34 CFR 674.39 - Loan rehabilitation.

Status message

There is 1 rule appearing in the Federal Register for 34 CFR 674. View below or at eCFR (GPOAccess)
§ 674.39 Loan rehabilitation.
(a) Each institution must establish a loan rehabilitation program for all borrowers for the purpose of rehabilitating defaulted loans made under this part, except for loans for which a judgment has been secured or loans obtained by fraud for which the borrower has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining title IV, HEA program assistance. The institution's loan rehabilitation program must provide that—
(1) A defaulted borrower is notified of the option and consequences of rehabilitating a loan; and
(2) A loan is rehabilitated if the borrower makes an on-time, monthly payment, as determined by the institution, each month for nine consecutive months and the borrower requests rehabilitation.
(b) Within 30 days of receiving the borrower's last on-time, consecutive, monthly payment, the institution must—
(1) Return the borrower to regular repayment status;
(2) Treat the first payment made under the nine consecutive payments as the first payment under the 10-year repayment maximum; and
(3) Instruct any credit bureau to which the default was reported to remove the default from the borrower's credit history.
(c) Collection costs on a rehabilitated loan—
(1) If charged to the borrower, may not exceed 24 percent of the unpaid principal and accrued interest as of the date following application of the twelfth payment;
(2) That exceed the amounts specified in paragraph (c)(1) of this section, may be charged to an institution's Fund until July 1, 2002 in accordance with § 674.47(e)(5); and
(3) Are not restricted to 24 percent in the event the borrower defaults on the rehabilitated loan.
(d) After rehabilitating a defaulted loan and returning to regular repayment status, the borrower regains the balance of the benefits and privileges of the promissory note as applied prior to the borrower's default on the loan. Nothing in this paragraph prohibits an institution from offering the borrower flexible repayment options following the borrower's return to regular repayment status on a rehabilitated loan.
(e) The borrower may rehabilitate a defaulted loan only one time.
(Approved by the Office of Management and Budget under control number 1845-0023)
[64 FR 58311, Oct. 28, 1999, as amended at 65 FR 65614, Nov. 1, 2000; 67 FR 67077, Nov. 1, 2002; 71 FR 45698, Aug. 9, 2006; 74 FR 55661, Oct. 28, 2009]
Editorial Note:
At 75 FR 55661, Oct. 28, 2010, § 674.39, was amended by revising the authority citation at the end of the section however, the amendment could not be incorporated because there was no authority citation at the end to revise.

Title 34 published on 2013-07-01

The following are only the Rules published in the Federal Register after the published date of Title 34.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2013-11-01; vol. 78 # 212 - Friday, November 1, 2013
    1. 78 FR 65768 - Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program
      GPO FDSys XML | Text
      DEPARTMENT OF EDUCATION, Office of Postsecondary Education
      Final regulations.
      Effective date: These regulations are effective July 1, 2014. Implementation dates: For implementation dates, see the Implementation Date of These Regulations section of the SUPPLEMENTARY INFORMATION section.
      34 CFR Parts 668, 674, 682, and 685

Title 34 published on 2013-07-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 34 CFR 674 after this date.

  • 2013-11-01; vol. 78 # 212 - Friday, November 1, 2013
    1. 78 FR 65768 - Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program
      GPO FDSys XML | Text
      DEPARTMENT OF EDUCATION, Office of Postsecondary Education
      Final regulations.
      Effective date: These regulations are effective July 1, 2014. Implementation dates: For implementation dates, see the Implementation Date of These Regulations section of the SUPPLEMENTARY INFORMATION section.
      34 CFR Parts 668, 674, 682, and 685