[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR668.187]

[Page 552-553]
 
                           TITLE 34--EDUCATION
 
                         DEPARTMENT OF EDUCATION
 
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS--Table of Contents
 
                     Subpart M--Cohort Default Rates
 
Sec. 668.187  Consequences of cohort default rates on your ability to participate in Title IV, HEA programs.

    (a) End of participation. (1) Except as provided in paragraph (f) of 
this section, you lose your eligibility to participate in the FFEL and 
Direct Loan programs 30 days after you receive our notice that your most 
recent cohort default rate is greater than 40 percent.
    (2) Except as provided in paragraphs (e) and (f) of this section, 
you lose your eligibility to participate in the FFEL, Direct Loan, and 
Federal Pell Grant programs 30 days after you receive our notice that 
your three most recent cohort default rates are each 25 percent or 
greater.
    (b) Length of period of ineligibility. Your loss of eligibility 
under this section continues--
    (1) For the remainder of the fiscal year in which we notify you that 
you are subject to a loss of eligibility; and
    (2) For the next 2 fiscal years.
    (c) Using a cohort default rate more than once. The use of a cohort 
default rate as a basis for a loss of eligibility under this section 
does not preclude its use as a basis for--
    (1) Any concurrent or subsequent loss of eligibility under this 
section; or
    (2) Any other action by us.
    (d) Special institutions. If you are a special institution that 
satisfies the requirements for continued eligibility under Sec. 668.198, 
you are not subject to any loss of eligibility under this section or to 
provisional certification under Sec. 668.16(m).
    (e) Continuing participation in Pell. If you are subject to a loss 
of eligibility under paragraph (a)(2) of this section, based on three 
cohort default rates of 25 percent or greater, you may continue to 
participate in the Federal Pell Grant Program if we determine that you--
    (1) Were ineligible to participate in the FFEL and Direct Loan 
programs before October 7, 1998, and your eligibility was not 
reinstated;
    (2) Requested in writing, before October 7, 1998, to withdraw your 
participation in the FFEL and Direct Loan programs, and you were not 
later reinstated; or
    (3) Have not certified an FFELP loan or originated a Direct Loan 
Program loan on or after July 7, 1998.
    (f) Requests for adjustments and appeals. (1) A loss of eligibility 
under this section does not take effect while your request for 
adjustment or appeal, as listed in Sec. 668.189(a), is pending, provided 
your request for adjustment or appeal is complete, timely, accurate, and 
in the required format.
    (2) Eligibility continued under paragraph (f)(1) of this section 
ends if we determine that none of the requests for adjustments and 
appeals you have submitted qualify you for continued eligibility under 
Sec. 668.189. Loss of eligibility takes effect on the date that you 
receive notice of our determination on

[[Page 553]]

your last pending request for adjustment or appeal.
    (3) You do not lose eligibility under this section if we determine 
that your request for adjustment or appeal meets all requirements of 
this subpart and qualifies you for continued eligibility under 
Sec. 668.189.
    (4) To avoid liabilities you might otherwise incur under paragraph 
(g) of this section, you may choose to suspend your participation in the 
FFEL and Direct Loan programs during the adjustment or appeal process.
    (g) Liabilities during the adjustment or appeal process. If you 
continued to participate in the FFEL or Direct Loan Program under 
paragraph (f)(1) of this section, and we determine that none of your 
requests for adjustments or appeals qualify you for continued 
eligibility--
    (1) For any FFEL or Direct Loan Program loan that you certified and 
delivered or originated and disbursed more than 30 days after you 
received the notice of your cohort default rate, we estimate the amount 
of interest, special allowance, reinsurance, and any related or similar 
payments we make or are obligated to make on those loans;
    (2) We exclude from this estimate any amount attributable to funds 
that you delivered or disbursed more than 45 days after you submitted 
your completed appeal to us;
    (3) We notify you of the estimated amount; and
    (4) Within 45 days after you receive our notice of the estimated 
amount, you must pay us that amount, unless--
    (i) You file an appeal under the procedures established in subpart H 
of this part (for the purposes of subpart H of this part, our notice of 
the estimate is considered to be a final program review determination); 
or
    (ii) We permit a longer repayment period.
    (h) Regaining eligibility. If you lose your eligibility to 
participate in a program under this section, you may not participate in 
that program until--
    (1) The period described in paragraph (b) of this section has ended;
    (2) You pay any amount owed to us under this section or are meeting 
that obligation under an agreement acceptable to us;
    (3) You submit a new application for participation in the program;
    (4) We determine that you meet all of the participation requirements 
in effect at the time of your application; and
    (5) You and we enter into a new program participation agreement.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)