Department Extends Waiver of Single-Holder Rule

The U.S. Department of Education published guidance in Dear Colleague Letter FP-04-06 that extends the waiver for Federal Family Education Loan Program (FFELP) Consolidation loans that do not comply with the Department's interpretation of the single-holder rule.

The extended-waiver language states that the Department will not deny reinsurance for FFELP Consolidation loans in circumstances in which a borrower has both a FFELP loan held by a single FFELP holder and one or more non-FFELP loans, as long as all the Loan Verification Certificates (LVCs) are sent to the loan holders by the date the Higher Education Act is reauthorized, or Sept. 30, 2005, whichever is earlier.

Previously, the Department had stated that reinsurance would not be denied for Consolidation loans for which the LVCs were sent to loan holders by Sept. 1, 2004.

For additional information about the waiver extension or the single-holder rule, contact USA Funds^®' policy advisers.