Section R. 390.1606 - Procedures; loan denialRule 6.
(1) The authority shall develop and maintain procedures necessary to carry out applicable provisions of Title IV, part B, of the higher education act of 1965, and the regulations therefor, and as may be required in the exercise of reasonable care and diligence in the making and collection of loans. If the authority determines that there is sufficient evidence to indicate that the applicant will not exercise reasonable diligence in completing repayment of a loan, the loan request may be denied. In determining that sufficient evidence for denial exists, the authority shall use such ethical methods and practices as are acceptable and proven in the collection of credit information in the commercial banking community.(2) Evidence that indicates the applicant will not exercise reasonable diligence in completing repayment of a loan may include, but is not limited to, any of the following:(a) Defaults on previous debts.(c) Repossessions of tangible properties for reason of nonpayment.(d) Excessive and existing indebtedness beyond present and anticipated means of payment.(e) Incarceration for a felony.(f) Physical or mental disability in a degree that employment and repayment may not reasonably be expected.(3) If a loan application is denied, the applicant shall be advised by the authority, in writing or through an electronic method, if agreed to by the applicant, of the reason for the denial.Mich. Admin. Code R. 390.1606