
paragraph (c)(7)(ii).


Sec. 682.505  [Amended]

    57. Section 682.505(d) is amended by adding ``Federal'' before 
``PLUS'' and again before ``SLS'' in the italicized heading; and by 
adding ``Federal'' in the introductory text before ``SLS''.


Sec. 682.507  [Amended]

    58. Section 682.507(a)(2) is amended by adding ``Federal'' before 
``Consolidation''.


Sec. 682.511  [Amended]

    59. Section 682.511 is amended by adding ``Federal'' before 
``Consolidation'' in paragraph (a)(2); and by removing 
``682.402(e)(1)'' and adding, in its place, ``682.402(g)(1)'' in 
paragraph (b)(2).


Sec. 682.512  [Amended]

    60. Section 682.512 is amended by removing ``(682.402(f)(2) and 
(f)(3)'' and adding, in its place, ``(682.402(h)(2) and (h)(3)'' in 
paragraph (b)(1)(ii).


Sec. 682.603  [Amended]

    61. Section 682.603 is amended by removing the comma and adding 
``or'' after ``Stafford'' and by removing ``, or SLS'' in paragraph (d) 
introductory text,; by removing ``, SLS,'' in paragraph (e) 
introductory text,; by redesignating paragraph (f)(1)(i) as paragraph 
(f)(1)(i)(A); by adding a new paragraph (f)(1)(i)(B); by removing the 
comma and the parenthetical phrase in paragraph (f)(1)(ii)(B), and 
adding, in its place, a period; by adding ``time'' after 
``instruction'' in paragraph (f)(3)(ii)(A); to read as follows:


Sec. 682.603  Certification by a participating school in connection 
with a loan application.

* * * * *
    (f)(1) * * *
    (i) * * *
    (B) For a defaulted borrower who has regained eligibility under 
Sec. 682.401(b)(4), the academic year in which the borrower regained 
eligibility.
* * * * *


Sec. 682.604  [Amended]

    62. Section 682.604 is amended by removing ``If'', and adding, in 
its place, ``Except as provided in Sec. 668.167, if'' in paragraph 
(a)(3); by adding, before the first comma, ``and (D)(1)'' in paragraph 
(b)(1); by removing ``from the beginning of'', and adding, in its 
place, ``for'' in paragraph (b)(2)(i); by adding, before the first 
comma, ``and (D)(1)'' in paragraph (c)(2)(i); by removing ``student'', 
and adding, in its place, ``borrower'' in paragraph (c)(2)(ii); by 
removing ``student'' before ``borrower's'' in paragraph (c)(2)(ii)(B); 
by removing ``not more than 30 days prior to the first day of classes 
of the period of enrollment for which the loan is intended,'' and 
``Federal'' in paragraph (c)(3) introductory text; by removing 
``668.165(b)(2)'', and adding, in its place, ``668.164'' in paragraph 
(d)(1)(ii)(A); by adding paragraph

[[Page 18982]]

(d)(1)(ii)(B); by removing ``682.605(b)(1)(ii)'', and adding, in its 
place, ``682.605'', and by removing ``682.605(b)(1)(A) and (B)'', and 
adding, in its place, ``682.605'' in paragraph (d)(4); by adding ``, 
touch-tone telephone technology'', in the first sentence, after 
``presentation'', in paragraph (f)(1); by removing ``correspondence 
school'', and by adding, in its place, ``student enrolled in a 
correspondence course'' in paragraph (g)(1)(i); by adding ``the 
borrower's expected permanent address, the address of the borrower's 
next of kin, and'' after ``as well as'' in paragraph (g)(2)(vi); by 
adding ``or unsubsidized'' after ``nonsubsidized'' in paragraph (h)(1); 
and by removing ``only the'', and adding, in its place, ``any'' in 
paragraph (h)(3) to read as follows:


Sec. 682.604  Processing the borrower's loan proceeds and counseling 
borrowers.

* * * * *
    (d) * * *
    (1) * * *
    (ii) * * *
    (B) The school, as a fiduciary for the benefit of the guaranty 
agency, the Secretary, and the student, may hold any additional loan 
proceeds that the student requests in writing that the school retain in 
order to assist the student in managing his or her loan funds for the 
remainder of the academic year. The school shall maintain these funds, 
as provided in Sec. 668.165(b)(5).
* * * * *

Appendix B to Part 682--[Removed]

    63. Appendix B to part 682 is removed and reserved.
    64. Appendix D to part 682 is amended, in the ``Note'' following 
the heading, by adding, at the end, ``For the purpose of determining 
the three-year deadline, reinsurance is lost on the later of (a) three 
years from the last date the claim could have been filed for claim 
payment with the guaranty agency (270th day of delinquency) for a claim 
that was not filed; or (b) three years from the date the guaranty 
agency rejected the claim, for a claim that was filed.''; by adding 
``(a)(6)'' after ``(a)(5),'' in the ``Introduction'' section, in the 
second paragraph, sixth sentence, and removing, in the seventh 
sentence, ``682.300(b)(2)(vi)'', and adding, in its place, 
``682.300(b)(2)(vii)''; by adding a new definition of ``Earliest 
unexcused violation `` in alphabetical order in paragraph D.I.A.; by 
removing ``682.402(e)(2)(i)'', and adding, in its place, 
``682.402(g)(2)(i)'' in D.I.E.2., first paragraph; and adding, in the 
second paragraph, in the third sentence, before the period, ``unless 
the status has changed due solely to passage of time. In the latter 
case, the lender must place the borrower in the status that would exist 
had no bankruptcy claim been filed. If the borrower is delinquent after 
the loan is determined nondischargeable, the lender should grant 
administrative forbearance to bring the borrower's account current as 
provided in (682.211(f)(5)'' to read as follows:

Appendix D--Policy for Waiving the Secretary's Right to Recover or 
Refuse to Pay, Interest Benefits, Special Allowance, and 
Reinsurance on Stafford, PLUS, Supplemental Loans for Students, and 
Consolidation Program Loans Involving Lenders' Violations of 
Federal Regulations Pertaining to Due Diligence in Collection or 
Timely Filing of Claims [Bulletin 88-G-138]

* * * * *
    D. * * *
    I. * * *
    A. * * *
    Earliest unexcused violation means:
    1(a) In cases when reinsurance is lost due to a failure to 
timely establish a first payment due date, the earliest unexcused 
violation would be the 46th day after the date the first payment due 
date should have been established.
    1(b) In cases when reinsurance is lost due to a gap of 46 days, 
the earliest unexcused violation date would be the 46th day 
following the last collection activity.
    (c) In cases when reinsurance is lost due to 3 or more due 
diligence violations of 6 days or more, the earliest unexcused 
violation would be the day after the date of default.
    (d) In cases when reinsurance is lost due to a timely filing 
violation, the earliest unexcused violation would be the day after 
the filing deadline.
* * * * *
[FR Doc. 99-9260 Filed 4-15-99; 8:45 am]
BILLING CODE 4000-01-P