The House passed legislation (H.R. 1777) yesterday by voice vote to make technical corrections to the Higher Education Act (HEA), suspend the Parent PLUS Loan auction, and assist borrowers who are unable to rehabilitate their loans due to current market conditions.
The 54-page bill that makes minor changes to the HEA -- like correcting typos -- includes a one-year suspension of the pilot auction program to sell the rights to make federal Parent PLUS Loans in a state for a two-year period. The program was scheduled to begin on July 1, 2009 and the Department planned to hold the auction on April 15. The bill postpones the auction program until July 1, 2010.
Another provision in the bill is designed to help borrowers who are eligible to rehabilitate their loans, but remain in default because disruptions in the credit market prevent many lenders from participating in the Loan Rehabilitation Program. The provision allows guaranty agencies to assign loans to the Secretary of Education if they have secured nine payments within 20 days of the due date for 10 consecutive months and the agency is unable to sell the rehabilitated loan due to current market conditions.
The bill also delays implementation of the simplified Free Application for Federal Student Aid (FAFSA) for one year - to 2010-11. The shortened form, known as the EZ FAFSA, would make it easier for some students to apply for federal aid.
The bill changes the date (from July 2010 to July 2009) for financial aid offices to begin excluding veteran education benefits when determining eligibility for student loans and campus-based aid. This would ensure that benefits provided by the Post 9/11 GI Bill - that goes into effect this July - does not reduce veterans' eligibility for additional aid.
Media Coverage
Delay for Loan Auction, Help for Borrowers Inside Higher Ed
House Moves to Postpone PLUS Loan Auction, Help Borrowers Escape Default The Chronicle of Higher Education
Posted 03/31/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.
