Subchapter J. CONSOLIDATION LOAN PROGRAM
Sec.
121.181. Submission and processing of applications.
121.182. Lender eligibility.
121.183. Repayment.
121.184. Cancelled debt.
121.185. Default.§ 121.181. Submission and processing of applications.
(a) Applicant. An applicant desiring to secure a Federal Consolidation Loan guaranty shall obtain from a participating lender or from the Agency a loan application packet containing the Federal Consolidation Loan Application/Promissory Note form. The information provided on the form will be used to determine the eligibility of the applicant to receive a Federal Consolidation Loan. The applicant shall complete the loan application and read, sign and date the promissory note that is part of the loan application form. After completing this form, the applicant shall retain a copy and forward the remaining copies of the form to the lender or to the Agency as instructed on the form.
(b) Lender. If the form is sent to the lender, the lender shall make sure the applicant has completed the application/promissory note and signed and dated the form. The lender shall obtain loan payoff data concerning the loans to be consolidated from the creditors holding the loans. The lender shall determine to its satisfaction that each loan being consolidated is a legal, valid and binding obligation of the borrower, that each loan was made and serviced in compliance with applicable law and regulations, and, in the case of Federal Family Education Loans that the guaranty on the loan is still in effect. The lender shall electronically or by other means forward a copy of the application/promissory note form to the Agency.
(c) PHEAA. The Agency will complete processing of the loan application and make a final determination of the amount of loan assistance the applicant is entitled to obtain. The Agency will then electronically or by other means inform the lender of the amount of the guaranty.
(d) Lender. The lender shall provide the borrower with a Federal Consolidation Loan Repayment Schedule Disclosure Statement and issue sufficient loan disbursement checks to discharge the borrower’s liability on the loans selected and approved for consolidation. An adverse action notice will be provided to the borrower by the lender if Federal Consolidation Loan assistance is denied.
Authority The provisions of this § 121.181 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. § § 5181—5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. § § 5191—5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. § § 5198.1—5198.7).
Source The provisions of this § 121.181 adopted July 22, 1988, effective July 23, 1988, 18 Pa.B. 3208; amended July 12, 1996, effective July 13, 1996, 26 Pa.B. 3321. Immediately preceding text appears at serial pages (183523) to (183524).
§ 121.182. Lender eligibility.
A bank, Federal or State savings and loan association, mutual savings bank, Federal or State credit union or other lender approved by the United States Secretary of Education and by the Agency which executes a Lender Participation Agreement for Federal Consolidation Loans with the Agency shall become an eligible lender.
Authority The provisions of this § 121.182 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. § § 5181—5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. § § 5191—5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. § § 5198.1—5198.7).
Source The provisions of this § 121.182 adopted July 22, 1988, effective July 23, 1988, 18 Pa.B. 3208; amended July 12, 1996, effective July 13, 1996, 26 Pa.B. 3321. Immediately preceding text appears at serial page (183524).
§ 121.183. Repayment.
(a) A loan is due for repayment within 60 days after the date upon which all holders of the loans consolidated have discharged the borrower’s liability for these loans.
(b) The borrower shall repay a Federal Consolidation Loan according to the repayment schedule provided by the lender. The repayment schedule shall provide for repayment in monthly installments and over a term as specified in Federal statutes and regulations.
(c) Upon proper notice to the lender, repayment of principal may be deferred in accordance with, and during periods specified in, the Higher Education Act of 1965, the act of November 8, 1965 (Pub.L. No. 89-329, 79 Stat. 1219) and Federal regulations based on this act. The borrower is responsible for interest not paid by the Federal government that accrues during any period principal repayment is deferred. If the borrower has consolidated subsidized Federal Stafford Loans, the interest that accrues during a period of deferment will be paid by the Federal government.
Authority The provisions of this § 121.183 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. § § 5181—5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. § § 5191—5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. § § 5198.1—5198.7).
Source The provisions of this § 121.183 adopted July 22, 1988, effective July 23, 1988, 18 Pa.B. 3208; amended October 4, 1991, effective October 5, 1991, 21 Pa.B. 4637; amended July 12, 1996, effective July 13, 1996, 26 Pa.B. 3321. Immediately preceding text appears at serial pages (183524) to (183525).
Cross References This section cited in 22 Pa. Code § 121.185 (relating to default).
§ 121.184. Cancelled debt.
The obligation to repay the indebtedness of a Federal Consolidation Loan borrower who dies, who becomes totally and permanently disabled, or whose loans are discharged in bankruptcy, shall be cancelled upon the acceptance of proper documentation by the lender or holder of the loan of the deceased, disabled or bankrupt borrower.
Authority The provisions of this § 121.184 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. § § 5181—5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. § § 5191—5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. § § 5198.1—5198.7).
Source The provisions of this § 121.184 adopted July 22, 1988, effective July 23, 1988, 18 Pa.B. 3208; amended July 12, 1996, effective July 13, 1996, 26 Pa.B. 3321. Immediately preceding text appears at serial page (183525).
§ 121.185. Default.
Except as otherwise provided in § 121.183 (relating to repayment), a note shall be declared in default at the following times:
(1) One hundred eighty days, or as otherwise established by the Agency to comply with Federal statutes or regulations, after the date on which a monthly payment was scheduled to be made by a borrower under a repayment schedule, if the borrower fails to make the monthly payment within 180 days of its due date, or as otherwise established by the Agency to comply with Federal statutes or regulations.
(2) Two hundred forty days, or as otherwise established by the Agency to comply with Federal statutes or regulations, after the date on which a quarterly payment of nonsubsidized interest was scheduled to be made by a borrower under a quarterly interest repayment schedule, if the borrower fails to make the quarterly payment within 240 days of its due date, or as otherwise established by the Agency to comply with Federal statutes or regulations.
Authority The provisions of this § 121.185 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. § § 5181—5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. § § 5191—5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. § § 5198.1—5198.7).
Source The provisions of this § 121.185 adopted July 22, 1988, effective July 23, 1988, 18 Pa.B. 3208.
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