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Teacher Loan Forgiveness The Discharge Process for Lender Held Loans Presented by: Jim Sutton College Foundation, Inc. Teacher Loan Forgiveness Regulations Purpose Eligibility The Discharge Process Regulations Section 682.215 Final rule published November 1, 2000 Effective July 1, 2001 Purpose To encourage individuals to enter and continue in the teaching profession Awards up to a cumulative Maximum amount of $5,000 Eligibility New Borrower on or after October 1, 1998 Must teach for 5 years consecutive years School must be eligible for Title I benefits and be listed in Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits Loans can be Subsidized or Unsubsidized Stafford Loans must be made before the end of the 5 th year of qualifying teaching service The Discharge Process Borrower contacts the lender requesting discharge Lender sends TLF Application and TLF Forbearance request to borrower – At the borrowers request, a 60-day administrative forbearance is granted while awaiting a completed TLF Application from the borrower FFELP to use draft form in the interim until combined FFELP & FDLP form is available The Discharge Process Borrower returns application prior to the end of 60 days – Initial 60-day forbearance ceases when application is received Borrower does not return application within 60 days – Lender ends forbearance at end of 60-day period – Caps accrued interest – Resumes servicing loan(s) The Discharge Process Borrower Returns Application – Lender reviews application to determine if complete regardless if received within the original 60-day period or later The Discharge Process Application Incomplete – Lender returns application to the borrower – Resumes any unused portion of the initial 60-day forbearance The Discharge Process Application Complete – If requested by the borrower, the lender places effected loans in the TLF Forbearance until determination of eligibility and payment are made – If TLF Forbearance not requested by the borrower the lender ends the initial 60-day forbearance, if applicable, and resumes servicing while determination of eligibility and discharge payment are made The Discharge Process Borrower ineligible – Lender ends forbearance if granted – Caps accrued interest – Resumes servicing – Notifies borrower of ineligibility and reason The Discharge Process Borrower eligible – Lender completes sections A, B, and C of the Teacher Loan Forgiveness Discharge Request (TLFDR) – Submits packet to the guarantor within 60 days of receiving borrower application The Discharge Process Guarantor reviews borrower application and TLFDR for completeness – If incomplete returns to the lender Lender corrects, completes, and/or if necessary returns application to the borrower – If complete guarantor determines borrower eligibility within 45 days of receipt from lender If eligible guarantor completes Section D of the TLFDR and returns to the lender with Discharge Payment less applicable interest penalty The Discharge Process Guarantor returns TLFDR to lender – Request Approved Lender applies discharge amount to borrowers qualifying loan(s) Lender writes off interest penalty amount, if applicable, and repays interest and special allowance to ED If interest penalty is not applicable, lender ends TLF Forbearance and caps accrued interest Borrower is notified of discharge amount and the remaining balance if any within 30 days If credit balance, overpayment is refunded to the guarantor The Discharge Process Guarantor returns TLFDR to lender – Request denied Lender ends TLF Forbearance, if applicable, and caps accrued interest Resumes servicing loan(s) Informs borrower within 30 of notification from guarantor Teacher Loan Forgiveness Questions ? Unpaid Refund Discharge Presented by: Wanda Hall edamerica Eligibility Refunds owed but not paid by school Both former and current FFELP borrowers Loans disbursed on or after January 1, 1986 If school is open, student is no longer enrolled Student completed < 60% of loan period Borrower Completes Application Perjury statement Requests borrower supply information for guarantor to calculate refund amount Requires borrower certifications Borrower Certifies That: Information is accurate Obtained loan to attend school No longer enrolled and owed a refund Did not benefit from a refund from school or third party Does not have another discharge request pending Agrees to provide additional documentation to establish eligibility Agrees to assist ED with enforcement actions Unpaid Refund Discharge – Lender Held Loans Borrower contacts lender or guarantor indicating he/she is or may be eligible for discharge Lender sends borrower Loan Discharge Application – If borrower contacts guarantor, guarantor will either refer borrower to lender or notify lender of borrower contact Unpaid Refund Discharge – Lender Held Loans Lender grants a 60-day administrative forbearance on affected loan(s) – Borrower returns application prior to the end of 60 days, initial forbearance ceases when received – Borrower does not return application within 60 days, forbearance ends at the end of the 60-day period, caps accrued interest and resumes servicing Unpaid Refund Discharge – Lender Held Loans Borrower returns application, lender reviews to determine if complete – Regardless if received within 60-day period or after If application incomplete, lender returns to borrower resuming any unused portion of the initial 60-day administrative forbearance Unpaid Refund Discharge – Lender Held Loans Lender determined application complete – Lender/servicer completes sections A, B, C of URDDR and forwards all information to the guarantor – Lender grants a 120-day administrative forbearance on borrower account Unpaid Refund Discharge – Lender Held Loans Guarantor reviews borrower application and URDDR to determine if complete If application or URDDR incomplete, guarantor returns to lender – Lender corrects, completes, and/or if applicable returns to borrower – If returned to borrower, lender resumes any unused portion of the initial 60-day administrative forbearance Unpaid Refund Discharge – Lender Held Loans Guarantor determines application and URDDR complete Guarantor researches borrower allegations and makes determination if a refund is due – If school open, guarantor contacts school – School must respond no later than 60 days provide documentation demonstrating that alleged unpaid refund either paid or not required to be paid Unpaid Refund Discharge – Lender Held Loans Guarantor determines borrower not eligible for discharge – Notifies borrower of denial and right to appeal – Returns URDDR to lender completing section D, item #25 Lender ends forbearance, caps accrued interest and resumes servicing Unpaid Refund Discharge – Lender Held Loans If borrower appeals, guarantor notifies lender to place loan(s) back in administrative forbearance Guarantor makes determination if a refund is due Unpaid Refund Discharge – Lender Held Loans Guarantor determines borrower eligible for discharge If school open, school refunds eligible amount – school responsible for accrued interest and special allowance – if school does not pay, guarantor required to notify DOE Guarantor will return URDDR to lender completing section D, item #24 Unpaid Refund Discharge – Lender Held Loans If school closed (or open but does not refund), guarantor: – Determines refund amount – Notifies borrower of discharge amount – Completes section D of URDDR, item #26 – Returns URDDR and refund to lender within 45 days of making determination Unpaid Refund Discharge – Lender Held Loans Lender ends administrative forbearance and applies refund payment If credit balance, overpayment to borrower and reports paid-in-full status to credit bureau If no credit balance, reports new balance to credit bureau and resumes servicing Unpaid Refund Discharge – Lender Held Loans Payments received on paid-in-full loan(s) after discharge: – If payment required, forward to DOE – If payment not required, return to sender and notify borrower payments no longer required – If subsequent payments received after notification to borrower, forward to DOE QUESTIONS??
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