[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR668.35]

[Page 457-458]
 
                           TITLE 34--EDUCATION
 
                         DEPARTMENT OF EDUCATION
 
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS--Table of Contents
 
                     Subpart C--Student Eligibility
 
Sec. 668.35  Student debts under the HEA and to the U.S.

    (a) A student who is in default on a loan made under a title IV, HEA 
loan program may nevertheless be eligible to receive title IV, HEA 
program assistance if the student--
    (1) Repays the loan in full; or
    (2)(i) Makes arrangements, that are satisfactory to the holder of 
the loan and in accordance with the individual title IV, HEA loan 
program regulations, to repay the loan balance; and
    (ii) Makes at least six consecutive monthly payments under those 
arrangements.
    (b) A student who is not in default on a loan made under a title IV, 
HEA loan program, but has inadvertently obtained loan funds under a 
title IV, HEA

[[Page 458]]

loan program in an amount that exceeds the annual or aggregate loan 
limits under that program, may nevertheless be eligible to receive title 
IV, HEA program assistance if the student--
    (1) Repays in full the excess loan amount; or
    (2) Makes arrangements, satisfactory to the holder of the loan, to 
repay that excess loan amount.
    (c) A student who receives an overpayment under the Federal Perkins 
Loan Program, or under a title IV, HEA grant program may nevertheless be 
eligible to receive title IV, HEA program assistance if the student--
    (1) Pays the overpayment in full; or
    (2) Makes arrangements, satisfactory to the holder of the 
overpayment debt, to pay the overpayment.
    (d) A student who has property subject to a judgement lien for a 
debt owed to the United States may nevertheless be eligible to receive 
title IV, HEA program assistance if the student-
    (1) Pays the debt in full; or
    (2) Makes arrangements, satisfactory to the United States, to pay 
the debt.
    (e) (1) A student is not liable for a Federal Pell Grant overpayment 
received in an award year if the institution can eliminate that 
overpayment by adjusting subsequent Federal Pell Grant payments in that 
same award year.
    (2) A student is not liable for a FSEOG or LEAP overpayment or 
Federal Perkins loan overpayment received in an award year if the 
institution can eliminate that overpayment by adjusting subsequent title 
IV, HEA program (other than Federal Pell Grant) payments in that same 
award year.
    (f) A student who otherwise is in default on a loan made under a 
title IV, HEA loan program, or who otherwise owes an overpayment on a 
title IV, HEA program grant or Federal Perkins loan, is not considered 
to be in default or owe an overpayment if the student--
    (1) Obtains a judicial determination that the debt has been 
discharged or is dischargeable in bankruptcy; or
    (2) Demonstrates to the satisfaction of the holder of the debt that-
-
    (i) When the student filed the petition for bankruptcy relief, the 
loan, or demand for the payment of the overpayment, had been outstanding 
for the period required under 11 U.S.C. 523(a)(8)(A), exclusive of 
applicable suspensions of the repayment period for either debt of the 
kind defined in 34 CFR 682.402(m); and
    (ii) The debt otherwise qualifies for discharge under applicable 
bankruptcy law.

(Authority: 20 U.S.C. 1091 and 11 U.S.C. 523 and 525)

[60 FR 61810, Dec. 1, 1995, as amended at 65 FR 38729, June 22, 2000]