Current through Register Vol. 54, No. 45, November 9, 2024
Section 121.35 - Payment of interest on Federal Stafford Loans and Federal PLUS Loans(a) The Agency will require an educational institution to repay to the appropriate lending institution the interest that has accrued on Federal Stafford Loan or Federal PLUS Loan funds under the following circumstances: (1) A borrower receives loan assistance for which he is not eligible because of the educational institution's negligent or willful false certification of a student's loan eligibility.(2) If the educational institution violates State or Federal regulations in its release of Federal Stafford Loan or Federal PLUS Loan funds to a borrower.(3) If the educational institution is required to make a loan refund as specified in Federal regulations and does not make the refund within the time frame specified in the regulations.(b) The interest amount that the Agency will require to be repaid under the circumstances described in subsection (a) will be based on the maximum interest rate allowed under Federal law governing the particular loan and will be calculated over the following time periods: (1) For the condition described in subsection (a)(1), from the date of disbursement of the loan funds until the date the ineligible principal portion is repaid.(2) For the condition described in subsection (a)(2), from the date of release of the loan funds until the date the principal portion of the loan funds in question is repaid.(3) For the condition described in subsection (a)(3), from the latest date, as specified in Federal regulations, that a refund should have been made until the date the refund actually is made.(c) Educational institutions required to pay interest will receive written notice as to the reason the interest is owed and the amount to be remitted to the Agency. The educational institution will have a maximum of 60 days from the date of the written notice to respond to the Agency.(d) Failure of the educational institution to respond to the notice specified in subsection (c) or to repay the particular interest amount requested will lead the Agency to refer the case to the United States Secretary of Education for further enforcement action.The provisions of this §121.35 adopted July 22, 1988, effective 7/23/1988, 18 Pa.B. 3208; amended July 12, 1996, effective 7/13/1996, 26 Pa.B. 3321.The provisions of this §121.35 issued under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); amended under section 4 of the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); section 1 of the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of July 18, 1974 (P. L. 483, No. 174) (24 P. S. §§ 5181-5189); the act of July 1, 1988 (P. L. 1259, No. 155) (24 P. S. §§ 5191-5197); and the act of June 26, 1992 (P. L. 322, No. 64) (24 P. S. §§ 5198.1-5198.7).