Questions and Answers Regarding the College Cost Reduction and Access Act (CCRAA)
Note: The information provided is subject to change based on anticipated guidance from the U.S. Department of Education.
Last Updated 1/14/2008
Legislative
When was the College Cost Reduction and Access Act (CCRAA) signed by the President?
The College Cost Reduction and Access Act (CCRAA), H.R. 2669, was signed by President Bush on September 27, 2007. The CCRAA is Public Law 110-084.
Are provisions from this legislation effective immediately?
There are varying effective dates associated with these provisions. The majority of these provisions are effective October 1, 2007. Specific triggering effective dates can be found in OGSLP's CCRAA Impact Summary and in the National Council of Higher Education Loan Programs' (NCHELP) side-by-side analysis.
LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES
Are there specific public service jobs listed that are eligible for loan forgiveness?
The CCRAA defines public service jobs as a full-time job in the following:
emergency management
government
military service
public safety
law enforcement
public health
public education (including early childhood education)
social work in a public child or family service agency
public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization)
public child care
public services for individuals with disabilities
public services for the elderly
public library sciences
school-based library sciences and other school-based services
an organization that is described in section 501(c)(3) of the Internal Revenue Code (IRS) of 1986 and exempt from taxation under 501(a) of the same Code
teaching as a full-time faculty member at a Tribal College or University as defined in section 316(b) and other faculty teaching in high-needs areas, as determined by the Secretary
We expect to receive more specific guidance from the U.S. Department of Education in the future.
Do the 120 payments have to be on-time payments?
The 120 payments must be made in the Direct Loan Program. Jeff Baker from the U.S. Department of Education (ED) has stated that the 120 months do not have to be consecutive; however, ED has not yet specified whether the payments must be on-time payments.
Is a borrower with a repayment plan of less than 10 years eligible for loan forgiveness?
No. The law clearly requires 120 payments as one of the borrower eligibility requirements.
INCOME-BASED REPAYMENT (IBR) PLAN
What is income-based repayment?
Income-based repayment (IBR) is a new repayment plan available to borrowers in both the FFEL and Direct Loan Programs. Borrowers with Stafford (subsidized and unsubsidized) and graduate PLUS loans are eligible regardless of the disbursement dates of their loans. Borrowers with a "partial financial hardship" may elect to have the aggregate monthly payment for all such loans not exceed 15% of the result obtained by calculating on at least an annual basis the AGI minus 150% of the poverty line for the family size. Parent PLUS loans and consolidation loans that contain parent PLUS loans are not eligible for IBR.
Can a borrower with a consolidated loan get an income-based repayment plan?
Yes, as long as the borrower meets all other eligibility requirements.
Who is eligible for IBR?
Since eligibility for the plan is determined by an income-based formula, borrowers must qualify on an annual basis to begin and continue repayment under the plan.
ECONOMIC HARDSHIP DEFERMENT
What is the effective date of the change to the economic hardship deferment definition?
The effective date for the definition change pertaining to the economic hardship deferment is October 1, 2007.
How did the definition of economic hardship deferment change?
The definition of economic hardship has been changed from 100% of the poverty line for a family of two to 150% of the poverty line applicable to the borrower's family size.
MILITARY DEFERMENT
Can a borrower receive the military deferment multiple times?
Yes. The three-year limit for the deferment has been eliminated.
COMPETITIVE LOAN AUCTION PILOT PROGRAM - PARENT PLUS LOANS
Since there will be two types of PLUS loan lenders (auction and non-auction based), could there be more than one special allowance rate paid for PLUS loans?
There will be a special allowance rate for PLUS loan auction lenders, which may differ from the special allowance rate for non-auction PLUS lenders.
Does the parent borrower have a choice of lenders?
Each state has the potential for two lenders. The parent PLUS loan borrower will be able to choose from one of the two lenders that win the bids. For states that do not have two lenders that bid, the U.S. Department of Education will choose a lender of last resort. In these states, parent PLUS borrowers would be limited to the lender of last resort.
Does the reference to "new borrower" apply to the parent or the student?
According to Section 701 of the CCRAA, the definition of "new borrower" applies to the parent. The parent PLUS auction program applies only to new parent PLUS borrowers on or after July 1, 2009.
Does the parent PLUS loan pilot auction affect Direct Lending schools?
There is no impact to Direct Loan Program schools. The competitive loan auction pilot is only for FFELP parent PLUS loans.
TEACH GRANTS
Is it true that a TEACH Grant will be converted to an unsubsidized Stafford loan if the student fails to fulfill the grant requirements after leaving school?
Yes. If the TEACH Grant recipient does not fulfill the requirements after leaving school, the TEACH Grant converts to a Federal Direct Unsubsidized Stafford loan. The applicant must agree to serve as a full-time teacher in a high-need field in a public or other qualified nonprofit elementary or secondary school for at least four academic years within eight years after completing education for which the applicant received the TEACH Grant(s). The applicant must submit evidence of such employment annually and comply with requirements for being a "highly qualified teacher" under the Elementary and Secondary Education Act of 1965 (ESEA).
COLLEGE ACCESS CHALLENGE GRANT
Who is eligible for this new grant program?
The new grant program was designed to support access programs at the state level. In states where there is a designated State Higher Education Executive Officer (SHEEO), those entities will have first right of refusal for the grant. The Oklahoma State Regents for Higher Education is the designated SHEEO agency for Oklahoma.
Have Questions?
If you have additional questions about CCRAA, please contact Policy, Compliance and Training at 405.234.4432 or pct@ogslp.org.