Current through Register Vol. 46, No. 39, September 25, 2024
(a) Scope and
duration. A suspension may affect all aspects of an institution's or lender's
participation in programs under this Chapter or only a portion thereof. The
duration of a suspension may be set to extend until the president has
determined that the basis for the suspension has been removed and that a
repetition of such violation appears unlikely; provided, however, that the
period of suspension shall not exceed 60 days, unless the institution or lender
and the president agree to an extension or unless limitation or termination
procedings are initiated pursuant to section
2004.6 of this Part within this
period of time, in which case the period of suspension may be extended until
the completion of such proceedings.
(b) Procedures.
(1) Except as provided in subdivision (c) of
this section, suspensions shall only be made pursuant to notice and opportunity
to show cause as provided in this paragraph.
(2) Suspension proceedings shall be initiated
by the president mailing to the institution or lender in question, a notice, by
certified mail with return receipt requested:
(i) informing the institution of the
corporation's intent to suspend the institution's or lender's eligibility and
of the basis for such action;
(ii)
specifying the proposed effective date of the suspension and the consequences
of such action; and
(iii) informing
the institution or lender of its rights, if exercised within a stated period of
time, to submit written material and to request a meeting before the president
or president's designee to show cause why such action should not be taken,
prior to the time of suspension becomes effective. The notice shall also
provide information about the nature of the meeting and such other information
about the matter as the president may determine appropriate. The notice shall
also invite voluntary efforts to correct the violation which led to the
initiation of these proceedings.
(3) The proposed effective date for
suspension provided for in paragraph (2) of this subdivision shall not be less
than 15 days after the notice of intent has been sent. The period of time
within which the institution or lender may submit written material or request a
meeting to show cause shall not be less than 10 days after such notice has been
sent. If such a meeting is requested, the president shall set a time and place
for it, which time shall not be less than five days nor more than 30 days after
the request is received by him. If a meeting is requested, but it cannot be
held prior to the proposed effective date of suspension, the date shall be
postponed until the completion of such meeting.
(4) The president shall consider any timely
material presented to him in writing, any material presented to him during the
course of the informal meeting provided for in paragraph (3) of this
subdivision and any showing that the institution or lender has adequately
corrected the violation which led to the initiation of suspension proceedings.
If, after considering such material, the president concludes that the
institution or lender has failed to show cause why its eligibility should not
be suspended, he may suspend eligibility in whole or part and subject to such
terms and conditions as he shall specify. Notice of such suspension shall be
promptly transmitted to the institution or lender and shall become effective
upon the date of transmittal. The institution of suspension proceedings or any
suspension imposed shall not operate to waive the corporation's right to take
action based upon the violations found to exist, including but not limited to
the taking of limitation or termination proceedings or the imposition of such
sanctions.
(c) Emergency
action. The president may withhold the issuance of further commitments of
guaranty to a lender or with respect to loans for all students attending an
institution, upon three days' prior written notice if he determines that such
immediate action is necessary in order to prevent an unreasonable risk of a
substantial loss of funds either to the State or the students involved if
further disbursements under this Part were permitted and that such risk is
sufficiently serious to outweigh the importance of following the procedures set
forth in subdivision (b) of this section. Such emergency action shall be
initiated by sending the institution or lender a notice, by certified mail and
return receipt requested, informing the institution or lender of the suspension
and the grounds therefor. Such emergency action shall not exceed seven days in
length unless suspension proceedings are initiated pursuant to subdivision (b)
of this section or limitation or termination proceedings as initiated pursuant
to section 2004.6 of this Part within such
seven-day period, in which case the president may continue to withhold
commitments of insurance until the conclusion of such proceedings. If
limitation or termination proceedings are initiated, the president shall
provide the institution or lender, if it so requests, an opportunity to show
cause why the action should be rescinded pending the outcome of such
proceedings.
