SECTION 3. SCOPE AND

APPLICATION

Section 3.1. Eligible Borrowers . For purposes of § 144(b)(1)(B), an eligible borrower of an original loan under a State Supplemental Loan program is a student (with or without a co-obligor or guarantor) or a parent (with or without a co

obligor or guarantor) borrowing for the benefit of a child who is a student. An eligible borrower of a refinancing loan under § 144(b)(1)(B) is the student or parent borrower of the original loan.

Section 3.2. The Student Nexus Re- quirement . The student nexus requirement applies to the student beneficiary of the loan, even if the borrower is the parent of the student beneficiary. An original loan meets the student nexus requirement if, at the time the original loan is originated, the student beneficiary is a resident of the State from which the volume cap for the qualified student loan bonds that finance the original loan is derived or is enrolled at an educational institution located in that State. A refinancing loan meets the student nexus requirement if: (1) at the time the original loan was originated, the student beneficiary was a resident of the State from which the volume cap for the qualified student loan bonds that finance the refinancing loan is derived or was enrolled at an educational institution located in that State; or (2) at the time the refinancing loan is originated, the student beneficiary of the original loan resides in the State from which the volume cap for the qualified student loan bonds that finance the refinancing loan is derived or is a student enrolled in an educational institution located in that State. In the case of refunding bonds for which no volume cap is required under § 146, the student nexus requirement is applied with respect to the State from which the volume cap on the refunded bonds (or in a series of refundings, the original bonds) was derived.

Section 3.3. The Loan Size Limitation . Under § 144(b)(1)(B), the amount of a State Supplemental Loan may not exceed the difference between the total cost of attendance and other forms of student assistance for which the student may be eligible. For this purpose, for an original loan, an issuer may rely on a certification of the student’s total cost of attendance and other student assistance by the institution of higher education at which the student is enrolled. Further, for this purpose, certifying institutions may use the definition of “total cost of attendance” under § 472 of the Higher Education Act, 20 U.S.C. § 1087ll, and the definition of

November 30, 2015 690 Bulletin No. 2015–48

gins. ¹ However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.

Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Consistent with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from October 2015 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of October 2015 are, respectively, 1.61, 4.02, and 5.03. The 24-month average segment rates determined under § 430(h)(2)(C)(i) through (iii) must be adjusted pursuant to § 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. For plan years beginning before 2018, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. The 25-year average segment rates for plan years beginning in 2014, 2015, and 2016 were published in Notice 2013–58, 2013–40 I.R.B. 294, Notice 2014–50, 2014–40 I.R.B. 590, and Notice 2015–61, 2015–39 I.R.B. 408, respectively.

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for November 2015 without adjustment for the 25year average segment rate limits are as follows:

Third Segment

“estimated financial assistance” under § 428(a)(2)(C)(ii) of the Higher Education Act, 20 U.S.C. § 1078(a)(2)(C)(ii), respectively. For a refinancing loan, (1) the original loan must have met the loan size limitation under § 144(b)(1)(B) and (2) the stated principal amount of the refinancing loan may not exceed the sum of the refinanced loan’s outstanding stated principal amount and any accrued but unpaid stated interest as of the date of the refinancing.

Section 3.4. Types of Loans Eligible for Refinancing . Under § 144(b)(1)(B), a State Supplemental Loan may refinance an original loan that was a State Supplemental Loan or another type of original loan, for example, a FFELP loan or a student loan made by a private lender, provided that the refinancing loan meets all of the requirements for a State Supplemental Loan.