Trends and Issues

Register for third installment of IBR webinar series

Next week, the National Council of Higher Education Loan Programs (NCHELP) continues its series of webinars focusing on the new Income-Based Repayment (IBR) plan that will be available to borrowers beginning July 1, 2009. The next webinar in the series will highlight lender- and servicer-related IBR issues.

The webinar, scheduled for April 16, 1:30 p.m.-3 p.m., CDT, will provide a more detailed discussion on IBR payment terms and disclosure, determination of partial financial hardship, tracking payments toward forgiveness, and claim filing.

Registration
Register for this free webinar at http://w.on24.com/r.htm?e=140226&s=1&k=FE808F94C69FB40B54394B65730281A9. Please note that NCHELP webinars deliver both the audio and presentation slides via your PC; there is no dial-in "audio only" option.

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Policy potpourri

Q.: What does it matter if a school uses "active" or "passive" confirmation for purposes of loan notification? What's the difference?

A.: Passive and active confirmation processes are defined on page 4-9 of the 2008-09 Federal Student Aid Handbook:

"Active confirmation -— a school does not disburse the loan until the borrower either affirmatively requests or accepts the proposed loan type and amount or requests changes to the proposed loan package.

Passive confirmation — a school does not disburse the loan until the borrower is notified of his or her proposed loan package, and the time given to the borrower to respond has elapsed. (The notification can come from the school, lender and/or guarantor.) The borrower only needs to take action if he or she wants to decline the loan or make adjustments to the type or amount of the loan."

For example, a school's award letter may be used as part of either an active or passive confirmation process. For active confirmation, the borrower would be asked to confirm the loan amount offered by responding to the school's offer. For passive confirmation, the borrower would be asked to respond only if he or she wanted to cancel or reduce the loan amount offered.

The distinction between active and passive confirmation is significant because the timeframe requirement for the school to send the loan notification differs for each. This topic was described in detail in Shoptalk Online edition 442, but in brief:

"Rules for active confirmation
Schools using active confirmation ... must still:

• Send the notice of credit to the student's school account within 30 days before and 30 days after the school credits the account; and
  
  
• Give the borrower 14 days to cancel the loan funds as a result of the notice of credit to the student's account.

Rules for passive confirmation
ED has imposed greater requirements upon schools that choose to use a passive confirmation process, since students at these schools face a heightened possibility of unintentional or unnecessary borrowing. For those students, the final rules [published on November 1, 1007] put into place additional protection by revising the loan cancellation notice. Specifically, those schools will be required to:

• Send the notice of credit to the student's school account within 30 days before and 7 days after the school credits the account; and
  
  
• Give the borrower 30 days to cancel the loan funds as a result of the notice of credit to the student's account."

Do you have a question?
If you have a question that needs an answer, feel free to Ask TG™. Ask TG is TG's online query tool for borrowers, schools, and lenders. It includes a database of frequently asked questions about financial aid, student loan processing, and TG's products and services. To submit a question to Ask TG, visit tgslc.custhelp.com.

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