Activity 9: Federal Family Education Loan Program

Regulations:
[**682.604**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=604&TYPE=TEXT)
(Processing Loan Proceeds and Counseling Borrowers)

[**682.603(g)**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=603&TYPE=TEXT)
(Grad Plus Loans), and
[**682.610**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=610&TYPE=TEXT)
(Administrative and Fiscal Requirements)

Review Section:

-   Processing Loan Proceeds and Counseling Borrowers

-   Administrative and Fiscal Requirements

Good Practices:

To assist you with the completion of this Policy and Procedure, we
recommend that you consider\
the following:

-   Consider developing the Policies and Procedures in a manual or an
    electronic format with a table of contents for easy reference

-   Develop a schedule to test, review and update your manual.

-   Establish a team that incorporates all appropriate offices to assist
    in the review and writing of the procedure.

-   Complete Fiscal Management Assessment

**Instructions for completing this activity:** We recommend that you
refer to your current policies and procedures to determine if your
institution meets the requirements listed above in the Review Section
and set forth in the Federal Regulations. Please review the appropriate
sections in the Code of Federal Regulations (the link is provided for
you), and the activity below, to determine if your institution is
currently meeting those requirements. Use the activity as a chart and
checklist to assist you with evaluating and/or developing your policies
and procedures. Remember, you are required\
to have policies and procedures and are responsible to follow the
procedures you develop.\
An auditor or program reviewer can cite your school for not having
polices and procedures and\
not following them.

+-----------------------------------------------------------------------+
| Reminder:                                                             |
|                                                                       |
| It is important to have your policy and procedures in writing. It is  |
| equally important however, to ensure that the process is being        |
| followed. We recommend that you test your policy and procedures by    |
| completing the recommended assessment(s) outlined in the Design       |
| Process for Policies and Procedures. Also, remember to\               |
| train your staff on the procedures you develop or revise.             |
+-----------------------------------------------------------------------+

Management Enhancement:

If you determine that an area requires improvement, it is recommended
(not required) that you consider completing a Management Enhancement
Form. This will help you track what needs to be included who is
responsible to make sure the policy and/or procedure is updated and
identifies an anticipated completion date. [Management Enhancement
Form](http://ifap.ed.gov/qamodule/MgtEnhancementWk.html).

**Topic:** Processing Loan Proceeds and Counseling Borrowers

Regulation:
[**682.604**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=604&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Processing Loan          | Located In         | Offices Involved    |
| Proceeds\                |                    |                     |
| and Counseling Borrowers |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Establish rules for  |                    |                     |
|     processing FFEL or   |                    |                     |
|     Plus Loan as         |                    |                     |
|     outlined in          |                    |                     |
|     [682.60              |                    |                     |
| 4](http://frwebgate.acce |                    |                     |
| ss.gpo.gov/cgi-bin/get-c |                    |                     |
| fr.cgi?TITLE=34&PART=682 |                    |                     |
| &SECTION=604&TYPE=TEXT), |                    |                     |
|     [682.2               |                    |                     |
| 01](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=601&TYPE=TEXT) |                    |                     |
|     (Rules for a school  |                    |                     |
|     that makes or        |                    |                     |
|     originates loans),   |                    |                     |
|     [668                 |                    |                     |
| .22](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 68&SECTION=22&TYPE=TEXT) |                    |                     |
|     (Treatment of title  |                    |                     |
|     IV funds when a      |                    |                     |
|     student withdraws),  |                    |                     |
|     [668.1               |                    |                     |
| 64](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=66 |                    |                     |
| 8&SECTION=164&TYPE=TEXT) |                    |                     |
|     (Disbursing Funds)   |                    |                     |
|     and                  |                    |                     |
|     [682.2               |                    |                     |
| 07](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=207&TYPE=TEXT) |                    |                     |
|     (Due Diligence in    |                    |                     |
|     disbursing a loan),  |                    |                     |
|     and                  |                    |                     |
|     [682.6               |                    |                     |
| 07](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=607&TYPE=TEXT) |                    |                     |
|     (Payment of a refund |                    |                     |
|     or a return of tile  |                    |                     |
|     IV,HEA program funds |                    |                     |
|     to a lender upon a   |                    |                     |
|     student's            |                    |                     |
|     withdrawal).         |                    |                     |
|     Establish rules for  |                    |                     |
|     Grad PLUS Loan       |                    |                     |
|     [682.603(            |                    |                     |
| d)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=603&TYPE=TEXT) |                    |                     |
|     (Notification)       |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Identify the process |                    |                     |
|     to provide prior to  |                    |                     |
|     a school delivering  |                    |                     |
|     or crediting an FFEL |                    |                     |
|     loan account by EFT  |                    |                     |
|     or master check, the |                    |                     |
|     school must provide  |                    |                     |
|     the student or       |                    |                     |
|     parent borrower with |                    |                     |
|     the notice as        |                    |                     |
|     described under      |                    |                     |
|     [668                 |                    |                     |
| .15](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 68&SECTION=15&TYPE=TEXT) |                    |                     |
|     (Factors of          |                    |                     |
|     Financial            |                    |                     |
|     Responsibility).     |                    |                     |
|                          |                    |                     |
| -   Identify             |                    |                     |
|     requirements before  |                    |                     |
|     certifying a Grad    |                    |                     |
|     Plus Loan:           |                    |                     |
|     [682.603(            |                    |                     |
| d)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=603&TYPE=TEXT) |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Outline process on   |                    |                     |
|     how the borrower is  |                    |                     |
|     provided the         |                    |                     |
|     conditions under     |                    |                     |
|     which the borrower   |                    |                     |
|     may defer payment or |                    |                     |
|     obtain partial       |                    |                     |
|     cancellation of a    |                    |                     |
|     loan.                |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Outline process on   |                    |                     |
|     how the borrower is  |                    |                     |
|     to provide           |                    |                     |
|     corrections to the   |                    |                     |
|     institution's        |                    |                     |
|     records concerning   |                    |                     |
|     name, address, SSN,  |                    |                     |
|     references and       |                    |                     |
|     driver's license     |                    |                     |
|     number as well as    |                    |                     |
|     the name and address |                    |                     |
|     of the borrowers     |                    |                     |
|     expected employer    |                    |                     |
|     that will then by    |                    |                     |
|     provided within 60   |                    |                     |
|     days to the guaranty |                    |                     |
|     agency or agencies   |                    |                     |
|     listed in the        |                    |                     |
|     borrowers records.   |                    |                     |
+--------------------------+--------------------+---------------------+
| -   The process to treat |                    |                     |
|     excess loan          |                    |                     |
|     proceeds.            |                    |                     |
+--------------------------+--------------------+---------------------+

**Initial Loan Counseling
[682.604(f)](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=604&TYPE=TEXT)
*and*
[682.603(d)](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=603&TYPE=TEXT)**

+--------------------------+--------------------+---------------------+
| Counseling Borrowers     | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   **Initial            |                    |                     |
|     Counseling:**        |                    |                     |
|     Determine the method |                    |                     |
|     that initial         |                    |                     |
|     counseling is        |                    |                     |
|     conducted with each  |                    |                     |
|     student borrower     |                    |                     |
|     unless the student   |                    |                     |
|     borrower has         |                    |                     |
|     received a prior     |                    |                     |
|     Federal Stafford     |                    |                     |
|     Federal SLS or       |                    |                     |
|     Direct Subsidized or |                    |                     |
|     Unsubsidized Loan    |                    |                     |
|     (i.e. in person,     |                    |                     |
|     audiovisual          |                    |                     |
|     presentation or      |                    |                     |
|     interactive          |                    |                     |
|     electronic means).   |                    |                     |
|     Procedures must      |                    |                     |
|     ensure the initial   |                    |                     |
|     counseling is        |                    |                     |
|     completed prior to   |                    |                     |
|     first disbursement.  |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Procedures to ensure |                    |                     |
|     staff member with    |                    |                     |
|     expertise in the     |                    |                     |
|     Title IV programs to |                    |                     |
|     be reasonable        |                    |                     |
|     available shortly    |                    |                     |
|     after the counseling |                    |                     |
|     to answer questions. |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Include procedures   |                    |                     |
|     to ensure borrowers  |                    |                     |
|     enrolled in          |                    |                     |
|     correspondence       |                    |                     |
|     programs or study    |                    |                     |
|     abroad programs to   |                    |                     |
|     provide written      |                    |                     |
|     counseling materials |                    |                     |
|     before the loan      |                    |                     |
|     proceeds are         |                    |                     |
|     disbursed.           |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Develop counseling   |                    |                     |
|     materials to include |                    |                     |
|     all of the elements  |                    |                     |
|     outlined in          |                    |                     |
|     [682.604(f)(         |                    |                     |
| 2)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=604&TYPE=TEXT) |                    |                     |
|     and                  |                    |                     |
|     [682.603(            |                    |                     |
| g)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=68 |                    |                     |
| 2&SECTION=603&TYPE=TEXT) |                    |                     |
+--------------------------+--------------------+---------------------+
| -   If the initial       |                    |                     |
|     counseling is        |                    |                     |
|     conducted through    |                    |                     |
|     interactive          |                    |                     |
|     electronic means,    |                    |                     |
|     procedures must      |                    |                     |
|     include reasonable   |                    |                     |
|     steps to ensure that |                    |                     |
|     each student         |                    |                     |
|     borrower receives    |                    |                     |
|     the counseling       |                    |                     |
|     materials, and       |                    |                     |
|     participates in and  |                    |                     |
|     completes the        |                    |                     |
|     initial counseling.  |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Maintain             |                    |                     |
|     documentation of     |                    |                     |
|     initial counseling   |                    |                     |
|     in each student's    |                    |                     |
|     file.                |                    |                     |
+--------------------------+--------------------+---------------------+

> **Exit Loan Counseling
> [682.604(g)](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=604&TYPE=TEXT)
> and
> [682.603(g)](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=603&TYPE=TEXT)**

+--------------------------+--------------------+---------------------+
| Counseling Borrowers     | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   **Exit Counseling:** |                    |                     |
|     Determine the method |                    |                     |
|     that exit counseling |                    |                     |
|     is conducted with    |                    |                     |
|     each student         |                    |                     |
|     borrower (i.e. in    |                    |                     |
|     person, audiovisual  |                    |                     |
|     presentation or      |                    |                     |
|     interactive          |                    |                     |
|     electronic means).   |                    |                     |
|     Procedures must      |                    |                     |
|     ensure the initial   |                    |                     |
|     counseling is        |                    |                     |
|     completed shortly    |                    |                     |
|     before the student   |                    |                     |
|     borrower ceases at   |                    |                     |
|     least half-time      |                    |                     |
|     study at the school. |                    |                     |
|                          |                    |                     |
| -   Note: Grad PLUS exit |                    |                     |
|     requirement:         |                    |                     |
|                          |                    |                     |
|     If a school is       |                    |                     |
|     conducting exit      |                    |                     |
|                          |                    |                     |
|     counseling for a     |                    |                     |
|     borrower who has     |                    |                     |
|                          |                    |                     |
|     also received a      |                    |                     |
|     Stafford loan, Grad  |                    |                     |
|                          |                    |                     |
|     PLUS information     |                    |                     |
|     must be included in  |                    |                     |
|                          |                    |                     |
|     the exit counseling. |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Procedures to ensure |                    |                     |
|     staff member with    |                    |                     |
|     expertise in the     |                    |                     |
|     Title IV programs to |                    |                     |
|     be reasonable        |                    |                     |
|     available shortly    |                    |                     |
|     after the counseling |                    |                     |
|     to answer questions. |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Include procedures   |                    |                     |
|     to ensure borrowers  |                    |                     |
|     enrolled in          |                    |                     |
|     correspondence       |                    |                     |
|     programs or study    |                    |                     |
|     abroad programs to   |                    |                     |
|     provide written      |                    |                     |
|     counseling materials |                    |                     |
|     by mail within 30    |                    |                     |
|     days after the       |                    |                     |
|     student borrower     |                    |                     |
|     completes the        |                    |                     |
|     program.             |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Include procedures   |                    |                     |
|     for student          |                    |                     |
|     borrowers who        |                    |                     |
|     withdraw from school |                    |                     |
|     without the school's |                    |                     |
|     prior knowledge or   |                    |                     |
|     who fail to complete |                    |                     |
|     an exit counseling   |                    |                     |
|     session as required  |                    |                     |
|     to show that exit    |                    |                     |
|     counseling is        |                    |                     |
|     provided through     |                    |                     |
|     either interactive   |                    |                     |
|     electronic means or  |                    |                     |
|     by mailing written   |                    |                     |
|     counseling materials |                    |                     |
|     to the student       |                    |                     |
|     borrower at the      |                    |                     |
|     student borrower's   |                    |                     |
|     last know address    |                    |                     |
|     within 30 days after |                    |                     |
|     learning that the    |                    |                     |
|     student borrower has |                    |                     |
|     withdrawn from       |                    |                     |
|     school or failed to  |                    |                     |
|     complete the exit    |                    |                     |
|     counseling as        |                    |                     |
|     required.            |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Develop counseling   |                    |                     |
|     materials to include |                    |                     |
|     all of the elements  |                    |                     |
|     outlined in          |                    |                     |
|     [682.604(g)(2        |                    |                     |
| )](http://frwebgate.acce |                    |                     |
| ss.gpo.gov/cgi-bin/get-c |                    |                     |
| fr.cgi?TITLE=34&PART=682 |                    |                     |
| &SECTION=604&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+
| -   If the exit          |                    |                     |
|     counseling is        |                    |                     |
|     conducted through    |                    |                     |
|     interactive          |                    |                     |
|     electronic means,    |                    |                     |
|     procedures must      |                    |                     |
|     include reasonable   |                    |                     |
|     steps to ensure that |                    |                     |
|     each student         |                    |                     |
|     borrower receives    |                    |                     |
|     the counseling       |                    |                     |
|     materials, and       |                    |                     |
|     participates in and  |                    |                     |
|     completes the exit   |                    |                     |
|     counseling.          |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Maintain             |                    |                     |
|     documentation of     |                    |                     |
|     initial counseling   |                    |                     |
|     in each student's    |                    |                     |
|     file.                |                    |                     |
+--------------------------+--------------------+---------------------+

As a good practice, you may want to include a copy of your initial and
exit counseling materials with your policies and procedures

**Topic:** Administrative and Fiscal Requirements

Regulation:
[**682.610**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=682&SECTION=610&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Administrative and       | Located In         | Offices Involved    |
| Fiscal Requirements      |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Establish and        |                    |                     |
|     maintain proper      |                    |                     |
|     administrative and   |                    |                     |
|     fiscal procedures    |                    |                     |
|     and all necessary    |                    |                     |
|     records as outlined  |                    |                     |
|     in                   |                    |                     |
|     [682.61              |                    |                     |
| 0](http://frwebgate.acce |                    |                     |
| ss.gpo.gov/cgi-bin/get-c |                    |                     |
| fr.cgi?TITLE=34&PART=682 |                    |                     |
| &SECTION=610&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Follow record        |                    |                     |
|     retention            |                    |                     |
|     requirements as      |                    |                     |
|     outline in           |                    |                     |
|     [668.                |                    |                     |
| 24](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=66 |                    |                     |
| 8&SECTION=24&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+
| -   A process to         |                    |                     |
|     complete and return\ |                    |                     |
|     a Student Status     |                    |                     |
|     confirmation report  |                    |                     |
|     within 30 days of    |                    |                     |
|     receipt to the       |                    |                     |
|     Secretary or the     |                    |                     |
|     guaranty agency\     |                    |                     |
|     as appropriate.      |                    |                     |
+--------------------------+--------------------+---------------------+

+--------------------------+--------------------+---------------------+
| Certification            | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   Include procedures   |                    |                     |
|     to ensure that the   |                    |                     |
|     school determines    |                    |                     |
|     the borrower's       |                    |                     |
|     eligibility for a    |                    |                     |
|     Stafford loan before |                    |                     |
|     certifying a Grad    |                    |                     |
|     PLUS loan.           |                    |                     |
|     [682.603(d)]         |                    |                     |
| (http://frwebgate.access |                    |                     |
| .gpo.gov/cgi-bin/get-cfr |                    |                     |
| .cgi?TITLE=34&PART=682&S |                    |                     |
| ECTION=603&TYPE=TEXT)and |                    |                     |
|     [Federal Register,   |                    |                     |
|     November 1,          |                    |                     |
|     2007](http://if      |                    |                     |
| ap.ed.gov/fregisters/att |                    |                     |
| achments/FR11012007.pdf) |                    |                     |
+--------------------------+--------------------+---------------------+