CLARK ATLANTA UNIVERSITY

Transcription

1 CLARK ATLANTA UNIVERSITY Policy : Resolving Student Default Loans CLARK ATLANTA UNIVERSITY POLICY and PROCEDURE Subject: Resolving Student Default Loans Department: Student Financial Aid Review Date: 10/19/10 7/25/13 Effective Date: 8/13/13 Issued By: Provost and Dean of Enrollment Management; Distribution: Student Financial Aid Office University website Required Approval: University President No. of Pages: 5 Signature Carlton E. Brown Date 8/13/2013 July 25, 2013

2 Table of Contents Page 1.0 Policy Statement Procedure Narrative Financial Literacy Program Direct Student Loans Entities Affected By This Policy Definition of Key Terms Desktop Procedures 3 July 25, 2013

3 1.0 Policy Statement Clark Atlanta University s (University) students are responsible for meeting all of their financial obligations. 2.0 Procedure Narrative Defaulting on a student loan may have a number of negative impacts on a student s life including the inability to receive further financial aid. Any default will be reflected on the borrower's credit bureau record for at least seven years. The University may refer collection on a defaulted Perkins loan to an outside collection agency or to the Federal government, whereby these entities may exercise their rights in accordance with the law. This may result in additional collection and legal costs to the borrower Financial Literacy Program The University developed a financial literacy programs to not only educate students about finances, but also to reduce student loan default rates, protect Title IV funding, and improve graduation rates. A vast majority of the students coursework is designed to help people pick up skills to earn more money. Yet, little or no time is spent teaching them how to plan, save, and grow that money. Providing money management for students can proactively address many of the issues they ll face as adults, and help them live happy lives as alumni free from financial worry Direct Student Loans If a student defaults on their Direct Student Loan (NDSL) or Federal Perkins Loan they may resolve their defaulted loans in a number of ways: Repayment in full (including consolidation). A student can resolve a default and regain eligibility for FSA funds by repaying the loan in full (loan status code DP) in NSLDS. Satisfactory repayment arrangements. A student in default on an FSA loan can be eligible for FSA funds if he has made repayment arrangements that are satisfactory to the loan holder. After he makes six consecutive, full, voluntary payments on time, he regains eligibility for FSA funds (loan status code DX). Voluntary payments are those made directly by the borrower and do not include payments obtained by federal offset, garnishment, or income or asset execution. A student may regain eligibility under this option only one time. Loan rehabilitation. Although a student can regain eligibility for all FSA funds by making satisfactory repayment arrangements, the loan is still in default. After the student makes more payments, the loan may be rehabilitated, that is, it won t be in default anymore, and the student will have all the normal loan benefits, such as deferments. A loan is rehabilitated once the borrower makes nine full, voluntary payments on time (no later than 20 days after the due date) within 10 consecutive months. July 25, 2013 Page 1

4 After a student successfully rehabilitates their defaulted loan they may again be subject to the terms and conditions and qualify for the benefits and privileges of their original promissory note. The default information will be removed from their credit history. A student can rehabilitate a defaulted NDSL or Federal Perkins Loan only once. 3.0 Entities Affected By This Policy Current and Prospective Students, parents, and Student Financial Aid Office. 4.0 Definition of Key Terms Default - Federal regulations governing student loans define default as the failure of a borrower to make an installment payment due or to comply with other terms of the promissory note or written repayment agreement. July 25, 2013 Page 2

5 5.0 Desktop Procedures: Step Action 1 Students are notified by the appropriate party that their loan is in default. 2 Student Financial Aid Office sends a Missing Information Request to the student informing them that they are in default and that it is their responsibility to rehabilitate their defaulted loan with the lender. July 25, 2013 Page 3