[Code of Federal Regulations] [Title 34, Volume 3] [Revised as of July 1, 2005] From the U.S. Government Printing Office via GPO Access [CITE: 34CFR674.42] [Page 587-589] TITLE 34--EDUCATION CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION PART 674_FEDERAL PERKINS LOAN PROGRAM--Table of Contents Subpart C_Due Diligence Sec. 674.42 Contact with the borrower. (a) Disclosure of repayment information. The institution must disclose the following information in a written statement provided to the borrower either shortly before the borrower ceases at least half- time study at the institution or during the exit interview. If the borrower enters the repayment period without the institution's knowledge, the institution must provide the required disclosures to the borrower in writing immediately upon discovering that the borrower has entered the repayment period. The institution must disclose the following information: (1) The name and address of the institution to which the debt is owed and the name and address of the official or servicing agent to whom communications should be sent. (2) The name and address of the party to which payments should be sent. (3) The estimated balance owed by the borrower on the date on which the repayment period is scheduled to begin. (4) The stated interest rate on the loan. (5) The repayment schedule for all loans covered by the disclosure including the date the first installment payment is due, and the number, amount, and frequency of required payments. (6) An explanation of any special options the borrower may have for loan [[Page 588]] consolidation or other refinancing of the loan, and a statement that the borrower has the right to prepay all or part of the loan at any time without penalty. (7) A description of the charges imposed for failure of the borrower to pay all or part of an installment when due. (8) A description of any charges that may be imposed as a consequence of default, such as liability for expenses reasonably incurred in attempts by the Secretary or the institution to collect on the loan. (9) The total interest charges which the borrower will pay on the loan pursuant to the projected repayment schedule. (10) The contact information of a party who, upon request of the borrower, will provide the borrower with a copy of his or her signed promissory note. (11) An explanation that if a borrower is required to make minimum monthly repayments, and the borrower has received loans from more than one institution, the borrower must notify the institution if he or she wants the minimum monthly payment determination to be based on payments due to other institutions. (b) Exit interview. (1) An institution must ensure that exit counseling is conducted with each borrower either in person, by audiovisual presentation, or by interactive electronic means. The institution must ensure that exit counseling is conducted shortly before the borrower ceases at least half-time study at the institution. As an alternative, in the case of a student enrolled in a correspondence program or a study-abroad program that the institution approves for credit, the borrower may be provided with written counseling material by mail within 30 days after the borrower completes the program. If a borrower withdraws from the institution without the institution's prior knowledge or fails to complete an exit counseling session as required, the institution must ensure that exit counseling is provided through either interactive electronic means or by mailing counseling materials to the borrower at the borrower's last known address within 30 days after learning that the borrower has withdrawn from the institution or failed to complete exit counseling as required. (2) The exit counseling must-- (i) Inform the student as to the average anticipated monthly repayment amount based on the student's indebtedness or on the average indebtedness of students who have obtained Perkins loans for attendance at the institution or in the borrower's program of study; (ii) Review for the borrower available repayment options (e.g. loan consolidation and refinancing, including the consequences of consolidating a Federal Perkins Loan); (iii) Suggest to the borrower debt-management strategies that would facilitate repayment; (iv) Emphasize to the borrower the seriousness and importance of the repayment obligation the borrower is assuming; (v) Describe the likely consequences of default, including adverse credit reports and litigation; (vi) Emphasize that the borrower is obligated to repay the full amount of the loan even if the borrower has not completed the program, is unable to obtain employment upon completion, or is otherwise dissatisfied with or does not receive the educational or other services that the borrower purchased from the institution; (vii) Review for the borrower the conditions under which the borrower may defer repayment or obtain partial cancellation of a loan; (viii) Require the borrower to provide current information concerning name, address, social security number, references, and driver's license number, the borrower's expected permanent address, the address of the borrower's next of kin, as well as the name and address of the borrower's expected employer; (ix) Review for the borrower information on the availability of the Student Loan Ombudsman's office; and (x) Inform the borrower of the availability of title IV loan information in the National Student Loan Data System (NSLDS). (3) If exit counseling is conducted through interactive electronic means, the institution must take reasonable [[Page 589]] steps to ensure that each student borrower receives the counseling materials, and participates in and completes the exit counseling. (4) The institution must maintain documentation substantiating the institution's compliance with this section for each borrower. (c) Contact with the borrower during the initial and post deferment grace periods. (1)(i) For loans with a nine-month initial grace period (NDSLs made before October 1, 1980 and Federal Perkins loans), the institution shall contact the borrower three times within the initial grace period. (ii) For loans with a six-month initial or post deferment grace period (loans not described in paragraph (b)(1)(i) of this section), the institution shall contact the borrower twice during the grace period. (2)(i) The institution shall contact the borrower for the first time 90 days after the commencement of any grace period. The institution shall at this time remind the borrower of his or her responsibility to comply with the terms of the loan and shall send the borrower the following information: (A) The total amount remaining outstanding on the loan account, including principal and interest accruing over the remaining life of the loan. (B) The date and amount of the next required payment. (ii) The institution shall contact the borrower the second time 150 days after the commencement of any grace period. The institution shall at this time notify the borrower of the date and amount of the first required payment. (iii) The institution shall contact a borrower with a nine-month initial grace period a third time 240 days after the commencement of the grace period, and shall then inform him or her of the date and amount of the first required payment. (Approved by the Office of Management and Budget under control number 1845-0023) (Authority: U.S.C. 424, 1087cc, 1087cc-1) [52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 FR 32346, July 21, 1992; 59 FR 61411, 61415, Nov. 30, 1994; 64 FR 58312, Oct. 28, 1999; 67 FR 67077, Nov. 1, 2002]