15 KAR 1:040. Eligibility for insured student loans made directly by the corporation

Link to law: http://www.lrc.ky.gov/kar/015/001/040.htm
Published: 2015

      15 KAR 1:040. Eligibility for insured

student loans made directly by the corporation.

 

      RELATES TO: KRS 164A.040, 164A.050(2),

164A.060(1), (2), (4), 164A.065, 34 C.F.R. 668.32, 682.201, 20 U.S.C. 1078(a),

1078-2, 1078-3, 1091

      STATUTORY AUTHORITY: KRS 164A.060(8)

      NECESSITY, FUNCTION, AND CONFORMITY: KRS

164A.040 and 164A.050(2) authorize the Kentucky Higher Education Student Loan

Corporation to finance student loan operations in Kentucky. KRS 164A.060(1)

empowers the corporation to make or participate in the making of insured

student loans. KRS 164A.065 authorizes the corporation to exercise all of its

powers in furtherance of making loans, including federal PLUS loans authorized

by Section 428B of the federal Act (20 U.S.C. 1078-2) and federal consolidation

loans authorized by Section 428C of the federal Act (20 U.S.C. 1078-3). This

administrative regulation establishes the eligibility requirements and

procedures for applying for an insured student loan made directly by the

corporation.

 

      Section 1. Definitions. (1) "Adverse

credit history" means information available to the corporation that

indicates that the applicant:

      (a) Is ninety (90) days or more

delinquent in the repayment of a debt; or

      (b) Has been, within five (5) years

preceding the date of any credit report on which the determination of adverse

credit is based, the subject of a determination of default, foreclosure,

repossession, tax lien, or wage garnishment for any debt or a write-off of any

debt under the federal Act.

      (2) "Corporation" is defined by

KRS 164A.020(3).

      (3) "Eligible borrower" is

defined by 20 U.S.C. 1078-3(a)(3).

      (4) "Eligible institution" is

defined by KRS 164A.020(4).

      (5) "Eligible student loans" is

defined by 20 U.S.C. 1078-3(a)(4).

      (6) "Federal act" is defined by

KRS 164A.020(6).

      (7) "Federal consolidation

loan" means the loan program authorized by 20 U.S.C. 1078-3.

      (8) "Federal Family Educational Loan

Program" or "FFELP" means the programs of insured student loans

authorized by Part B of Title IV of the federal Act (20 U.S.C. 1071, et seq.)

including federal consolidation loans, federal PLUS loans, and Robert T.

Stafford federal student loans.

      (9) "Federal PLUS Loan" means

the loan program authorized by 20 U.S.C. 1078-2.

      (10) "Guarantee agency" is

defined by KRS 164A.020(7).

      (11) "Insured student loan" is

defined by KRS 164A.020(9).

      (12) "Pell Grant" means the

grant program authorized by 20 U.S.C. 1070a.

      (13) "Qualified student" is

defined by KRS 164A.020(8).

      (14) "Reaffirmation" means the

acknowledgement of the loan by the borrower in a legally binding manner and may

include the borrower signing a new promissory note or repayment schedule, or

making a payment on the loan.

      (15) "Robert T. Stafford Federal

Student Loan" means the student loan program, consisting of subsidized and

unsubsidized loans, authorized by 20 U.S.C. 1078 and 1078-8.

 

      Section 2. Eligibility for Federal

Consolidation Loan Made by the Corporation. An individual shall be eligible to

borrow a federal consolidation loan from the corporation if, at the time of

application:

      (1) The applicant:

      (a) Is an eligible borrower with eligible

student loans outstanding;

      (b) Has no other application pending with

any other lender for a federal consolidation loan;

      (c) Supplies the names, addresses and

telephone numbers of a minimum of two (2) verifiable personal references;

      (d) Agrees to payment arrangements that

are satisfactory to a guarantee agency, if the applicant is consolidating

defaulted loans;

      (e) Agrees to notify the holder of the

loan of any changes in address; and

      (f) Certifies that the corporation holds

an outstanding eligible student loan of the borrower that is being consolidated

or that the borrower has unsuccessfully sought a federal consolidation loan

from the holders of the outstanding eligible student loans and was unable to

secure a federal consolidation loan from the holder; and

      (2) The federal consolidation loan is

determined eligible for insurance by the Kentucky Higher Education Assistance

Authority or another guarantee agency of the corporation's choice.

 

      Section 3. Eligibility for a FFELP Loan

Other than Federal Consolidation Loans. An individual shall be eligible to

borrow a FFELP loan, other than a federal consolidation loan, if, at the time

of application, the applicant:

      (1)(a) Is an undergraduate student who:

      1. Is seeking a Robert T. Stafford loan

for the cost of attendance at a school that participates in the Pell Grant

Program; and

      2. Has received a final determination; or

      (b) Is a student who:

      1. Has filed an application with the

school for a Pell Grant;

      2. Has received a preliminary

determination from the school of the student's eligibility or ineligibility for

a Pell Grant; and

      3. If eligible, has applied for the

period of enrollment for which the loan is sought;

      (2) Is a borrower whose previous FFELP

loan was cancelled due to total and permanent disability and the applicant:

      (a) Provides reaffirmation of the loan

amount that previously was canceled due to the borrower's total and permanent

disability or that was written off;

      (b) Obtains a certification from a

physician that the borrower's condition has improved and that the borrower is

able to engage in substantial gainful activity; and

      (c) Signs a statement acknowledging that

any new FFELP loan the borrower receives cannot be cancelled in the future on

the basis of any present impairment, unless that condition substantially

deteriorates;

      (3) Is not serving in a medical

internship or residency program, except for an internship in dentistry;

      (4) Is a resident of Kentucky or is in

attendance at a Kentucky institution of higher education;

      (5) Is an eligible student or a parent

borrowing on behalf of an eligible student as specified in Section 4 of this

administrative regulation;

      (6) Submits either the Federal Consolidation

Loan Application and Promissory Note or the Application and Promissory Note for

Federal PLUS Loan, whichever is applicable, fully completed and signed by the

borrower;

      (7) For purposes of borrowing a federal

PLUS Loan, is determined by the corporation to:

      (a) Not have an adverse credit history;

or

      (b) Have an adverse credit history if the

applicant either:

      1. Demonstrates to the satisfaction of

the corporation that extenuating circumstances exist that excuse or correct the

adverse credit history; or

      2. Obtains an endorser who is determined

by the corporation to not have an adverse credit history; and

      (8) Is determined to be eligible for loan

insurance by the Kentucky Higher Education Assistance Authority or another

guarantee agency of the corporation's choice.

 

      Section 4. Student Eligibility. The

eligibility of a student for purposes of obtaining a FFELP loan shall be

governed by 34 C.F.R. 668.32 to 668.35.

 

      Section 5. Request for Redetermination of

Eligibility. (1) Upon a determination by the corporation that the loan will not

be made on the basis of an adverse credit history, the applicant or any

prospective endorser declined due to an adverse credit history may submit a

written request for redetermination of eligibility to the corporation within

thirty (30) calendar days after the date of the denial notice provided by the

corporation. The applicant or prospective endorser shall submit with the

request documentation to demonstrate to the satisfaction of the corporation

that:

      (a) The credit report or other

information relied upon by the corporation is erroneous or outdated;

      (b) Extenuating circumstances beyond the

control of the individual contributed materially to the adverse credit history;

or

      (c) The individual has made a substantial

good faith effort to resolve past delinquencies, including payment arrangements

satisfactory to a guarantee agency on any defaulted insured student loan.

      (2) The corporation shall, upon timely

submission of all documentation, notify the applicant and any prospective

endorser in writing of the final decision on whether it will make the desired

loan.

 

      Section 6. Incorporation by Reference.

(1) The following material is incorporated by reference:

      (a) Federal Consolidation Loan

Application and Promissory Note, OMB No. 1845-0036; and

      (b) Application and Promissory Note for

Federal PLUS Loan, OMB No. 1845-0009.

      (2) This material may be inspected,

copied, or obtained, subject to applicable copyright law, at the Kentucky

Higher Education Student Loan Corporation, 10180 Linn Station Road, Suite C200,

Louisville, Kentucky 40223, Monday through Friday, 8 a.m. to 4:30 p.m. (22

Ky.R. 125; Am. 587; eff. 9-7-95; 30 Ky.R. 368; 841; eff. 10-31-2003.)
Read Entire Law on www.lrc.ky.gov