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Rules and Regulations of the State of Georgia
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Subject 268-11-1 LENDER OF LAST RESORT PROGRAM RULE

Rule 268-11-1-.01 Legislative Authority

(1) The Federal laws and regulations governing the student loan programs require the Georgia Higher Education Assistance Corporation (GHEAC) to ensure that it, or an eligible lender under section 435(g)(1)(D) of the Act, serves as a lender of last resort (LLR) in its State. [Reference: Act 428(j) and 34 CFR 682.401(c)(1) ]
(2) GHEAC has designated the Georgia Student Finance Authority (GSFA) as the LLR in the GHEAC service area. [Reference: 34 CFR 682.401(c)(3) and Bulletin 88-G-153 (LD)]

Rule 268-11-1-.02 Definitions

(1) "Act" or "Federal Act" means Title IV, Part B, of the Higher Education Act of 1965, ( P.L. 89-329) as amended, ( 20 U.S.C. 1071et seq).
(2) "Authority" means the Georgia Student Finance Authority created by Georgia Code Section 20-3-313.
(3) "Borrower" means an eligible student or eligible parent who has obtained an educational loan.
(4) "Certification" means the act of confirming formally by signing one's name certain information as true, accurate, or genuine.
(5) "Cohort Default Rate" means the percentage of current and former student borrowers who enter the repayment period in a given Federal Fiscal Year that default before the end of the following Federal Fiscal Year.
(6) "Corporation" means the Georgia Higher Education Assistance Corporation created by Georgia Code Section 20-3-263.
(7) "Credit Report" means a report of an applicant's consumer credit history obtained from a credit reporting agency.
(8) "Credit Worthy" means the condition of an applicant who has been deemed able to repay an educational loan based upon an evaluation of the applicant's credit history.
(9) "Default" means the term "default" as defined in 34 CFR 682.200(b).
(10) "Derogatory Credit" means an applicant's credit history that reflects a negative payment record in accordance with the GSFA credit policy.
(11) "Federal Interest Benefits" means quarterly interest payments made to the lender by the federal government on behalf of the Stafford borrower while the borrower is enrolled at least half-time in an eligible school, during the grace period, and during any authorized period of deferment.
(12) "Loan" or "Educational Loan" means an obligation representing advances of money by a lender to an eligible student or eligible parent evidenced by one or more promissory note, on note forms prescribed by the corporation, as to which the payment of principal and interest is fully guaranteed by the corporation as evidenced by one or more loan guarantees issued by the corporation and reinsured by the secretary to the maximum extent permitted under the federal act, but in any event so reinsured for not less than 80 percent of principal and interest. In the event of the purchase and sale or the pledge or assignment of such loans or a participating interest in such loans, the term shall include contingent interests, security interests, pledges, commitments, chooses in action, or other property interests in such loans.
(13) "Overaward" means any disbursement that exceeds the amount of assistance for which a student is eligible, taking into account other financial aid awarded to the student.
(14) "PLUS Loans" means educational loans authorized by the federal and state governments to help parents of dependent under-graduate or graduate students pay the costs of education beyond high school.
(15) "Refund" means that amount of tuition and fees paid by a student to a school for an attendance period that is due to be returned to the student because of his/her withdrawal from the school before the end of the attendance period. By applying for a Stafford loan, a borrower authorizes the school to pay directly to the lender that portion of a refund that is allocable to the loan.
(16) "Secretary" means the United States secretary of education or any official succeeding to the powers of such secretary under the federal act.
(17) "SLS Loans" means supplemental loans for students authorized by the federal and state governments to help independent undergraduate, graduate, and professional students pay the costs of education beyond high school.
(18) "Stafford Loans" means a low interest, educational loan, authorized by the federal and state governments to help dependent students who demonstrate financial need pay the costs of education beyond high school.

Rule 268-11-1-.03 School Eligibility

Georgia educational institutions that are deemed eligible institutions by GHEAC but that are deemed ineligible for student participation in the GSFA Assured Access Lending Program, may be eligible for participation under the LLR program.

Rule 268-11-1-.04 LLR Eligibility Requirements

(1) The school/branch must first be approved as an eligible institution by GHEAC and subject to the GHEAC "School Eligibility Requirements Policy"; and
(2) The school does not meet the GSFA Assured Access Lending Program criteria; and
(3) The school is located in Georgia; and
(4) School eligibility decisions will be made at least twice annually when new cohort default rates are made available by GHEAC and when new cohort default rates are made available by the U.S. Department of Education.

Rule 268-11-1-.05 Loan Types

(1) GSFA will make subsidized Stafford loans pursuant to this LLR policy to any eligible student who qualifies for Federal interest benefits for a loan amount of at least $200. [Reference: 34 CFR 682.401(c)(2)(A) and (B) ]
(2) GSFA will NOT make PLUS or Supplemental Loans for Students (SLS) loans under the LLR policy.

Rule 268-11-1-.06 Borrower Eligibility

(1) To qualify for a Stafford Loan and Federal interest benefits under the LLR Program, a student must meet all eligibility requirements prescribed by Federal and State laws and regulations and GHEAC policies and procedures governing the guaranteed student loan program and the additional eligibility requirements listed below.
(2) The applicant must submit a properly completed GHEAC Stafford Loan Application to GSFA.
(3) In accordance with [ 34 CFR 682.401(c)(2)(B) ] the applicant must have made conscientious efforts to obtain a loan from another eligible lender for the same period of enrollment. This requirement will be met as follows:
(a) GSFA will require the applicant to complete and sign a "Student Certification and Request for Lender of last Resort Stafford Loan Processing" form. This must be an original form and must be fully completed and attached to the Stafford loan application when submitted to GSFA for processing. The student is required to certify that he/she is an eligible student, attending a school located in Georgia, and that he/she has contacted an eligible Georgia lender, has asked if that lender would make a student loan under the circumstances of his/her enrollment, and has been told the lender would not.
(4) The total financial situation of the applicant will be reviewed to ensure the applicant does not have derogatory credit. [Reference: Act 428(a)(6)]
(a) GSFA will obtain a credit report from a credit reporting agency.
(b) The applicant's credit report will be evaluated by a loan officer in accordance with the GSFA credit policy.
(c) Applicants who are deemed to have derogatory credit under the evaluation, will receive a denial notification letter in compliance with the Federal Fair Credit Opportunity Act.
(5) The applicant must receive a loan counseling interview as follows:
(a) A GSFA debt management/loan counselor will conduct an interview with the applicant by telephone in accordance with established counseling procedures, including but not limited to discussion of:
1. Acknowledgement by the applicant of the loan obligation and that it must be repaid;
2. The fees that will be deducted from the loan proceeds;
3. The estimate minimum monthly payment;
4. Student borrower responsibilities pertaining to name or address chances and withdrawal from school; and
5. The consequences of default.
(b) The applicant will provide references on the loan application and those references will be contacted by the GSFA loan counselor, who will verify the applicant's and references' addresses and the references' relationship to the applicant.
(c) If the counselor is unable, alter numerous attempts, to contact the applicant, GSFA will send a follow up letter advising the applicant that the loan will not be processed unless counseling is accomplished within or prior to five working days of the GHEAC loan application deadline.

Rule 268-11-1-.07 Loan Origination and Servicing

(1) To obtain a loan guarantee commitment from GHEAC, applications will be processed as follows:
(a) Properly completed applications (including submission of a properly completed and signed by the student "Student Certification and Request for Lender of Last Resort Stafford Loan Processing" form) must be submitted by the student or the school.
(b) Applications must be received by GSFA by the 20th day of the month preceding the last month of the loan period.
(c) Applications will be processed in date-received order.
(d) Additional relevant documents may be required from the student.
(e) Financial evaluation and counseling will be performed prior to the GHEAC loan application deadline. [Reference: Act 428(a)(6)] GSFA may consider special circumstances leading to derogatory credit, i.e., the applicant's past attempts to repay other debts (if any), and any financial or personal hardship the applicant may have experienced, within the GHEAC guarantee deadline. [Reference: private letter guidance-Michael J. Farrell, April 26, 1991.]
(f) A GSFA loan officer will sign the application prior to submitting it to GHEAC for guarantee.
(g) GSFA will NOT approve/request a late disbursement on LLR loans.
(h) A student may be denied due to:
1. Derogatory credit;
2. Prior educational loan default;
3. Failure to complete corrections in a timely manner; or
4. Receipt of application after the deadline.
(i) Disbursements will be ma de in accordance with Federal and State laws and regulations governing the guaranteed student loan program and in accordance with GHEAC policies and procedures.
(j) Refunds and overawards shall be processed in accordance with GHEAC policies and procedures and Federal and State laws and regulations governing the student loan program.
(2) LLR loans will be serviced and due diligence performed in accordance with GSFA loan servicing procedures, the Federal and State laws and regulations, and GHEAC policies and procedures governing the guaranteed student loan program.

Rule 268-11-1-.08 Termination of School Eligibility in the LLR Program

GSFA will have the authority to terminate any institution from the LLR program in accordance with the Act and its regulations, as amended.