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 2720.50 - Procedures for Disclosure and Repayment

Current through Register Vol. 48, No. 28, July 12, 2024
a) Disclosure and repayment procedures are
				specified in federal regulations. (See
				34 CFR
				682.205,
				682.209 and
				682.604.)
				Furthermore, the lender shall provide required disclosures to federal Stafford,
				PLUS, and Consolidation loan borrowers, according to federal regulations. (See
				34 CFR
				682.205,
				682.208(e)(1),
				682.210(a)(3)(ii),
				682.211(e).)
b) Prior to disbursement, the borrower
				executed a common ED-approved promissory note for the principal and interest on
				the loan. The lender shall retain an original or true and exact copy of the
				promissory note. (See
				34
				CFR 682.414.)
c) The lender shall transmit to ED any and
				all statements and reports necessary to obtain federal interest payments on the
				borrower's behalf. The lender shall not collect or attempt to collect from the
				borrower or ISAC any portion of the interest on the loan that is payable by
				ED.
d) Except for loans pursuant to
				Section
				2720.55,
				or loans made under a Blanket Certificate of Loan Guaranty agreement, the
				lender shall not disburse the proceeds of any loan on the borrower's behalf
				unless and until the lender shall have received from ISAC evidence of a
				guarantee. The lender shall inform ISAC of all disbursement dates.
e) Federal Stafford and Federal PLUS Loan
				proceeds shall be transmitted directly to the institution.
1) Federal Stafford Loan checks shall be
				payable to the student borrower unless the institution requires all Stafford
				loan checks to be co-payable to the borrower and the institution. Federal PLUS
				Loan checks shall be co-payable to the institution and the borrower. Federal
				Stafford or Federal PLUS Loan funds disbursed either via EFT or by Master Check
				to the institution shall include information identifying the names, Social
				Security Numbers and the loan amounts of the borrowers who are receiving a
				portion of the disbursement, and, in the case of a Parent PLUS Loan, the names
				and the Social Security Numbers of the students on whose behalf the parents are
				borrowing.
2) Loan proceeds must be
				disbursed to the institution and delivered to the borrower no later than 180
				days after the end of the loan period or 180 days after the date on which the
				student ceased to be enrolled at least half-time, whichever is earlier. If the
				loan proceeds are not delivered pursuant to this subsection (e)(2), the school
				must request that the loan be canceled and must return any loan proceeds. (See
				34 CFR
				668.164(g).)
3) If the student has withdrawn from
				enrollment and federal regulations require the institution to submit a refund
				to the lender, either electronically or in the form of a check payable to the
				lender on behalf of the borrower, the institution shall provide simultaneous
				written notice to the borrower of the refund.
A) If the institution fails to issue a timely
				refund, as defined by federal regulations (see
				34
				CFR 682.607(c) and
				668.22(j)
				), the institution shall pay penalty interest.
B) The penalty interest shall equal the total
				amount of interest and special allowance generated by the principal value of
				the refund amount. The penalty interest shall be computed from the date the
				refund was due until the date the refund was issued.
C) The penalty interest shall be paid to the
				lender or subsequent holder.