Frequently Asked Questions
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Deferments
& Forbearances
What
is a grace (Type G) deferment?
A grace deferment
is granted to borrowers who re-enter school before their original
grace period ends. Grace deferments are processed for a given
for “period of time” and renew the borrower’s
original grace period.
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What is a student (Type S) deferment?
A student deferment
is granted to borrowers who re-enter school after their original
grace period ends. Student deferments deter the actual bills for
the period in which the borrower is enrolled. Following this type
of deferment, the borrower is granted a six-month post-deferment
grace period.
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How
far in advance can a student deferment (Type S) be processed?
We process student
deferments (Type S) through the current quarter/semester
for most schools as long as the borrower submits a deferment form.
However, the system will allow a form to be processed up to 18
months in advance. Deferments processed via enrollment data received
from the National StudentClearinghouse (NSC) are processed up
to a year in advance (through the current academic year).
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When
are credit bureaus updated as a result of enrollment data?
If a grace deferment
is processed on a loan, all derogative information is deleted
up to the newly calculated grace end. This procedure is followed
in accordance with 34CFR 674.38(c). Late fees are also removed
from the borrower’s loan; however, our company will not
adjust collection fees and/or other costs.
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What
types of deferments defer principal?
Hardship deferments and forbearances defer principal; however,
interest continues to accrue and can be billed during or after
the deferment. Economic Hardship,
unemployment deferments, and student deferments (Type S)
defer principal and interest and are followed by a six-month post-deferment
grace period.
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What
is forbearance?
Forbearance
is a loan benefit that allows for the temporary cessation or reduction
of loan payments. Forbearance defers the principal for a specific
length of time, but interest still accrues on the loan. Depending
on the payment plan, the interest on the loan may be billed during
or at the end of the forbearance period. The time limit for forbearance
is 36 months.
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How
do you determine forbearance?
We typically grant forbearance
in the following circumstances.
- When borrowers are in the process of consolidating loans,
we grant forbearance on their loans.
- If borrowers in a residency program apply for forbearance
and attach proof of their residency, we grant forbearance if
their note date is not eligible for Internship/Residency or
any other time limit benefits.
- We will grant forbearance at a borrower’s request if:
a. |
their student loan payment equals 20% or
more of their total monthly income, and |
b. |
the difference is less than 220% of the poverty line. |
c.
|
The borrower also must submit copies of their pay stubs
and all student loan payments. |
| Loan payments are totaled and divided by their
gross monthly income. |
Total Student Loan Payments
Gross Monthly Income |
| |
|
| If the resulting percentage is
> 20%, they qualify for a Type M forbearance. |
Then we perform other
calculations to determine if they qualify for a better benefit.
Figure
A |
Figure
B |
| Gross
Monthly Income
-Student Loan Payments
Balance X 12 payments per year
= Total |
Poverty Level X 220%
=Total
|
If the total in Figure A is less than (<) Figure B, and
the percentage is equal to or greater than (=) 20%, we will process
an economic hardship or Type K deferment.
If a borrower is asking
for forbearance based on expenses compared to income, we must
have a pay statement and documents to support their expense entries.
We do not and cannot grant forbearance without substantiating
proof.
We subtract total monthly
expenses from gross monthly income. If the difference in these
two figures is between $200-$300 or less or if expenses exceed
income, we grant a forbearance. Otherwise we deny the forbearance.
If the borrower is married, the spouse’s income must be
included in gross monthly income for the household.
There is no grace period
after the forbearance period is completed, and regular billing
starts immediately. Forbearance cannot be started during a grace
period. We cannot apply it to a future dated form, because interest
will still accrue. There is also a three-year time limit for loan
forbearance.
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Can
an economic hardship be used for Temporary Total Disability?
No. If the note date
is on or after 07/01/93, a forbearance
("M" deferment) should be processed
for a temporary total disability or prolonged illness. Loans with
a note date from 10/01/80 to 07/01/93 are eligible for a Temporary
Total Disability (Type D)
for up to three years.
Borrowers are also eligible
for this type of deferment if they are caring for a spouse who
is temporarily totally disabled. Loans with a note date from 07/01/87
to 07/01/93 with a nine-month original grace period are eligible
for a temporary total disability
for the borrower or a disabled dependent (Type B).
A six-month post-deferment grace period will follow a temporary
total disability deferment.
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What are the provisions for unemployment
(Type U) deferments?
The borrower is eligible
for an unemployment deferment if they are currently unemployed
or if the borrower is working part time and actively seeking full-time
employment. We ask the borrower to provide a list of firms where
he/she has applied or has registered with a public or private
employment agency. We also ask for the name of the agency, the
address, a contact name and telephone number. The maximum length
of deferment for unemployment is three years.
For more specific eligibility requirements
for Unemployment Deferment,
click
here:
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What
are the provisions for an economic hardship (Type K) deferment?
A borrower could qualify
for economic hardship for up to three years under the following
conditions.
| 1. |
The borrower has submitted proof of deferment
(for economic hardship only) for other loan programs (i.e.
Stafford or Federal Direct loan is deferred). |
| 2. |
The borrower is receiving federal or state public assistance
such as Aid to Families with Dependent Children, Supplemental
Security Income, and Food Stamps. |
| 3. |
The borrower is working full time (at least 30 hours /week)
and his/her total monthly gross income is less than the federal
minimum wage or 100% of the federal poverty line for a family
of two. |
| 4. |
The borrower is working full time (at least 30 hours /week)
and his/her total monthly gross income (TMGI) is less than
the federal minimum wage times 2 or the federal poverty line
for a family of two times 2 minus the borrower’s monthly
student loan payments. |
| 5. |
The amount of the borrower’s student loan payments
are at least 20% of his/her TMGI and the difference between
the TMGI and the borrower’s debt burden is less than
220% of the monthly minimum wage or 100% of the federal poverty
line for a family of two. |
Note:
To determine the poverty line for a family of two, go to http://aspe.hhs.gov/poverty.
For more specific eligibility requirements
for Economic Hardships,
click
here.
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Does
interest accrue during an economic hardship?
No. Interest does not
accrue during the deferment or the six-month post grace period.
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What
is a Type Z deferment? Can a Type Z deferment be processed while
the borrower is in a grace period?
A Type
Z deferment removes principal and interest for
loans that are eligible for cancellation. Type Z deferments cannot
be processed during a borrower’s grace period since he/she
should be allowed the full benefit of their grace period.
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What kind
of deferment can be processed for borrowers who are in jail?
Borrowers who are currently in jail are eligible for the same
types of deferments as other borrowers. Typically, economic hardships
and forbearances are used.
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Loan Cancellation
What is a cancellation?
Cancellation is the reduction of loan principal in exchange for providing service in an eligible field (see service fields below). The borrower is not responsible for repaying the portion of the loan that is cancelled, or forgiven.
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What services can my borrower perform to qualify for partial or total cancellation?
- Full-time teaching in a field of expertise (e.g. science, math)
- Full-time employment as a nurse or medical technician
- Full-time employment in a public or private non-profit child or family service agency.
- Full-time employment as a qualified professional provider of early intervention services in a public or other non-profit program.
- Volunteer services in the Peace Corps Act or Domestic Volunteer Service Act of 1973 (VISTA).
- Employment as a law enforcement or corrections officer
- Full-time educational staff member in a preschool program carried out under the Head Start Act.
- Additional requirements apply. Please see the information below.
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How does Campus Partners determine if a school qualifies as serving low-income students?
Campus Partners determines a school’s eligibility by consulting the Federal Register, an annual guide that identifies low-income student schools (where low-income students exceed 30% of the school’s total enrollment). Each state is given a quota of schools to be listed, and not all schools having high concentrations of students from low-income families will be listed. Click here to see if the school in question qualifies.
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How can my borrowers determine if their loan qualifies for cancellation benefits?
Your borrower may download a cancellation form from our Web site or call our office at (800) 334-8609 to request a form. If you are a Modified customer, click here to download a form. If you are a Full Service customer, use this form.
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When should my borrower file for cancellation?
Applying for a cancellation is a two-step process because a loan cancellation cannot be granted before the borrower has completed their specified length of service.
- First, the borrower should apply for a deferment at the beginning of their qualifying service.
- Once their service is performed, they can apply for the cancellation.
For example:
Your borrower has been hired to teach for a year in a field that qualifies for cancellation. The borrower should complete a deferment form in anticipation of cancellation. At the end of his or her year of employment, the borrower can apply to have his or her loan principal cancelled for that year.
- For Teaching Service: Deferments in anticipation of cancellation should be submitted at the beginning of each academic or calendar year, and cancellations should be submitted after teaching service has been completed each year.
- For Military, Peace Corps/Vista, Law Enforcement, Nurse/Medical Technician: Deferments in anticipation of cancellations should be submitted each year beginning with the first month of employment, and cancellations should be submitted after each year of service. The cancellation form has an area for each request and the borrower’s hiring authority must certify each set of dates.
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How can my borrower get instructions on how to fill out the cancellation form?
The Campus Partners Web site provides help for borrowers filling out cancellation forms. Just go to "Cancellation Form Instructions."
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How many hours is considered fulltime?
Thirty-two hours worked in a single week is usually considered full-time. If the borrower works less than 32 hours in a single week, and his or her employer certifies that they are considered full-time, the borrower may still qualify for cancellation benefits.
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What percentage of your borrower’s loan will be cancelled?
The total percentage cancelled on a loan depends on the type and length of service that is being provided. To get the total percentage amount and the percentage rate, borrowers should refer to their promissory note or call Campus Partners at (800) 334-8609.
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Is the completed cancellation form all that is required to obtain cancellation benefits?
If there is an asterisk next to the field of service in section A of the cancellation form, additional documentation must be submitted along with the form. If additional documentation is required for your field of service, the borrower should call Campus Partners at (800) 334-8609 before sending in the form.
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Collection
Processing
What
is a borrower paid collection cost (BPCC)?
Borrower
paid collection cost, or BPCC, is the fee charged
to the borrower by the collection agency. Most collection agencies
charge a "contingency fee," which means collection costs
are only earned by the collection agency when the borrower makes
a payment. This is noted as "Collection
Costs." The institution may also charge collection
costs to the borrower, which is an actual or average cost that
is assessed for the effort that the institution made to collect
on the loan. This is coded as "Other
Costs." These two categories allow schools
to determine which costs belong to the school, and which are assessed
by the collection agency.
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Why
are collection fees taken out of some collection payments and
not on others?
Our system will only
automatically assess a fee, if:
1 |
a collection cost percentage is indicated on
the loan, |
2. |
the institution has asked that all loans coded with a specific
agency be assessed a specific percentage, or |
3. |
we have instructions from a school or agency to key BPCC. |
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When a
payment posts to an account and collection costs are posted afterward
why doesn't the PAYR (Payment Reversal) screen show the fees paid?
Why does the PAYR Screen only show the original payment? If adjustments
are made (for example, collection costs are added to the loan)
why aren’t the adjustments reflected on this screen?
The PAYR (Payment Reversal)
screen is a transaction screen used to reverse payments. If a
fee is posted after the payment is applied, the fee is backdated
to one day before the payment date to allow the fee to be assessed.
The PAYR screen is not intended to reflect reprocessing adjustments.
The on-line history of the account (HALL)
should be used to review the distribution of payment between fees,
principal, and interest.
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Why
does it take so long to post the payment after the collection
agency receives it?
The majority of collection agencies send an invoice only at month-end.
The invoice reflects their activity for the entire month. We usually
receive the invoice within the first two weeks of the following
month. Once the invoice is received, payments are posted within
three days. Payments are backdated to reflect the date the agency
received the payment.
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How
can I determine if a credit balance on an account should be applied
to collection
costs?
First, look to see if the loan was ever placed with a collection
agency. Then, review the payments to verify that collection costs
were assessed for each payment that the borrower made while the
loan was placed with an agency. If there are fees missing from
a payment, you may need to contact the agency to verify that they
assessed the fee. Our Customer Service team can easily adjust
the loan if fees have been missed that should have been accessed.
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How are
collection agencies paid?
Collection agencies will either bill the school for their services
(called the "gross check method") or the agency will
net the fees directly from the borrower payments (called the "net
check method"). Schools select a preferred
method when contracting with a new agency.
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What
is the net check method?
The net check method
refers to payments that are received from a collection agency
minus agency fees. When net checks are received, an Institutional
Paid Collection Cost (IPCC)
also will be keyed.
For example, if an agency collects
$100 from a borrower, and agency fees (IPCC) on the loan are $25,
the school will receive $75. When we receive the invoice, we key
in $100 on line so the borrower will receive full credit for his
payment and $25 is keyed as the IPCC. The school should also be
set up so that as payments are applied, a Borrower Paid Collection
Cost should be assessed to offset the agency charges.
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Who
notifies the collection agencies when a loan has been returned
to regular billing?
If a loan has been returned to billing, it will be reflected on
the Transactions vs. Loans in Collections Report. The
borrower’s name will be listed on the report, and under
the heading “Activity,” the report will indicate "REMOVED."
The agency should be able to pull this report weekly from Document
Direct since a hard copy of this report is not sent to the agency.
If an agency closes and returns a loan, it is critical that the
school notifies our company. This will allow the loan to be returned
to regular billing. Collection agencies must inform the school
when a loan has been closed and returned. They do not notify our
company.
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What
does "oldest outstanding bill" mean?
The “Oldest
Outstanding” bill is the oldest bill that
remains due and not paid by the borrower. The date of this bill
can be found in the second column of the MAIN
screen. This information also appears on the HOSB
screen.
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