I. PROGRAM PROFILE A. Legislative Authority 1. State:

The Student Loan Division of the Colorado Department of Higher Education (hereinafter referred to as “Division”), was established in 1979 to administer the Colorado Student Loan Program (hereinafter referred to as “CSLP”) pursuant to an act of the Colorado General Assembly at C.R.S. 1973, Title 23, Article 3.1, as amended. A copy of the text of the Act may be found in Appendix B.

2. Federal:

The Guaranteed Student Loan (hereinafter referred to as “GSL”), Supplemental Loan to Assist Students (hereinafter referred to as “SLS”), and Parent Loan (hereinafter referred to as “PLUS”) Programs are authorized by Title IV, Part B of the Higher Education Act of 1965, as amended, (hereinafter referred to as the “ACT”), (20 U.S.C. 1071 et seq.). They are administered by the U.S. Department of Education in accordance with the Act, Title 34 of the Code of Federal Regulations at Parts 668 and 682 (hereinafter referred to as the “Regulations of the Secretary”) (see Appendix A for text and specific citations), and program agreements between the Secretary of Education (hereinafter referred to as the “Secretary”) and the Division.

B. Basis and Purpose The purpose of the CSLP is to make low interest loans available to all qualified borrowers In order to help meet their postsecondary education expenses. The loans are made to eligible students and parents by commercial lending or authorized educational Institutions. They are guaranteed by the Division and reinsured by the Federal government. The CSLP facilitates broad access to postsecondary education. Guaranteed loans are an important supplement to other federal, state, institutional, and private student financial aid programs. It is hoped that through various sources of grants, work, and loans, no qualified student will be denied an opportunity to pursue a program of postsecondary education for financial reasons.

C. Discrimination Prohibited No institution, bank, credit union, corporation, or other lender who regularly extends, renews, or continues credit or provides insurance under the Higher Education Act of 1965 as amended shall exclude from receipt or deny the benefits of, or discriminate against any borrower or application in obtaining such credit or Insurance on the basis of race, national origin, religion, sex or marital status, age, or handicapped status.

D. Effective Date 1. These rules shall take effect on September 30, 1982.

2. Temporary amendments to these existing rules take effect on September 16, 1983, and apply to all PLUS loans currently outstanding as well as affect the following sections: III.A.1.a.; III.A.I.b.; III.A.1.c.; III.F.4.; VI.B.8.C.; VI.B.8.C.I.; VI.B.8.C.II; VI.B.8.c.IiI.; X.B.3.; X.C.2; X.E.1.d.; X.E.1.e.; X.E.3.b.

3. Permanent amendments take effect on November 7, 1983, and apply to all PLUS loans currently outstanding and affect the sections listed in Part 2 of this section.

4. A temporary amendment to these rules is effective on June 4, 1984, and affects the following section: III.A.1.c.

5. Permanent amendments to these rules take affect August 22, 1984, and affect the following sections: I.C.; III.A.1.C.; III.E.5.; V.A.4.; V.A.5.a.; V.A.5.b.; V.C.5.C.; V.D.2.; VI.C.2.; VI.D.2.; VII.A.1.b.; VII.A.1.d.; VII.B.3.; VII.B.5.C.; VII.C.1.C.i.; VII.D.2.6.; VIII.A.1.e.; VII.C.1.c.1.; X.A.1.b.; IX.A.2.; IX.A.2.a.; IX.B.2.; IX.C.1.g.l.aa-yy.; IX.C.4.a.; XI.23.

6. Permanent amendments to these rules take effect August 22, 1984, and affect the following sections: II.D.6.b.; II.E.2.n.; III.A.1.; III.D.15.; III.E.2.C.; VIII.A.1.b.; IX.A.1.a.; IX.A.2.b.; IX.D.1.; IX.D.2.; X.B.3.8.; X.C.1.; X.C.1.a.; X.C.3.; XI.13.

7. Permanent amendments to these rules take effect 7/1/85 and affect the following sections: II.F.2.a; II.F.2.d; II I.D.1.c.II.; V.A.4.; V.A.5.; V.A.6.; V.A.7.; V.A.8.; V.A.9.; IX.B.3.; IX.C.1.a.; IX.C.1.b.; IX.C.1.c.; IX.C.1.d.; IX.C.1.e.I.; IX.C.1.f.i.; IX.C.I.g.III.; IX.C.1.h.II.; IX.C.1.h.iv.; IX.C.1.1.; IX.C.1.j.; IX.C.1.k.I; X.B.4.; XI.25.

8. Temporary amendments to these rules become effective 6/10/85. The following sections are effected: V.A.2.a.; V.A.2.b.; V.A.2.C.

9. Permanent amendments to these rules take effect 9/3/85 and affect the following sections: V.A.2.a.; V.A.2.b.; V.A.2.C.; VI.B.8.c.iII.; VII.D.6.; VIII.D.5.a.; IX.E.4.b.; IX.E.4.C.; X.B.3.; X.C.2.; X.E.1.e.; X.E.3.b.; X.E.4.b.; X.E.4.C.

10. Temporary amendments to these rules become effective March 1, 1986. The following sections are affected: III.D.16.b.; III.D.16.C.; III.D.16.d.; IV.A.2.h.; VII.E.3.

11. Permanent amendments to these rules take effect 5/1/86. The following sections are affected. II.E.2.n; III.D.19.; III.D.20.; III.D.21.; III.F.; V.D.2.; VI.D.2.; VII.A.1.b.; VII.A.1.d.; VII.B.5.; VIII.A.1.b.; VIII.A.1.e.; VIII.B.6.; IX.E.2.; IX.E.3.; IX.E.3.a.; IX.E.3.b.; IX.E.3.C.; IX.E.4.; IX.E.5.; IX.E.5.a.; IX.E.5.b.; IX.E.5.c.; IX.E.5.d.; IX.E.6.; IX.E.7.; IX.E.8.; X.E.2.; X.E.3.; X.E.3.a.; X.E.3.c.; X.E.4.; X.E.5.; X.E.5.a.; X.E.5.b.; X.E.5.c.; X.E.5.d.; X.E.6.; X.E.7.; X.E.8. Regulation III.F. was repealed and reenacted with amendments effective for loans that become delinquent on or after 5/1/86.

12. Permanent amendments to these rules take effect 6/30/86. The following sections are affected: III.D.16.b.; III.D.16.c.; III.D.16.d.; IV.A.2.h.; VII.E.3.

13. Permanent amendments to these rules become effective August 17, 1987. They are comprehensive in scope and affect.

II. SCHOOL INFORMATION FOR GSL, SLS AND PLUS PROGRAMS A. School eligibility. The term “School” as referred to In these regulations shall have the same meaning assigned to the term “Eligible Institution” In the Act, and the term “Eligible Institution” In Regulations of the Secretary. (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material).

B. School Participation. Participation In the CSLP is contingent on approval by the Division.

C. Approval by the Division will be based on the following:

1. The school must be an “Eligible Institution” as defined by the Act and Regulations of the Secretary (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material); and 2. The school must satisfy all standards and criteria established under the Act and Regulations of the Secretary for participation of “Eligible Institutions” In the Student Loan Insurance Programs; and 3. The school must be willing and able to comply with all terms of the Act, Regulations of the Secretary, and Regulations and published policies of the Division.

D. Responsibilities of Educational Institutions. Schools that participate in the CSLP shall comply with all Regulations of the Secretary, the Act, and Colorado laws and regulations pertinent to the CSLP. Failure to comply may result In limitation, suspension or termination of participation in the CSLP.

E. Records and Inspection Requirements 1. The school shall maintain records In accordance with the Act and applicable regulations (and Interpretive publications) of both the Secretary and the Division (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material) (See 34 C.F.R. 682.610).

2. The form and manner for maintenance of records relating to loans guaranteed by the Division must be approved by the Division prior to use.

3. In the event of the closure, termination, suspension or change of ownership of a participating school, that school or Its successor must make arrangements for the retention of the records and reports required by these rules and for access to these records and reports by the Division.

4. All student financial aid records of the school shall be open for inspection and audit by the Division.

5. The school shall submit a copy of each audit report completed for the Department of Education under the Loan Guarantee Program of the Act to the Division.

III. ELIGIBLE LENDER INFORMATION FOR GSL, SLS AND PLUS PROGRAMS A. Lender eligibility, participation and conduct will be governed In accordance with the Act and Regulations of the Secretary that pertain to “Eligible Lenders” therein, except as otherwise provided In these regulations. (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material).

B. Lender Responsibilities 1. To participate in the CSLP administered by the Division, a prospective lender must submit a written request to the Director. If the request is approved, the lender must enter into a participation agreement with the Division. The Director will respond to a lender’s or holder’s request to participate In the CSLP within a reasonable time after receipt of the application.

2. The lender shall notify the Division when 6SL, SLS or PLUS loan amounts are reduced or disbursement dates are changed.

3. The lender shall promptly complete or confirm all reports as required by the Division.

4. The lender shall notify the Division and secure its permission to transfer the guarantee of any loan by sale or pledge to another participating lender or holder of CSLP loans using CSLP Form 302 or such other form supplied or approved by the Division. The purchaser (holder of record) must submit a loan transfer statement (CSLP Form 300 or such other form supplied or approved by the Division) which Identifies the individual loans purchased.

5. The lender shall submit a report of the previous month’s loan transactions by lender manifest or other format approved by the Division, to the Division by the 10th day of the following month.

6. When a lender learns that a student who has received a GSL loan is no longer enrolled at a participating school on at least a half-time basis, the lender must complete a repayment addendum, including appropriate disclosures, and mail the completed addendum to the student.

7. The lender shall notify the borrower in writing of its decision on requests for a reduced grace period, a deferment or a forbearance.

8. The lender shall, at or prior to the time such lender disburses a loan to a borrower which is guaranteed by the Division, provide thorough and accurate loan information to the borrower. In accordance with Section 433 of the Act, the pertinent loan information shall appear in the loan application forms., disclosure statements, and promissory notes furnished or approved by the Division.

9. Lenders may establish credit-worthiness standards to ensure that the borrower will be able to retire the debt In the required repayment period. The lender may not charge the cost of a credit analysis to the borrower.

10. The lender shall request pre-claims assistance from the Division on the appropriate form supplied or approved by the Division when a loan becomes 60 days delinquent, and supplemental pre-claims assistance from the Division when a loan becomes 115 to 130 days delinquent.

11. If all attempts to locate a borrower or endorser (If any) have been unsuccessful, the lender shall request pre-claims assistance on a loan that Is less than sixty (60) days delinquent, provided that a minimum of ten (10) days of skip tracing has been performed by the lender, by submitting a request for pre-claim assistance form to the Division.

12. The lender shall submit any claim for payment on a defaulted loan to the Division on the appropriate form supplied or approved by the Division.

13. The lender shall submit death, disability and bankruptcy claims to the Division on the appropriate form supplied or approved by the Division.

C. Record Keeping and Inspection 1. The lender shall maintain records as required by the Act, Regulations of the Secretary and Interpretive publications of both the Secretary and the Division. (The Act and Regulations of The Secretary do not Include later amendments to the Incorporated material).

2. Any additional records specifically required by the Division which are necessary to document the validity of an Insurance claim or to make any reports required by the Division under these regulations shall be submitted to the Division by the lender.

3. Records relating to CSLP loans must be in the form or manner approved by the Division.

4. Except for promissory notes, the lender may store records In microfilm or computer format.

5. Upon request, a lender shall afford the Director, and any authorized representatives of the Division and the United States Department of Education access to its records.

D. Due Diligence 1. General a. Federal laws and regulations governing the GSL, SLS and PLUS loan program(s) require guarantee agencies, such as the Division to establish and enforce standards and procedures for the exercise of due diligence In making, servicing, and collecting GSL, SLS and PLUS loans. (34 CFR 682.401 and 34 CFR 682.411).

b. Secondary market holders should note that participation In the GSL, SLS and PLUS programs require full compllance with Colorado and Federal laws and regulations applicable to lenders participating in the CSLP. The delegation of functions to a servicing agency or other party does not relieve the lender or holder ‘of ’ its responsibilities under these regulations.

c. Loan Making: The loan making process includes such functions as processing necessary forms, the approval of a borrower for a loan, the determination of a loan amount, the explanation to the borrower of his/her responsibilities under the loan, and the disbursement of loan proceeds.

d. Loan Servicing: The lender must maintain records of events affecting a loan that occur while It is the holder of the loan. This shall include changes In the borrower’s name and permanent address, and, in the case of a GSL, PLUS or SLS loan, status as at least a half-time student, eligibility of the borrower for deferment of repayment of principal, payments and prepayments, and transfers of the loan.

e. Loan Collection: A lender must exercise due diligence in the collection of loans insured under these programs, both with respect to borrowers and any endorsers whose signatures may appear on a GSL, SLS or PLUS note.

f. Default claims received by the Division will be reviewed to ensure that the lender submitting the claim has complied with the due diligence requirements of these regulations. Failure to comply with the practices outlined below could terminate or delay the payment of claims and/or result in Interest penalties. The following are the minimum due diligence collection practices required by the Division.

2. Loan Collection Due Diligence By Lenders.

a. In the event of delinquency on a loan guaranteed by the Division, the lender shall engage in at least the collection efforts described In this section.

b. For purposes of this section, delinquency on a loan begins on the first day after the due date of the first missed payment not later made, or 30 days after the day the lender discovers that the borrower has entered the repayment period, whichever is later. If the payment is made late, the first day of delinquency Is the day after the due date of the next missed payment not later made.

c. One to 30 days delinquent: During this period, the lender shall send at least two written notices or collection letters to the borrower Informing the borrower of the delinquency and urging the borrower to make payments sufficient to eliminate the del nquency.

d. Thirty-One to 60 days delinquent: During this period, the lender shall make diligent efforts to contact the borrower by telephone. If the lender is unable, despite those efforts, to reach the borrower by telephone, the lender shall send at least two forceful collection letters to the borrower and endorser urging the borrower to cure the delinquency. The letters shall also warn the borrower that, if the delinquency is not cured, the lender will assign the loan to the Division which In turn will report the default to a credit bureau and may bring suit against the borrower to compel repayment of the loan.

e. Sixty-One to 150 days delinquent: During each thirty-day period comprising this period, the lender shall make diligent efforts to contact the borrower and endorser by telephone. During each thirty-day period, if the lender Is unable, despite those efforts, to reach the borrower or endorser by telephone, the lender shall send at least one more collection letter to the borrower and endorser no less forceful than those described in Paragraph (d) of this section.

f. One Hundred Fifty-One to 180 days delinquent: During this period, the lender shall send a final demand letter to the borrower and endorser unless the address is unknown, requiring repayment of the loan In full and notifying the borrower and endorser that a default will be reported to a national credit bureau. The lender shall allow the borrower and endorser at least 30 days to respond to the final demand letter and to make payments sufficient to bring the loan out of default before filing a default claim on the loan or reporting that default to a credit bureau.

g. Documentation shall be maintained by the lender to enable the Division to determine the action the lender has taken.

3. Follow-up Contact.

a. When contact has been made with the borrower or endorser (if any) and he/she has promised to bring the loan current or requested a deferment or forbearance, the Initial contact shall be followed up by additional contact(s) of the borrower and endorser adjusted to fit the circumstances. Any offer or request which would cure the delinquency and any new information received on the account shall be acted on promptly and no later than ten (10) days.

b. Documentation of the follow-up contact or attempts to contact the borrower or endorser (if any) shall be recorded In the borrower’s collection history.

4. Collection and Final Demand Letters.

a. If Information received from the borrower suggests that he/she is eligible for a deferment (entitlement) or forbearance (lender’s discretion), the lender shall send the borrower a letter explaining that he/she may qualify for deferment or forbearance (lender’s discretion) of his/her repayment obligation together with the appropriate deferment or forbearance request form(s).

b. Special circumstances letters may be sent to the borrower or endorser (if any) at the Sender’s discretion.

c. The tender’s Final Demand Letter shall be sent by first class mail to both the borrower and the endorser (if any). This Lender’s Final Demand letter shall do the following:

i. Advise the borrower and endorser (if any) of the pending default and assignment of the promissory note to the Division.

ii. Advise the borrower and endorser to pay the loan in full, and cite the total dollar amount outstanding.

iii. Inform the borrower and endorser of the consequences of failure to remedy the default condition.

iv. Contain the phrase “Lender’s Final Demand” in the text.

v. Give a specific calendar date stating the deadline to comply with one of the options.

d. Documentation of mailing of the collection and final demand letters shall be recorded in the borrower’s collection history.

5. Skiptracing.

a. Skiptracing is an activity performed when the lender is unable to locate the borrower or endorser (if any) and therefore unable to cure the delinquency. Promptly, and no later than ten (10) days of receipt of Information that indicates it does not know the borrower’s or endorser’s current address, the lender shall research all reasonably accessible Information.

b. The following skiptracing due diligence efforts shall be performed concurrently In order to locate the borrower or endorser (if any):

i. All references named on the borrower application shall be contacted to ascertain the borrower’s and endorser’s (if any) telephone number(s) and address(es). If telephone numbers are incorrect, directory assistance shall be consulted to ascertain correct numbers.

ii. The lender shall review the borrower’s documentation for presence of the borrower’s employer, spouse’s employer, or relative’s employer. The employer shall be telephoned by the lender to ascertain the borrower’s last known telephone number and address.

iii. The lender shall contact the educational Institution, if the borrower has left that Institution within twelve (12) months, to find the last known telephone number and address of the borrower.

iv. In the event the borrower or endorser (If any) has not been located through utilization of methods 1 and 2 above, the following resources should also be utilized to determine reference and borrower or endorser (if any) telephone numbers and addresses as follows:

Reference Tool Purpose aa. City Directories Residential and business listings In other areas.

bb. Zip Code Directories Verify streets and zip codes, time zone Information. Locate military bases.

cc. Tax Assessor’s Office Make telephone call to county office and check property tax to obtain addresses.

dd. Public Library Telephone call to get information from other Polk city directories.

ee. Post Office Assistance Telephone call to Post Master, to check for change of address.

ff. Residence Managers Telephone call for forwarding address left by previous occupant.

1. (student borrower).

v. If the borrower or endorser (if any) Is a skip (left no forwarding address or phone number) and has been determined to be in the military an attempt shall be made to find the borrower through the military locator.

vi. If the Division finds any current Information concerning the borrower or endorser (if any), during any process of the skiptracing procedure, this information shall receive due diligence by the lender upon receipt from the Division.

c. Documentation of skiptracing efforts shall be recorded in the borrower’s collection history.

6. Lender shall notify the Division of any payments, deferments or other loan status changes It receives on a loan for which pre-claims assistance has been requested within 10 days after the date such information Is received by the lender.

7. Pre-Claims Due Diligence The lender shall request pre-claims assistance from the Division between the 60th and 70th day of delinquency and supplemental pre-claims assistance between the 115th and 130th day of delinquency. The lender shall continue the aforementioned collection and due diligence efforts during the pre-claim and supplemental pre-claims process. If at any time during the period of time the Division provides pre-claim or supplemental pre-claims assistance, satisfactory repayment arrangements are made, the lender shall cancel said assistance by submitting Form LR-4 or such other form supplied or approved by the Division. The cancellation form shall be sent within 10 days of the arrangements.

a. For purposes of this section, “satisfactory repayment arrangements” are defined as follows:

i. Payment of the delinquent account equal to or less than thirty (30) days past due, or;

ii. By granting a deferment (borrower entitlement If eligible) or forbearance (lender option for eligible borrowers) to the borrower after he/she submits such documentation as may be required by the Division.

b. Reactivation of Pre-claim Assistance. The lender shall request the Division to reactivate pre-claim assistance In the following situations:

i. If the arrangements made by the borrower or endorser (if any) are dishonored, the lender need only call the Division to reactivate the pre-claim assistance.

ii. When the request for pre-claim assistance is cancelled and the loan later becomes (sixty) 60 days delinquent, the pre-claim assistance form, as supplied or approved by the Division, shall be filed with the Division along with the collection activity pursued of the borrower by the lender since the initial delinquency was cancel led.

8. Consequences of Non-Compliance and Cure Process.

a. Non-Compllance, Loss of Interest.

i. When the Division receives and reviews a request for payment of claim on a defaulted GSL, SLS or PLUS loan, it may require reworking of the loan account for a specified period of time, prior to payment of the claim In the event any due diligence obligation(s) has not been performed by the lender.

ii. Interest will not be paid on a default claim, submitted to the Division, for periods of time during which due diligence obligations are not performed and time spent reworking the account.

b. Consequences of Material Non-Compliance. The following circumstances may result In rejection of claim payment and revocation of the loan guarantee by the Division:

i. Failure by the lender to make any attempt to contact a delinquent borrower during the delinquency period; or ii. Material failure of the lender to comply with the due diligence requirements prescribed by the Act, these regulations and Regulations of the Secretary for making, disbursing and servicing a loan.

c. Cure Process.

i. In the event of a determination that the lender failed to perform its due diligence obligations, the Division shall notify the lender in writing of any action the lender must take to receive payment on a claim in accordance with published cure policies and procedures of the Division.

ii. In the event a claim is rejected because of a due diligence violation, as described in Paragraph b. above, the lender may obtain reinstatement of the guarantee, if the borrower signs a new repayment agreement and makes four full payments. On the date the lender receives the fourth full payment the guarantee Is reinstated. In the event the loan should go to claim at a later date, the lender may not request the Interest from the first day of delinquency that culminated in default until the date the guarantee was reinstated.

iii. When due diligence or cure requirements have been met and the borrower’s loan account returns to default status, the lender shall resubmit a request for claim payment to the Division. A delinquent loan shall not be considered a default for purposes of claim payment eligibility, until cure requirements have been satisfied by the lender.

iv. A lender may challenge a determination of failure to perform due diligence obligations by written appeal to the Director or his/her designee within 15 days after notice of the determination is received by the lender from the Division.

9. Conditions of Guarantee Coverage. The Division makes a claim payment to a lender on a loan guaranteed by the D iv is ion only if :

a. The lender exercised due diligence In making, disbursing and servicing the loan, as prescribed by these regulations;

b. The loan check was cashed within 120 days after disbursement;

c. The lender exercises due diligence In collecting the loan through collection efforts meeting the requirements of these regulations;

d. The loan is In default;

e. The lender files a default claim thereon with the Division within 90 days of default;

f. The lender satisfied all conditions of guarantee coverage set by the Division unless the Division reinstated guarantee coverage on the loan, following the lender’s failure to satisfy such a condition, pursuant to policies and procedures established by the Division; and g. The lender complied with all other Federal requirements and has not caused the Division to lose Federal reinsurance coverage with respect to the loan due to an act or omission of the lender.

h. Notwithstanding Paragraphs (a) through (g) of this section, the Division may waive its right to refuse to make a claim payment when, in the Director’s judgment, the best interests of the CSLP so require.

10. Claim Procedures for a Loan Held By a Lender.

a. Documentation. A lender shall provide the Division with the following documentation when filing a claim:

i. The original promissory note.

ii. The loan application.

iii. In the case of a death claim, those documents that formed the basis for the determination of death.

iv. Guarantee approval, v. Evidence of disbursement, vi Assignment.

vii. Repayment addendum (or other approved documentation). viii. Repayment history.

ix. In the case of a disability claim, a copy of the certification of disability described In Paragraph 2.b. of this section.

x. In the case of a bankruptcy claim, evidence that a bankruptcy petition has been filed, written evidence of the lender’s efforts to determine If the borrower filed a Hardship Petition, an assignment to the Division of the lender’s proof of claim, and all pertinent documents sent to or received from the bankruptcy court by the lender and a statement of any facts of which the lender Is aware that may form the basis for an objection or exception to the discharge of the borrower’s loan obligation in bankruptcy, and all documents supporting those facts.

xi. In the case of a forbearance, the lender shall submit all documentation required by the Regulations of the Secretary. (The Regulations of the Secretary do not include later amendments to the Incorporated material).

xii. Documentary evidence of all skiptracing activity, which shall Include but not be limited to: evidence of letters sent by the lender to the confirmed address; and descriptions of the substance of telephone contacts.

E. Death, Disability and Bankruptcy Payments 1. General.

a. If a PLUS Program loan was obtained by two parents as co-makers and only one of the borrowers dies, becomes totally and permanently disabled, or has his or her loan obligation discharged in bankruptcy, the other borrower remains obligated to repay the loan.

b. The Division may not pay a death, disability, or bankruptcy claim If a default claim for the loan previously has been disapproved by the Division, or If the loan would not qualify either for payment of a default claim or for reinsurance payments due to an act or omission of the lender.

2. Death.

a. If an Individual borrower dies, the borrower’s obligation to make any further payments of principal and Interest on the loan is cancel led.

b. The lender may determine that a borrower has died on the basis of a death certificate or other proof of death that is acceptable under applicable Colorado law. if a death certificate or other acceptable proof of death is not available, the borrower’s obligation on the loan Is cancelled only upon a determination by the Division on the basis of other evidence that the Division may find conclusive.

c. Once the lender has determined that the borrower has died, the lender may not attempt to collect on the loan from the borrower’s estate or from any endorser.

d. The lender shall return to the sender, any payments received from the estate or paid on behalf of the borrower after the date of the borrower’s death.

3. Total and Permanent Disability.

a. If the lender determines that an individual borrower Is totally and permanently disabled, the borrower’s obligation to make any further payments of principal and interest on the loan is cancelled. A borrower is not considered totally and permanently disabled on the basis of a condition that existed before he or she applied for the loan, unless the borrower’s condition has substantially deteriorated since he or she submitted the loan application, so as to render the borrower totally and permanently disabled.

b. After being notified by the borrower of the borrower’s representative that the borrower claims to be totally and permanently disabled, the lender shall promptly request that the borrower or the borrower’s representative obtain a certification from a physician who is a doctor of medicine or osteopathy and legally authorized to practice, on a form provided or approved by the Secretary, that the borrower Is totally and permanently disabled. The lender shall continue collection until it receives the certification or receives a letter from a physician stating that the certification has been requested and that additional time Is needed to determine If the borrower is totally and permanently disabled. After receiving the physician’s certification or letter, the lender may not attempt to collect from the borrower or any endorser.

c. After receiving the physician’s certification described in Paragraph 3.b. of this section, the lender shall return any payments that it received from or on behalf of the borrower after the date the borrower or the borrower’s representative notified the lender of the borrower’s claim described in Paragraph 3,b. of this section.

d. If the lender determines that a loan owed by a borrower who claims to be totally and permanently disabled is not eligible for cancellation for that reason, or if the lender has not received the physician’s certification, described In Paragraph 3.b. of this section, within 60 days of the receipt of the physician’s letter described in Paragraph 3.b. of this section, the lender shall resume collection and shall be deemed to have exercised forebearance of payment of both principal and Interest from the date the lender received the physician’s letter described in Paragraph 3.b. of this section, and may capitalize, in accordance with these regulations, any interest payments forborne.

4. Bankruptcy.

a. If an individual borrower’s repayment obligation on a loan Is discharged in bankruptcy, the Secretary assumes the borrower’s liability for unpaid principal and interest on the loan.

b. The lender shall determine that a borrower has filed a bankruptcy petition on the basis of a notice of the first meeting of creditors received from the bankruptcy court.

c. Once a lender determines that a borrower has filed a bankruptcy petition, the lender may not attempt to collect on the loan, except as required by Paragraph 4.d. of this section, and shall file a proof of claim with the bankruptcy court within 30 days after the lender receives notice of the first meeting of creditors.

d. If the loan has not been In repayment for at least five years (exclusive of any applicable suspension of the repayment period) on the date the lender receives notice of the first meeting of creditors, the lender shall hold the loan and promptly inquire of the bankruptcy court whether a petition to have the loan obligation declared dischargeable In bankruptcy on grounds of undue hardship (hereinafter referred to as a “Hardship Petition”) has been filed by the borrower. Based on such Inquiry, if the lender determines that the borrower has not filed a Hardship Petition, the lender shall continue to hold the loan, and not attempt collection, until the bankruptcy action Is concluded. Thereafter, the lender shall treat the loan as if the lender had exercised forbearance as to repayment of principal and interest from the date of the borrower’s filing of the bankruptcy petition until the date the lender is notified that the bankruptcy action is concluded. The lender shall file a bankruptcy claim on the loan with the Division, under the following circumstances:

i. The borrower has filed a petition for relief under Chapter 13 of the U.S. Bankruptcy Code;

ii. The loan has been In repayment for more than five years (exclusive of any applicable suspension of the repayment period); or iii. The loan has been In repayment for less than five years (exclusive of any applicable suspension of the repayment period) and the lender determines that the borrower has filed a Hardship Petition.

5. Filing Deadlines. As a condition for obtaining payment, a lender shall comply with the following requirements for filing death, disability, and bankruptcy claims:

a. A lender must file a death or disability claim with the Division with in 60 days after the lender determines that a borrower has died or is totally and permanently disabled, In accordance with the procedures In Paragraphs 2. and 3. of this section.

b. A lender must file a bankruptcy claim with the Division:

i. Within 30 days after the lender receives notice of the first meeting of creditors In a borrower’s bankruptcy proceeding, If the loan has been in repayment for more than five years (exclusive of any applicable suspension of the repayment period);

ii. Within 30 days after the lender determines that the borrower has filed a Hardship Petition, If the loan has been In repayment for less than five years (exclusive of any applicable suspension of the repayment period); or iii. Within 30 days after receiving notice of the first meeting of creditors, if the borrower files a petition for relief under Chapter 13 of the bankruptcy code.

6. Payment of Death, Disability, and Bankruptcy Claims By the Division.

a. The amount of loss to be paid on a death, disability, or bankruptcy claim is equal to the unpaid balance of principal and Interest in accordance with Paragraph b. of this section. The unpaid balance of principal may include interest capitalized in accordance with these regulations.

b. Payment of Interest. The payment of an approved claim covers the unpaid interest that accrues during the following periods:

i. During the period before the claim Is filed, not to exceed the period provided for in Paragraph 5.a. of this section for filing the claim.

ii. During a period not to exceed 30 days following the return of the claim to the lender by the Division for additional documentation necessary for the claim to be approved.

iii. During the period required by the Division to review the claim and to authorize payment.

7. Treatment of Loans Acquired By the Division Through the Payment of Bankruptcy Claims to Lenders. After payment of a bankruptcy claim to a lender and once the dischargeability of the loan has been decided in a bankruptcy action, the Division may:

a. Submit the bankruptcy claim to the Secretary for reimbursement, if the loan Is discharged; or b. Treat the loan as if forbearance had been exercised as to repayment of principal and interest from the date of filing of the bankruptcy petition until the date the court held the loan to be non- dischargeable, If the court so held, and either- i. Require the lender that filed the claim to repurchase the loan; or ii. Permit another eligible lender to purchase the loan.

F. Special Condition for Filing a Claim.

1. A lender shall cease collection activity on a loan and file a claim with the Division with in 90 days of the date the lender learns that the school, in which the student on whose behalf the loan was made was enrolled, terminated its teaching activities involving that student during the academic period covered by the loan.

2. A lender may not, as a result of a claim filed with the Division under this section, make a report to any credit bureau or other third party concerning the borrower’s failure to repay the loan.

G. Loan Consolidation and Refinancing.

Lenders may consolidate eligible student loans In accordance with the Act and Regulations of the Secretary. To be eligible for reinsurance from the Division on a consolidated or refinanced loan, a lender must satisfy the following:

1. Obtain written approval from the Division to participate In the CSLP Loan Consolidation or Refinancing Program;

2. Enter Into a written agreement with the Division to establish the rights and responsibilities of each party in either program; and 3. Obtain a Certificate of Insurance from the Division for coverage of consolidation loans.

IV. COMPLIANCE FOR GSL, SLS AND PLUS PROGRAMS A. Denial, Limitation, Suspension and Termination of School and Lender Participation 1. Upon notice to the Division that a participating school or lender has ceased to be eligible under these rules or the Regulations of the Secretary, the Division shall suspend approval of loans for attendance at such school or loans made by such lender.

a. A school or lender which has ceased to be eligible or has been limited or suspended by the Secretary, shall be notified by certified mail by the Division of its change in status and reason for the change.

b. If within 20 days the school or the lender has not provided evidence to establish its continuing eligibility, the school or the lender shall be declared ineligible and removed from the list of participants In the CSLP.

c. If the Director determines that a loss of eligibility did not occur, the school or the lender shall be reinstated and loan applications received during the period of suspension shall be processed and checks ordered to be disbursed.

d. A school or a lender which again becomes eligible after having been declared to be ineligible by the Director under this section must execute a new agreement with the Division before it may resume participation.

2. Approval of loans for attendance at a school shall be suspended upon the notice by the Director to the school that it has failed to return a Student Confirmation Report within 30 days as required by these rules.

a. Upon receipt of a late Student Confirmation Report, the Director may lift the suspension and process pending applications; or b. The Director may Initiate an action for limitation, suspension or termination under these rules, upon a finding of repeated violations.

3. Denial of applications for participation by a school or a lender may be appealed according to the provisions of these rules.

4. The Director may deny, limit, suspend or terminate the participation of a school or a lender for noncompliance with any state or federal law or regulation applicable to these programs, for lack of eligibility, Including, in the case of a lender, denial of participation for failure to satisfy the Director that the lender meets the criteria enumerated in section III.D.1., or If the Secretary has suspended or limited its eligibility.

a. An action under this section resulting In a limitation or termination of participation shall not affect any responsibilities arising from participation in these programs prior to the date of the action.

b. The action shall not impair any benefits or claims to which a participant may be entitled based on its participation prior to the action, except as it may affect loan amounts not yet disbursed.

5. Informal Compliance Procedure: If the Division receives a complaint or has other information which it believes to be reliable Indicating that a participant is or may be In violation of applicable laws, regulations, special arrangements, or limitations, notice shall be given to the participant.

a. The participant shall have an opportunity:

i. To respond to the complaint or other Information;

ii. To show that the matter has been corrected; or iii. To submit an acceptable plan to correct the violation and prevent Its recurrence.

b. The procedures provided in this section for limitation, suspension, or termination need not be delayed during the Informal compliance procedure If the Director believes that the delay would have an adverse effect on the CSLP, or that Informal compliance procedures will not correct the alleged violation.

6. Emergency Action: The Director may take emergency action to suspend the Issuance of loan guarantees or the disbursement of loan funds if the Director:

a. Has reasonable cause to believe that the participant has will fully and deliberately violated applicable laws, rules or regulations; or b. Determines that immediate action is necessary to prevent the likelihood of substantial losses by the Division and Is Imperative to promote the public welfare.

c. An emergency action is begun by notifying the participant of the action and the basis on which It Is being taken by certified mail with return receipt requested.

i. The effective date of the action Is the date on which the notice Is received by the participant.

ii. An emergency action shall not exceed thirty (30) days unless a suspension, limitation, or termination proceeding Is begun under this section before the expiration of that period.

iii. In such case, the period may be extended until the completion of that proceeding, including any appeal to the Executive Director.

7. Suspension: A suspension removes a lenders' or schools' eligibility to participate in the CSLP for a period of time. That period may not exceed sixty (60) days unless the participant and the Division agree to an extension and the participant has not requested a hearing, or the Director begins a limitation or termination proceeding under this section. A suspension proceeding Is begun by sending the school or lender a notice of intent by certified mail with return receipt requested.

a. The notice must:

i. Inform the participant of the intent of the Director to suspend participation, cite the consequences of that action, and identify the alleged violations which constitute the basis for the actions;

ii. Specify the proposed effective date of the suspension, which shall be at least twenty (20) days after the mailing of the notice of intent;

iii. Inform the participant that the suspension will not be effective on the date specified in the notice if a designated Division official receives at least five (5) days before that date, a request for hearing or written material Indicating why the suspension should not take place; and iv. Invite voluntary efforts to correct the violation(s) which led to the commencement of the action.

b. Suspension Hearing Procedures: If the participant does not request a hearing but submits written material, the Director, after considering that material, will notify the participant either that the proposed suspension is dismissed, or that the suspension Is effective as of a specified date.

i. If the participant on a timely basis requests a hearing, the Director will set a date and place for It. The date will be at least fifteen (15) days after the designated Division official receives the request. No suspension will take place until after the scheduled date of the hearing.

ii. The Director will preside at the hearing and shall consider any written material presented before the hearing or any material or other evidence presented during the hearing. If, after considering the evidence, the Director concludes the suspension is warranted, he/she will issue an Initial decision suspending the eligibility of all or part of the participant.

iii. Notice of the suspension will be promptly mailed to the participant. The suspension will take effect either upon the date notice of suspension is received by the participant or the original proposed effective date stated In the notice of Intent, whichever is later.

8. Limitation or Termination Proceedings: A limitation or termination either limits In a specified manner the eligibility of a school or lender to participate In the CSLP or ends the participation of a school or lender in the CSLP. The proceeding Is begun by sending the school or lender a notice of intent by certified mail with return receipt requested. A limitation or termination proceeding may be commenced whether or not a suspension proceeding has begun.

a. The notice must:

i. Inform the participant of the intent of the Director to limit or terminate the institution’s eligibility, cite the consequences of that action, identify the alleged violations which constitute the basis for the action, and in the case of I imitation proceedings, state the limitations which may be imposed.

ii. Specify the proposed effective date of the limitation or termination, which shall be at least twenty (20) days after the date of mailing of the notice of Intent;

iii. Inform the participant that the limitation or termination will not be effective on the date specified in the notice If the designated Division official receives, at least five (5) days before that date, a request for a hearing or written material indicating why the limitation or termination should not take place;

iv. Invite voluntary efforts to correct the violation(s) which led to the initiation of the action.

b. Limitation or Termination Hearing Procedures; If the participant does not request a hearing but submits written material, the Director after considering that material shall notify the participant:

i. That the proposed action is dismissed;

ii. That limitations are effective as of a specified date; or iii. That the termination is effective as of a specified date.

c. If the participant on a timely basis requests a hearing, the Director will set a date and place for it. The date will be at least fifteen (15) days after the designated Division official receives the request. No proposed limitation or termination may take place until after the scheduled date of the hearing.

d. The Director will preside at the hearing and shall consider any written material presented before the hearing or any material; or other evidence presented during the hearing. If, after considering the evidence, the Director concludes that limitation or termination is warranted, he/she will issue an initial decision limiting or terminating the institution’s participation in whole or in part. If a termination action is brought against a participant, and the Director believes a limitation to be more appropriate, the Director may issue a decision Imposing one or more limitations on a participant rather than terminating its participation.

9. Expedited Hearings: With the approval of the Director and the mutual consent of the parties, any time schedule specified in this section may be shortened.

10. Initial and Final Decisions: The Director issues an Initial decision In any limitation, suspension, or termination proceeding based on findings of fact and conclusions of law.

a. Findings of fact shall be based only on evidence considered at the hearing and matters of which official notice has been taken. The Initial decision of the Director will be promptly mailed to the institution.

b. In a limitation or termination proceeding, the Initial decision of the Director becomes final twenty (20) days after being Issued, unless within that twenty (20) day period the participant appeals the decision to the Executive Director.

c. The initial decision of the Director limiting or terminating participation will not take effect pending the appeal, unless the Director determines that a stay would adversely affect the Division or the students and/or borrowers involved.

11. Limitation Scope: A limitation may include any of the following:

a. A limit on the number or percentage of students enrolled and/or parents of students enrolled in a school who may receive GSL, SLS or PLUS loans;

b. A limit on the percentage of a schools' total receipts from tuition and fees derived from GSL, SLS or PLUS loan funds, for a stated period of time;

c. A requirement that an Institution obtain a bond, In a specified amount, to assure Its ability to meet its financial obligations to students and/or parents of students who receive GSL, SLS or PLUS loans;

d. A limit on the number or total amount of loans which a lender may make, purchase, or hold under the GSL, SLS or PLUS programs;

e. A limit on the number or total amount of loans a lender may make under the GSL, SLS or PLUS loan programs to students and/or parents of students enrolled at a particular school;

f. A requirement that a school lender utilize a special promissory note which provides that a student’s obligation with regard to his/her GSL or SLS loan amount depends on the student’s continued enrollment during the academic period for which the loan was made and is proportionate to the percentage of that period which he/she has completed; or g. Such other conditions as may be determined to be reasonable and appropriate.

12. Removal of Limitation: A school or a lender whose participation has been limited may not apply for removal of the limitation until twelve (12) months after the effective date of the limitation. After that time, the participant may request removal of the limitation In writing. The request must show that the participant has corrected the violation(s) on which the I imitation was based.

The Director shall respond to such a request for removal of I imitation by either:

a. Granting the request; or b. Denying the request; or c. Granting the request subject to other limitations. If the Director denies the request, or establishes other limitations, the participant, upon request, will be granted an opportunity to show cause why Its participation should be fully reinstated. A request for a show cause meeting shall not be deemed to waive the institution’s right to participate in the program if it continues to comply with the limitations pending the outcome of the meeting.

13. Reinstatement after Termination: A school or a lender whose participation has been terminated under this section may not file a request for reinstatement before the expiration of eighteen (18) months from the effective date of Its termination.

a. After the minimum termination period, a participant may request reinstatement. The request must be in writing and show that the participant has corrected the violations on which the termination was based and that the participant meets all qualifications for eligibility.

b. No later than sixty (60) days after receipt of the request for reinstatement, the Director shall respond to the participant by either:

i. Granting its request; or ii. Denying its request; or iii. Granting the request subject to limitations.

c. If the Director denies the participant’s request, or allows reinstatement subject to limitation(s), the participant, upon request, will be granted an opportunity to show cause why it should be fully reinstated. In the event the Director’s response allows reinstatement subject to limitation, the participant, by requesting a show cause meeting, shall not be deemed to waive Its rights to participate in the program if It complies with the reinstatement limitations pending the outcome of the meeting.

14. If, after the meeting to show cause for removal of a i imitation or reinstatement after termination, the participant wishes to appeal the Director’s decision to the Executive Director, it must request such an appeal no later than twenty (20) days following the decision. This decision will remain In effect pending the appeal.

a. In the case of an appeal, the Executive Director will Issue a final decision affirming, modifying, or reversing the decision made at the show cause hearing, including a statement of reasons for the decision.

b. If the participant wishes to introduce any new evidence, it must request the Director to grant a rehearing. If the Director declines to grant the rehearing, the appeal to the Executive Director will be based on the evidence submitted at the original show cause meeting.

B. Reimbursements, Refunds and Offsets 1. The Secretary or Director may require a lender or school to take reasonable corrective action to remedy a violation of applicable laws, regulations, special arrangements, agreements, or limitations.

2. The corrective action may Include payment to the Secretary, Division, or designated recipients, of any funds that the lender or school Improperly received, withheld, disbursed or caused to be disbursed. Corrective action may, for example, relate to:

a. Interest benefits or special allowances paid by the Secretary, or claims paid by the Division and subsequently reimbursed by the Secretary;

b. Discounts, premiums, or excess Interest paid in violation of pertinent sections of the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not include later amendments to the Incorporated material).

c. Refunds owed to students;

d. Any grants, work-study assistance or loans made in violation of Federal regulations or these rules.

3. If a final decision requires a lender or school to reimburse or make any payment to the Division or the Secretary, the Division or Secretary may offset these claims against any benefits or claims due the lender or school.

V. BORROWER ELIGIBILITY FOR GUARANTEED STUDENT LOANS A. Borrower Qualifications. To be eligible to receive a guaranteed student loan under this program a borrower must meet the criteria established under the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not include later amendments to the Incorporated material). However, the maximum annual amount may be applied to the academic year as certified by the educational institution. The academic year may not exceed 12 months. The terms of the loan shall be established in accordance with the Act, Regulations of the Secretary, and the applications and promissory notes supplied or approved by the Division. (The Act and the Regulations of the Secretary do not Include later amendments to the Incorporated material).

VI. BORROWER ELIGIBILITY FOR PLUS LOANS AND SUPPLEMENTAL LOANS FOR STUDENTS (SLS)

A. Borrower Qualifications To be eligible to receive a PLUS or SLS loan under this program, a borrower must meet and comply with the criteria established under the Act and Regulations of the Secretary (The Act and Regulations of the Secretary do not include later amendments to the incorporated material). However the maximum annual amount may be applied to an academic year certified by the educational institution. The academic year may not exceed 12 months. The terms of the loan shall be established In accordance with the Act, Regulations of the Secretary, and the applications and promissory notes supplied or approved by the Division. (The Act and Regulations of the Secretary do not include later amendments to the Incorporated material).

B. Exclusive of the guarantee fee, the maximum annual interest rate that may be charged a borrower on the unpaid principal balance of any PLUS and SLS loans may not exceed the maximum annual rate allowed by the Federal laws and regulations governing the PLUS and SLS loan programs. Under certain circumstances the unpaid principal balance of the loan may Include capitalized Interest.

1. The lender shall calculate Interest from the date of disbursement of funds to the borrower. In calculating the Interest, the lender may use either of the following methods as defined by the Secretary:

a. The “Average Daily Balance” method; or b. The “Actual Accrual Exact Time-Exact Interest” method. Use of the “Banker’s Rule” (“Exact Time- Ordinary Interest”) and “Rule of ‘78’s” are prohibited because these methods result In an actual rate In excess of the allowable maximum rate of interest.

2. A lender may capitalize accrued interest covering any periods of forbearance or delinquency.

a. If interest has accrued during a period of authorized forbearance, the lender may add the accrued Interest to the principal only on the date repayment of principal is required to begin or resume.

b. If interest has accrued during the period from the date the first repayment Installment was due until It was made, the lender may add the accrued Interest to the principal only on the date repayment of principal actually begins.

VII. LOAN ORIGINATION FOR GUARANTEED STUDENT LOANS A. Insurance Commitment (Guarantee).

1. The student shall execute the promissory note and application on forms as supplied, or approved by the Division.

2. The Division will review the application to determine whether It will guarantee the loan. If the Division agrees to guarantee the loan, it will transmit a notification of loan approval and guarantee to the lender. The notification of loan approval and guarantee Informs the lender that the Division will Insure the loan.

B. Disbursement of Funds.

Lenders and schools shall disburse funds to the borrowers, In accordance with the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material).

C. Insurance Premium.

1. The Insurance premium Is a fee which the student pays the Division for processing and Insuring the loan. The Insurance covers the life of the student’s loan.

2. The Insurance premium on a GSL loan Is one percent (1 percent) per annum of the principal amount of the loan over the period between disbursement of the loan funds and the anticipated graduation of the student plus the post-school grace period. The fee can be calculated by referring to the chart in appendix F, page 6.

a. The grace period for seven percent loans is nine (9) months.

b. The grace period for eight percent loans Is six (6) months.

c. The grace period for nine percent loans is six (6) months.

3. The formula for insurance premium calculations Is as follows: .01 × Principal amptimes; Months to Maturity = 12 Insurance Premium 4. In order to calculate the number of months elapsing between the date the loan funds are disbursed by the lender, and the graduation date plus grace period, refer to the chart in appendix F, page 4.

5. If the lender makes multiple disbursements, a. The insurance premium shall be calculated on the amount of each disbursement as of the anticipated date of disbursement.

b. The Insurance premium shall be proportionately paid to the Division from each disbursement to the borrower.

6. Insurance premiums for applications filed on or after July 1, 1987 shall be equal to not more than three percent of the principal amount of the loan, by deduction proportionately from each disbursement of the proceeds of the loan to the borrower.

D. Loan Origination Fee. An origination fee may be collected or reported by the lender In accordance with the Act and Regulations of the Secretary. VIII. LOAN ORIGINATION FOR PLUS AND SLS LOANS A. Insurance Commitment (Guarantee). If the lender does not disburse the loan or disburses less than the amount which the Division has guaranteed (the initial amount on the application), the lender must notify the Division of the reduction or cancellation within thirty (30) days on the lender’s manifest.

1. The Division will review the application to determine whether it will guarantee the loan. If the Division agrees to guarantee the loan, It will transmit a notification of loan approval and guarantee to the lender. The notification of loan approval and guarantee Informs the lender that the Division will insure the loan.

2. The student shall execute the promissory note and application on forms as supplied, or approved by the Division.

B. Disbursement of Funds. Lenders and schools shall disburse funds to the borrower In accordance with the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material).

C. Insurance Premium 1. The insurance premium Is a one-time fee which the borrower pays the Division for processing and insuring the loan. The insurance covers the life of the borrower’s loan.

2. The insurance premium charged on a CSLP PLUS or SLS loan is one percent (1 percent) per annum of the declining unpaid PLUS or SLS loan principal balance, excluding Interest or other charges that may have been added to principal, from date of disbursement through repayment of the loan. For applications filed on or after July 1, 1987, the insurance premium shall be equal to not more than three percent of the principal amount of the loan.

3. If an authorized period of deferment Is requested at the time the loan approval and guarantee are issued, the anticipated length of the deferment period will be included in the calculation of the insurance premium.

4. An insurance premium will not be recalculated in the event a consolidation extends the life of the loan and duration of the insurance coverage.

IX. LOAN SERVICING FOR GUARANTEED STUDENT LOANS (GSL)

A. Grace Period 1. A GSL borrower with a 7 percent loan is entitled to a nine (9) month grace period following graduation, withdrawal, or reduction to less than half-time enrollment at an educational Institution before he/she must begin repaying the loan. When only the month and year is known, the lender may extend the grace period through the first (1st) day of the tenth (10th) month following that month and year.

2. All other GSL borrowers are entitled to a six (6) month grace period following graduation, withdrawal or reduction to less than half-time enrollment at an educational institution before he/she must begin repaying the loan. When only the month and the year are known, the lender must extend the grace period through the first (1st) day of the seventh (7th) month following that month and year.

B. Repayment. Terms of repayment shall be in accordance with the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not include later amendments to the Incorporated material).

1. A repayment addendum on a form approved by the Division, must be completed by the lender and forwarded to the student and endorser, if any, along with applicable billing Information.

2. The first repayment installment should be made no later than 60 days following the expiration of the grace period.

C. Forbearance and Deferment. Forbearance or deferment of a loan by a lender shall be conducted In accordance with the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not Include later amendments to the incorporated material).

D. Delinquency and Default, shall be the same in these regulations as it is defined and described by the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not include later amendments to the Incorporated material).

X. LOAN SERVICING FOR PLUS AND SLS LOANS A. Repayment 1. A repayment addendum on a form approved by the Division, must be completed by the lender and forwarded to the borrower and co-maker, if any, along with applicable billing Information.

B. Deferment and Forbearance of Repayment. Deferment and forbearance of a loan shall be conducted In accordance with the terms of the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not Include later amendments to the Incorporated material). A new repayment addendum need not be prepared at the end of a period of forbearance or deferment unless the terms of repayment have changed.

C. Delinquency.

1. PLUS and SLS loans become delinquent when any one of the following occur:

a. The borrower does not begin repayment 60 days after disbursement of funds;

b. The borrower falls to enter or resume repayment after an authorized deferment period and/or a period of lender forbearance ends;

c. The borrower enters repayment but then falls to make or maintain scheduled payments.

d. In the case of a PLUS or SLS loan which has been forborne where the lender and the borrower have agreed that Interest payments will not be capitalized, the borrower falls to make scheduled Interest payments.

e. Failure to make Interest payments during periods of authorized deferment does not constitute delinquency. The lender shall bill for Interest payments on at least a quarterly basis during deferment periods where the borrower has agreed not to have Interest due capitalized. If unpaid interest accrues during a period of authorized deferment, the lender shall add the accrued Interest to principal no more frequently than quarterly, during the deferment period or on the date repayment of principal Is required to begin or resume.

2. Upon determining that a borrower Is delinquent, a lender shall exercise due diligence In accordance with standards established by the Division in these regulations to collect upon the account.

XL. DEFINITIONS.

Words and phrases not otherwise defined In these regulations shall have the same meanings assigned to them In the Act and Regulations of the Secretary. (The Act and Regulations of the Secretary do not Include later amendments to the incorporated material).

1. CSLP: Colorado Student Loan Program which is administered by the Division.

2. Director: The Director of the Division.

3. Division: The Student Loan Division of the Colorado Department of Higher Education and the administrator of the CSLP.

4. Executive Director; The Executive Director of the Colorado Department of Higher Education.

5. Repayment addendum: The legal addendum to the promissory notes which state the terms of loan repayment and discloses the schedule of payments. The repayment addendum can be used to consolidate multiple guaranteed student loan original notes.