Posted Date: July 10, 2015

Author:  Lynn Mahaffie, Deputy Assistant Secretary, Policy, Planning and Innovation, Office of Postsecondary Education

Subject: Notice of Proposed Rulemaking on Income-Contingent Repayment, Servicemembers Civil Relief Act, Loan Rehabilitation, Public Service Loan Forgiveness, and Cohort Default Rates

On July 9, 2015, the Department published in the Federal Register a Notice of Proposed Rulemaking (NPRM) (80 FR 39607). To implement the President’s directives to the Department, the proposed regulations would create a new income-contingent repayment plan that would allow more Direct Loan borrowers to cap their loan payments at 10 percent of their monthly incomes. In addition, the Secretary is proposing changes to the regulations to streamline and enhance existing processes and provide additional support to struggling borrowers. These additional changes include:

  • establishing new procedures for Federal Family Education Loan (FFEL) Program loan holders to identify servicemembers who may be eligible for a reduced interest rate under the Servicemembers Civil Relief Act;
  • requiring 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;
  • allowing lump sum payments made through student loan repayment programs administered by the Department of Defense to count as qualifying payments for purpose of the Public Service Loan Forgiveness Program; and
  • expanding the circumstances under which an institution may challenge or appeal a draft or final cohort default rate based on the institution's participation rate index.

The proposed rules reflect the consensus of a negotiated rulemaking committee that met earlier this year. Comments on the proposed regulations may be submitted electronically through and must be received no later than August 10, 2015. We have attached a pdf copy of the NPRM to this announcement.


July 9, 2015 Notice of Proposed Rulemaking in PDF Format, 482KB, 35 Pages


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