Student Debt Solutions Software Support

I have attached the full document for those who have the time to read, but below are the highlights:

1.) The final regulations will also require guaranty agencies to provide FFEL Program borrowers who are in the process of rehabilitating a defaulted loan with information on repayment plans available to them after the loan has been rehabilitated, as well as additional financial and economic education materials. Assist with the transition to loan repayment for a borrower who rehabilitates a defaulted loan, by requiring a guaranty agency to:  provide each borrower with whom it has entered into a loan rehabilitation agreement with information on repayment plans available to the borrower after rehabilitating the defaulted loan; explain to the borrower how to select a repayment plan; and provide financial and economic education materials to borrowers who successfully complete loan rehabilitation.

2.) In addition, the final regulations will add a new income-contingent repayment plan, called the Revised Pay As You Earn repayment plan (REPAYE plan), to §685.209.  The REPAYE plan is modeled on the existing Pay As You Earn repayment plan, and will be available to all Direct Loan student borrowers regardless of when the borrower took out the loans.  

·      Provide that, for each year a borrower is in the REPAYE plan, the borrower’s monthly payment amount is recalculated based on income and family size information provided by the borrower.  If a process becomes available in the future that allows borrowers to give consent for the Department of Education (the Department) to access their income and family size information from the Internal Revenue Service (IRS) or another Federal source, the regulations will allow use of such a process for recalculating a borrower’s monthly payment amount. 

     • In the case of a married borrower filing a separate Federal income tax return, use the adjusted gross income (AGI) of both the borrower and the borrower’s spouse to calculate the monthly payment amount.  A married borrower filing separately who is separated from his or her spouse or who is unable to reasonably access his or her spouse’s income is not required to provide his or her spouse’s AGI.

     • Limit the amount of interest charged to the borrower of a subsidized loan to 50 percent of the remaining accrued interest when the borrower’s monthly payment is not sufficient to pay the accrued interest (resulting in negative amortization).  This limitation applies after the consecutive three-year period during which the Secretary does not charge the interest that accrues on subsidized loans during periods of negative amortization.

     • Limit the amount of interest charged to the borrower of an unsubsidized loan to 50 percent of the remaining accrued interest when the borrower’s monthly payment is not sufficient to pay the accrued interest (resulting in negative amortization).

     • For a borrower who only has loans received to pay for undergraduate study, provide that the remaining balance of the borrower’s loans that have been repaid under the REPAYE plan is forgiven after 20 years of qualifying payments.

     • For a borrower who has at least one loan received to pay for graduate study, provide that the remaining balance of the borrower’s loans that have been repaid under the REPAYE plan is forgiven after 25 years of qualifying payments.

     • Provide that, if the borrower does not provide the income information needed to recalculate the monthly repayment amount, the borrower is removed from the REPAYE plan and placed in an alternative repayment plan.  The monthly payment amount under the alternative repayment plan will equal the amount required to pay off the loan within 10 years from the date the borrower begins repayment under the alternative repayment plan, or by the end date of the 20- or 25-year REPAYE plan repayment period, whichever is earlier.

     • Allow the borrower to return to the REPAYE plan if the borrower provides the Secretary with the income information for the period of time that the borrower was on the alternative repayment plan or another repayment plan.  If the payments the borrower was required to make under the alternative repayment plan or the other repayment plan are less than the payments the borrower would have been required to make under the REPAYE plan, the borrower's monthly REPAYE payment amount will be adjusted to ensure that the excess amount owed by the borrower is paid in full by the end of the REPAYE plan repayment period.

     •  Provide that payments made under the alternative repayment plan will not count as qualifying payments for purposes of the Public Service Loan Forgiveness Program, but may count in determining eligibility for loan forgiveness under the REPAYE plan, the income-contingent repayment plan, the income-based repayment plan, or the Pay As You Earn repayment plan (each of these plans may be referred to as an “income-driven repayment plan” or “IDR plan”) if the borrower returns to the REPAYE plan or changes to another income-driven repayment plan.

3.) Finally, the regulations will allow lump sum payments made through student loan repayment programs administered by the DOD to count as qualifying payments for purposes of the Public Service Loan Forgiveness Program.