Teacher Loan Forgiveness

1
Teacher Loan Forgiveness

• The Discharge Process for Lender Held Loans
• Presented by Jim Sutton
• College Foundation, Inc.

2
Teacher Loan Forgiveness

• Regulations
• Purpose
• Eligibility
• The Discharge Process

3
Regulations

• Section 682.215
• Final rule published November 1, 2000
• Effective July 1, 2001

4
Purpose

• To encourage individuals to enter and continue in
  the teaching profession
• Awards up to a cumulative Maximum amount of 5,000

5
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 5th year
  of qualifying teaching service

6
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

7
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)

8
The Discharge Process

• Borrower Returns Application
• Lender reviews application to determine if
  complete
• regardless if received within the original 60-day
  period or later

9
The Discharge Process

• Application Incomplete
• Lender returns application to the borrower
• Resumes any unused portion of the initial 60-day
  forbearance

10
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

11
The Discharge Process

• Borrower ineligible
• Lender ends forbearance if granted
• Caps accrued interest
• Resumes servicing
• Notifies borrower of ineligibility and reason

12
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

13
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

14
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

15
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

16
Teacher Loan Forgiveness

• Questions ?

17
Unpaid Refund Discharge Presented by Wanda
Hall edamerica
18
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 lt 60 of loan period

19
Borrower Completes Application

• Perjury statement
• Requests borrower supply information for
  guarantor to calculate refund amount
• Requires borrower certifications

20
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

21
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

22
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

23
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

24
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

25
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

26
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

27
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

28
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

29
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

30
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

31
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

32
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

33
QUESTIONS??