title iv student loan update a distinctive approach to educational debt recovery since 1974

Title IV Student Loan Update

A distinctive approach to educational debt recovery since 1974.

Copyright ©2005, Todd, Bremer & Lawson, Inc.

Higher Education Reconciliation Act of 2005Other LegislationFederal Perkins Loan IssuesPresident’s FY 2007 Budget RequestHEA Reauthorization


Recent LegislationHigher Education Reconciliation Act of 2005

P.L. 109-171, Feb 8, 2006 (HERA)

Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006

P.L. 109-234, June 15, 2006

Higher Education Act ExtensionP.L. ????, Extended through June 30, 2007


Not-So-Recent Legislation

Student Loan Interest RatesP.L. 107-139, Feb 8, 2002

Taxpayer-Teacher Protection Act of 2004P.L. 108-409, Oct 30, 2004

Higher Education Relief Opportunities for Students

(HEROES) P.L. 109-78, extended through 9/30/07


Higher Education Reconciliation Act of 2005

FFEL, Direct Loans, & Perkins LoansActive Duty Military Deferment

Beginning July 1, 2006, provides for a military deferment of up to three years for FFEL, Direct Loan and Federal Perkins Loans that were first disbursed on or after July 1, 2001For borrowers on active duty during war or other military operation or during national emergency (including qualify National Guard)

At least 30 days duration




Military operation defined as “contingency operation” Current examples: Operation Enduring Freedom (Afghanistan) and Operation Iraqi Freedom (Iraq)Consolidation loan made on/after July 1, 2001 eligible if all underlying Title IV loans eligibleEligibility documentation includes military orders or commanding officer’s written statement

Don’t need to recollect documentation if already have for HEROS forbearance




Included in new Perkins MPN; prior borrowers must be informed.Definition of terms used in the deferment DCL GEN-06-02Provides that there is no refund of payments made

Need to redistribute payments, cannot refund if redistribution makes an overpayment.



FFEL, Direct Loans, & Perkins LoansIncreased loan limits in FFEL and Direct Loan

Increased annual loan limitsFirst year students from $2,625 to $3,500Second year students from $3,500 to $4,500

Increased annual unsubsidized loan limit for graduate students from $10,000 to $12,000No change in aggregate loan limitsEffective July 1, 2007



FFEL, Direct Loans, & Perkins Loans

Extends PLUS Eligibility to Graduate Students and professional students

Retains all eligibility criteria including credit checks and no in-school status or grace periodProvides for in school deferment.Effective July 1, 2006



FFEL, Direct Loans, & Perkins LoansRehabilitation of Defaulted Student Loans

Provides that the number of on-time payments required to rehabilitate a loan would be reduced from 12 to 9 made within a 20 days of the due date during 10 consecutive monthsDOES NOT apply to the Perkins loan programEffective July 1, 2006



FFEL, Direct Loans, & Perkins LoansFalse Certification Discharge

Based on borrower being a victim of the crime of identity theftNeed a copy of local, state or Federal court verdict or judgment required. (It must be an adjudicated crime)



FFEL, Direct Loans, & Perkins LoansExtends Teacher Loan Forgiveness from Teacher-Taxpayer Act

Permanently and retroactively extends the authorization of the increased loan forgiveness of $17,500 for “highly qualified” math, science, and special education teachers at qualified low-income schoolsProvided eligibility to private school teachers by defining “highly qualified” for them.Effective date October 1, 2005



FFEL, Direct Loans, & Perkins LoansConsolidation Loans

Provides no reconsolidationEliminates In-School Consolidations in Direct Loan Program and “Early conversion to repayment” Consolidations in FFEL ProgramEliminates joint spousal consolidationsPerkins borrowers can still request to enter repayment early to consolidate or for any other reason. However there is really no good reason to do so anymore.


Federal Perkins Loan Issues

Revised Perkins Loan MPNDCL CB-06-10, June 22, 2006Includes the HERA Military Deferment LanguageAuthorized through June 30, 2009Must be distributed as of July 1, 2006

Revised Perkins E-MPNDCL CB-06-11, July 3, 2006


Federal Perkins Loan Issues

Revised Perkins Loan Assignment FormDCL CB-06-12, Aug 12, 2006New changes for E-signature Perkins Assignments, Perkins MPNs, and Reporting “date of first disbursement”

Need copy of audit of compliance to E-signature Standards


Total and Permanent Disability Application

DCL – GEN-06-12, July 31, 2006Approves Application through May 31, 2008New address for Disability Assignments

U.S. Department of EducationConditional Disability Discharge6201 Interstate 30Greenville, TX 75402


President’s FY 2007 Budget Request

Federal Pell Grant Program ProposalsContinued maximum award for 2007-2008 at $4,050Provides year-round Pell GrantsLimits eligibility to equivalent of 16 semestersEliminates tuition sensitivity award rule



FFEL and Direct Loan Program ProposalsNo proposed changes for FFEL and Direct Loan Programs



Campus Based Program ProposalsNo program changes for FSEOG and FWS programsPerkins Loan Program

Provides no funding for FCC or loan cancellationsRecalls Federal portion repayments


HEA ReauthorizationH.R. 609 – College Access and Opportunity Act of 2006

Passed by the House on March 30, 2006

Senate –No billed passed as of today.Unlikely in 2006, election year, need full week to debate on floor.

2007 ???Depends on election outcome in November

title iv student loan update a distinctive approach to educational debt recovery since 1974

Documents

direct loans

perkins loan programeffective

federal perkins loans

perkins loansextends

aggregate loan limitseffective

recent legislationstudent

military orders

graduate students