The College Cost Reduction and Access Act (CCRAA) made several welcomed changes to the military service deferment created by Higher Education Reconciliation Act of 2005 (HERA). This deferment is for active duty members of the U.S. Armed Forces or qualifying full-time National Guard duty during a war, other military action, or national emergency.

Effective October 1, 2007, qualifying Title IV borrowers may receive a military deferment for all of their outstanding Title IV loans, regardless of when the loan was first disbursed. Prior to this change, the military deferment was loan-specific and limited to loans first disbursed on or after July 1, 2001. CCRAA also eliminated the three-year cap for the deferment, and expanded the period covered by the deferment to include a 180-day period following the demobilization date for qualifying military service.

In addition, CCRAA created a new section in Part G of the law - Section 493D Deferral of Loan Repayment Following Active Duty - that extends the deferment period even further for certain borrowers. If a borrower was enrolled at an eligible institution within 6 months before military activation, the borrower is eligible for additional deferment for up to 13 months after demobilization. Should the borrower resume enrollment before the end of the 13-month period, the deferment expires.

As a reminder, active duty does not include active duty for training or attendance at a service school. A national emergency refers to a national emergency due to a terrorist attack declared by President Bush on Sept. 14, 2001, or other national emergencies declared by the President as the result of terrorist attacks. Borrowers in the National Guard must be under a call to active duty, authorized by the President or Secretary of Defense, for a period of at least 30 consecutive days in connection with a war, military operation, or national emergency declared by the President.

By Eileen Welsh, NASFAA Assistant Director of Professional Assessment, Training, and Regulatory Assistance, and Justin Draeger, NASFAA Assistant Director for Communications

Posted 10/16/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.