GEN-16-08: Approval of Servicemember Civil Relief Act (SCRA) Interest Rate Limitation Request for the Direct Loan and FFEL Programs

Publication Date: May 5, 2016

DCL ID:  GEN-16-08

Subject: Approval of Servicemember Civil Relief Act (SCRA) Interest Rate Limitation Request for the Direct Loan and FFEL Programs

Summary: This letter announces the approval of a new SCRA Interest Rate Limitation Request for the Direct Loan and FFEL programs. The form fulfills the regulatory requirement at 34 CFR 682.208(j)(3)(ii), which becomes effective on July 1, 2016.

Dear Colleague:

The Office of Management and Budget (OMB) has approved the SCRA Interest Rate Limitation Request Form for use in the William D. Ford Federal Direct Loan (Direct Loan) Program and The Federal Family Education Loan (FFEL) Program under OMB Control Number 1845-0135.

On August 25, 2014, we posted DCL GEN-14-16. That letter authorized FFEL Program loan holders to apply the SCRA interest rate limitation without requiring a borrower’s request if the FFEL Program loan holder could document the borrower’s eligibility for the SCRA interest rate limitation by conducting a data match with the Department of Defense’s Defense Manpower Data Center (DMDC). In DCL GEN-14-16, we noted that we had instructed our servicers, for Direct Loans and FFEL Program loans that we hold, to follow this same practice.

Following publication of DCL GEN-14-16 we conducted negotiated rulemaking sessions that led to a revision of the FFEL Program regulations. Specifically, the revised FFEL Program regulations, at 34 CFR 682.208(j) require FFEL Program loan holders to do what was only an authorization in DCL GEN-14-16—apply the SCRA interest rate limitation without a request and based on a data match with the DMDC. These revised regulations become effective on July 1, 2016.

Even though, in most instances, FFEL program loan holders and our servicers will apply the SCRA interest rate limitation automatically using the information in the DMDC, there may be instances when they will be unable to do so or unable to do so accurately based on the data match with the DMDC. Examples of such instances include:

  • Information that is missing from the DMDC that causes a borrower to appear ineligible for the SCRA interest rate limitation;

  • Inaccurate information in the DMDC that causes a borrower to appear to be ineligible for the SCRA interest rate limitation or to be eligible for the SCRA interest rate limitation for a period of time that is shorter than the period of time for which the borrower is actually eligible for the SCRA interest rate limitation; or

  • The borrower is eligible for the SCRA interest rate limitation, but records about the borrower’s military service are outside the scope of the records included in the DMDC (most notably, those performing National Guard service under 32 USC 502(f)).

In such cases, to receive the SCRA interest rate limitation or to receive them for a longer period, the revised FFEL Program regulations allow a borrower to either:

  • Provide to the loan holder a written request and a copy of his or her military orders; or

  • Have an authorized official certify, on the new form that is the subject of this letter, that the borrower is or was engaged in active duty military service.

Implementation and Transition to New Forms

Program participants may begin distributing the attached OMB-approved form to borrowers immediately. However, beginning July 1, 2016, the new form must be distributed to borrowers when applicable.

Imaging Technology

To accommodate imaging technology, the attached form requires the borrower to complete and sign the form in ink. However, a pencil signature does not invalidate the form.

Printing Instructions

To improve accessibility for visually impaired borrowers, we are providing the form only in PDF format. Loan holders, servicers, and guaranty agencies are responsible for ensuring that the form they use is identical to the attached form, as approved by OMB. No changes may be made to the form except as expressly provided below.

The loan holder, servicer, or guaranty agency must print the form on white paper with black ink. The typeface, point size, and general presentation of the form may not be changed from the attached version. Loan holders and servicers may use any blank spaces at the top, bottom, or sides of the form for bar coding or other loan holder- or servicer-specific information. Also, loan holders and servicers may pre-populate their contact and submission information in the section of the form designed for that purpose.

Thank you for your attention and cooperation.

Sincerely,

Jeff Baker, Director Policy Liaison and Implementation Federal Student Aid U.S. Department of Education

Attachments/Enclosures:

GEN-16-08: Approval of Servicemember Civil Relief Act (SCRA) Interest Rate Limitation Request for the Direct Loan and FFEL Programs in PDF Format, 667KB, 4 Pages

 

Publication Date: 5/5/2016


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