Current through Register Vol. 54, No. 44, November 2, 2024
(a) To be approved, a lending institution
shall comply with the following:
(1) The
lending institution shall be approved by the Agency as an eligible institution
for participation in the Federal Stafford Loan, Federal PLUS Loan and Federal
Consolidation Loan Programs.
(2)
The lending institution shall meet the United States Department of Education
definition of "eligible lender" contained in section 435(d) of the Higher
Education Act of 1965 (20
U.S.C.A. §
1085(d)).
(3) The lending institution shall have
executed and filed with the Agency an agreement, on a form provided by the
Agency, to make the loan program available to eligible students enrolled or
accepted for enrollment in an approved educational institution to the extent of
its resources available for these loans.
(b) The lending institution shall comply with
the Federal laws and regulations governing the Federal Stafford Loan, Federal
PLUS Loan and Federal Consolidation Loan Programs.
(c) Mailing dates and receipt dates
referenced in this section shall be evidenced by United States Postal Service
receipts. If a lending institution refuses or fails to accept a notice mailed
as set forth in this section, the Agency will consider the notice as being
received on the date that the lending institution refuses or fails to accept
the notice as noted by the United States Postal Service.
(d) The following provisions deal with
emergency action:
(1) The President and Chief
Executive Officer may take emergency action as follows against a lending
institution under which the processing of loan applications for students
borrowing through the institution is withheld if the President and Chief
Executive Officer:
(i) Receives information,
determined by an Agency official to be reliable, that the lending institution
is in violation of applicable laws, regulations, special arrangements,
agreements or limitations.
(ii)
Determines that immediate action is necessary to protect the interest of
applicants, the United States, the Commonwealth or the Agency.
(iii) Determines that the likelihood of loss
outweighs the importance of following the procedures set forth for suspension,
limitation or termination in subsection (e).
(2) The Agency will begin an emergency action
by notifying the lending institution by certified mail, with return receipt
requested, of the emergency action and the basis on which the action is taken.
The lending institution shall have an opportunity to show cause that the
emergency action is unwarranted by submission of written documentation to the
President and Chief Executive Officer. The effective date of the action shall
be the date on which the notice is mailed to the lending institution.
(3) An emergency action may not exceed
30-calendar days unless a suspension, limitation or termination proceeding is
begun under this section before the expiration of that period. In this case,
the period may be extended until the completion of that proceeding, including
an appeal to the Board.
(e) The following provisions deal with
suspension, limitation or termination:
(1) The
President and Chief Executive Officer may suspend the eligibility of a lending
institution to participate in the Federal Stafford Loan, Federal PLUS Loan and
Federal Consolidation Loan Programs if the lending institution violates
applicable laws, regulations, special arrangements or agreements. The
suspension may not exceed 60-calendar days unless the lending institution and
the President and Chief Executive Officer agree to an extension if the lending
institution has not requested a hearing or the Agency begins a limitation or
termination proceeding under this section.
(i)
A designated Agency official will notify the lending institution by certified
mail, with return receipt requested, of the Agency's intent to suspend the
participant from the Federal Stafford Loan, Federal PLUS Loan and Federal
Consolidation Loan Programs, citing the consequences of that action and
identifying the alleged violations on which the proposed action is based. The
initially designated beginning date of suspension shall be at least 20-calendar
days from the date the letter of intent is mailed.
(ii) The lending institution subject to the
suspension notice may request in writing a hearing before a hearing examiner or
submit written material for consideration by the designated Agency official. If
the lending institution submits written material or requests a hearing at least
5-calendar days prior to the effective date of the suspension, the suspension
date shall automatically be delayed until after a final determination is
made.
(iii) If the lending
institution does not request a hearing but submits written material, the
designated Agency official will review the material and notify the lending
institution that either the proposed suspension is dismissed or the suspension
is effective as of a specified date.
(iv) If the lending institution requests a
hearing at least 5-calendar days prior to the effective date of suspension, the
date of the hearing shall be at least 15-calendar days after receipt of the
request.
(A) A hearing examiner selected by
the President and Chief Executive Officer will conduct the hearing at the
Agency's principal office, and a written record will be made.
(B) The hearing examiner will consider all
written material presented before the hearing and the evidence presented at the
hearing.
(C) The hearing examiner
will issue a decision to either uphold the suspension or to dismiss it and
inform the President and Chief Executive Officer and lending institution of
this decision in writing within 30-calendar days of the conclusion of the
hearing.
(D) The hearing examiner's
decision is final unless appealed under subsection (g). If the decision is in
favor of suspension, the Agency will send a notice to the lending institution
which sets forth the effective date of the suspension.
(E) If the Agency begins a limitation or
termination proceeding before the suspension period ends, the suspension period
may be extended until completion of the new proceeding.
(F) The President and Chief Executive Officer
will inform the United States Department of Education of actions taken or
decisions made by the Agency in regard to the suspension so the United States
Department of Education can take appropriate action.
(v) In accordance with 1 Pa. Code §§35.111-35.116 (relating to prehearing
conferences), at any time prior to or during the hearings, the Agency may
schedule a conference with the parties.
(2) The President and Chief Executive Officer
may limit the number or percentage of borrowers who may receive loan guaranties
if the lending institution violates any applicable laws, regulations, special
arrangements or agreements.
(i) A designated
Agency official will notify the lending institution by certified mail, with
return receipt requested, of the Agency's intent to limit the lending
institution's participation in the Federal Stafford Loan, Federal PLUS Loan and
Federal Consolidation Loan Programs, citing the consequences of that action and
identifying the alleged violations on which the proposed action is based. The
initially designated beginning date of limitation shall be at least 20-calendar
days from the date the letter of intent is mailed.
(ii) The lending institution subject to the
limitation notice may request a hearing before a hearing examiner or submit
written material for consideration by the designated Agency official. If the
lending institution submits written material or requests a hearing at least
5-calendar days prior to the effective date of the limitation, the designated
limitation date shall automatically be delayed until after a final
determination is made.
(iii) If the
lending institution does not request a hearing but submits written material,
the designated Agency official will review that material and notify the lending
institution that either the proposed limitation is dismissed or the limitation
is effective as of a specified date.
(iv) If the lending institution requests a
hearing at least 5-calendar days prior to the effective date of limitation, the
date of the hearing shall be at least 15-calendar days after receipt of the
request.
(A) A hearing examiner selected by
the President and Chief Executive Officer will conduct the hearing at the
Agency's prinicipal office, and a written record will be made.
(B) The hearing examiner will consider the
written material presented before the hearing and the evidence presented at the
hearing.
(C) The hearing examiner
will issue a decision to either uphold the limitation or to dismiss it and
inform the President and Chief Executive Officer and lending institution of
this decision in writing within 30-calendar days of the conclusion of the
hearing.
(D) The hearing examiner's
decision is final unless appealed under subsection (g). If the decision is in
favor of limitation, the Agency will send a notice to the lending institution
which sets forth the effective date of the limitation.
(E) If the Agency begins a termination
proceeding before the limitation period ends, the limitation period may be
extended until completion of the new proceeding.
(F) The President and Chief Executive Officer
will inform the United States Department of Education of actions taken or
decisions made by the Agency in regard to the limitation so the United States
Department of Education can take appropriate action.
(v) In accordance with 1 Pa. Code §§35.111-35.116, at any time prior to or
during the hearings, the Agency may schedule a conference with the
parties.
(3) The
President and Chief Executive Officer may terminate a lending institution's
eligibility to participate in the Federal Stafford Loan, Federal PLUS Loan and
Federal Consolidation Loan Programs if the lending institution violates
applicable laws, regulations, special arrangements or agreements. Termination
prohibits the future guaranty of Federal Stafford Loans, Federal PLUS Loans and
Federal Consolidation Loans to borrowers applying through the lending
institution.
(i) A designated Agency official
will notify the lending institution by certified mail, with return receipt
requested, of the Agency's intent to terminate the lending institution from the
Federal Stafford Loan, Federal PLUS Loan and Federal Consolidation Loan
Programs, citing the consequences of that action and identifying the alleged
violations on which the proposed action is based. The initially designated
beginning date of termination shall be at least 20-calendar days from the date
the letter of intent is mailed.
(ii) The lending institution subject to the
termination notice may request in writing a hearing before the hearing examiner
or submit written material for consideration by the designated Agency official.
If the lending institution submits written material or requests a hearing at
least 5-calendar days prior to the effective date of termination, the
designated termination date shall automatically be delayed until after a final
determination is made.
(iii) If the
lending institution does not request a hearing but submits written material,
the designated Agency official will review the material and notify the lending
institution that either the proposed termination is dismissed or the
termination is effective as of a specified date.
(iv) If the lending institution requests a
hearing at least 5-calendar days prior to the effective date of termination,
the date of the hearing shall be at least 15-calendar days after receipt of the
request.
(A) A hearing examiner selected by
the President and Chief Executive Officer will conduct the hearing at the
Agency's principal office, and a written record will be made.
(B) The hearing examiner will consider all
written material presented before the hearing and the evidence presented at the
hearing.
(C) The hearing examiner
will issue a decision to either uphold the termination or to dismiss it and
inform the President and Chief Executive Officer and the lending institution of
this decision in writing within 30-calendar days of the conclusion of the
hearing.
(D) The hearing examiner's
decision is final unless appealed under subsection (g). If the decision is in
favor of termination, the Agency will send a notice to the lending institution
which sets forth the effective date of termination.
(E) The President and Chief Executive Officer
will inform the United States Department of Education of actions taken or
decisions made by the Agency in regard to the termination so the United States
Department of Education can take appropriate action.
(v) In accordance with 1 Pa. Code §§35.111-35.116, at any time prior to or
during the hearings, the Agency may schedule a conference with the
parties.
(f) A
lending institution may lose its eligibility to participate in the Federal
Stafford Loan, Federal PLUS Loan and Federal Consolidation Loan Programs
through other than emergency action, suspension, limitation or termination.
This may occur under one or more of the following conditions:
(1) Permanent closure of the lending
institution.
(2) Action taken by
the United States Secretary of Education under applicable Federal regulations
to limit, suspend or terminate the lending institution's
eligibility.
(g) The
Agency and the lending institution have the right to appeal the decision of the
hearing examiner to the Board within 20-calendar days after the receipt or a
copy of the decision, which shall be done by certified mail.
(1) Written notice of appeal and the
materials submitted in support shall be addressed to the Chairperson of the
Board at the Agency's principal address, with a copy to the other
party.
(2) The appealing party has
20-calendar days from the date of the notice of appeal to submit exceptions to
the hearing examiner's decision and supporting briefs and statements.
(3) The opposing party has 20-calendar days
from receipt of the appealing party's exceptions and brief to
respond.
(4) When the Chairperson
of the Board receives notice of an appeal, the Chairperson will place the
appeal on the meeting agenda of the Board at a time in the future that the
Board has received a record of the hearing and the briefs and supporting
materials and has had an opportunity to review the record. Before issuing a
final order, the Board of Directors will review the record and hearing
examiner's decision and may order oral argument.
(5) Notice of a final order by the Board of
Directors will be mailed promptly to the lending institution, the Agency and
the United States Department of Education.
(6) The decision of the Board of Directors
will become final upon mailing. Within 30-calendar days after the decision of
the Board of Directors becomes final, the lending institution may file an
appeal with Commonwealth Court.
(h) A lending institution whose eligibility
to participate was limited may not apply for removal of the limitation before
the expiration of 12 months from the effective date of the limitation.
(1) After the minimum limitation period, the
lending institution may request removal of the limitation. The request shall be
in writing and be supported by documented evidence that the institution has
corrected the violations on which the limitation was based.
(2) Within 60-calendar days after receipt of
the request, the President and Chief Executive Officer will respond to the
lending institution by granting the request, denying the request or granting
the request subject to other limitation.
(i) A lending institution whose eligibility
to participate has been terminated may file a request for reinstatement 18
months after the effective date of the termination. To be reinstated, a lending
institution shall:
(1) Demonstrate to the
President and Chief Executive Officer's satisfaction that it has corrected the
violations on which termination was based and repaid any funds which it had
improperly received.
(2) Meet the
requirements for participation in the Federal Stafford Loan, Federal PLUS Loan
and Federal Consolidation Loan Programs.
(3) Enter into a new participation agreement
with the Agency.
The provisions of this §121.191 issued under section 4 of
the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. §
5104); and section 1 of the act of January
25, 1966 (P. L. 1546, No. 541) (24 P. S. §
5151); 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).
This section cited in 22 Pa. Code §
121.1 (relating to
definitions).