Refusing	To	Originate	a	Loan	or	Originating	for	Less	Than	a	Borrower9s	Maximum	Eligibility
On	a	case-by-case	basis,	you	may	refuse	to	originate	a	Direct	Loan	for	an	individual	borrower,	or	you	may	originate	a	loan
for	an	amount	less	than	the	borrower9s	maximum	eligibility.	If	you	choose	to	exercise	this	discretion,	you	must	ensure
that	your	decisions	are	made	on	a	case-by-case	basis	and	do	not	constitute	a	pattern	or	practice	that	denies	access	to
Direct	Loans	for	borrowers	because	of	race,	sex,	color,	income,	religion,	national	origin,	age,	or	disability	status.	When	you
make	a	decision	not	to	originate	a	loan	or	to	reduce	the	amount	of	the	loan,	you	must	retain	documentation	supporting
the	determination	in	the	student9s	file	and	provide	the	reason	for	the	determination	to	the	student	in	writing.	Also	note
that	your	school	may	not	have	a	policy	of	limiting	Direct	Loan	borrowing	on	an	across-the-board	or	categorical	basis.	For
example,	you	may	not	have	a	policy	of	limiting	borrowing	to	the	amount	needed	to	cover	the	school	charges,	or	not
allowing	otherwise	eligible	students	to	receive	up	to	the	full	combined	annual	loan	limit	for	Direct	Subsidized	Loans	and
Direct	Unsubsidized	Loans.
Prohibition	on	Establishing	Additional	Eligibility	Requirements	for	Direct	Loans
You	may	not	condition	the	disbursement	of	a	Direct	Loan	on	anything	other	than	the	eligibility	criteria	under	the	federal
regulations	that	govern	the	Direct	Loan	Program.	For	example,	you	may	not:
Require	students	to	participate	in	counseling	beyond	the	required	entrance	counseling	for	first-time	student
borrowers	(see	Chapter	2	of	this	volume	for	more	information)	as	a	condition	for	receiving	a	Direct	Loan;
Require	a	student	to	complete	a	separate	Direct	Loan	application	as	a	condition	for	receiving	a	Direct	Loan;	or
Perform	credit	checks	on	students	in	connection	with	awarding	Direct	Loans	or	other	Title	IV	aid.
Department	of	Education	Office	of	the	Inspector	General	Hotline	Portal
1-800-MIS-USED	(1-800-647-8733)
Refusing	to	Originate	a	Loan
HEA	Sec.	479(A)(e)
34	CFR	685.301(a)(8)
DCL	GEN-11-07
Prohibition	on	Requiring	an	Additional	Application
March	18,	2014	Electronic	Announcement
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