DEPARTMENT OF TREASURY  
MICHIGAN HIGHER EDUCATION STUDENT LOAN AUTHORITY  
MICHIGAN ALTERNATIVE STUDENT LOAN PROGRAM  
(By authority conferred on the Michigan higher education student loan authority  
by sections 4, 4a, and 12 of 1975 PA 222, MCL 390.1154, 390.1154a, and 390.1162)  
R 390.1621 Definitions; A to D.  
Rule 1. As used in these rules:  
(a) "Academic year" means a period of not less than 7 months that represents the  
traditional academic year.  
(b) "Application fee" means a nonrefundable fee which is established by the  
authority and which is paid by the borrower to the authority at the time an application is  
submitted.  
(c) "Application period" means the period of time designated by the authority  
during which applications may be submitted for processing.  
(d) "Authority" means the Michigan higher education student loan authority as  
authorized by 1975 PA 222, MCL 390.1151 et seq.  
(e) "Bankruptcy" means a judicial action in which a person is declared insolvent  
and in which the individual's assets, if any, are taken under court administration.  
(f) "Borrower" means a student or parent.  
(g) "Cosigner" means a parent, legal guardian, or other responsible individual  
who is jointly and separately responsible for payment of the loan. Two persons may be  
cosigners if they reside in the same household and jointly meet the credit standards.  
A cosigner shall meet all of the following conditions:  
(i) Be not less than 18 years of age.  
(ii) Meet the credit standards.  
(iii) Not be currently in default on federal or state educational loans.  
(iv) Be a United States citizen or a permanent resident.  
(h) "Cost of attendance" means the cost of tuition and fees and other expenses  
related to attendance as determined by an eligible school for the loan period. An  
eligible school shall include only those costs that are permissible under the guaranteed  
student loan programs pursuant to title IV,  
part B, of the higher education act of 1965, as amended, 20 U.S.C.  
§1070 et seq.  
(i) "Credit standards" means a credit evaluation process established by the authority,  
which shall include an evaluation of all of the following:  
(i) Income.  
(ii) Debt.  
(iii) Employment history.  
(iv) Credit history.  
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(j) "Default" means the condition that exists when the borrower and cosigner or  
cosigners fail to perform any of the conditions of the promissory note or the authority  
has determined that the borrower or cosigner or cosigners made false representation to  
secure a loan.  
(k) "Disbursed" means the date that funds are issued for the loan.  
History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1622 Definitions; E, F.  
Rule 2. As used in these rules:  
(a) "Eligible school" means a degree-granting college or university that is located in  
this state and that is approved by the state board of education  
and by the United States secretary of education for purposes of the federal family  
education loan program.  
(b) "Estimated financial aid" means the estimated amount of assistance for which  
the borrower may be eligible, excluding loans under section 428B(a) of the higher  
education act of 1965, as amended, 20 U.S.C.§1078-2, relating to parent loans, and  
subpart I of part D of title VII of the public health service act of 1944, as amended, 42  
U.S.C. §294 et seq., relating to training in certain health professions.  
(c) "Forbearance" means a delay in the repayment of principal or principal and  
interest for a period of time as authorized by the authority.  
History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1623 Definitions; I to T.  
Rule 3. As used in these rules:  
(a) "Interest" means the percentage of an amount of money that is paid for its use  
for a specified time.  
(b) "Loan" means loans authorized under section 4a of 1975 PA 222, MCL  
390.1154a.  
(c) "Loan period" means a period of time the student expects to be enrolled and for  
which loan assistance is being requested. A loan period shall not be more than 12  
months.  
(d) "Michigan resident" means a person who is accepted for enrollment or enrolled  
in an eligible school located in this state or a person whose primary residence is in  
this state.  
(e) "Promissory note" means a note which is developed by the authority, which  
cites the terms and conditions of a loan, and which identifies the responsibilities of the  
borrower and cosigner or cosigners.  
(f) "Reserve fee" means a fee as established by the authority and paid by the  
borrower to the authority to establish a reserve.  
(g) "School student loan eligibility criteria" means a school evaluation process  
established by the authority, which may include the following:  
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(i) Graduation rate.  
(ii) Federal cohort default rate.  
(iii) Borrower credit readiness.  
(h) "Totally and permanently disabled" means the inability to work and earn money  
or attend school because of an impairment that is expected to continue indefinitely or to  
result in death.  
History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1624 Terms defined in Act No. 222 of 1975.  
Rule 4. Terms defined in Act No. 222 of the Public Acts of 1975, as amended,  
being S390.1151 et seq. of the Michigan Compiled Laws, have the same meanings  
when used in these rules.  
History: 1990 AACS.  
R 390.1625 Nondiscrimination.  
Rule 5. Loans are available to all eligible borrowers without regard to race, color,  
sex, religion, national origin, age, or marital status.  
History: 1990 AACS; 1995 AACS.  
R 390.1626 Eligibility for loans.  
Rule 6. To be eligible for a loan, all of the following requirements shall be met:  
(a) A borrower or the student shall be a Michigan resident.  
(b) The student shall have been accepted for enrollment or shall be currently in  
attendance at an eligible school and be making satisfactory academic progress as  
determined by the eligible school.  
(c) A borrower shall have submitted an application during the application  
period authorized by the authority.  
(d) A borrower shall be a United States citizen or permanent resident.  
(e) A borrower shall be not less than 18 years old or an emancipated minor, pursuant  
to the provisions of section 4 of 1968 PA 293, MCL 722.4.  
(f) One of the following loan criteria shall be met:  
(1) A borrower or cosigner or cosigners shall meet the credit standards.  
(2) The eligible school and borrower shall meet specific student loan eligibility  
criteria as determined by the authority.  
(g) The student shall demonstrate eligibility based on the cost of attendance less  
estimated financial aid.  
(h) A borrower or the student shall not currently be in default on any federal or  
state educational loans.  
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History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1627 Rescinded.  
History: 1990 AACS; 1995 AACS.  
R 390.1628 Loan; information and documentation; written credit denial.  
Rule 8. (1) The authority shall obtain the  
required  
information  
and  
documentation from the applicant and from the school and shall assess borrower  
eligibility.  
(2) If an applicant does not qualify for a loan, the authority shall issue a written  
credit denial within 30 days of the date that all materials were available for  
assessment.  
History: 1990 AACS; 1995 AACS.  
R 390.1629 Loan terms.  
Rule 9. (1) Loans made to eligible borrowers are subject to all of the following  
conditions:  
(a) The minimum loan amount shall not be less than the amount established by the  
authority.  
(b) The maximum loan amount per academic year is the student's cost of  
attendance minus estimated financial aid and shall not be more than the annual  
amount established by the authority.  
(c) A cumulative outstanding maximum amount to any 1 borrower shall not be  
more than the amount established by the authority.  
(2) The interest rates for loans shall be determined by the authority and shall not  
exceed the rate permitted by state law. The interest rates may be set at fixed or variable  
rates and there may be multiple fixed or variable interest rates. Interest shall begin to  
accrue on the date the loan is disbursed.  
(3) An applicant shall pay a nonrefundable application fee payable to the authority  
when submitting an application, if applicable.  
(4) An applicant shall pay a reserve fee that shall be deducted from the loan  
disbursement, if applicable.  
History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1630 Loan disbursement.  
Rule 10. (1) Loan proceeds shall not be disbursed more than 1 month before the  
start of the loan period as specified on the application.  
(2) Loans may be disbursed after the loan period has expired if authorized by the  
authority.  
(3) The interest and reserve fee, if applicable, shall be refunded if the disbursed  
funds are returned to the authority within 30 days of the date of the disbursement.  
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History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1631 Repayment terms.  
Rule 11. (1) Repayment of the loan shall begin within 60 days of the date that the  
loan is disbursed.  
(2) The minimum payment of $50.00 shall be paid by the borrower or cosigner or  
cosigners each month.  
(3) The authority may grant forbearance of principal or principal and interest  
payments to the borrower or cosigner or cosigners in accordance with conditions  
established by the authority.  
(4) The authority may offer graduated repayments or a modified repayment  
schedule if the repayment schedule is not in violation of the provisions of subrule (7) of  
this rule.  
(5) The authority may assess a late charge, which shall not be more than 6 cents for  
each dollar of each late installment, for a payment that is delinquent for more than  
10 days.  
(6) There shall be no penalty for prepayment of a loan.  
(7) A loan shall be repaid in full within the time established by the authority.  
History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
R 390.1632 Authority responsibilities for loan collection.  
Rule 12. (1) The authority shall be responsible for the collection of the loan.  
(2) The authority shall make periodic reports on the borrower and cosigner or  
cosigners to 1 or more national credit bureaus.  
(3) The authority may accelerate payment of the loan and demand payment in full  
of all outstanding principal, accrued interest, and late charges if either of the following  
conditions occurs:  
(a) A borrower and cosigner or cosigners default.  
(b) A borrower or cosigner or cosigners provided false information to obtain the  
loan.  
(4) The authority may exercise all legal options to collect the loan.  
History: 1990 AACS; 1998-2000 AACS.  
R 390.1633 Default  
Rule 13. (1) If a borrower and a cosigner or cosigners do not comply with the  
provisions of the promissory note for a period of 120 days or more, then the loan shall be  
declared in default.  
(2) Collection costs incurred by the authority in the collection of defaulted  
loans may be charged to the account of a defaulted borrower and cosigner or cosigners.  
History: 1990 AACS; 1998-2000 AACS.  
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R 390.1634 Death of student; effect.  
Rule 14. (1) The balance on a loan shall be canceled upon the death of the student.  
The authority shall not attempt to collect on the loan after the authority has received a  
death certificate or other official notification confirming the student's death.  
(2) Payments received after the date of the student's death shall be returned to  
the sender.  
History: 1990 AACS; 1998-2000 AACS.  
R 390.1635 Total and permanent disability of student; effect.  
Rule 15. (1) If a student is determined to be totally and permanently disabled,  
then the remaining loan balance shall be canceled.  
(2) The student or another party shall provide documentation of the total and  
permanent disability which is satisfactory to the authority.  
(3) A student 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 student's  
condition has substantially deteriorated since submission of the loan application so as  
to render the student totally and permanently disabled.  
(4) The authority shall cease collection on a loan after the authority determines  
that the student is totally and permanently disabled.  
(5) Payments paid after the date the student became totally and permanently disabled  
shall be returned to the sender.  
History: 1990 AACS; 1998-2000 AACS.  
R 390.1636 Bankruptcy; effect.  
Rule 16. (1) If the authority receives a notice of the first meeting of creditors from  
a bankruptcy court for a borrower and cosigner or cosigners, then the authority shall  
proceed as follows:  
(a) The authority shall file proof of claim with the bankruptcy court, unless  
advised otherwise by the court.  
(b) If, after the bankruptcy has been concluded, the authority is notified by the  
bankruptcy court that the loan has been discharged, then the authority shall report the  
bankruptcy to the credit bureau.  
(c) If a payment plan is ordered by the bankruptcy court, then the bankruptcy  
will be reported to the credit bureau, and the authority will proceed through its  
collector to collect the payments as ordered by the court. Upon conclusion of the  
payment plan, the authority shall proceed through its collector to collect the remaining  
outstanding balance.  
(d) If the loan is not discharged, then the authority shall establish the next payment  
date within 60 days. Payment shall be subject to the full force of the terms and  
conditions of the promissory note.  
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(2) If the authority receives a notice of the first meeting of creditors from a  
bankruptcy court for 1 of the signers of the promissory note, then the authority shall  
proceed as follows:  
(a) The authority shall file proof of claim with the bankruptcy court, unless  
advised otherwise by the court.  
(b) The authority shall cease billing the individual involved in the bankruptcy  
action.  
(c) The authority may continue collections with the other signer or signers of the  
promissory note, as the other signer or signers remain liable for unpaid principal,  
interest, and late charges.  
History: 1990 AACS; 1995 AACS; 1998-2000 AACS.  
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