No. 36447 (Repeal): Rule R765-626. Lender-of-Last-Resort Program

(Repeal)

DAR File No.: 36447
Filed: 07/05/2012 04:34:21 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule pertains to the Federal Family Education Loan Program (FFELP) which ended on 07/01/2010 with the passage of the Health Care and Education Reconciliation Act of 2010. All federal student loans are now made directly through the US Department of Education with funding provided by the Treasury. Therefore, no federal student loans are now made through commercial lenders, and there is no use or purpose to have a lender of last resort as was required under the FFELP.

Summary of the rule or change:

Repeal of rule is necessary since it applied to a federal program that no longer exists. This rule is repealed in its entirety.

State statutory or constitutional authorization for this rule:

• Title 53B, Chapter 12

Anticipated cost or savings to:

the state budget:

There are no costs nor savings to state budgets as this rule did not rely on state funding.

local governments:

There are no costs nor savings to local governments since this rule applied to a federal program that did not require any local government funding or budgets.

small businesses:

This rule never applied small businesses and therefore its repeal has no effect on costs nor savings to small businesses.

persons other than small businesses, businesses, or local governmental entities:

Repealing this rule presents no costs or savings to any individual since it pertains to a now defunct program that was replaced by a federal program offering student loans directly to students through schools. The lender of last resort program was a safeguard for borrowers who may have been denied a loan from a local lender but still needed a loan and were eligible. The new process using the Direct Loan Program does not require a lender of last resort since there is only one lender which must provide loans to all eligible applicants.

Compliance costs for affected persons:

There are no compliance costs for any individual.

Comments by the department head on the fiscal impact the rule may have on businesses:

There were no fiscal impacts on businesses when this rule was valid and therefore will be no fiscal impacts with its repeal.

William Sederburg, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Regents (Board Of)
Administration
BOARD OF REGENTS BUILDING, THE GATEWAY
60 SOUTH 400 WEST
SALT LAKE CITY, UT 84101-1284

Direct questions regarding this rule to:

• Ronell Crossley at the above address, by phone at 801-321-7291, by FAX at 801-321-7299, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/31/2012

This rule may become effective on:

09/07/2012

Authorized by:

William Sederburg, Commissioner

RULE TEXT

R765. Regents (Board of), Administration.

[R765-626. Lender-of-Last-Resort Program.

R765-626-1. Purpose.

The purpose of this rule is to provide the terms and conditions under which UHEAA will provide Lender-of-Last-Resort (LLR) loans to borrowers who have otherwise been unable to obtain a subsidized or unsubsidized Federal Stafford Loan from a lender participating in the UHEAA loan program.

 

R765-626-2. References.

2.1 Utah Code. Title 53B, Utah System of Higher Education, Chapter 12.

2.2 U.S. Congress, Title IV of the Higher Education Act of 1965, as amended.

2.3 U.S. Department of Education. Code of Federal Regulations, 34 CFR Part 682.401(c).

 

R765-626-3. General.

3.1 A student who meets eligibility requirements set forth in 34 CFR Part 682.201, but is unable to obtain a subsidized or unsubsidized Federal Stafford Loan from a lender participating in the UHEAA loan program, shall be eligible for a LLR loan if the school the student is attending is:

3.1.1 located in Utah; and

3.1.2 an eligible institution as determined by the U.S. Department of Education.

3.2 Notwithstanding 3.1.1, a Utah resident who attends an out-of-state school shall be eligible for a LLR loan.

3.3 The minimum amount for which UHEAA will authorize a loan guarantee for an LLR loan is $200.

3.4 LLR loans guaranteed by UHEAA shall be originated by the Utah State Board of Regents Loan Purchase Program (LPP).

3.5 For LLR purposes, the LPP shall maintain office hours from 8:00 a.m. to 5:00 p.m., Monday through Friday, except on state and federal holidays.

 

R765-626-4. Application Procedures.

4.1 To apply for an LLR loan, the student or school shall provide UHEAA with documentation verifying an eligible student has been unable to obtain a subsidized or unsubsidized Federal Stafford Loan for attendance at an eligible school from at least two eligible lenders.

4.2 Upon receipt of documentation described in 4.1, UHEAA shall approve the LLR loans and notify the school of the approval.

4.3 Once the LLR loans have been approved, UHEAA shall send an LLR loan information packet to the student.

4.4 The LLR information packet shall include:

4.4.1 an application and promissory note for an LLR loan with instructions to complete the application form and return it to UHEAA; and

4.4.2 counseling materials which include information relating to the borrower's loan obligation.

4.5 Once UHEAA receives the original, properly completed application and promissory note for an LLR loan, UHEAA shall inform the student as to the final status of the student's application within 60 days of receiving the properly completed form.

 

R765-626-5. Information Dissemination.

5.1 UHEAA shall disseminate to schools and lenders participating in the UHEAA loan program a copy of the final UHEAA LLR rule and notice of the effective date.

 

KEY: higher education, student loans*

Date of Enactment or Last Substantive Amendment: February 1, 1997

Notice of Continuation: April 13, 2010

Authorizing, and Implemented or Interpreted Law: 53B-12-101(6) ]

 

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