Overview of the College Cost Reduction And Access Act (CCRAA)

President Bush signed the College Cost Reduction and Access Act (H.R. 2669) (Public Law 110-84) into law on Sept. 27, 2007. These amendments to the Higher Education Act of 1965 became effective on Oct. 1, 2007, unless otherwise stated. This summary provides a general overview of the law.

Full Text and GPO Record  

Table of Contents 

TITLE I - GRANTS TO STUDENTS  

Sec. 101. Tuition Sensitivity  

The bill eliminates a "tuition sensitivity" provision in the Higher Education Act that prevents Pell Grant recipients at low-cost institutions from receiving their full Pell award. This section also authorizes and appropriates $11 million for FY 2008 to ensure that all eligible students receive funding in the 2007-08 award year.

Sec. 102. Mandatory Pell Increases  

The bill extends Pell Grant funding authority through 2017 and authorizes the following amounts to be appropriated:

  • $2,030,000,000 for FY 2008
  • $2,090,000,000 for FY 2009
  • $3,030,000,000 for FY 2010
  • $3,090,000,000 for FY 2011
  • $5,050,000,000 for FY 2012
  • $105,000,000 for FY 2013
  • $4,305,000,000 for FY 2014
  • $4,400,000,000 for FY 2015
  • $4,600,000,000 for FY 2016
  • $4,900,000,000 for FY 2017

The amounts made available in the bill will be used to increase the amount of the maximum Federal Pell Grant by-

  • $490 for the 2008-09 and 2009-10 award years
  • $690 for the 2010-11 and 2011-12 award years
  • $1,090 for the 2012-13 award year

The amounts specified will be increased or decreased to the extent that funds are available.

Sec. 103. Upward Bound 

This section:

  • Authorizes $57,000,000 to be appropriated each year for FY 2008 through 2011 for Upward Bound 
  • Allows any unused funds each year to be made available for technical assistance and administrative costs for Upward Bound programs 
  • Requires the Upward Bound funds to be used to provide assistance to all Upward Bound projects that did not receive assistance in FY 2007 and have a grant score above 70. These grants will be made in the form of four-year grants. 

 Sec. 104. TEACH Grants 

Beginning July 1, 2008, the TEACH Grant program will provide up to $4,000 a year in grant aid to undergraduate and graduate students and students enrolled in a post-baccalaureate teacher credential program, or current or prospective teachers. Eligible undergraduate and post-baccalaureate students may not receive more than $16,000 and graduate students may receive no more than $8,000 in total TEACH Grants.

Students enrolled less than full-time will have their TEACH Grant reduced according to a schedule established by the Department in regulations. The amount of TEACH Grant awarded when combined with other student aid may not exceed a student's cost of attendance (COA).

In exchange for TEACH Grant aid, students must agree to serve as a full-time teacher at specified schools and teach in a specified field for four academic years within eight years after completing the college course. TEACH Grant recipients that do not fulfill their teaching obligations must repay the grant as if it was an unsubsidized Direct Loan.

Student Eligibility Requirements:

  • Undergraduate students must have a 3.25 GPA (high school GPA for first year undergrads) OR score in the 75th percentile on at least one admissions test. 
  • GPA requirements do not apply graduate students who are currently teachers or who are retiring and have expertise in a subject where there is shortage of teachers (math, science, special ed, English as a second language, or another high-need subject). 
  • Graduate students completing a high-quality alternative teacher certification program, like Teach for America, are also eligible for the program. 
  • Students must be completing (or planning to complete) the coursework required to become a teacher. 
  • To receive a TEACH Grant students must also agree to: Serve as a full-time teacher for at least four years within eight years of completing their course of study; Comply with the requirements for being a highly qualified teacher (defined in section 9101 of the Elementary and Secondary Education Act); Teach math, science, a foreign language, bilingual education, special ed, a reading specialist, or a subject designated as "high need" by the federal or state government, or local education agency and approved by the Department; Provide certification by the school's chief administrator annually as evidence of required employment.

Institutional Eligibility Requirements:

In order to award TEACH Grants, the Department must determine that an otherwise eligible institution:

  • Provides high quality teacher preparation and professional development services, including extensive clinical experience as a part of pre-service preparation 
  • Is financially responsible 
  • Provides pedagogical coursework, or assistance in the preparation of coursework, including monitoring student performance, and formal instruction related to the theory and practices of teaching 
  • Provides supervision and support services to teachers or assistance in the provision of such services, including mentoring focused on developing effective teaching skills and strategies.

The bill authorizes such sums as may be necessary to provide TEACH Grants to each eligible applicant.

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TITLE II - STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS  

Sec. 201. Interest Rate Reductions  

The bill gradually cuts interest rates on subsidized Stafford loans for undergraduate students in half according to the following schedule:

  • 6.8 percent for loans first disbursed July 1, 2006 to July 1, 2008
  • 6 percent for loans first disbursed July 1, 2008 to July 1, 2009
  • 5.6 percent for loans first disbursed July 1, 2009 to July 1, 2010
  • 4.5 percent for loans first disbursed July 1, 2010 to July 1, 2011
  • 3.4 percent for loans first disbursed July 1, 2011 to July 1, 2012

Sec. 202. Student Loan Deferment for Certain Armed Forces Members  

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.

Sec. 203 Income-Based Repayment  

Generally, the provisions in this section become effective 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. PLUS Loans made on behalf of a dependent student and Direct Consolidation Loans that contain PLUS loans are not eligible for the income-based repayment program.Holders of these loans must apply the borrower's payments first to interest, second to fees, and then toward the principal of the loan.

Any interest due and not covered by the borrower shall be paid by the Secretary for up to three years except for periods that a borrower is in deferment due to economic hardship.The lender shall also capitalize the interest due when the borrower stops participating in the income-based repayment program, or begins making payments larger than what is specified under income-based repayment. Principal due and not paid under income-base repayment shall be deferred. Borrowers may remain in income-based repayment more than 10 years.

When borrowers leave the program the maximum payment required on the loan shall not exceed the monthly amount based on a 10-year repayment period when the borrower first joined income-based repayment. The time the borrower is permitted to repay the loan may exceed 10 years.The Department must repay or cancel any outstanding loan principal and interest for borrowers after 25 years of repayment. Borrowers currently repaying loans according to income-contingent repayment or income-sensitive repayment plans will have the choice to continue in their current plans or may participate in the program created by this bill. The Department must establish procedures to annually determine borrowers' eligibility for the program, including verification of a borrower's income and the amount of their loans.

Sec. 204. Deferral of Loan Repayment Following Active Duty  

Active duty National Guard or other reserve component of the armed forces and retired members of the armed forces who are called to active duty while enrolled at an institution will be eligible for a deferment during the 13 months after they complete their service. Their deferment expires if they enroll in school again.

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  Title III - REDUCTIONS TO LENDERS IN THE FFEL PROGRAM  

The proposed legislation would introduce several cuts to lenders and guarantors. The agreed upon legislation would:

  • Eliminate the "Exceptional Performer" status that allows lenders that meet certain requirements established by the Secretary of Education to receive higher insurance rates on defaulted loans 
  • Reduce the insurance paid by the federal government to lenders on defaulted loans from 98 percent to 97 percent of unpaid principal balances through October 1, 2012 at which point the insurance will be reduced to 95 percent 
  • Reduce the amount that guarantors may keep through collections on defaulted loans from 23 percent to 16 percent 
  • Reduce the special allowance payments (SAP) from the Department to lenders based on their tax status. For-profit lenders would receive a 55 basis point SAP reduction and non-for-profit lenders would receive a 40 basis point SAP reduction. To ensure that only nonprofit lenders benefit from the increased subsidization, nonprofit lenders that are owned in-whole or in-part by a for-profit entity would not be eligible for the reduced subsidy reductions. Nonprofit lenders that are purchased by for-profit entities would also lose their higher subsidization rates on the date of the sale. 
  • Increase the loan fee paid to the Department by lenders - that cannot be passed on to borrowers - from 0.5 percent to 1 percent of the principal amount of each newly originated loan made on or after October 1, 2007 
  • Decrease the account maintenance fees paid by the Department to guarantors from .10 percent to .06 percent on newly originated loans

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

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Title IV - PUBLIC SERVICE LOAN FORGIVENESS  

The proposed legislation would allow the Secretary of Education to cancel the balance of any interest and principal due on any Federal Direct Loan - including Direct Stafford, PLUS, or Consolidation Loan - that is not in default for borrowers who:

  • Have made 120 monthly payments on a Direct Loan after October 1, 2007 as part of an income contingent repayment plan or a standard repayment plan based on a 10-year repayment schedule
  • Are employed in a "public service job" and has been employed in a public service job during the 120 payment period.

A public service job is defined as a 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.

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Title V - FEDERAL PERKINS LOANS  

The date on which institutions must return late collections on Perkins loans due to the Secretary would increase from March 31, 2012 to Sept. 30, 2012.

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  Title VI - NEED ANALYSIS  

Income Protection Allowances: The proposed legislation would provide systematic increases in the income protection allowances for dependent students, independent students, married students where either or both spouses are enrolled in college, and for students with dependents other than spouses through the 2012-13 academic year. After the 2012-13 academic year, the Secretary would be required to update the dollar amounts of the income protection allowances by a percentage equal to the Consumer Price Index. Revised tables with updated amounts would be released by the Secretary of Education in the Federal Register for each academic year.

Simplified Needs Test: The proposed legislation would increase the family income level needed to qualify for an automatic zero from $20,000 to $30,000 and would require the Secretary to increase that amount according to the increases in the Consumer Price Index.

Increased Discretion Given To Financial Aid Administrators: Financial aid administrators would be given additional discretion on July 1, 2009 in calculating the EFC of families where at least one member of the family is a "dislocated worker," i.e., a person who has lost their job and is eligible for federal benefits. FAAs are also given more discretion in calculating the EFC of independent students that suffer a loss of employment or have become homeless.

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Title VII - COMPETITIVE LOAN AUCTION PROGRAM  

The proposed legislation would require the Secretary of Education to implement a student loan auction program for parent PLUS loans in the FFEL program to begin on July 1, 2009. Prior to its July 1, 2009 implementation date, the Secretary would hold an auction in each state where lenders would bid on the minimum amount of subsidization they would accept to have exclusive rights to originate parent PLUS loans in that state. The two lowest bidders would be given exclusive rights to originate those loans for two years for all students at institutions within that state until the students graduate from or leave that institution. An auction would be held every two years.

Lenders that want to make a bid would need to meet minimum requirements in a prequalification process established by the Secretary that contains a set of borrower benefits and servicing requirements and an assessment of the lender's capital capacity to effectively participate. If no winning bids are made, the Secretary shall designate a lender of last resort in each state. Lenders that want the lender of last resort designation would be required to submit an application to the Secretary.

Students who want to consolidate loans made under the auction process would be required to notify their originating lender first to give that lender the opportunity to meet the terms and conditions of another loan provider offering a consolidation loan.

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Title VIII - PARTNERSHIP GRANTS  

Sec. 801 College Access Challenge Grants  

The legislation would establish "College Access Challenge Grants" that would provide a two to one matching grant to be spent on efforts to increase college access and success among underserved student populations. If states fail to raise their share the Department will reduce the federal award proportionally. $66 million is authorized to be appropriated for FY 2008 and another $66 million for FY 2009.

Generally grant recipients must use the funds to:

  • provide information about the benefits of a college education, college opportunities, college planning, and career planning
  • inform students and families about financing options for college, financial literacy, and debt management
  • perform outreach activities for students at risk of not continuing their education
  • assist families in completing the FAFSA
  • provide need-based grants to students
  • provide professional development for guidance counselors at middle and high schools and financial aid administrators and college admissions counselors at colleges to help them give students better guidance on: 
    • entrance requirements for college admission
    • eligibility requirements for ACG/SMART Grants and other financial assistance that depends on a student's coursework
    • the college application process
    • the financial aid application process
    • activities that increase students' success at colleges
    • activities that prepare students for college entrance exams
     
  •   student loan forgiveness, loan repayment, or interest rate reductions for those working in high-need areas

The funds provide in this section may not be used to promote any lender's loans.

Sec. 802. Investment in HBCUs and Minority Serving Institutions  

This section provides $510 million from FY 2008 to FY 2009 for HBCUs and minority serving institutions to be distributed in the following manner:

  • $10 million for Native American Serving, Nontribal Institutions for lab equipment, instruction funding, purchasing equipment, and creating academic tutoring programs 
  • $200 million to Hispanic-Serving Institutions to be distributed through a competitive process for institutional efforts to increase the number of low-income students working to earn degrees in STEM fields. The funds can also be used for applications that develop model transfer articulation agreements. 
  • $170 million for HBCUs to purchase lab equipment, pay for instruction, and establish or enhance teacher education programs. The funds may also be used to increase the institution's capacity to prepare students for careers in the STEM fields and other specified areas. 
  • $30 million for Predominantly Black Institutions to award 50 grants of $600,000 for science, technology, engineering, health education, teacher education, or programs that improve the education performance of African American males. 
  • $60 million for Tribal Colleges and Universities for lab equipment, instruction funding, purchasing equipment, and establishing or enhancing teacher education and outreach programs 
  • $30 million for Alaskan/Hawaiian Native Institutions for lab equipment, instruction funding, purchasing equipment, and creating academic tutoring programs 
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Publication Date: 9/7/2007

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