What is LLR?

LLR is a guarantor or lender that agrees to make Stafford or PLUS (both graduate and parent) loans to borrowers who are eligible under the program guidelines, but have been denied a conventional loan by at least 1 lender. Generally the guarantor is the LLR for its designated state(s); ASA is the LLR for Massachusetts and D.C.

Does ASA think Lender of Last Resort (LLR) will be necessary?

For the majority of schools—no. There are still lenders committed to the Federal Family Education Loan Program (FFELP) that will be willing to offer conventional loans. The profile of a school that may have difficulty finding a lender willing to offer conventional FFELP loans to their borrowers is a school with a relatively low graduation rate, high withdrawal rate, high cohort default rate, and/or low balance loans. Most schools in Massachusetts and D.C., ASA’s designated states, do not fit that profile.

Where can schools find more information about LLR from the Department of Education (ED)?

Schools can find more information about LLR at the links below:

• – April
• – May
• – June

What is the minimum LLR loan amount that can be approved?

The minimum LLR loan amount that ASA will authorize is $200.

What are the terms of a LLR loan?

For borrowers, the loans that they borrow under LLR have the same fees, terms, and conditions that a conventional Stafford or PLUS loan has. For the lender, the loans originated under LLR have same terms and conditions that a conventional Stafford or PLUS loan has except the loans are insured against default at 100% rather than the regular 97%.

Are all schools eligible to participate in LLR with ASA?

A school can receive a LLR loan from ASA if the school is:

• – Located in either Massachusetts or D.C.
• – An eligible institution as determined by ED, with an approved Program Participation Agreement (PPA)
• – Unable to find a lender willing to make conventional FFELP loans to otherwise eligible borrowers

If schools have campuses in different states, how do they decide which guarantor to use for LLR?

The designated guarantor for the state in which the financial aid office is located must make LLR loans to any borrower attending the school in the designated state. The designated guarantor must also make loans to and any resident of their state attending a school in another state if needed.

What is the process for schools to have LLR loans approved for their students?

There are 2 options available for schools if LLR becomes necessary—individual borrower approvals or institution-wide LLR designation. Schools are encouraged to contact ASA before pursuing LLR as ASA may be able to assist the school in locating a lender willing to make conventional Stafford and PLUS loans.

For individual borrowers, the documents below should be packaged together and forwarded to ASA all at once to ensure efficient processing

• – An original Master Promissory Note (MPN) with ASA’s LLR code, completed in full by each borrower. ASA’s LLR code will be distributed as needed once the code is approved by ED.
• – An original School Certification Form completed by the school’s financial aid administrator.
• – The attached LLR Cover Sheet, which can be used for individual borrowers and groups of borrowers. The cover sheet represents the school verification that the borrower(s) was/were denied by at least 1 lender for a conventional loan and that the school has maintained the denial documentation. Please Note: Schools cannot require that students be denied by more than 2 lenders.

In order to receive institution-wide LLR designation, the school must provide the following documents to the school’s ASA Client Manager or representative:

• – Written confirmation that 80% or more of the school’s eligible students and parents are unable to obtain conventional Stafford or PLUS loans.
• – Written confirmation that the school has made at least 3 attempts to locate lenders willing to make conventional Stafford or PLUS loans beyond the lenders which have previously lent to the school’s borrowers.

Where do schools send the completed LLR paperwork?

For individual borrower approvals, the mailing address is:

American Student Assistance
Attention: Document Processing
P.O. Box 55152
Boston, MA 02205-8057

For institution-wide LLR designation, the mailing address is:

American Student Assistance
Attention: School’s Client Manager
P.O. Box 55152
Boston, MA 02205-8057

If a school receives institution-wide LLR designation, is the school still required to submit the cover sheet?

No, if a school becomes a designated LLR school by ED, the cover sheet would not be needed.

Do schools need to keep copies of the denial letters that borrowers provide them?

Yes, schools need to maintain the denial records in students’ files under the normal record retention requirements.

What is ASA’s LLR code?

ASA will distribute the code as necessary when the code is approved by ED.

Once all of the required documents are provided, when can schools expect to receive a disbursement?

Once ASA receives the completed documents, the loan(s) will be scheduled for disbursement. As a general rule, if all documents are complete and the preferred disbursement dates are not set in the future, the loan(s) could be disbursed in as few as 2, but no more than 8 business days, depending on the school’s disbursement schedule.

Does ASA have an electronic process for approving LLR loans?

ASA will have an electronic process in place in the coming months. We will provide more information to you when it becomes available.

Does ASA have LLR MPNs or other collateral that schools can use to facilitate the LLR process?

ASA will have LLR packets available once our LLR code has been approved. The packets will contain debt management information as well as a MPN with ASA’s LLR code pre-printed. We will contact schools when this information is available and also make it accessible via our website.

Who can schools call with questions?

If schools have any questions or concerns, they should contact their client manager or ASA's Call Center at customerservice@amsa.com or 800.999.9080 and select Option 1. The Call Center's normal hours of operation are Monday through Friday from 8:30 a.m. to 9:00 p.m. ET.

How does a borrower become eligible for a LLR loan at ASA?

An otherwise eligible FFELP borrower becomes eligible for an LLR loan by being denied a conventional loan by at least 1 lender. PLUS borrowers rejected for credit reasons only are not considered eligible for an LLR loan. In addition, the borrower must be a resident of or be attending a school in either Massachusetts or D.C.

What is the LLR process at ASA for a borrower?

A borrower who has attempted to obtain a conventional FFELP loan and has been denied will be referred to their school for assistance. The school may be able to assist the borrower in finding a conventional loan before proceeding with LLR. The borrower must supply the school with a copy of the denial (either e-mail or letter). The borrower must also complete a Master Promissory Note (MPN) with ASA’s LLR code.

Depending on the LLR option the school selects, the school will provide the appropriate documentation to ASA. Once the LLR loan is approved, the borrower will receive a notice of guarantee and disclosure and the loan will be disbursed according to the school’s disbursement schedule.

How will borrowers be counseled if they contact ASA about a LLR loan?

Under the current process, borrowers who contact ASA after being denied a conventional FFELP loan through a lender will be referred to his or her school for assistance. The school may be able to assist borrowers in finding a lender willing to offer a conventional loan before initiating LLR. Borrowers are encouraged to contact ASA with general questions about student loans or debt management.