People are remembering the College Cost Reduction and Access Act today. The below text shows the Department of Education Student Loans’ College Cost Reduction and Access Act passed in 2007 under the Bush Administration. But as examined below by LALATE, a major change in the Act on repayments comes into effect in just days. First, the bill gradually cuts interest rates on subsidized Stafford loans for undergraduate students in half according to the following schedule:This section eliminates a three-year limitation on loan deferment for certain members of the armed forces. It allows deferments until 180 days after the borrowers are demobilized. It also allows borrowers in the military to receive the benefit regardless of when the loan was originated. Eligibility for this deferment remains limited to members serving on active duty or performing qualified National Guard duty during war and a national emergency.
But the notable change that everyone is talking about today is the Income Based Repayment, a specific provision in the College Cost Reduction and Access Act, that hasn’t come into effect — until days from now on July 1, 2009. 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 25 years of repayment.
