Section R. 390.1432 - Maximum rate of interest; permissible fees and chargesRule 32.
(1) The maximum rate of interest that may be charged on educational loans shall not be more than 6% per annum with respect to loans made before August 3, 1968. The interest rate for educational loans made August 3, 1968, and after shall comply with the provisions of the act.(2) Interest is calculated from the date of disbursement of the funds by the lender to the borrower. A student borrower shall not be required to pay interest to the lender on any portion of the loan that the lender is concurrently receiving federal interest benefit payments from the federal government.(3) A lender may add accrued interest to the unpaid principal balance, which is referred to as capitalization, under conditions provided by the authority and the secretary in the provisions of 34 C.F.R. S682.202. These provisions are adopted by reference in R 390.1491.(4) A lender's method of computing interest shall not result in an actual rate that is more than the allowable maximum rate of interest.(5) An insurance premium payment may be charged by the authority to underwrite loans and to cover costs incurred in the administration of the program. The insurance premiums shall be collected by the lender from the borrower when the loan is disbursed and shall be forwarded to the authority. The amount of the insurance premiums set by the authority shall not exceed the maximum amount permitted by the act. The insurance premium is refundable under conditions established by the secretary as specified in the provisions of 34 C.F.R. SS682.202 and 682.401. These provisions are adopted by reference in R 390.1491. A disbursed loan for which the insurance premium has not been paid by the borrower or for which the check written by the borrower is not honored by the financial institution upon which the check was drawn is subject to cancellation of the guarantee commitment.(6) Each lender shall charge the borrower, if applicable, an origination fee or other fees as prescribed by the act.(7) A borrower may be charged for late payments. The amount of the charge shall not be more than the maximum allowable amount as prescribed by the secretary in the provisions of 34 C.F.R. S682.202. These provisions are adopted by reference in R 390.1491.(8) A borrower may be assessed collection charges as defined by the secretary in the provisions of 34 C.F.R. S682.202. These provisions are adopted by reference in R 390.1491.Mich. Admin. Code R. 390.1432
1979 AC; 1984 AACS; 1990 AACS