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Dear Colleague Letter Gen 06-11 dated June 2006, introduced new requirements for processing FFELP loans for U. S. students attending eligible foreign schools. Loans first disbursed on or after July 1, 2006, may be disbursed directly to the borrower by the lender only upon the institution's request.
For direct disbursement of loans certified prior to July 1, 2006, and first disbursed on or after July 1, 2006, the foreign school must contact the lender as soon as possible to make the request. Without a request, lenders must disburse the loan funds directly to the foreign school. If a lender will be disbursing the funds to the foreign school and the school has not already designated an office to receive the funds, it must contact the lender immediately to do so.
A foreign school may make a single request to a lender to disburse all FFEL Stafford loans directly to eligible students who attend the foreign school.
Guaranty agencies must confirm and verify institutional participation and student enrollment. ISAC has had special procedures in place for processing loan requests for foreign schools for some time; consequently, there are minimal changes necessary to accommodate these new requirements. However, lenders will need to take note of the following steps when processing these loans.
Upon notification that a borrower attending a foreign school wishes to receive funds directly:
- Send the application in the normal manner (transmitted via CommonLine or paper).
- If necessary, ISAC will contact the lender for additional information.
- ISAC will perform the required verification.
- Once the verification is complete, ISAC will guarantee the loan and forward a guarantee result to the lender.
- The lender may disburse the funds according to the disbursement dates found on the guarantee results.
For Lenders Using the Blanket Guaranty
Upon notification that a borrower attending a foreign school wishes to receive funds directly:
- Do not disburse any funds until the required verification is completed.
- Contact ISAC by e-mail at lenderservices@isac.org. Provide the following on a Microsoft Word password-protected (password protect the file with ISAC's three-digit guarantor code) attachment: Borrower SSN
Borrower First and Last Name
Period of Loan Begin and End Dates
Foreign School Name and Code
Name of Certifying School Official
Date of Certification
- Or, contact the following ISAC staff by phone:
School Services Department
866.247.2172
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