College Cost Reduction And Access Act Information

On September 27th, 2007 President Bush signed the College Cost Reduction and Access Act (CCRAA) (H.R. 2669) into law.  Although the Act has ramifications for students at many levels of higher education, a few important items have been highlighted here for law students. (However, you may read the entire text of the law at http://kennedy.senate.gov/imo/media/doc/HR2669_conf_report.pdf )

CCRAA Update Negotiated Rulemakers Reach Consensus on proposed Draft Regulations

On April 14, negotiators reached consensus on proposed draft regulations for the 2007 College Cost Reduction and Access Act. The Department will release the proposed regulations for public comment before final regulations are issued by November 1, 2008.

In order to qualify for Public Service Loan Forgiveness, a borrower must make 10-years of qualifying loan payments while working full-time in qualifying employment.

The current draft of the regulations defines full-time as:

  1. employment in one or more jobs for an annual average of at least 30 hours per week, not including vacation or leave time provided by the employer, or the number of hours the employer considers full-time, whichever is greater.

The current draft of the regulations defines qualifying employment as:

1. employment in 501(c)(3) organization; or
2. employment in government (local, state, federal, and tribal including 3. military employment and employment in public schools and universities); or service in a full-time Americorps position; plus
4. employment in a "public service organization"

The vast majority of public service lawyers work in 501(c)(3) organizations or government positions. Some that do not may still be in qualifying employment if they work for a "public service organization." A "public service organization":

  1. provides specific listed services including "public interest law services". ("Public interest law" is defined as "legal services provided by a public service organization that are funded in whole or in part by a local, State, Federal, or Tribal government."); and
  2. is not "a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing;"

For more information:

The National Association of Student Financial Aid Administrators has posted a summary of the proposed regulations here: http://www.nasfaa.org/publications/2008/negloans041508.html

IBRinfo.org posts updates here: http://www.ibrinfo.org/updates.vp.html

Quoted from Heather Wells Jarvis of Equal Justice Works

Income-Based Repayment (IBR)

“Loan payments will be limited to 15 percent of a borrower's discretionary income or 15 percent of the amount that a borrower's (and spouse's if applicable) adjusted gross income exceeds 150 percent of the poverty line, divided by 12. Unpaid interest and principal are capitalized and any outstanding loan balance is forgiven after 20 years of repayment. Loan payments will be limited to 15 percent of a borrower's discretionary income or 15 percent of the amount that a borrower's (and spouse's if applicable) adjusted gross income exceeds 150 percent of the poverty line, divided by 12. Unpaid interest and principal are capitalized and any outstanding loan balance is forgiven after 20 years of repayment.”

While GradPLUS loans are eligible under this provision, PLUS loans (borrowed specifically by parents) and consolidation loans which include PLUS loans do not qualify. Most aspects of the IBR provision do not go into effect until July 1, 2009.

Loan Forgiveness

“Public service” employees who are employed in a “public service job” (“full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education, social work, public interest law services, child care, public library sciences, or any other job at an organization that is described in section 501(C)(3) of the Internal Revenue Code of 1986.”) have made 120 payments on their Direct Loan after 10/01/2007 as part of income-contingent or standard repayment based on a 10-year repayment schedule may have their outstanding balance paid by the Department of Education after the 10-year repayment period.

Economic Hardship

“The definition of economic hardship is also changed from 100% of the poverty line for a family of 2 to 150% of the poverty line applicable to the family size.”

Additionally you can find further information and perspective at the following websites:

National Association of Student Financial Aid Administrators (NASFAA)
http://www.nasfaa.org/publications/2007/G2669Summary091007.html

Equal Justice Works
http://www.equaljusticeworks.org/resource/ccraa

The Project on Student Debt
http://projectonstudentdebt.org/initiative_page_view.php?initiative_idx=&initiative_page_idx=22

The American Bar Association
http://www.abanet.org/abanet/media/oped/oped.cfm?releaseid=191

http://www.abanet.org/media/youraba/200710/article03.html

The Wall Street Journal
http://online.wsj.com/article/SB119206289655155389.html

Professor Philip Schrag from Georgetown Law, who had a major impact on the creation and passing of H.R. 2669, has written an in-depth article about the CCRAA which can be found at http://www.law.georgetown.edu/news/releases//documents/Forgiveness_000.pdf

Frequently Asked Questions Regarding Public Service Loan Forgiveness