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| section_id ▼ | title_number | title_name | chapter | subchapter | part_number | part_name | subpart | subpart_name | section_number | section_heading | agency | authority | source_citation | amendment_citations | full_text |
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| 34:34:4.1.1.1.3.1.1.1 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | A | Subpart A—Purpose and Scope | § 685.100 The William D. Ford Federal Direct Loan Program. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 71 FR 45709, Aug. 9, 2006; 78 FR 65823, Nov. 1, 2013] | (a) Under the William D. Ford Federal Direct Loan (Direct Loan) Program (formerly known as the Federal Direct Student Loan Program), the Secretary makes loans to enable a student or parent to pay the costs of the student's attendance at a postsecondary school. This part governs the Federal Direct Stafford/Ford Loan Program, the Federal Direct Unsubsidized Stafford/Ford Loan Program, the Federal Direct PLUS Program, and the Federal Direct Consolidation Loan Program. The Secretary makes loans under the following program components: (1)(i) Federal Direct Stafford/Ford Loan Program (Direct Subsidized Loan Program), which provides loans to undergraduate, graduate, and professional students. Loans made under this program are referred to as Direct Subsidized Loans. Except as provided in paragraph (a)(1)(ii) of this section, the Secretary subsidizes the interest while the borrower is in an in-school, grace, or deferment period. Graduate and professional students are not eligible to receive Direct Subsidized Loans for any period of enrollment beginning on or after July 1, 2012. (ii) The Secretary does not subsidize the interest that accrues during the grace period on any Direct Subsidized Loan for which the first disbursement is made on or after July 1, 2012 and before July 1, 2014. (2) Federal Direct Unsubsidized Stafford/Ford Loan Program (Direct Unsubsidized Loan Program), which provides loans to undergraduate, graduate and professional students. Loans made under this program are referred to as Direct Unsubsidized Loans. The borrower is responsible for the interest that accrues during any period. (3) Federal Direct PLUS Program (Direct PLUS Loan Program), which provides loans to parents of dependent students and to graduate or professional students. Loans made under this program are referred to as Direct PLUS Loans. The borrower is responsible for the interest that accrues during any period. (4) Federal Direct Consolidation Loan Program (Direct Consolidation Loan Program), which provides loans to borrowers to cons… | ||||
| 34:34:4.1.1.1.3.1.1.2 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | A | Subpart A—Purpose and Scope | § 685.101 Participation in the Direct Loan Program. | ED | [78 FR 65823, Nov. 1, 2013] | (a) Colleges, universities, graduate and professional schools, vocational schools, and proprietary schools may participate in the Direct Loan Program. Participation in the Direct Loan Program enables an eligible student or parent to obtain a loan to pay for the student's cost of attendance at the school. (b)(1) An eligible undergraduate student who is enrolled at a school participating in the Direct Loan Program may borrow under the Direct Subsidized Loan and Direct Unsubsidized Loan programs. (2) An eligible graduate or professional student enrolled at a school participating in the Direct Loan Program may borrow under the Direct Subsidized Loan, Direct Unsubsidized Loan, and Direct PLUS Loan programs, except that a graduate or professional student may not borrow under the Direct Subsidized Loan Program for any period of enrollment beginning on or after July 1, 2012. (3) An eligible parent of an eligible dependent student enrolled at a school participating in the Direct Loan Program may borrow under the Direct PLUS Loan Program. | ||||
| 34:34:4.1.1.1.3.1.1.3 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | A | Subpart A—Purpose and Scope | § 685.102 Definitions. | ED | [59 FR 61690, Dec. 1, 1994] | (a)(1) The definitions of the following terms used in this part are set forth in the Student Assistance General Provisions, 34 CFR part 668: Academic year Campus-based programs Dependent student Disbursement Eligible program Eligible student Enrolled Expected family contribution (EFC) Federal Consolidation Loan Program Federal Pell Grant Program Federal Perkins Loan Program Federal PLUS Program Federal Supplemental Educational Opportunity Grant Program Federal Work-Study Program Full-time student Graduate or professional student Half-time student Independent student One-third of an academic year Parent Payment period Teacher Education Assistance for College and Higher Education (TEACH) Grant Program TEACH Grant Two-thirds of an academic year Undergraduate student U.S. citizen or national William D. Ford Federal Direct Loan (Direct Loan) Program Academic year Campus-based programs Dependent student Disbursement Eligible program Eligible student Enrolled Expected family contribution (EFC) Federal Consolidation Loan Program Federal Pell Grant Program Federal Perkins Loan Program Federal PLUS Program Federal Supplemental Educational Opportunity Grant Program Federal Work-Study Program Full-time student Graduate or professional student Half-time student Independent student One-third of an academic year Parent Payment period Teacher Education Assistance for College and Higher Education (TEACH) Grant Program TEACH Grant Two-thirds of an academic year Undergraduate student U.S. citizen or national William D. Ford Federal Direct Loan (Direct Loan) Program (2) The following definitions are set forth in the regulations for Institutional Eligibility under the Higher Education Act of 1965, as amended, 34 CFR part 600: Accredited Clock hour Correspondence course Credit hour Educational program Eligible institution Federal Family Education Loan (FFEL) Program Foreign institution Institution of high… | ||||
| 34:34:4.1.1.1.3.1.1.4 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | A | Subpart A—Purpose and Scope | § 685.103 Applicability of subparts. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 87 FR 66055, Nov. 1, 2022] | (a) Subpart A contains general provisions regarding the purpose and scope of the Direct Loan Program. (b) Subpart B contains provisions regarding borrowers in the Direct Loan Program. (c) Subpart C contains certain requirements regarding schools in the Direct Loan Program. (d) Subpart D of this part contains provisions regarding borrower defense to repayment in the Direct Loan Program. | ||||
| 34:34:4.1.1.1.3.1.1.5 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | A | Subpart A—Purpose and Scope | § 685.109 Severability. | ED | [87 FR 66055, Nov. 1, 2022] | If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice will not be affected thereby. | ||||
| 34:34:4.1.1.1.3.2.1.1 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.200 Borrower eligibility. | ED | [59 FR 61690, Dec. 1, 1994] | (a) Student Direct Subsidized or Direct Unsubsidized borrower. (1) A student is eligible to receive a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a combination of these loans, if the student meets the following requirements: (i) The student is enrolled, or accepted for enrollment, on at least a half-time basis in a school that participates in the Direct Loan Program. (ii) The student meets the requirements for an eligible student under 34 CFR part 668. (iii) In the case of an undergraduate student who seeks a Direct Subsidized Loan or a Direct Unsubsidized Loan at a school that participates in the Federal Pell Grant Program, the student has received a determination of Federal Pell Grant eligibility for the period of enrollment for which the loan is sought. (iv) In the case of a borrower whose previous loan or TEACH Grant service obligation was discharged due to total and permanent disability, the student— (A) In the case of a borrower whose prior loan under title IV of the Act or TEACH Grant service obligation was discharged after a final determination of total and permanent disability, the borrower— ( 1 ) Obtains a certification from a physician that the borrower is able to engage in substantial gainful activity; and ( 2 ) Signs a statement acknowledging that neither the new Direct Loan the borrower receives nor any previously discharged loan on which the borrower is required to resume payment in accordance with paragraph (a)(1)(iv)(B) of this section can be discharged in the future on the basis of any impairment present when the new loan is made, unless that impairment substantially deteriorates; (B) In the case of a borrower who receives a new Direct Loan, other than a Direct Consolidation Loan, within three years of the date that any previous title IV loan or TEACH Grant service obligation was discharged due to a total and permanent disability in accordance with § 685.213(b)(4)(iii), 34 CFR 674.61(b)(3)(v), 34 CFR 682.402(c)(3)(iv), or 34 CFR 686.42(b) based on a discharge request receive… | ||||
| 34:34:4.1.1.1.3.2.1.10 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.209 Income-driven repayment plans. | ED | [88 FR 43900, July 10, 2023; 89 FR 46331, May 29, 2024, as amended at 89 FR 107001, Dec. 31, 2024] | (a) General. Income-driven repayment (IDR) plans are repayment plans that base the borrower's monthly payment amount on the borrower's income and family size. The four IDR plans are— (1) The Revised Pay As You Earn (REPAYE) plan, which may also be referred to as the Saving on a Valuable Education (SAVE) plan; (2) The Income-Based Repayment (IBR) plan; (3) The Pay As You Earn (PAYE) Repayment plan; and (4) The Income-Contingent Repayment (ICR) plan; (b) Definitions. The following definitions apply to this section: Discretionary income means the greater of $0 or the difference between the borrower's income as determined under paragraph (e)(1) of this section and— (i) For the REPAYE plan, 225 percent of the applicable Federal poverty guideline; (ii) For the IBR and PAYE plans, 150 percent of the applicable Federal poverty guideline; and (iii) For the ICR plan, 100 percent of the applicable Federal poverty guideline. Eligible loan, for purposes of determining partial financial hardship status and for adjusting the monthly payment amount in accordance with paragraph (g) of this section means— (i) Any outstanding loan made to a borrower under the Direct Loan Program, except for a Direct PLUS Loan made to a parent borrower, or a Direct Consolidation Loan that repaid a Direct PLUS Loan or a Federal PLUS Loan made to a parent borrower; and (ii) Any outstanding loan made to a borrower under the FFEL Program, except for a Federal PLUS Loan made to a parent borrower, or a Federal Consolidation Loan that repaid a Federal PLUS Loan or a Direct PLUS Loan made to a parent borrower. Family size means, for all IDR plans, the number of individuals that is determined by adding together— (i)(A) The borrower; (B) The borrower's spouse, for a married borrower filing a joint Federal income tax return; (C) The borrower's children, including unborn children who will be born during the year the borrower certifies family size, if the children receive more than half their support from the borrower and are not included … | ||||
| 34:34:4.1.1.1.3.2.1.12 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.210 Choice of repayment plan. | ED | [88 FR 43904, July 10, 2023] | (a) Initial selection of a repayment plan. (1) Before a Direct Loan enters into repayment, the Secretary provides a borrower with a description of the available repayment plans and requests that the borrower select one. A borrower may select a repayment plan before the loan enters repayment by notifying the Secretary of the borrower's selection in writing. (2) If a borrower does not select a repayment plan, the Secretary designates the standard repayment plan described in § 685.208(b) or (c) for the borrower, as applicable. (3) All Direct Loans obtained by one borrower must be repaid together under the same repayment plan, except that— (i) A borrower of a Direct PLUS Loan or a Direct Consolidation Loan that is not eligible for repayment under an IDR plan may repay the Direct PLUS Loan or Direct Consolidation Loan separately from other Direct Loans obtained by the borrower; and (ii) A borrower of a Direct PLUS Consolidation Loan that entered repayment before July 1, 2006, may repay the Direct PLUS Consolidation Loan separately from other Direct Loans obtained by that borrower. (b) Changing repayment plans. (1) A borrower who has entered repayment may change to any other repayment plan for which the borrower is eligible at any time by notifying the Secretary. However, a borrower who is repaying a defaulted loan under the IBR plan or who is repaying a Direct Consolidation Loan under an IDR plan in accordance with § 685.220(d)(1)(i)(A)( 3 ) may not change to another repayment plan unless— (i) The borrower was required to and did make a payment under the IBR plan or other IDR plan in each of the prior three months; or (ii) The borrower was not required to make payments but made three reasonable and affordable payments in each of the prior 3 months; and (iii) The borrower makes, and the Secretary approves, a request to change plans. (2)(i) A borrower may not change to a repayment plan that would cause the borrower to have a remaining repayment period that is less than zero months, except that an eligible b… | ||||
| 34:34:4.1.1.1.3.2.1.13 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.211 Miscellaneous repayment provisions. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 64 FR 57961, Oct. 27, 1999; 64 FR 59043, Nov. 1, 1999; 65 FR 65629, Nov. 1, 2000; 66 FR 34765, June 29, 2001; 67 FR 67081, Nov. 1, 2002; 71 FR 45714, Aug. 9, 2006; 73 FR 63256, Oct. 23, 2008; 74 FR 56003, Oct. 29, 2009; 77 FR 66142, Nov. 1, 2012; 78 FR 65833, Nov. 1, 2013; 88 FR 43905, July 10, 2023] | (a) Payment application and prepayment. (1)(i) Except as provided for the Income-Based Repayment plan in paragraph (a)(1)(ii) of this section, the Secretary applies any payment in the following order: (A) Accrued charges and collection costs. (B) Outstanding interest. (C) Outstanding principal. (ii) The Secretary applies any payment made under the Income-Based Repayment plan in the following order: (A) Accrued interest. (B) Collection costs. (C) Late charges. (D) Loan principal. (2) A borrower may prepay all or part of a loan at any time without penalty. If a borrower pays any amount in excess of the amount due, the excess amount is a prepayment. (3) If a prepayment equals or exceeds the monthly repayment amount under the borrower's repayment plan, the Secretary— (i) Applies the prepaid amount according to paragraph (a)(1) of this section; (ii) Advances the due date of the next payment unless the borrower requests otherwise; and (iii) Notifies the borrower of any revised due date for the next payment. (4) If a prepayment is less than the monthly repayment amount, the Secretary applies the prepayment according to paragraph (a)(1) of this section. (b) Repayment incentives. To encourage on-time repayment, the Secretary may reduce the interest rate for a borrower who repays a loan under a system or on a schedule that meets requirements specified by the Secretary. (c) Refunds and returns of title IV, HEA program funds from schools. The Secretary applies any refund or return of title IV, HEA program funds that the Secretary receives from a school under § 668.22 against the borrower's outstanding principal and notifies the borrower of the refund or return. (d) Default —(1) Acceleration. If a borrower defaults on a Direct Loan, the entire unpaid balance and accrued interest are immediately due and payable. (2) Collection charges. If a borrower defaults on a Direct Loan, the Secretary assesses collection charges in accordance with § 685.202(e). (3) Collection of a defaulted loan. (i) The Se… | ||||
| 34:34:4.1.1.1.3.2.1.14 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.212 Discharge of a loan obligation. | ED | [59 FR 61690, Dec. 1, 1994] | (a) Death. (1) If a borrower (or a student on whose behalf a parent borrowed a Direct PLUS Loan) dies, the Secretary discharges the obligation of the borrower and any endorser to make any further payments on the loan based on— (i) An original or certified copy of the death certificate; (ii) An accurate and complete photocopy of the original or certified copy of the death certificate; (iii) An accurate and complete original or certified copy of the death certificate that is scanned and submitted electronically or sent by facsimile transmission; or (iv) Verification of the borrower's or student's death through an authoritative Federal or State electronic database approved for use by the Secretary. (2) Under exceptional circumstances and on a case-by-case basis, the Secretary discharges a loan based upon other reliable documentation of the borrower's or student's death that is acceptable to the Secretary. (3) In the case of a Direct Consolidation Loan that repaid a Direct PLUS Loan or a Federal PLUS Loan obtained on behalf of a student who dies, the Secretary discharges an amount equal to the portion of the outstanding balance of the consolidation loan, as of the date of the student's death, attributable to that Direct PLUS Loan or Federal PLUS Loan. (b) Total and permanent disability. If a borrower meets the requirements in § 685.213, the Secretary discharges the obligation of the borrower and any endorser to make any further payments on the loan. (c) Bankruptcy. If a borrower's obligation to repay a loan is discharged in bankruptcy, the Secretary does not require the borrower to make any further payments on the loan. (d) Closed schools. If a borrower meets the requirements in § 685.214, the Secretary discharges the obligation of the borrower and any endorser to make any further payments on the loan. In the case of a Direct Consolidation Loan, the Secretary discharges the portion of the consolidation loan equal to the amount of the discharge applicable to any loan disbursed, in whole or in part, on… | ||||
| 34:34:4.1.1.1.3.2.1.15 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.213 Total and permanent disability discharge. | ED | [77 FR 66142, Nov. 1, 2012, as amended at 84 FR 65007, Nov. 26, 2019; 86 FR 46982, Aug. 23, 2021; 87 FR 66058, Nov. 1, 2022; 88 FR 43065, July 6, 2023] | (a) General. (1) A borrower's Direct Loan is discharged if the borrower becomes totally and permanently disabled, as defined in § 685.102(b), and satisfies the eligibility requirements in this section. (2) For a borrower who becomes totally and permanently disabled as described in paragraph (1) of the definition of that term in § 685.102(b), the borrower's loan discharge application is processed in accordance with paragraph (b) of this section. (3) For veterans who are totally and permanently disabled as described in paragraph (2) of the definition of that term in § 685.102(b), the veteran's loan discharge application is processed in accordance with paragraph (c) of this section. (4) For purposes of this section, a borrower's representative or a veteran's representative is a member of the borrower's family, the borrower's attorney, or another individual authorized to act on behalf of the borrower in connection with the borrower's total and permanent disability discharge application. References to a “borrower” or a “veteran” include, if applicable, the borrower's representative or the veteran's representative for purposes of applying for a total and permanent disability discharge, providing notifications or information to the Secretary, and receiving notifications from the Secretary. (b) Discharge application process for a borrower who is totally and permanently disabled as described in paragraph (1) of the definition of that term in § 685.102(b) —(1) Borrower application for discharge. Except as provided in paragraph (d)(2) of this section, to qualify for a discharge of a Direct Loan based on a total and permanent disability, a borrower must submit a discharge application to the Secretary on a form approved by the Secretary. If the borrower notifies the Secretary that the borrower claims to be totally and permanent disabled prior to submitting a total and permanent disability discharge application, the Secretary— (i) Provides the borrower with information needed for the borrower to apply for a total and… | ||||
| 34:34:4.1.1.1.3.2.1.16 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.214 Closed school discharge. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 59 FR 66134, Dec. 22, 1994; 64 FR 58972, Nov. 1, 1999. Redesignated at 65 FR 65629, Nov. 1, 2000, as amended at 66 FR 34765, June 29, 2001; 78 FR 65834, Nov. 1, 2013; 81 FR 76081, Nov. 1, 2016; 84 FR 49930, Sept. 23, 2019; 87 FR 66060, Nov. 1, 2022; 88 FR 43065, July 6, 2023] | (a) General. (1) The Secretary discharges the borrower's (and any endorser's) obligation to repay a Direct Loan in accordance with the provisions of this section if the borrower (or the student on whose behalf a parent borrowed) did not complete the program of study for which the loan was made because the school at which the borrower (or student) was enrolled closed, as described in paragraph (d) of this section. (2) For purposes of this section— (i) If a school has closed, the school's closure date is the earlier of: the date, determined by the Secretary, that the school ceased to provide educational instruction in programs in which most students at the school were enrolled, or a date determined by the Secretary that reflects when the school ceased to provide educational instruction for all of its students; (ii) “School” means a school's main campus or any location or branch of the main campus, regardless of whether the school or its location or branch is considered title IV eligible; (iii) “Program” means the credential defined by the level and Classification of Instructional Program code in which a student is enrolled, except that the Secretary may define a borrower's program as multiple levels or Classification of Instructional Program codes if: (A) The enrollment occurred at the same institution in closely proximate periods; (B) The school granted a credential in a program while the student was enrolled in a different program; or (C) The programs must be taken in a set order or were presented as necessary for borrowers to complete in order to succeed in the relevant field of employment; (b) Relief pursuant to discharge. (1) Discharge under this section relieves the borrower of any past or present obligation to repay the loan and any accrued charges or collection costs with respect to the loan. (2) The discharge of a loan under this section qualifies the borrower for reimbursement of amounts paid voluntarily or through enforced collection on the loan. (3) The Secretary does not regard a borrower… | ||||
| 34:34:4.1.1.1.3.2.1.17 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.215 Discharge for false certification of student eligibility or unauthorized payment. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 59 FR 66134, Dec. 22, 1994; 61 FR 29900, June 12, 1996; 64 FR 58972, Nov. 1, 1999; 65 FR 65622, Nov. 1, 2000. Redesignated and amended at 65 FR 65629, Nov. 1, 2000; 66 FR 34765, June 29, 2001; 71 FR 45714, Aug. 9, 2006; 78 FR 65835, Nov. 1, 2013; 81 FR 76082, Nov. 1, 2016; 84 FR 49931, Sept. 23, 2019; 87 FR 66062, Nov. 1, 2022] | (a) Basis for discharge —(1) False certification. The Secretary discharges a borrower's (and any endorser's) obligation to repay a Direct Loan in accordance with the provisions of this section if a school falsely certifies the eligibility of the borrower (or the student on whose behalf a parent borrowed) to receive the proceeds of a Direct Loan. The Secretary considers a student's eligibility to borrow to have been falsely certified by the school if the school— (i) Certified the eligibility of a student who— (A) Reported not having a high school diploma or its equivalent; and (B) Did not satisfy the alternative to graduation from high school requirements under section 484(d) of the Act and 34 CFR 668.32(e) of this chapter that were in effect when the loan was originated; (ii) Certified the eligibility of a student who is not a high school graduate based on— (A) A high school graduation status falsified by the school; or (B) A high school diploma falsified by the school or a third party to which the school referred the borrower; (iii) Signed the borrower's name on the loan application or promissory note without the borrower's authorization; (iv) Certified the eligibility of the student who, because of a physical or mental condition, age, criminal record, or other reason accepted by the Secretary, would not meet State requirements for employment (in the student's State of residence when the loan was originated) in the occupation for which the training program supported by the loan was intended; or (v) Certified the eligibility of a student for a Direct Loan as a result of the crime of identity theft committed against the individual, as that crime is defined in paragraph (c)(6) of this section. (2) Unauthorized payment. The Secretary discharges a borrower's (and any endorser's) obligation to repay a Direct Loan if the school, without the borrower's authorization, endorsed the borrower's loan check or signed the borrower's authorization for electronic funds transfer, unless the proceeds of the loan wer… | ||||
| 34:34:4.1.1.1.3.2.1.18 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.216 Unpaid refund discharge. | ED | [64 FR 58969, Nov. 1, 1999. Redesignated and amended at 65 FR 65629, Nov. 1, 2000; 66 FR 34765, June 29, 2001; 78 FR 65835, Nov. 1, 2013] | (a)(1) Unpaid refunds in closed school situations. In the case of a school that has closed, the Secretary discharges a former or current borrower's (and any endorser's) obligation to repay that portion of a Direct Loan equal to the refund that should have been made by the school under applicable law and regulations, including this section. Any accrued interest and other charges associated with the unpaid refund are also discharged. (2) Unpaid refunds in open school situations. (i) In the case of a school that is open, the Secretary discharges a former or current borrower's (and any endorser's) obligation to repay that portion of a Direct Loan equal to the refund that should have been made by the school under applicable law and regulations, including this section, if— (A) The borrower (or the student on whose behalf a parent borrowed) is not attending the school that owes the refund; (B) The borrower has been unable to resolve the unpaid refund with the school; and (C) The Secretary is unable to resolve the unpaid refund with the school within 120 days from the date the borrower submits a complete application in accordance with paragraph (c)(1) of this section regarding the unpaid refund. Any accrued interest and other charges associated with the unpaid refund are also discharged. (ii) For the purpose of paragraph (a)(2)(i)(C) of this section, within 60 days of the date notified by the Secretary, the school must submit to the Secretary documentation demonstrating that the refund was made by the school or that the refund was not required to be made by the school. (b) Relief to borrower following discharge. (1) If the borrower receives a discharge of a portion of a loan under this section, the borrower is reimbursed for any amounts paid in excess of the remaining balance of the loan (including accrued interest and other charges) owed by the borrower at the time of discharge. (2) The Secretary reports the discharge of a portion of a loan under this section to all consumer reporting agencies to which the … | ||||
| 34:34:4.1.1.1.3.2.1.19 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.217 Teacher loan forgiveness program. | ED | [65 FR 65629, Nov. 1, 2000, as amended at 71 FR 45715, Aug. 9, 2006; 71 FR 64400, Nov. 1, 2006; 73 FR 35495, June 23, 2008; 74 FR 56004, Oct. 29, 2009; 78 FR 65835, Nov. 1, 2013] | (a) General. (1) The teacher loan forgiveness program is intended to encourage individuals to enter and continue in the teaching profession. For new borrowers, the Secretary repays the amount specified in this paragraph (a) on the borrower's Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, and in certain cases, Direct Consolidation Loans or Federal Consolidation Loans. The forgiveness program is only available to a borrower who has no outstanding loan balance under the Direct Loan Program or the FFEL Program on October 1, 1998, or who has no outstanding loan balance on the date he or she obtains a loan after October 1, 1998. (2)(i) The borrower must have been employed at an eligible elementary or secondary school that serves low-income families or by an educational service agency that serves low-income families as a full-time teacher for five consecutive complete academic years. The required five years of teaching may include any combination of qualifying teaching service at an eligible elementary or secondary school or for an eligible educational service agency. (ii) Teaching for an eligible elementary or secondary school may be counted toward the required five consecutive complete academic years only if for least one year of teaching was after the 1997-1998 academic year. (iii) Teaching at an eligible educational service agency may be counted toward the required five consecutive complete academic years only if the consecutive five-year period includes qualifying service at an eligible educational service agency performed after the 2007-2008 academic year. (3) All borrowers eligible for teacher loan forgiveness may receive loan forgiveness of up to a combined total of $5,000 on the borrower's eligible Direct Loan and FFEL Program loans. (4) A borrower may receive loan forgiveness of up to a combined total of $17,500 on the borrower's eligible Direct Loan and FFEL Program loans if the borrower was employed for five consecutive years— (i) At an eligibl… | ||||
| 34:34:4.1.1.1.3.2.1.2 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.201 Obtaining a loan. | ED | [64 FR 58965, Nov. 1, 1999, as amended at 65 FR 65629, Nov. 1, 2000; 71 FR 45711, Aug. 9, 2006; 78 FR 65825, Nov. 1, 2013] | (a) Application for a Direct Subsidized Loan or a Direct Unsubsidized Loan. (1) To obtain a Direct Subsidized Loan or a Direct Unsubsidized Loan, a student must complete a Free Application for Federal Student Aid and submit it in accordance with instructions in the application. (2) If the student is eligible for a Direct Subsidized Loan or a Direct Unsubsidized Loan, the school in which the student is enrolled must perform the following functions: (i) Create a loan origination record and transmit the record to the Secretary. (ii) Ensure that the loan is supported by a completed Master Promissory Note (MPN) and, if applicable, transmit the MPN to the Secretary. (iii) In accordance with 34 CFR 668.162, draw down funds or receive funds from the Secretary, and disburse the funds to the student. (b) Application for a Direct PLUS Loan. (1) For a parent to obtain a Direct PLUS Loan, the parent must complete the Direct PLUS Loan MPN and the dependent student on whose behalf the parent is borrowing must complete a Free Application for Federal Student Aid and submit it in accordance with instructions in the application. (2) For a graduate or professional student to apply for a Direct PLUS Loan, the student must complete a Free Application for Federal Student Aid and submit it in accordance with instructions in the application. The graduate or professional student must also complete the Direct PLUS Loan MPN. (3) For either a parent or student PLUS borrower, as applicable, the school must complete its portion of the Direct PLUS Loan MPN and, if applicable, submit it to the Secretary. The Secretary makes a determination as to whether the parent or graduate or professional student has an adverse credit history. The school performs the functions described in paragraph (a)(2) of this section. (c) Application for a Direct Consolidation Loan. (1) To obtain a Direct Consolidation Loan, the applicant must complete the application and promissory note and submit it to the Secretary. The application and promissory note se… | ||||
| 34:34:4.1.1.1.3.2.1.20 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.218 Discharge of student loan indebtedness for survivors of victims of the September 11, 2001, attacks. | ED | [71 FR 78083, Dec. 28, 2006, as amended at 72 FR 55054, Sept. 28, 2007; 78 FR 65836, Nov. 1, 2013] | (a) Definition of terms. As used in this section— (1) Eligible public servant means an individual who— (i) Served as a police officer, firefighter, other safety or rescue personnel, or as a member of the Armed Forces; and (ii)(A) Died due to injuries suffered in the terrorist attacks on September 11, 2001; or (B) Became permanently and totally disabled due to injuries suffered in the terrorist attacks on September 11, 2001. (2) Eligible victim means an individual who died due to injuries suffered in the terrorist attacks on September 11, 2001 or became permanently and totally disabled due to injuries suffered in the terrorist attacks on September 11, 2001. (3) Eligible parent means the parent of an eligible victim if— (i) The parent owes a Direct PLUS Loan incurred on behalf of an eligible victim; or (ii) The parent owes a Direct Consolidation Loan that was used to repay a Direct PLUS Loan or a FFEL PLUS Loan incurred on behalf of an eligible victim. (4) Died due to injuries suffered in the terrorist attacks on September 11, 2001 means the individual was present at the World Trade Center in New York City, New York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site at the time of or in the immediate aftermath of the terrorist-related aircraft crashes on September 11, 2001, and the individual died as a direct result of these crashes. (5) Became permanently and totally disabled due to injuries suffered in the terrorist attacks on September 11, 2001 means the individual was present at the World Trade Center in New York City, New York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site at the time of or in the immediate aftermath of the terrorist-related aircraft crashes on September 11, 2001 and the individual became permanently and totally disabled as a direct result of these crashes. (i) An individual is considered permanently and totally disabled if— (A) The disability is the result of a physical injury to the individual that was treated by a medical p… | ||||
| 34:34:4.1.1.1.3.2.1.21 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.219 Public Service Loan Forgiveness Program (PSLF). | ED | [87 FR 66063, Nov. 1, 2022; 88 FR 43065, July 6, 2023; 88 FR 43905, July 10, 2023] | (a) Purpose. The Public Service Loan Forgiveness Program is intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their Direct loans after they satisfy the public service and loan payment requirements of this section. (b) Definitions. The following definitions apply to this section: AmeriCorps service means service in a position approved by the Corporation for National and Community Service under section 123 of the National and Community Service Act of 1990 (42 U.S.C. 12573). Civilian service to the military means providing services to or on behalf of members, veterans, or the families or survivors of deceased members of the U.S. Armed Forces or the National Guard that is provided to a person because of the person's status in one of those groups. Early childhood education program means an early childhood education program as defined in section 103(8) of the Act (20 U.S.C. 1003). Eligible Direct Loan means a Direct Subsidized Loan, a Direct Unsubsidized Loan, a Direct PLUS Loan, or a Direct Consolidation Loan. Emergency management services means services that help remediate, lessen, or eliminate the effects or potential effects of emergencies that threaten human life or health, or real property. Employee or employed means an individual— (i) To whom an organization issues an IRS Form W-2; (ii) Who receives an IRS Form W-2 from an organization that has contracted with a qualifying employer to provide payroll or similar services for the qualifying employer, and which provides the Form W-2 under that contract; (iii) who works as a contracted employee for a qualifying employer in a position or providing services which, under applicable state law, cannot be filled or provided by a direct employee of the qualifying employer. Full-time means: (i) Working in qualifying employment in one or more jobs— (A) A minimum average of 30 hours per week during the period being certified, (B) A minimum of 30 hours per week throughou… | ||||
| 34:34:4.1.1.1.3.2.1.22 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.220 Consolidation. | ED | [78 FR 65836, Nov. 1, 2013, as amended at 81 FR 76083, Nov. 1, 2016; 88 FR 43905, July 10, 2023] | (a) Direct Consolidation Loans. A borrower may consolidate education loans made under certain Federal programs into a Direct Consolidation Loan. Loans consolidated into a Direct Consolidation Loan are discharged when the Direct Consolidation Loan is originated. (b) Loans eligible for consolidation. The following loans may be consolidated into a Direct Consolidation Loan: (1) Subsidized Federal Stafford Loans. (2) Guaranteed Student Loans. (3) Federal Insured Student Loans (FISL). (4) Direct Subsidized Loans. (5) Direct Subsidized Consolidation Loans. (6) Federal Perkins Loans. (7) National Direct Student Loans (NDSL). (8) National Defense Student Loans (NDSL). (9) Federal PLUS Loans. (10) Parent Loans for Undergraduate Students (PLUS). (11) Direct PLUS Loans. (12) Direct PLUS Consolidation Loans. (13) Federal Consolidation Loans. (14) Unsubsidized Federal Stafford Loans. (15) Federal Supplemental Loans for Students (SLS). (16) Direct Unsubsidized Loans. (17) Direct Unsubsidized Consolidation Loans. (18) Auxiliary Loans to Assist Students (ALAS). (19) Health Professions Student Loans (HPSL) and Loans for Disadvantaged Students (LDS) made under subpart II of part A of title VII of the Public Health Service Act. (20) Health Education Assistance Loans (HEAL). (21) Nursing loans made under part E of title VIII of the Public Health Service Act. (c) Components of Direct Consolidation Loans —(1) Subsidized component of Direct Consolidation Loans. The term “Direct Subsidized Consolidation Loan” refers to the portion of a Direct Consolidation Loan attributable to— (i) The loans identified in paragraphs (b)(1) through (b)(5) of this section; and (ii) The portion of a Federal Consolidation Loan under paragraph (b)(13) of this section that is eligible for interest benefits during a deferment period under section 428C(b)(4)(C) of the Act. (2) Unsubsidized component of Direct Consolidation Loans. Except as provided in paragraph (c)(3) of this section, the term “Direct Unsubsidized Consolidatio… | ||||
| 34:34:4.1.1.1.3.2.1.23 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.221 Alternative repayment plan. | ED | [88 FR 43905, July 10, 2023] | (a) The Secretary may provide an alternative repayment plan to a borrower who demonstrates to the Secretary's satisfaction that the terms and conditions of the repayment plans specified in §§ 685.208 and 685.209 are not adequate to accommodate the borrower's exceptional circumstances. (b) The Secretary may require a borrower to provide evidence of the borrower's exceptional circumstances before permitting the borrower to repay a loan under an alternative repayment plan. (c) If the Secretary agrees to permit a borrower to repay a loan under an alternative repayment plan, the Secretary notifies the borrower in writing of the terms of the plan. After the borrower receives notification of the terms of the plan, the borrower may accept the plan or choose another repayment plan. (d) A borrower must repay a loan under an alternative repayment plan within 30 years of the date the loan entered repayment, not including periods of deferment and forbearance. | ||||
| 34:34:4.1.1.1.3.2.1.24 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.222 Borrower defenses and procedures for loans first disbursed on or after July 1, 2017, and before July 1, 2020, and procedures for loans first disbursed prior to July 1, 2017. | ED | [81 FR 76083, Nov. 1, 2016, as amended at 84 FR 49932, Sept. 23, 2019; 88 FR 43905, July 10, 2023] | (a) General. (1) For loans first disbursed prior to July 1, 2017, a borrower asserts and the Secretary considers a borrower defense in accordance with the provisions of § 685.206(c), unless otherwise noted in § 685.206(c). (2) For loans first disbursed on or after July 1, 2017, and before July 1, 2020, a borrower asserts and the Secretary considers a borrower defense in accordance with this section. To establish a borrower defense under this section, a preponderance of the evidence must show that the borrower has a borrower defense that meets the requirements of this section. (3) A violation by the school of an eligibility or compliance requirement in the Act or its implementing regulations is not a basis for a borrower defense under either this section or § 685.206(c) unless the violation would otherwise constitute a basis for a borrower defense under this section or § 685.206(c), as applicable. (4) For the purposes of this section and § 685.206(c), “borrower” means— (i) The borrower; and (ii) In the case of a Direct PLUS Loan, any endorsers, and for a Direct PLUS Loan made to a parent, the student on whose behalf the parent borrowed. (5) For the purposes of this section and § 685.206(c), a “borrower defense” refers to an act or omission of the school attended by the student that relates to the making of a Direct Loan for enrollment at the school or the provision of educational services for which the loan was provided, and includes one or both of the following: (i) A defense to repayment of amounts owed to the Secretary on a Direct Loan, in whole or in part; and (ii) A right to recover amounts previously collected by the Secretary on the Direct Loan, in whole or in part. (6) If the borrower asserts both a borrower defense and any other objection to an action of the Secretary with regard to that Direct Loan, the order in which the Secretary will consider objections, including a borrower defense, will be determined as appropriate under the circumstances. (b) Judgment against the school. The borrower … | ||||
| 34:34:4.1.1.1.3.2.1.25 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.223 Severability. | ED | [81 FR 76086, Nov. 1, 2016] | If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby. | ||||
| 34:34:4.1.1.1.3.2.1.3 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.202 Charges for which Direct Loan Program borrowers are responsible. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 61 FR 29900, June 12, 1996; 62 FR 63434, Nov. 28, 1997; 64 FR 46254, Aug. 24, 1999; 66 FR 34765, June 29, 2001; 71 FR 45711, Aug. 9, 2006; 72 FR 62009, Nov. 1, 2007; 74 FR 56001, Oct. 29, 2009; 77 FR 66135, Nov. 1, 2012; 78 FR 28986, May 16, 2013; 78 FR 65825, Nov. 1, 2013; 80 FR 67238, Oct. 30, 2015; 87 FR 66055, Nov. 1, 2022] | (a) Interest —(1) Interest rate for Direct Subsidized Loans and Direct Unsubsidized Loans first disbursed before July 1, 1995. During all periods, the interest rate during any twelve-month period beginning on July 1 and ending on June 30 is determined on the June 1 immediately preceding that period. The interest rate is equal to the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to that June 1 plus 3.1 percentage points, but does not exceed 8.25 percent. (2) Interest rate for Direct Subsidized Loans and Direct Unsubsidized Loans first disbursed on or after July 1, 1995, and before July 1, 1998 —(i) During the in-school, grace, and deferment periods. The interest rate during any twelve-month period beginning on July 1 and ending on June 30 is determined on the June 1 immediately preceding that period. The interest rate is equal to the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to that June 1 plus 2.5 percentage points, but does not exceed 8.25 percent. (ii) During all other periods. The interest rate during any twelve-month period beginning on July 1 and ending on June 30 is determined on the June 1 immediately preceding that period. The interest rate is equal to the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to that June 1 plus 3.1 percentage points, but does not exceed 8.25 percent. (3) Interest Rate for Direct Subsidized Loans and Direct Subsidized Loans first disbursed on or after July 1, 1998, and before July 1, 2006. (i) During the in-school, grace, and deferment periods. The interest rate during any twelve-month period beginning on July 1 and ending on June 30 is determined on the June 1 immediately preceding that period. The interest rate is equal to the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to that June 1 plus 1.7 percentage points, but does not exceed 8.25 percent. (ii) During all other periods. The interest … | ||||
| 34:34:4.1.1.1.3.2.1.4 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.203 Loan limits. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 64 FR 58966, Nov. 1, 1999; 67 FR 67081, Nov. 1, 2002; 68 FR 75430, Dec. 31, 2003; 71 FR 45711, Aug. 9, 2006; 71 FR 64399, Nov. 1, 2006; 73 FR 35495, June 23, 2008; 74 FR 56001, Oct. 29, 2009; 78 FR 65827, Nov. 1, 2013] | (a) Direct Subsidized Loans. (1) In the case of an undergraduate student who has not successfully completed the first year of a program of undergraduate education, the total amount the student may borrow for any academic year of study under the Direct Subsidized Loan Program may not exceed the following: (i) $3,500 for a program of study of at least a full academic year in length. (ii) For a one-year program of study with less than a full academic year remaining, the amount that is the same ratio to $3,500 as the— (iii) For a program of study that is less than a full academic year in length, the amount that is the same ratio to $3,500 as the lesser of the— (2) In the case of an undergraduate student who has successfully completed the first year of an undergraduate program but has not successfully completed the second year of an undergraduate program, the total amount the student may borrow for any academic year of study under the Direct Subsidized Loan Program may not exceed the following: (i) $4,500 for a program of study of at least a full academic year in length. (ii) For a program of study with less than a full academic year remaining, an amount that is the same ratio to $4,500 as the— (3) In the case of an undergraduate student who has successfully completed the first and second years of a program of study of undergraduate education but has not successfully completed the remainder of the program, the total amount the student may borrow for any academic year of study under the Direct Subsidized Loan Program may not exceed the following: (i) $5,500 for a program of study of at least an academic year in length. (ii) For a program of study with less than a full academic year remaining, an amount that is the same ratio to $5,500 as the— (4) In the case of a student who has an associate or baccalaureate degree which is required for admission into a program and who is not a graduate or professional student, the total amount the student may borrow for any academic year of study may not exceed the amounts… | ||||
| 34:34:4.1.1.1.3.2.1.5 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.204 Deferment. | ED | [78 FR 65829, Nov. 1, 2013] | (a) General. (1) A Direct Subsidized Loan or Direct Subsidized Consolidation Loan borrower who meets the requirements described in paragraphs (b), (d), (e), (f), (g), (h), (i), or (j) of this section is eligible for a deferment during which periodic installments of principal and interest need not be paid. (2) A Direct Unsubsidized Loan, Direct Unsubsidized Consolidation Loan, Direct PLUS Loan, or Direct PLUS Consolidation Loan borrower who meets the requirements described in paragraphs (b) through (j) of this section is eligible for a deferment during which periodic installments of principal need not be paid but interest does accrue and is capitalized or paid by the borrower. At or before the time a deferment is granted, the Secretary provides information, including an example, to assist the borrower in understanding the impact of capitalization of accrued, unpaid interest on the borrower's loan principal and on the total amount of interest to be paid over the life of the loan. (3) A borrower whose loan is in default is not eligible for a deferment, unless the borrower has made payment arrangements satisfactory to the Secretary. (4)(i) To receive a deferment, except as provided for in-school deferments under paragraphs (b)(2)(ii) through (iv) of this section, the borrower must request the deferment and, except as provided in paragraph (a)(5)(i) of this section, provide the Secretary with all information and documents required to establish eligibility for the deferment. (ii) In the case of a military service deferment under paragraph (h) of this section, a borrower's representative may request the deferment and provide the required information and documents on behalf of the borrower. If the Secretary grants a military service deferment based on a request from a borrower's representative, the Secretary notifies the borrower that the deferment has been granted and that the borrower has the option to cancel the deferment and continue to make payments on the loan. The Secretary may also notify the borrower's rep… | ||||
| 34:34:4.1.1.1.3.2.1.6 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.205 Forbearance. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 61 FR 29900, June 12, 1996; 64 FR 58968, Nov. 1, 1999; 65 FR 65629, Nov. 1, 2000; 66 FR 34765, June 29, 2001; 68 FR 75430, Dec. 31, 2003; 71 FR 45712, Aug. 9, 2006; 73 FR 63255, Oct. 23, 2008; 74 FR 56003, Oct. 29, 2010; 78 FR 65832, Nov. 1, 2013; 81 FR 76080, Nov. 1, 2016; 84 FR 49926, Sept. 23, 2019; 87 FR 66055, Nov. 1, 2022] | (a) General. “Forbearance” means permitting the temporary cessation of payments, allowing an extension of time for making payments, or temporarily accepting smaller payments than previously scheduled. The borrower has the option to choose the form of forbearance. Except as provided in paragraph (b)(9) of this section, if payments of interest are forborne, they are capitalized. The Secretary grants forbearance if the borrower or endorser intends to repay the loan but requests forbearance and provides sufficient documentation to support this request, and— (1) The Secretary determines that, due to poor health or other acceptable reasons, the borrower or endorser is currently unable to make scheduled payments; (2) The borrower's payments of principal are deferred under § 685.204 and the Secretary does not subsidize the interest benefits on behalf of the borrower; (3) The borrower is in a medical or dental internship or residency that must be successfully completed before the borrower may begin professional practice or service, or the borrower is serving in a medical or dental internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training; (4) The borrower is serving in a national service position for which the borrower is receiving a national service education award under title I of the National and Community Service Act of 1990; (5)(i) The borrower is performing the type of service that would qualify the borrower for loan forgiveness under the requirements of the teacher loan forgiveness program in § 685.217. (ii) Before a forbearance is granted under § 685.205(a)(5)(i), the borrower must— (A) Submit documentation for the period of the annual forbearance request showing the beginning and ending dates that the borrower is expected to perform, for that year, the type of service described in § 685.217(c); and (B) Certify the borrower's intent to satisfy the requirements of § 685.217(c). … | ||||
| 34:34:4.1.1.1.3.2.1.7 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.206 Borrower responsibilities and defenses. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 60 FR 33345, June 28, 1995; 64 FR 58972, Nov. 1, 1999; 78 FR 65832, Nov. 1, 2013; 81 FR 76080, Nov. 1, 2016; 84 FR 49926, Sept. 23, 2019; 87 FR 66055, Nov. 1, 2022] | (a) The borrower must give the school the following information as part of the origination process for a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan: (1) A statement, as described in 34 CFR part 668, that the loan will be used for the cost of the student's attendance. (2) Information demonstrating that the borrower is eligible for the loan. (3) Information concerning the outstanding FFEL Program and Direct Loan Program loans of the borrower and, for a parent borrower, of the student, including any Federal Consolidation Loan or Direct Consolidation Loan. (4) A statement authorizing the school to release to the Secretary information relevant to the student's eligibility to borrow or to have a parent borrow on the student's behalf (e.g., the student's enrollment status, financial assistance, and employment records). (b)(1) The borrower must promptly notify the Secretary of any change of name, address, student status to less than half-time, employer, or employer's address; and (2) The borrower must promptly notify the school of any change in address during enrollment. (c) Borrower defense to repayment for loans first disbursed prior to July 1, 2017. (1) For loans first disbursed prior to July 1, 2017, the borrower may assert a borrower defense under this paragraph. A “borrower defense” refers to any act or omission of the school attended by the student that relates to the making of the loan for enrollment at the school or the provision of educational services for which the loan was provided that would give rise to a cause of action against the school under applicable State law, and includes one or both of the following: (i) A defense to repayment of amounts owed to the Secretary on a Direct Loan, in whole or in part. (ii) A claim to recover amounts previously collected by the Secretary on the Direct Loan, in whole or in part. (2) The order of objections for defaulted Direct Loans are as described in § 685.222(a)(6). A borrower defense claim under this section must be asserted, and will be … | ||||
| 34:34:4.1.1.1.3.2.1.8 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.207 Obligation to repay. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 64 FR 58968, Nov. 1, 1999; 68 FR 75430, Dec. 31, 2003; 71 FR 45712, Aug. 9, 2006; 78 FR 65832, Nov. 1, 2013] | (a) Obligation of repayment in general. (1) A borrower is obligated to repay the full amount of a Direct Loan, including the principal balance, fees, any collection costs charged under § 685.202(e), and any interest not subsidized by the Secretary, unless the borrower is relieved of the obligation to repay as provided in this part. (2) The borrower's repayment of a Direct Loan may also be subject to the deferment provisions in § 685.204, the forbearance provisions in § 685.205, the discharge provisions in § 685.212, and the loan forgiveness provisions in §§ 685.217 and 685.219. (3) A borrower's first payment on a Direct Loan is due within 60 days of the beginning date of the repayment period as determined in accordance with paragraph (b), (c), (d), or (e) of this section. (b) Direct Subsidized Loan repayment. (1) During the period in which a borrower is enrolled at an eligible school on at least a half-time basis, the borrower is in an “in-school” period and is not required to make payments on a Direct Subsidized Loan unless— (i) The loan entered repayment before the in-school period began; and (ii) The borrower has not been granted a deferment under § 685.204(b). (2)(i) When a borrower ceases to be enrolled at an eligible school on at least a half-time basis, a six-month grace period begins, unless the grace period has been previously exhausted. (ii)(A) Any borrower who is a member of a reserve component of the Armed Forces named in section 10101 of title 10, United States Code and is called or ordered to active duty for a period of more than 30 days is entitled to have the active duty period excluded from the six-month grace period. The excluded period includes the time necessary for the borrower to resume enrollment at the next available regular enrollment period. Any single excluded period may not exceed 3 years. (B) Any borrower who is in a grace period when called or ordered to active duty as specified in paragraph (b)(2)(ii)(A) of this section is entitled to a full six-month grace period upon c… | ||||
| 34:34:4.1.1.1.3.2.1.9 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | B | Subpart B—Borrower Provisions | § 685.208 Fixed payment repayment plans. | ED | [71 FR 45712, Aug. 9, 2006, as amended at 71 FR 64400, Nov. 1, 2006; 73 FR 63255, Oct. 23, 2008; 77 FR 66135, Nov. 1, 2012; 78 FR 65833, Nov. 1, 2013; 80 FR 67238, Oct. 30, 2015; 87 FR 66058, Nov. 1, 2022; 88 FR 43900, July 10, 2023] | (a) General. Under a fixed payment repayment plan, the borrower's required monthly payment amount is determined based on the amount of the borrower's Direct Loans, the interest rates on the loans, and the repayment plan's maximum repayment period. (b) Standard repayment plan for all Direct Subsidized Loan, Direct Unsubsidized Loan, and Direct PLUS Loan borrowers, regardless of when they entered repayment, and for Direct Consolidation Loan borrowers who entered repayment before July 1, 2006. (1) Under this repayment plan, a borrower must repay a loan in full within ten years from the date the loan entered repayment by making fixed monthly payments. (2) A borrower's payments under this repayment plan are at least $50 per month, except that a borrower's final payment may be less than $50. (3) The number of payments or the fixed monthly repayment amount may be adjusted to reflect changes in the variable interest rate identified in § 685.202(a). (c) Standard repayment plan for Direct Consolidation Loan borrowers entering repayment on or after July 1, 2006. (1) Under this repayment plan, a borrower must repay a loan in full by making fixed monthly payments over a repayment period that varies with the total amount of the borrower's student loans, as described in paragraph (j) of this section. (2) A borrower's payments under this repayment plan are at least $50 per month, except that a borrower's final payment may be less than $50. (d) Extended repayment plan for all Direct Loan borrowers who entered repayment before July 1, 2006. (1) Under this repayment plan, a borrower must repay a loan in full by making fixed monthly payments within an extended period of time that varies with the total amount of the borrower's loans, as described in paragraph (i) of this section. (2) A borrower makes fixed monthly payments of at least $50, except that a borrower's final payment may be less than $50. (3) The number of payments or the fixed monthly repayment amount may be adjusted to reflect changes in the variable inte… | ||||
| 34:34:4.1.1.1.3.3.1.1 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.300 Agreements between an eligible school and the Secretary for participation in the Direct Loan Program. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 64 FR 58970, Nov. 1, 1999; 71 FR 64400, Nov. 1, 2006; 78 FR 65838, Nov. 1, 2013; 81 FR 76087, Nov. 1, 2016; 83 FR 34048, July 19, 2018; 84 FR 49933, Sept. 23, 2019; 87 FR 66066, Nov. 1, 2022] | (a) General. Participation of a school in the Direct Loan Program means that eligible students at the school may receive Direct Loans. To participate in the Direct Loan Program, a school must— (1) Demonstrate to the satisfaction of the Secretary that the school meets the requirements for eligibility under the Act and applicable regulations; and (2) Enter into a written program participation agreement with the Secretary. (b) Program participation agreement. In the program participation agreement, the school must promise to comply with the Act and applicable regulations and must agree to— (1) Identify eligible students who seek student financial assistance at the institution in accordance with section 484 of the Act; (2) Estimate the need of each of these students as required by part F of the Act for an academic year. For purposes of estimating need, a Direct Unsubsidized Loan, a Direct PLUS Loan, or any loan obtained under any State-sponsored or private loan program may be used to offset the expected family contribution of the student for that year; (3) Certify that the amount of the loan for any student under part D of the Act is not in excess of the annual limit applicable for that loan program and that the amount of the loan, in combination with previous loans received by the borrower, is not in excess of the aggregate limit for that loan program; (4) Set forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 428G of the Act; (5) On a monthly basis, reconcile institutional records with Direct Loan funds received from the Secretary and Direct Loan disbursement records submitted to and accepted by the Secretary; (6) Provide timely and accurate information to the Secretary for the servicing and collecting of loans— (i) Concerning the status of student borrowers (and students on whose behalf parents borrow) while these students are in attendance at the school; (ii) Upon request by the Secretary, concerning any new information of whic… | ||||
| 34:34:4.1.1.1.3.3.1.10 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.309 Administrative and fiscal control and fund accounting requirements for schools participating in the Direct Loan Program. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 60 FR 33345, June 28, 1995; 61 FR 60493, Nov. 27, 1996; 61 FR 60610, Nov. 29, 1996; 78 FR 65841, Nov. 1, 2013] | (a) General. A participating school must— (1) Establish and maintain proper administrative and fiscal procedures and all necessary records as set forth in this part and in 34 CFR part 668; and (2) Submit all reports required by this part and 34 CFR part 668 to the Secretary. (b) Enrollment reporting process. (1) Upon receipt of an enrollment report from the Secretary, a school must update all information included in the report and return the report to the Secretary— (i) In the manner and format prescribed by the Secretary; and (ii) Within the timeframe prescribed by the Secretary. (2) Unless it expects to submit its next updated enrollment report to the Secretary within the next 60 days, a school must notify the Secretary within 30 days after the date the school discovers that— (i) A loan under title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended; or (ii) A student who is enrolled at the school and who received a loan under title IV of the Act has changed his or her permanent address. (c) Record retention requirements. An institution must follow the record retention and examination requirements in this part and in 34 CFR 668.24. (d) Accounting requirements. A school must follow accounting requirements in 34 CFR 668.24(b). (e) Direct Loan Program bank account. Schools must follow the procedures for maintaining funds established in 34 CFR 668.163. (f) Division of functions. Schools must follow the procedures for division of functions in 34 CFR 668.16(c). (g) Limit on use of funds. Funds received by a school under this part may be used only to make Direct Loans to eligible borrowers and may not be used or hypothecated for any other purpose. | ||||
| 34:34:4.1.1.1.3.3.1.11 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.310 Severability. | ED | [81 FR 76089, Nov. 1, 2016] | If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby. | ||||
| 34:34:4.1.1.1.3.3.1.2 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.301 Origination of a loan by a Direct Loan Program school. | ED | [78 FR 65838, Nov. 1, 2013] | (a) Determining eligibility and loan amount. (1) A school participating in the Direct Loan Program must ensure that any information it provides to the Secretary in connection with loan origination is complete and accurate. A school must originate a Direct Loan while the student meets the borrower eligibility requirements of § 685.200. Except as provided in 34 CFR part 668, subpart E, a school may rely in good faith upon statements made by the borrower and, in the case of a parent Direct PLUS Loan borrower, the student and the parent borrower. (2) A school must provide to the Secretary borrower information that includes but is not limited to— (i) The borrower's eligibility for a loan, as determined in accordance with §§ 685.200 and 685.203; (ii) The student's loan amount; and (iii) The anticipated and actual disbursement date or dates and disbursement amounts of the loan proceeds, as determined in accordance with § 685.303(d). (3) Before originating a Direct PLUS Loan for a graduate or professional student borrower, the school must determine the borrower's eligibility for a Direct Subsidized and a Direct Unsubsidized Loan. If the borrower is eligible for a Direct Subsidized or Direct Unsubsidized Loan, but has not requested the maximum Direct Subsidized or Direct Unsubsidized Loan amount for which the borrower is eligible, the school must— (i) Notify the graduate or professional student borrower of the maximum Direct Subsidized or Direct Unsubsidized Loan amount that he or she is eligible to receive and provide the borrower with a comparison of— (A) The maximum interest rate for a Direct Subsidized Loan and a Direct Unsubsidized Loan and the maximum interest rate for a Direct PLUS Loan; (B) Periods when interest accrues on a Direct Subsidized Loan and a Direct Unsubsidized Loan, and periods when interest accrues on a Direct PLUS Loan; and (C) The point at which a Direct Subsidized Loan and a Direct Unsubsidized Loan enters repayment, and the point at which a Direct PLUS Loan enters repayment; and (ii) … | ||||
| 34:34:4.1.1.1.3.3.1.3 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.302 [Reserved] | ED | ||||||
| 34:34:4.1.1.1.3.3.1.4 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.303 Processing loan proceeds. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 60 FR 33345, June 28, 1995; 61 FR 29901, June 12, 1996; 61 FR 60610, Nov. 29, 1996; 64 FR 58971, Nov. 1, 1999; 65 FR 65651, Nov. 1, 2000; 66 FR 34766, June 29, 2001; 68 FR 75430, Dec. 31, 2003; 71 FR 45717, Aug. 9, 2006; 71 FR 64400, Nov. 1, 2006; 72 FR 62033, Nov. 1, 2007; 74 FR 55666, Oct. 28, 2009; 75 FR 67200, Nov. 1, 2010; 78 FR 65839, Nov. 1, 2013] | (a) Purpose. This section establishes rules governing a school's processing of a borrower's Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan proceeds. The school must also comply with any rules for processing loan proceeds contained in 34 CFR part 668. (b) General —(1) A school may not disburse loan proceeds to a borrower unless the borrower has executed a legally enforceable promissory note. (2) The Secretary provides Direct Loan funds to a school in accordance with 34 CFR 668.162. (3)(i) Except in the case of a late disbursement under paragraph (f) of this section, or as provided in paragraph (b)(3)(iii) of this section, a school may disburse loan proceeds only to a student, or a parent in the case of a Direct PLUS Loan obtained by a parent borrower, if the school determines the student has continuously maintained eligibility in accordance with the provisions of § 685.200 from the beginning of the loan period for which the loan was intended. (ii) If a student delays attending school for a period of time, the school may consider that student to have maintained eligibility for the loan from the first day of the period of enrollment. However, the school must comply with the requirements under paragraph (b)(4) of this section. (iii) If, after a school makes the first disbursement to a borrower, the student becomes ineligible due solely to the school's loss of eligibility to participate in the title IV programs or the Direct Loan Program, the school may make subsequent disbursements to the borrower as permitted by 34 CFR part 668. (iv) If, prior to making any disbursement to a borrower, the student temporarily ceases to be enrolled on at least a half-time basis, the school may make a disbursement and any subsequent disbursement to the student if the school determines and documents in the student's file— (A) That the student has resumed enrollment on at least a half-time basis; (B) The student's revised cost of attendance; and (C) That the student continues to qualify for the entire amount of t… | ||||
| 34:34:4.1.1.1.3.3.1.5 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.304 Counseling borrowers. | ED | [74 FR 55666, Oct. 28, 2009, as amended at 78 FR 28986, May 16, 2013; 78 FR 65841, Nov. 1, 2013; 84 FR 49933, Sept. 23, 2019; 86 FR 31438, June 14, 2021; 87 FR 66068, Nov. 1, 2022] | (a) Entrance counseling. (1) Except as provided in paragraph (a)(8) of this section, a school must ensure that entrance counseling is conducted with each Direct Subsidized Loan or Direct Unsubsidized Loan student borrower prior to making the first disbursement of the proceeds of a loan to a student borrower unless the student borrower has received a prior Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized or Unsubsidized Federal Stafford Loan, or Federal SLS Loan. (2) Except as provided in paragraph (a)(8) of this section, a school must ensure that entrance counseling is conducted with each graduate or professional student Direct PLUS Loan borrower prior to making the first disbursement of the loan unless the student borrower has received a prior student Direct PLUS Loan or student Federal PLUS Loan. (3) Entrance counseling for Direct Subsidized Loan, Direct Unsubsidized Loan, and graduate or professional student Direct PLUS Loan borrowers must provide the borrower with comprehensive information on the terms and conditions of the loan and on the responsibilities of the borrower with respect to the loan. This information may be provided to the borrower— (i) During an entrance counseling session, conducted in person; (ii) On a separate written form provided to the borrower that the borrower signs and returns to the school; or (iii) Online or by interactive electronic means, with the borrower acknowledging receipt of the information. (A) Online or by interactive electronic means, with the borrower acknowledging receipt of the information. (B) If a standardized interactive electronic tool is used to provide entrance counseling to the borrower, the school must provide to the borrower any elements of the required information that are not addressed through the electronic tool: ( 1 ) In person; or ( 2 ) On a separate written or electronic document provided to the borrower. (4) If entrance counseling is conducted online or through interactive electronic means, the school must take reasonable steps to… | ||||
| 34:34:4.1.1.1.3.3.1.6 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.305 Determining the date of a student's withdrawal. | ED | [64 FR 59044, Nov. 1, 1999, as amended at 78 FR 65841, Nov. 1, 2013] | (a) Except as provided in paragraph (b) of this section, a school must follow the procedures in § 668.22(b) or (c), as applicable, for determining the student's date of withdrawal. (b) For a student who does not return for the next scheduled term following a summer break, which includes any summer term(s) in which classes are offered but students are not generally required to attend, a school must follow the procedures in § 668.22(b) or (c), as applicable, for determining the student's date of withdrawal except that the school must determine the student's date of withdrawal no later than 30 days after the start of the next scheduled term. (c) The school must use the date determined under paragraph (a) or (b) of this section for the purpose of reporting to the Secretary the student's date of withdrawal and for determining when a refund or return of title IV, HEA program funds must be paid under § 685.306. | ||||
| 34:34:4.1.1.1.3.3.1.7 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.306 Payment of a refund or return of title IV, HEA program funds to the Secretary. | ED | [64 FR 59044, Nov. 1, 1999; 65 FR 37045, June 13, 2000, as amended at 78 FR 65841, Nov. 1, 2013] | (a) General. By applying for a Direct Loan, a borrower authorizes the school to pay directly to the Secretary that portion of a refund or return of title IV, HEA program funds from the school that is allocable to the loan. A school— (1) Must pay that portion of the student's refund or return of title IV, HEA program funds that is allocable to a Direct Loan to the Secretary; and (2) Must provide simultaneous writ-ten notice to the borrower if the school pays a refund or return of title IV, HEA program funds to the Secretary on be-half of that student. (b) Determination, allocation, and payment of a refund or return of title IV, HEA program funds. In determining the portion of a student's refund or return of title IV, HEA program funds that is allocable to a Direct Loan, the school must follow the procedures established in 34 CFR 668.22 for allocating and paying a refund or return of title IV, HEA program funds that is due. | ||||
| 34:34:4.1.1.1.3.3.1.8 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.307 Withdrawal procedure for schools participating in the Direct Loan Program. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 78 FR 65841, Nov. 1, 2013] | (a) A school participating in the Direct Loan Program may withdraw from the program by providing written notice to the Secretary. (b) A participating school that intends to withdraw from the Direct Loan Program must give at least 60 days notice to the Secretary. (c) Unless the Secretary approves an earlier date, the withdrawal is effective on the later of— (1) 60 days after the school notifies the Secretary; or (2) The date designated by the school. | ||||
| 34:34:4.1.1.1.3.3.1.9 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | C | Subpart C—Requirements, Standards, and Payments for Direct Loan Program Schools | § 685.308 Remedial actions. | ED | [59 FR 61690, Dec. 1, 1994, as amended at 81 FR 76089, Nov. 1, 2016; 84 FR 49933, Sept. 23, 2019; 87 FR 66068, Nov. 1, 2022] | (a) General. The Secretary may require the repayment of funds and the purchase of loans by the school if the Secretary determines that the school is liable as a result of— (1) The school's violation of a Federal statute or regulation; (2) The school's negligent or willful false certification under § 685.215; or (3) The school's actions that gave rise to a successful claim for which the Secretary discharged a loan, in whole or in part, pursuant to § 685.206, § 685.214, § 685.216, § 685.222, or subpart D of this part. (b) In requiring a school to repay funds to the Secretary or to purchase loans from the Secretary in connection with an audit or program review, the Secretary follows the procedures described in 34 CFR part 668, subpart H. (c) The Secretary may impose a fine or take an emergency action against a school or limit, suspend, or terminate a school's participation in the Direct Loan Program in accordance with 34 CFR part 668, subpart G. | ||||
| 34:34:4.1.1.1.3.4.1.1 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.400 Scope and purpose. | ED | This subpart sets forth the provisions under which a borrower defense to repayment may be asserted and applies to borrower defense applications pending with the Secretary on July 1, 2023, or received by the Secretary on or after July 1, 2023. | |||||
| 34:34:4.1.1.1.3.4.1.10 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.409 Recovery from institutions. | ED | (a)(1) For loans first disbursed on or after July 1, 2023, the Secretary may collect from the school, or in the case of a closed school, a person affiliated with the school as described in § 668.174(b) of this chapter, any liability to the Secretary for any amounts discharged or reimbursed to borrowers for claims approved under § 685.406. (2) Notwithstanding paragraph (a) of this section, the Secretary may choose not to collect from the school, or in the case of a closed school, a person affiliated with the school as described in § 668.174(b) of this chapter, any liability to the Secretary for any amounts discharged or reimbursed to borrowers under the discharge process described in § 685.408, under conditions such as: (i) The cost of collecting would exceed the amounts received; or (ii) The claims were approved outside of the limitations period in paragraph (c) of this section; (b) The Secretary will not collect from the school any liability to the Secretary for any amounts discharged or reimbursed to borrowers for an approved claim under § 685.406 for loans first disbursed prior to July 1, 2023, unless: (1) For loans first disbursed before July 1, 2017, the claim would have been approved under the standard in § 685.206(c)(1); (2) For loans first disbursed on or after July 1, 2017, and before July 1, 2020, the claim would have been approved under the standard in §§ 685.222(b) through (d); or (3) For loans first disbursed on or after July 1, 2020, and before July 1, 2023, the claim would have been approved under the standard in § 685.206(e)(2). (c)(1) The Secretary will initiate a proceeding to collect from the school the amount of discharge or reimbursement for the borrower resulting from a borrower defense under § 685.408 no later than 6 years after the borrower's last date of attendance at the institution; (2) The limitations period described in paragraph (c)(1) of this section will not apply if at any time prior to the end of the limitations period— (i) The Department official notifies the school of… | |||||
| 34:34:4.1.1.1.3.4.1.11 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.410 Cooperation by the borrower. | ED | To obtain a discharge under this subpart, a borrower must reasonably cooperate with the Secretary in any proceeding under this subpart. | |||||
| 34:34:4.1.1.1.3.4.1.12 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.411 Transfer to the Secretary of the borrower's right of recovery against third parties. | ED | (a) Upon the granting of any discharge under this subpart, the borrower is deemed to have assigned to, and relinquished in favor of, the Secretary any right to a loan refund (up to the amount discharged) that the borrower may have by contract or applicable law with respect to the loan or the contract for educational services for which the loan was received, against the school, its principals, its affiliates, and their successors, its sureties, and any private fund. (b) The provisions of this section apply notwithstanding any provision of State law that would otherwise restrict transfer of those rights by the borrower, limit or prevent a transferee from exercising those rights, or establish procedures or a scheme of distribution that would prejudice the Secretary's ability to recover on those rights. (c) Nothing in this section limits or forecloses the borrower's right to pursue legal and equitable relief against a party described in this section for recovery of any portion of a claim exceeding that assigned to the Secretary or any other claims arising from matters unrelated to the claim on which the loan is discharged. | |||||
| 34:34:4.1.1.1.3.4.1.13 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.499 Severability. | ED | If any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice will not be affected thereby. | |||||
| 34:34:4.1.1.1.3.4.1.2 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.401 Borrower defense-general. | ED | (a) Definitions. For the purposes of this subpart, the following definitions apply: Borrower means (i) The borrower; and (ii) In the case of a Direct PLUS Loan, any endorsers, and for a Direct PLUS Loan made to a parent, the student on whose behalf the parent borrowed. Borrower defense to repayment means an act or omission of the school attended by the student that relates to the making of a Direct Loan for enrollment at the school or the provision of educational services for which the loan was provided and that caused the borrower detriment warranting relief in the form of: (i) A defense to repayment of all amounts owed to the Secretary on a Direct Loan including a Direct Consolidation Loan that was used to repay a Direct Loan, a FFEL Program Loan, Federal Perkins Loan, Health Professions Student Loan, Loan for Disadvantaged Students under subpart II of part A of title VII of the Public Health Service Act, Health Education Assistance Loan, or Nursing Loan made under part E of the Public Health Service Act; (ii) Reimbursement of all payments previously made to the Secretary on the Direct Loan or on a loan repaid by the Direct Consolidation Loan; (iii) For borrowers in default, determining that the borrower is not in default on the loan and is eligible to receive assistance under title IV of the Act; and (iv) Updating or deleting adverse reports the Secretary previously made to consumer reporting agencies regarding the borrower's Direct Loan. Covered loan means a Direct Loan or other Federal student loan that is or could be consolidated into a Federal Direct Consolidation Loan. Department official means an employee of the Department who administers the group process described in § 685.402, the individual process as described in § 685.403, and the institutional response process in § 685.405. Direct Loan means a Direct Subsidized Loan, a Direct Unsubsidized Loan, a Direct PLUS Loan, or a Direct Consolidation Loan. Legal assistance organization means a legal assistance organization that: (i) empl… | |||||
| 34:34:4.1.1.1.3.4.1.3 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.402 Group process for borrower defense. | ED | (a) Group process, generally. Upon consideration of factors including, but not limited to, the existence of common facts and claims by borrowers, the likelihood of actionable acts or omissions that were pervasive or widely disseminated, and the promotion of compliance by an institution or other title IV, HEA program participant, the Secretary may determine whether a group of borrowers from one institution or commonly owned institutions identified by the Secretary has a borrower defense under this subpart. (b) Group process initiated by the Secretary. The Secretary may identify and form a group based upon information from sources that include but are not limited to— (1) Actions by the Federal Government, State attorneys general, other State agencies or officials, or other law enforcement activity; (2) Lawsuits related to educational programs filed against the institutions that are the subject of the claims or judgments rendered against the institutions; or, (3) Individual borrower defense claims pursuant to § 685.403. (c) Group process initiated in response to a third-party requestor application. The Secretary will consider a request to form a group from a third-party requestor that complies with the requirements of this section. To comply with the requirements of this section, the requestor— (1) Submits an application to the Secretary, under penalty of perjury, and on a form approved by the Secretary that— (i) Identifies the requested group, including at minimum: (A) The name of the institution or commonly owned institutions; (B) The campuses or programs which are the subject of the claim, if applicable; (C) A description of the conduct that forms the basis for the group borrower defense claim under the Federal standard in § 685.401(b); (D) An analysis of why the conduct should result in an approved group borrower defense claim under the Federal standard in § 685.401(b); and, (E) The period during which the activity in (c)(1)(i)(C) of this section occurred; (ii) Provides evidence beyond sworn b… | |||||
| 34:34:4.1.1.1.3.4.1.4 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.403 Individual process for borrower defense. | ED | [87 FR 66068, Nov. 1, 2022, as amended at 88 FR 43905, July 10, 2023] | (a) Individual process, generally. (1) If § 685.402 does not apply to an individual borrower who has submitted a borrower defense application, the Secretary will initiate a process to determine whether the individual borrower has a borrower defense under this subpart. (2) If § 685.402 applies to an individual borrower who is covered under a group borrower defense application being considered by the Secretary, that group borrower defense application will toll the timelines under § 685.406 on adjudicating the individual borrower application. (3) Paragraph (a)(1) of this section will not apply to claims covered by a group claim under § 685.402, including claims submitted prior to the formation of such a group, until after the Secretary makes a decision on that group claim. (b) Individual process. (1) The Secretary will consider a borrower defense claim from an individual borrower to be materially complete when the borrower— (i) Submits an application to the Secretary, under penalty of perjury and on a form approved by the Secretary with the following information: (A) A description of one or more acts or omissions by the institution; (B) The school or school representative attributed with the act or omission; (C) Approximately when the act or omission occurred; (D) How the act or omission impacted their decision to attend, to continue attending, or to take out the loan for which they are asserting a defense to repayment; and, (E) A description of the detriment they suffered as a result of the institution's act or omission; (ii) Provides additional supporting evidence for the claims made under subparagraph (b)(1)(i) of this section, if any; (2) The individual must provide any other information or supporting documentation reasonably requested by the Secretary. (c) Individual borrower status. Upon receipt of a materially complete application under this section, the Secretary— (1) Designates a Department official to present the individual's claim in the institutional response process described in § 685… | ||||
| 34:34:4.1.1.1.3.4.1.5 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.404 Group process based on prior Secretarial final actions. | ED | (a) For purposes of forming a Secretary-initiated group process in accordance with § 685.402(b), the Department official may consider final actions as described in § 685.401(b)(5)(ii). (b) For groups based on prior Secretarial final actions in accordance with this section, § 685.405 will not apply to the affected institutions. | |||||
| 34:34:4.1.1.1.3.4.1.6 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.405 Institutional response. | ED | (a) For purposes of adjudicating a borrower defense claim other than those based on prior Secretarial final actions in accordance with § 685.404, the Department official notifies the institution of the group claim under § 685.402 or individual claim under § 685.403 and requests a response from the school. Such notification also may include, but is not limited to, requests for documentation to substantiate the school's response. (b)(1) The notification in paragraph (a) of this section tolls any limitation period by which the Secretary may recover from the institution under § 685.409. (2) The Department official requests a response from the institution, which will have 90 days to respond from the date of the Department official's notification. (c) With its response, the institution must submit an affidavit, on a form approved by the Secretary, certifying under penalty of perjury that the information submitted to the Department official is true and correct. (d) If the institution does not respond to the Department official's information request within 90 days, the Department official will presume that the institution does not contest the borrower defense to repayment claim. | |||||
| 34:34:4.1.1.1.3.4.1.7 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.406 Adjudication of borrower defense applications. | ED | [87 FR 66068, Nov. 1, 2022; 88 FR 43065, July 6, 2023] | (a) Adjudication. The Department official adjudicates a borrower defense claim in accordance with this section. (b) Group process, adjudication. (1) For a group formed under § 685.402, the Department official makes a recommendation to the Secretary regarding adjudication after considering any evidence related to the claim, including materials submitted as part of the group application, individual claims that are part of the group, evidence in the Secretary's possession, evidence provided by the institution during the institutional response process described in § 685.405, and any other relevant information. (2) For a group of borrowers under § 685.402 for which the Department official determines that there may be a borrower defense under § 685.401(b), there is a rebuttable presumption that the act or omission giving rise to the borrower defense affected each member of the group in deciding to attend, or continue attending, the institution, and that such reliance was reasonable. (c) Individual process, adjudication. For an individual process under § 685.403, the Department official adjudicates the borrower defense using the information available to the official and makes a recommendation to the Secretary regarding adjudication. The Department official considers any evidence related to the claim, including materials submitted as part of the individual application, evidence in the Secretary's possession, evidence provided by the institution during the institutional response process described in § 685.405, and any other relevant information. (d) Additional information needed from the school or individual. If the Department official requests additional information from the school, the school must respond to the Department official's information request within 90 days. If the Department official requests additional information from the individual, the individual must respond to the Department official's information request within 90 days. (e) Secretary decision. The Secretary makes a final decision after … | ||||
| 34:34:4.1.1.1.3.4.1.8 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.407 Reconsideration. | ED | (a) The decision of the Secretary is final as to the merits of the borrower defense and any discharge that may be granted on the claim. Notwithstanding the foregoing— (1) If the borrower defense is denied, an individual may request that the Secretary reconsider their individual borrower defense claim on the following grounds: (i) Administrative or technical errors; (ii) Consideration under an otherwise applicable State law standard under § 685.401(c) but only for loans first disbursed before July 1, 2017; or, (iii) Identification of evidence that was not previously provided by the borrower and that was not identified in the final decision as a basis for the Department official's determination; (2)(i) If the borrower defense is denied for a group claim adjudicated under § 685.406(b)(1), any of the third-party requestors that requested to form a group under § 685.402(c) may request that the Secretary reconsider the borrower defense for the reasons provided under (a)(1)(i) through (iii) of this section. A third-party requestor's reconsideration request made in accordance with subparagraph (a)(1)(ii) of this section must provide: (A) The applicable State law standard; (B) Why the third-party requestor requests use of such State law standard; (C) Why application of the State law standard would result in a different outcome for the group than adjudication under the Federal standard; and (D) Why the applicable State law standard would lead to a borrower defense. (ii) An individual borrower from a group claim initially adjudicated under § 685.406(b)(1) may not file a reconsideration request under this section. (3) The borrower or third-party requestor that requested to form a group under § 685.402(c) must request reconsideration under this section no later than 90 days from the date of the Department official's written decision, for any decisions issued on or after the effective date of these regulations. (4)(i) The Secretary will consider a reconsideration request under paragraph (a)(1) or (a)(2)(i) of this … | |||||
| 34:34:4.1.1.1.3.4.1.9 | 34 | Education | VI | 685 | PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM | D | Subpart D—Borrower Defense to Repayment | § 685.408 Discharge. | ED | (a) The Secretary discharges the obligation of the borrower in accordance with the procedures described in subpart D of this part. (b) Members of a group that received a written notice of an approved borrower defense claim in accordance with § 685.406(f)(1) may request to opt out of the discharge for the group. |
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