Trends and Issues

School Certification Q&A

This question and answer (Q&A) is the first in a series that will be featured on Shoptalk Online in the coming months. Each will relate to a different topic associated with higher education. This Q&A pertains to the subject of school certification of a loan.

Q: What does a school certify when it certifies a Stafford loan borrower's eligibility?

A: Per the Federal Stafford Loan School Certification form, the school certifies that the borrower is:

• Accepted for enrollment on at least a half-time basis,
• Making satisfactory progress in an eligible program,
• Not incarcerated,
• Compliant with the requirements of the Selective Service Act, and
• Eligible for a loan in the amount certified in accordance with the Higher Education Act of 1965 (the Act), as amended, and federal regulations.

The school also certifies that the borrower's eligibility for a Pell grant has been determined and that the disbursement schedule for the loan complies with the requirements of the Act.

Q: Could a school ever refuse to certify a borrower's loan?

A: According to the Common Manual, subsection 5.8.B., derived from the 34 Code of Federal Regulations 682.603(e), on a borrower-by-borrower basis, a school may refuse to certify a loan or may reduce the borrower's eligibility if it provides the reason for its action to the borrower in writing and retains documentation of the reason in the student's file. Reasons for refusing to certify a loan or reducing the borrower's eligibility for the loan might include:

• The school determines that the student's cost of attendance can be met more appropria
tely by the school or directly by the student and/or borrower from other sources.
• The borrower indicates an unwillingness to repay the loan.

Q: Under what circumstances may a school not refuse to certify a loan?

A: Also according to subsection 5.8.A. of the Common Manual, derived from the 34 Code of Federal Regulations 682.603(e), a school may not refuse to certify a loan based on policies that result in a pattern or practice of denying access to FFELP loans because of:

• Borrower race,
• Sex,
• Religion,
• National origin,
• Age,
• Income, or
• Selection of a particular lender or guarantor.

Practices at the school also may not discriminate against student borrowers who are physically, emotionally, or intellectually challenged—provided the student exhibits an appropriate ability to benefit. The school also may not refuse to certify a loan solely because it is aware that the student or borrower has filed a bankruptcy petition.

Q: What happens after a school certifies a borrower's loan eligibility?

A: According to the Common Manual, subsection 2.2.A., after the school has certified a borrower's loan eligibility, the borrower or school submits the loan information to an eligible lender of the borrower's choice. In some cases, the borrower or school may submit this information directly to the guarantor on the lender's behalf.

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