Illinois Administrative Code › Title 23 - EDUCATION AND CULTURAL RESOURCES › Part 2720 - FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP) › Subpart A - FEDERAL LOAN PROGRAMS: THE FEDERAL STAFFORD LOAN PROGRAM, FEDERAL PLUS PROGRAM, FEDERAL SUPPLEMENTAL LOANS FOR STUDENTS (SLS) PROGRAM, AND FEDERAL CONSOLIDATION LOAN PROGRAM › Section 2720.70 - Reimbursement Procedures

Current through Register Vol. 48, No. 28, July 12, 2024
a) The
				lender or holder shall request reimbursement from ISAC within 60 days from the
				date the lender or holder receives a completed request for loan cancellation or
				discharge due to death, total and permanent disability, attendance at a school
				that closes, false certification by a school of a borrower's eligibility for a
				loan, unpaid refunds, areas of national need, civil legal assistance attorneys,
				or teacher loan forgiveness, in accordance with federal regulations and the
				Higher Education Act of 1965, as amended. (See, e.g.,
				34 CFR
				682.216,
				682.402
				and
				682.409.)
b) Requests for default reimbursement must be
				submitted to ISAC within the time frames specified in, and the lender or holder
				shall be reimbursed in accordance with, federal regulations and the Higher
				Education Act of 1965, as amended. In the case of a default on a Federal PLUS
				Loan, the borrower, co-maker and endorser must meet the default criteria
				contained in federal regulations.
c) The lender or holder must request ISAC
				reimbursement for a bankruptcy claim in accordance with federal regulations and
				the Higher Education Act of 1965, as amended. (See, e.g.,
				34
				CFR 682.402(f).) The request
				for reimbursement must be submitted within 30 days after the lender's or
				holder's receipt of notice that collection on the debt is stayed, or 15 days
				upon notice of an adversary proceeding for undue hardship. A copy of the
				restraining order and the appropriate papers must be included. In the case of a
				bankruptcy involving a Federal PLUS Loan, the borrower, co-maker and endorser
				must meet the bankruptcy criteria contained in federal regulations.
d) Prior to reimbursement, the lender or
				holder must certify compliance with federal due diligence requirements and
				subsection (h).
e) Prior to
				reimbursement, the lender or holder must have remitted the federal default fee
				established by Section
				2720.80.
f) The lender or holder shall forward to ISAC
				any payments made by or on behalf of the borrower after default reimbursement
				and shall advise ISAC of any subsequent information received concerning the
				borrower. Prior to reimbursement, all original notes or true and exact copies
				of original notes must be properly endorsed and submitted to ISAC. If the notes
				have been lost or erroneously stamped "Paid in Full", the lender or holder
				shall execute a Hold Harmless Agreement with ISAC.
g) No fee or charge to the borrower, other
				than the maximum interest rate prescribed by ED and the collection charges
				outlined in federal regulations (see
				34 CFR
				682.202(e) and (f) ),
				including the federal default fee, and the federal loan origination fee, shall
				be contracted for or received by the lender.
h) The lender or holder shall make a proper
				collection effort in accordance with acceptable practices of prudent lending
				institutions including, but not limited to, the collection activities required
				by federal regulations. (See, e.g.,
				34
				CFR 682.402,
				682.411
				and
				682.412.)
i) ISAC shall collect the outstanding amount
				on the reimbursed guaranteed loan. If the borrower refuses to retire the debt,
				ISAC shall follow the requirements of federal regulations, including, but not
				limited to, offsets of federal income tax refunds and other payments made by
				the federal government to the borrower. (See
				34 CFR
				682.410(b)(6).)
j) Should a borrower refuse to retire the
				debt, ISAC shall direct the State Comptroller to offset any payment from the
				State Treasurer to the borrower. The funds offset shall be remitted to ISAC and
				credited against the debt.
1) All offsets
				shall be processed in accordance with 74 Ill. Adm. Code 285.
2) ISAC shall not direct an offset if the
				borrower has maintained a satisfactory repayment record. (See 23 Ill. Adm. Code
				2700.40(a)(1).)
3) ISAC shall notify the Office of the
				Comptroller that a borrower is eligible to be offset. ISAC may provide
				additional notice of subsequent offsets for the same debt. The Comptroller
				shall notify the borrower that the Comptroller is required to hold all eligible
				payments until the loan is paid in full. Should the borrower dispute the debt,
				a protest must be filed with the Office of the Comptroller within 30 days after
				and including the date of the notice. If the requested relief is granted, the
				funds offset shall be returned to the borrower.
4) Funds eligible to be offset include, but
				are not limited to, State income tax refunds and the wages of State
				employees.