Kentucky Administrative Regulations › Title 11 - KENTUCKY HIGHER EDUCATION ASSISTANCE AUTHORITY › Chapter 3 - Kentucky Loan Program › Section 11 KAR 3:005 - Lender participation

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				164.740(6), (16),
				164.748(5),
				(13),
				20 U.S.C.
				1078(B)(1)(U),
				1085(d),
				34 C.F.R.
				682.401(b)(17)(i)(A), (B)
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				164.748(1) authorizes the
				board to "provide loan guarantees, upon such terms and conditions as the board
				may prescribe within the limitations provided by
				KRS
				164.740 to
				164.785,
				and the federal act in respect of loans to eligible students."
				KRS
				164.748(5) authorizes the
				board to "enter into contracts with eligible lenders approved by the state to
				lend moneys, upon such terms and conditions as may be agreed upon between the
				authority and the eligible lender, to provide for the administration of student
				financial assistance programs, including, but not by way of limitation, the
				authority's program of insured student loans." The authority is the designated
				guarantor for the state of Kentucky under the Robert T. Stafford Federal
				Student Loan Program, the Federal Plus Program, the Federal Consolidation Loan
				Program, and the Federal Supplemental Loans to Students Program pursuant to the
				federal act of 1965, as amended (20
				U.S.C. 1071 et seq.) and agreements with the
				secretary. Section 428(b)(1)(U) of the federal act requires the authority to
				provide for the eligibility of all lenders described in 435(d)(1) of the
				federal act under reasonable criteria.
				34 C.F.R.
				682.401(b)(17)(A) requires
				the authority to establish and disseminate the criteria for lender eligibility.
				This administrative regulation sets forth the criteria for approval of lender
				participation and execution of a contract of insurance with eligible lenders.
				This amendment is necessary to eliminate a geographic limitation on
				organizations that may participate as lenders, and eliminate definitions now
				contained in
				11 KAR
				3:001.
Section
			 1. In order to be considered for participation in the authority's
			 insured student loan program, a lender shall submit to the authority, if
			 requested, information sufficient to enable the authority to determine the
			 eligibility of the lender and whether it meets the following criteria. In
			 determining whether to enter into a contract of insurance with an applicant,
			 and, if so, what the terms of the contract will be, the authority considers:
(1) Whether the applicant is an organization
			 described in, and not disqualified pursuant to, 435(d) of the federal act
			 (20 U.S.C.
			 1085(d)) ;
(2) Whether the applicant is capable of
			 complying with federal regulations and 11 KAR Chapter 3 as they apply to
			 lenders participating in the authority's insured student loan
			 program;
(3) Whether the applicant
			 is capable of implementing adequate procedures for making, servicing, and
			 collecting insured student loans;
(4) Whether the applicant has had prior
			 experience with a similar federal, state, or private nonprofit student loan
			 program, and the amount and percentage of loans that are currently delinquent
			 or in default under that program;
(5) The financial resources of the applicant;
			 and
(6) In the case of a school
			 that is seeking approval as a lender, whether it is accredited.