[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: 34CFR682.102]



[Page 629-630]

 

                           TITLE 34--EDUCATION

 

 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

 

PART 682_FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM--Table of Contents

 

                       Subpart A_Purpose and Scope

 

Sec. 682.102  Obtaining and repaying a loan.



    (a) Stafford loan application. Generally, to obtain a Stafford loan 

a student requests a loan by completing the Free Application for Federal 

Student Aid (FAFSA), or contacting the school, lender or guarantor. The 

school determines and certifies the student's eligibility for the loan. 

Prior to loan disbursement, the lender obtains a loan guarantee from a 

guaranty agency or the Secretary and the student completes a promissory 

note, unless the student has previously completed a Master Promissory 

Note (MPN) that the lender may use for the new loan.

    (b) [Reserved]

    (c) PLUS loan application. Generally, to obtain a PLUS loan, both 

the student and the parent complete an application and submit it to the 

school for certification. After the school certifies the application, 

the application is submitted to a participating lender. If the lender 

decides to make the loan, the lender obtains a loan guarantee from a 

guaranty agency or the Secretary.

    (d) Consolidation loan application. To obtain a Consolidation loan, 

a borrower completes an application and submits it to the lender holding 

the borrower's FFEL Program loan or loans. If the borrower has multiple 

holders of FFEL Program loans, or if the borrower's single loan holder 

declines to make a Consolidation loan, or declines to make one with 

income-sensitive repayment terms, the borrower may submit the 

application to any lender participating in the Consolidation Loan 

Program. In the case of a married couple seeking a Consolidation loan, 

if at least one of the applicants has multiple holders, the applicants 

may submit the application to any lender participating in the 

Consolidation Loan Program. If both applicants have a single holder, 

only the holder for one of the applicants must be contacted for 

consolidation. If a lender decides to make the loan, the



[[Page 630]]



lender obtains a loan guarantee from a guaranty agency or the Secretary.

    (e) Repaying a loan--(1) General. Generally, the borrower is 

obligated to repay the full amount of the loan, late fees, collection 

costs chargeable to the borrower, and any interest not payable by the 

Secretary. The borrower's obligation to repay is cancelled if the 

borrower dies, becomes totally and permanently disabled, or has that 

obligation discharged in bankruptcy. The borrower's obligation to repay 

a PLUS loan is cancelled if the student, on whose behalf the parent 

borrowed, dies. The borrower's or student's obligation to repay all or a 

portion of his or her loan may be cancelled if the student is unable to 

complete his or her program of study because the school closed or the 

borrower's or student's eligibility to borrow was falsely certified by 

the school. The obligation to repay all or a portion of a loan may be 

forgiven for Stafford loan borrowers who enter certain areas of the 

teaching or child care professions.

    (2) Stafford loan repayment. In the case of a subsidized Stafford 

loan, a borrower is not required to make any principal payments on a 

Stafford loan during the time the borrower is in school. The Secretary 

pays the interest on the borrower's behalf during the time the borrower 

is in school. When the borrower ceases to be enrolled on at least a 

half-time basis, a grace period begins during which no principal 

payments are required, and the Secretary continues to make interest 

payments on the borrower's behalf. In the case of an unsubsidized 

Stafford loan, the borrower is responsible for interest during these 

periods. At the end of the grace period, the repayment period begins. 

During the repayment period, for the subsidized and unsubsidized 

Stafford loan, the borrower pays both the principal and the interest 

accruing on the loan.

    (3) SLS loan repayment. Generally, the repayment period for an SLS 

loan begins immediately on the day of the last disbursement of the loan 

proceeds by the lender. The first payment of principal and interest on 

an SLS loan is due from the borrower within 60 days after the loan is 

fully disbursed unless a borrower who is also a Stafford loan borrower, 

but who has not yet entered repayment on the Stafford loan, requests 

that commencement of repayment on the SLS loan be deferred until the 

borrower's grace period on the Stafford loan expires.

    (4) PLUS loan repayment. Generally, the repayment period for a PLUS 

loan begins on the day the loan is fully disbursed by the lender. The 

first payment of principal and interest on a PLUS loan is due from the 

borrower within 60 days after the loan is fully disbursed.

    (5) Consolidation loan repayment. Generally, the repayment period 

for a Consolidation loan begins on the day the loan is disbursed. The 

first payment of principal and interest on a Consolidation loan is due 

from the borrower within 60 days after the borrower's liability on all 

loans being consolidated has been discharged.

    (6) Deferment of repayment. Repayment of principal on a FFEL program 

loan may be deferred under the circumstances described in Sec. 682.210.

    (7) Default. If a borrower defaults on a loan, the guarantor 

reimburses the lender for the amount of its loss. The guarantor then 

collects the amount owed from the borrower.



(Approved by the Office of Management and Budget under control number 

1845-0020)



(Authority: 20 U.S.C. 1071 to 1087-2)



[57 FR 60323, Dec. 18, 1992, as amended at 59 FR 25744, May 17, 1994; 59 

FR 33348, June 28, 1994; 64 FR 18975, Apr. 16, 1999; 64 FR 58952, Nov. 

1, 1999; 68 FR 75428, Dec. 31, 2003]