Changes to the Federal Program based on recent legislation

The College Cost Reduction and Access Act of 2007 (CCRAA) changed some of the terms of Federal Stafford, PLUS, and Consolidation Loans made under the Federal Family Education Loan Program (FFELP). As a result, certain terms of the loan(s) you received under your Federal Stafford or Federal PLUS Loan Master Promissory Note (MPN) or your Federal Consolidation Application/Promissory Note now differ from other terms found in your Promissory Note(s) and Borrower’s Rights and Responsibilities Statement(s).

The following changes may affect some of your loans:

Income-Based Payments: Effective July 1, 2009, an income-based repayment plan will be available for Federal PLUS loans made to graduate or professional student borrowers and for Stafford loans. Under this plan, the required monthly payment amount will be based on a borrower’s income during any period when the borrower has a partial financial hardship. The maximum repayment period under the plan may exceed 10 years. Eligible borrowers who meet certain requirements over a specified period of time may qualify for cancellation of any outstanding balance on their loans.

Military Deferment: Effective July 1, 2006, a deferment is available for a period during which a borrower is serving on active duty during a war or other military operation or national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency, and if a borrower is serving on or after October 1, 2007, for the 180-day period following the demobilization date for the qualifying service.  Effective October 1, 2007, a borrower who is a member of the National Guard or other reserve component of the U. S. Armed Forces (current or retired) and who is called or ordered to active duty while enrolled at an eligible school, or within 6 months after having been enrolled, is eligible for a deferment during the 13 months following the conclusion of the active duty service, or until the date the borrower returns to enrolled student status, whichever is earlier.

Public Service Loan Forgiveness: Effective July 1, 2008, a borrower may consolidate or re-consolidate his or her FFELP loans into the William D. Ford Federal Direct Loan (Direct Loan) Program to take advantage of the public service loan forgiveness program.  This program provides for the cancellation of the remaining balance due on eligible Direct Loan Program loans after the borrower has made 120 payments (after October 1, 2007) on those Direct Loans under certain repayment plans while the borrower is employed in certain public service jobs.