Posted Date: October 30, 2015

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

Subject: Final Regulations for the Revised Pay As You Earn Plan, Servicemembers Civil Relief Act, Loan Rehabilitation, Public Service Loan Forgiveness, and Cohort Default Rates

Today, the Department published in the Federal Register the final regulations for the Title IV Student Loan programs that resulted from the negotiated rulemaking sessions held between February and April of 2015.

The final regulations create a new income-driven repayment plan—the Revised Pay As You Earn (REPAYE) plan—which allows all Direct Loan student borrowers to cap their loan payments at 10 percent of their discretionary incomes without regard to when the student took out their loans. The Department intends on making the REPAYE plan available to Direct Loan borrowers in mid-December 2015.

The final regulations also amend the Federal Family Education Loan (FFEL) Program and Direct Loan Program regulations to streamline and enhance existing processes, which will be implemented on July 1, 2016. These changes include:

  • Requiring FFEL Program loan holders to identify servicemembers who may be eligible for benefits under the SCRA and apply those benefits to eligible borrowers’ loans;

  • 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; and

  • Allowing lump sum payments made through student loan repayment programs administered by the Department of Defense to count as multiple qualifying payments for purposes of the Public Service Loan Forgiveness Program.

Finally, the final regulations also amend the Student Assistance General Provisions regulations by 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. This regulation will be effective in February 2017 in conjunction with the implementation the cohort default rate component of the Data Challenge and Appeal Solution (DCAS).


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