Section 668.35 - Student debts under the HEA and to the U.S(a) A student who is in default on a loan made under a title IV, HEA loan program may nevertheless be eligible to receive title IV, HEA program assistance if the student-(1) Repays the loan in full; or(2) Except as limited by paragraph (c) of this section-(i) Makes arrangements, that are satisfactory to the holder of the loan and in accordance with the individual title IV, HEA loan program regulations, to repay the loan balance; and(ii) Makes at least six consecutive monthly payments under those arrangements.(b) A student who is subject to a judgment for failure to repay a loan made under a title IV, HEA loan program may nevertheless be eligible to receive title IV, HEA program assistance if the student-(1) Repays the debt in full; or(2) Except as limited by paragraph (c) of this section-(i) Makes repayment arrangements that are satisfactory to the holder of the debt; and(ii) Makes at least six consecutive, voluntary monthly payments under those arrangements. Voluntary payments are those payments made directly by the borrower, and do not include payments obtained by Federal offset, garnishment, or income or asset execution.(c) A student who reestablishes eligibility under either paragraph (a)(2) of this section or paragraph (b)(2) of this section may not reestablish eligibility again under either of those paragraphs.(d) A student who is not in default on a loan made under a title IV, HEA loan program, but has inadvertently obtained loan funds under a title IV, HEA loan program in an amount that exceeds the annual or aggregate loan limits under that program, may nevertheless be eligible to receive title IV, HEA program assistance if the student- (1) Repays in full the excess loan amount; or(2) Makes arrangements, satisfactory to the holder of the loan, to repay that excess loan amount.(e) Except as provided in 34 CFR 668.22(h) , a student who receives an overpayment under the Federal Perkins Loan Program, or under a title IV, HEA grant program, may nevertheless be eligible to receive title IV, HEA program assistance if- (1) The student pays the overpayment in full;(2) The student makes arrangements satisfactory to the holder of the overpayment debt to pay the overpayment;(3) The overpayment amount is less than $25 and is neither a remaining balance nor a result of the application of the overaward threshold in 34 CFR 673.5(d) ; or(4) The overpayment is an amount that a student is not required to return under the requirements of § 668.22(h)(3)(ii)(B) .(f) A student who has property subject to a judgement lien for a debt owed to the United States may nevertheless be eligible to receive title IV, HEA program assistance if the student- (1) Pays the debt in full; or(2) Makes arrangements, satisfactory to the United States, to pay the debt.(g)(1) A student is not liable for a Federal Pell Grant overpayment received in an award year if the institution can eliminate that overpayment by adjusting subsequent Federal Pell Grant payments in that same award year.(2) A student is not liable for an ACG overpayment received in an award year if-(i) The institution can eliminate that overpayment by adjusting subsequent title IV, HEA program (other than Federal Pell Grant, ACG, or National SMART Grant) payments in that same award year; or(ii) The institution cannot eliminate the overpayment under paragraph (g)(2)(i) of this section but can eliminate that overpayment by adjusting subsequent ACG payments in that same award year.(3) A student is not liable for a National SMART Grant overpayment received in an award year if- (i) The institution can eliminate that overpayment by adjusting subsequent title IV, HEA program (other than Federal Pell Grant, ACG, or National SMART Grant) payments in that same award year; or(ii) The institution cannot eliminate the overpayment under paragraph (g)(3)(i) of this section but can eliminate that overpayment by adjusting subsequent National SMART Grant payments in that same award year.(4) A student is not liable for a TEACH Grant overpayment received in an award year if-(i) The institution can eliminate that overpayment by adjusting subsequent title IV, HEA program (other than Federal Pell Grant, ACG, National SMART Grant, or TEACH Grant) payments in that same award year; or(ii) The institution cannot eliminate the overpayment under paragraph (g)(4)(i) of this section but can eliminate that overpayment by adjusting subsequent TEACH Grant payments in that same award year.(5) A student is not liable for a FSEOG or LEAP overpayment or Federal Perkins loan overpayment received in an award year if the institution can eliminate that overpayment by adjusting subsequent title IV, HEA program (other than Federal Pell Grant) payments in that same award year.(h) A student who otherwise is in default on a loan made under a title IV, HEA loan program, or who otherwise owes an overpayment on a title IV, HEA program grant or Federal Perkins loan, is not considered to be in default or owe an overpayment if the student- (1) Obtains a judicial determination that the debt has been discharged or is dischargeable in bankruptcy; or(2) Demonstrates to the satisfaction of the holder of the debt that-(i) When the student filed the petition for bankruptcy relief, the loan, or demand for the payment of the overpayment, had been outstanding for the period required under 11 U.S.C. 523(a)(8)(A) , exclusive of applicable suspensions of the repayment period for either debt of the kind defined in 34 CFR 682.402(m) ; and(ii) The debt otherwise qualifies for discharge under applicable bankruptcy law; and(i) In the case of a student who has been convicted of, or has pled nolo contendere or guilty to a crime involving fraud in obtaining title IV, HEA program assistance, has completed the repayment of such assistance to:(2) The holder, in the case of a title IV, HEA program loan.60 FR 61810, Dec. 1, 1995, as amended at 65 FR 38729 , June 22, 2000; 67 FR 67073 , Nov. 1, 2002; 71 FR 38003 , July 3, 2006; 71 FR 45696 , Aug. 9, 2006; 71 FR 64397 , Nov. 1, 2006; 73 FR 35493 , June 23, 2008 Authority: 20 U.S.C. 1070g , 1091 ; 11 U.S.C. 523 , 525