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Student Loan Law: 11.2.3 Qualifying Repayment Plans and Payments

In order to qualify for forgiveness through the PSLF Program, borrowers must not be in default and have made 120 monthly qualifying payments (i.e., ten years of payments) on their loans after October 1, 2007. The 120 payments do not have to be consecutive.

Student Loan Law: 11.2.5.5.1 The limited PSLF waiver

In October 2021, the Department announced temporary changes to the PSLF Program to correct longstanding problems—referred to as the limited PSLF waiver. The Department estimated that the changes would result in an increase in qualifying payments for over 550,000 borrowers who had previously consolidated their loans. Because these changes make more types of loans eligible for PSLF if they are consolidated into Direct Loans, that estimate is likely conservative.109

Student Loan Law: 17.2.2.3.2 Cohort default rate requirements

Schools are not considered administratively capable when their cohort default rates (CDRs) rise above certain limits.126 The cohort default rate is a specific way of measuring federal student loan defaults. CDRs measure the number of a school’s borrowers who entered repayment on federal loans during a particular fiscal year and defaulted within a three-year period.

Student Loan Law: 17.2.3.2.1 Overview

Distance education, which includes online education,239 is a rapidly growing sector and more and more students are obtaining their education online every year.240 The COVID-19 pandemic has further accelerated the growth of online distance education.

Student Loan Law: 17.2.2.4 Financial Responsibility

To be eligible for Title IV funding, a school must also demonstrate that it meets financial responsibility standards, and those standards are largely defined by regulation.158 Generally, a for-profit or nonprofit institution is considered financially responsible if it meets all its financial obligations, has sufficient cash reserves to make required refunds, and is current on any debt payments to the Secretary.159 It must also have a “composite score”—calculated from required financial state

Student Loan Law: 17.2.2.3.1 Overview

In order to receive federal financial aid, the school must demonstrate that it meets administrative capability requirements.120 There are a number of administrative capability requirements, including maintaining a satisfactory academic progress policy and various recordkeeping requirements.121 This includes designating a capable individual to be responsible for administering the funds.

Student Loan Law: 17.3.2.5 Falsification of Student Eligibility for Financial Aid

There have been numerous concerns about school manipulation of federal student aid eligibility—including violations of ability-to-benefit (ATB) requirements and high school diplomas, requirements for satisfactory academic progress, and other requirements.470 Relief for federal student loan borrowers whose school falsely certified their eligibility for federal student aid is covered in

Student Loan Law: 17.2.4 Accreditation

In addition to state authorization, a school must be accredited by a Department-recognized agency that has the authority to cover all of the institution’s programs in order to be Title IV-eligible. This is considered the school’s primary accreditor. There may also be other programmatic accrediting agencies. The Department publishes a list of accrediting agencies it has recognized on its website.280

Student Loan Law: 17.3.2.7 Online and Distance Education

Distance education, which includes online education,486 is a rapidly growing sector and more and more students are obtaining their education online every year.487 In fall 2016, 52% of students at for-profit schools exclusively took distance education courses.488 The number of college students enrolling in online education grew significantly during the COVID-19 pandemic.489 In fact, the percent

Student Loan Law: 2.3.1 Academic Requirements

To be eligible for federal student assistance, individuals must be enrolled as regular students in eligible programs.16 This means, for example, that the student cannot also be enrolled in elementary or secondary school.17 Students must be enrolled in a degree, certificate, or other approved program at an eligible school.18 They must also be enrolled at least half-time.19

Student Loan Law: 2.1 Overview

As of July 1, 2010, all new Stafford, consolidation, and Direct PLUS loans are originated through the government’s Direct Loan Program. On September 30, 2015, authorization for the Perkins Loan Program expired.

Student Loan Law: 4.1 Overview

This chapter covers the primary ways to postpone repayment on federal student loans. Grace periods give borrowers a short break after they complete or leave school and before repayment begins. Deferments and forbearances allow eligible borrowers to postpone paying back their loans under certain circumstances.

Deferments can be an extremely useful option, particularly because, for subsidized loans, interest does not accrue on the loan during the deferment period. However, only borrowers who have not yet defaulted on their loans are eligible for deferments.

Student Loan Law: 4.2 Grace Periods

Repayment for Direct Stafford Loans begins after graduation, after a student withdraws from school, or after a student becomes enrolled in a half-time or shorter capacity. After one of these events, a borrower has a six-month grace period before they are required to begin repayment.7 Interest accrues for unsubsidized loans during the grace period, but does not accrue for subsidized loans.8 The grace period for Perkins Loans is nine months.9

Student Loan Law: 4.3.1 Introduction

Student loan borrowers are legally entitled to defer payments in certain situations. Deferment can help prevent default for borrowers unable to make their monthly payments. If a loan is being deferred, the loan is not in default, and the borrower will not be subject to debt collection attempts and will be eligible for additional educational assistance. Deferment rights vary depending on the type of loan and when the loan obligation was incurred.

Student Loan Law: 4.3.2 Borrower’s Default Limits Eligibility for Deferment

An important limitation to the usefulness of the borrower’s deferment right is that the right exists only when borrowers are current or “delinquent” on the loan obligation, not when they are in “default.”27 If a borrower cannot qualify for a deferment because the loan is in default, the borrower can re-establish eligibility for a deferment by first getting the loan out of default.28

Student Loan Law: 4.3.3 General Eligibility Requirements for Deferments

The various student loan programs have different rules about when the borrower qualifies for a deferment. Rules differ not only by the type of loan—for example, Perkins Loan Program loans (Perkins Loans), Direct Loan Program loans (Direct Loans), or Federal Family Education Loan (FFEL) Program loans—but also by when the loan was extended.

Most deferments carry maximum time limits, including cumulative limits, and have recertification requirements—generally every six months or one year—for the borrower to remain eligible.

Student Loan Law: 4.3.4 Applying for Deferments

Except for in-school deferments, borrowers must request deferments and provide the documentation necessary to establish eligibility.38 Application forms for various types of deferments are available on Federal Student Aid’s website.39 Borrowers may also request help from their servicers to access deferments.

Student Loan Law: 4.3.5.1 Generally

Direct Loans, FFEL Program loans, and most consolidation loans first disbursed on or after July 1, 1993, are generally subject to the same deferment terms. With respect to FFEL Consolidation Loans, the post-July-1993 rules apply to borrowers who obtain an FFEL Consolidation Loan on or after July 1, 1993, and have no other outstanding FFEL Program loans at that time.49 The following deferments are available for these loans:

Student Loan Law: 4.3.5.2 Economic Hardship Deferments

The economic hardship deferment is usually the most important one for low-income borrowers.

Borrowers automatically qualify for the deferment if they fit into one of the following categories and can provide supporting documentation:

Student Loan Law: 4.3.5.4 Military Deferments

The 2005 Deficit Reduction Act included a military deferment for all three loan programs—FFEL, Direct Loan, and Perkins Loan.80 The deferment applies to periods during which the borrower is serving on active duty during a war or other military operation, serving during a national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency.81