Teacher Loan Forgiveness

							   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??