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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

Student Loan Law: 4.3.5.5 Post-Active Duty Deferments

The College Cost Reduction and Access Act of 2007 included a deferment for members of the National Guard or other reserve components of the Armed Forces or members of such forces in retired status.89 This deferment is available for FFEL, Direct Loan, and Perkins Loan borrowers.90 The deferment is available to borrowers who were serving on active duty on October 1, 2007, or began serving on or after that date.91

Student Loan Law: 4.3.5.6 Cancer Deferments

The Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 included a cancer deferment for all three loan student loan programs—FFEL, Direct Loan, and Perkins Loan.101

Student Loan Law: 4.3.6 PLUS Loan Deferments

FFEL and Direct PLUS Loan borrowers are generally eligible for the same deferments as other borrowers. The borrower must qualify for the deferment. If the loan is a parent PLUS loan, the parent borrower must qualify for the deferment. Because PLUS loans are unsubsidized, interest will accrue during the deferment period.

Student Loan Law: 4.3.8 Grounds for Perkins Loan Deferments

Borrowers are entitled to defer Perkins Loan principal payments without accruing interest under certain situations. As with FFEL Program loans, the specific qualifying circumstances depend on when the loan was made. For Perkins Loans made after July 1, 1993, deferments are available based on a number of grounds, including:

Student Loan Law: 4.3.9 Ending Deferments

Under the Direct Loan Program regulations, a borrower has the right to cancel a deferment and resume payment.133 The FFEL regulations explicitly give this right only to borrowers who are responsible for interest accruing during the deferment.134 However, there is also no FFEL provision preventing other borrowers from cancelling a deferment.135 Some FFEL Program loan holders have interpreted the regulations to require that they maintain the de

Student Loan Law: 4.4.3 Forbearances Post-270 Days Delinquent and Prior to Default Claim or Collection Status

Borrowers who are more than 270 days delinquent are technically in default. However, if the Department has not transferred the loans to collections (for Direct Loans)—or if the guaranty agency has not paid a default claim (for FFEL Program loans)—then borrowers can use a forbearance to eliminate the default or reduce the amount of the delinquency.166 This can be an incredibly valuable way to help borrowers unwind a recent default and avoid the harshest consequences of default.

Student Loan Law: 2.2.1 Introduction

There are general eligibility criteria that apply to most federal student loan programs. In some cases, students must show financial need. The Expected Family Contribution (EFC) is a measure of the borrower’s family’s financial situation and indicates how much of the borrower’s (and family’s, if the borrower is a dependent) resources should be available to help pay for education.

Student Loan Law: 2.2.2 Dependent and Independent Students

In general, a borrower’s responses on the application for federal assistance will determine whether they are considered dependent or independent. The main difference is that dependents must also report their parents’ income and assets, and parents of dependent students are expected to contribute to their children’s education.

A borrower is considered independent if the borrower:

Student Loan Law: 2.3.2 Satisfactory Academic Progress

A student must maintain satisfactory progress in the course of study in order to remain eligible for assistance.27 Schools must have a published policy for monitoring that progress. There are requirements describing how often a school must check satisfactory academic progress (SAP).28

Student Loan Law: 2.3.3 Citizenship and Immigration Status Requirements

Individuals must be United States citizens or eligible non-citizens to be eligible to take out federal student loans.32 Eligible non-citizens primarily include permanent residents, refugees, and asylees.33 Victims of human trafficking have the same eligibility for federal benefits as refugees. In addition, immigrants who are victims of domestic violence by their U.S.

Student Loan Law: 2.3.4 Drug Convictions Are No Longer a Barrier

Until very recently, federal law made students ineligible for federal student aid if they had certain drug convictions.43 However, these restrictions were fully eliminated as part of the FAFSA Simplification Act.44 The Department of Education implemented the provisions of the Act eliminating drug convictions as a barrier to federal student aid eligibility early.45 Beginning with the 2021–2022 award year, drug convictions are no longer a barrier to

Student Loan Law: 2.3.6 Prior Student Aid History

Students are generally not eligible for federal student aid if they are in default on federal student loans or if they owe overpayments on federal grants or loans.61 As discussed in § 7.6, infra, borrowers with loans in default have options available to restore their eligibility for federal student aid.

Student Loan Law: 2.4.1.3 Program Requirements

Because a school’s eligibility does not necessarily extend to all its programs, the school must ensure that a program is eligible before awarding federal aid funds to students in that program. The school is responsible for determining that a program is eligible. For example, the program must be included in the notice of accreditation and must be authorized by the appropriate state to offer the program.

Student Loan Law: 2.4.1.4 Distance Education

Distance education has long been a part of the higher education landscape in the United States. These programs have proliferated as online education has become more ubiquitous.89 “Distance education” is generally defined as education that uses one or more of the following technologies to deliver instruction to students who are separated from the instructor and to support regular and substantive interaction between the students and the instructor, either synchronously or asynchronously. The technologies may include:

Student Loan Law: 2.4.1.5 Admissions Standards

With a few exceptions, eligible institutions may admit as regular students only persons who have high school diplomas or recognized equivalents.98 A recognized equivalent of a high school diploma is either a GED or a state certificate.99