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DRAFT for discussion at 2nd session 

3/25/2009 

Issue 5 

Proposed Regulatory Language 

 Team II – School-based Loan Issues 

Origin: HEOA section 488(a) 

 

Issue: Information and Dissemination 

Activities 

Statutory cites: HEA section 485(a)

Regulatory cites: §668.42 

DCL GEN-08-12 cite: Page 95 

Summary of issue: As part of the required information an 

institution must make available to prospective and enrolled 

students, the HEOA added a general requirement that the 

institution describe the terms and conditions of the loans 

students receive under the FFEL, Direct Loan and Perkins 

Loan programs. The HEA and current regulations—in 34 CFR 

§668.42(a)(1)—require that an institution provide a 

description of all student financial assistance programs to 

prospective and enrolled students. The new statutory 

provision expands the information that institutions must 

provide to include the terms and conditions of the loans. 

For students receiving financial assistance, current 

regulations—-in 34 CFR §668.42(c)(4)—-require an 

institution to provide specific information about any loan 

received by the student as part of the aid package. 
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DRAFT for discussion at 2nd session 

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The HEOA also deleted the specific statutory requirement 

that institutions provide information about the terms and 

conditions under which FFEL and Perkins Loans could be 

deferred for service under the Peace Corps or Domestic 

Volunteer Service acts. 

Regulatory language: 

§ 668.42 Financial assistance information. 

(a)(1) Information on financial assistance that the 

institution must publish and make readily available to 

current and prospective student's under this subpart 

includes, but is not limited to, a description of all the 

Federal, State, local, private and institutional student 

financial assistance programs available to students who 

enroll at that institution. 

(2) These programs include both need-based and nonneed-based programs. 

(3) The institution may describe its own financial 

assistance programs by listing them in general categories. 

(4) The institution must describe the terms and 

conditions of the loans students receive under the Federal 

Stafford Loan Program, the William D. Ford Federal Direct 

Student Loan Program, and the Federal Perkins Loan Program.

(b) For each program referred to in paragraph (a) of 

this section, the information provided by the institution 

must describe—

(1) The procedures and forms by which students apply 

for assistance; 

(2) The student eligibility requirements; 
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DRAFT for discussion at 2nd session 

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(3) The criteria for selecting recipients from the 

group of eligible applicants; and 

(4) The criteria for determining the amount of a 

student's award. 

(c) The institution shall describe the rights and 

responsibilities of students receiving financial assistance 

and, specifically, assistance under the title IV, HEA 

programs. This description must include specific 

information regarding—

(1) Criteria for continued student eligibility under 

each program; 

(2)(i) Standards which the student must maintain in 

order to be considered to be making satisfactory progress 

in his or her course of study for the purpose of receiving 

financial assistance; and 

(ii) Criteria by which the student who has failed to 

maintain satisfactory progress may re-establish his or her 

eligibility for financial assistance; 

(3) The method by which financial assistance 

disbursements will be made to the students and the 

frequency of those disbursements; 

(4) The terms of any loan received by a student as 

part of the student's financial assistance package, a 

sample loan repayment schedule for sample loans and the 

necessity for repaying loans; 

(5) The general conditions and terms applicable to any 

employment provided to a student as part of the student's 

financial assistance package; 

(6) The institution shall provide and collect exit 

counseling information as required by 34 CFR 674.42 for 

borrowers under the Federal Perkins Loan Program, by 34 CFR 
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DRAFT for discussion at 2nd session 

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685.304 for borrowers under the William D. Ford Federal 

Direct Student Loan Program, and by 34 CFR 682.604 for 

borrowers under the Federal Stafford Loan Program; and 

(7) The terms and conditions under which students 

receiving Federal Family Education Loan or William D. Ford 

Federal Direct Loan assistance may obtain deferral of the 

repayment of the principal and interest of the loan for—

(i) Service under the Peace Corps Act (22 U.S.C. 

2501);

(ii) Service under the Domestic Volunteer Service Act 

of 1973 (42 U.S.C. 4951); or

(iii) Comparable service as a volunteer for a taxexempt organization of demonstrated effectiveness in the 

field of community service.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1092)

[51 FR 43323, Dec. 1, 1986. Redesignated and amended at 64 

FR 59067, Nov. 1, 1999]