Ensuring Continued Access to Student Loans Act of 2008
The Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715) was signed by the President on May 7, 2008. The bill increases annual and aggregate loan limits for undergraduate dependent and independent students; includes an in-school deferment provision for parent PLUS loans, including extenuating circumstances; clarifies the Lender of Last Resort program (LLR); and grants temporary authority to the U.S. Department of Education (ED) to purchase student loans, improving program liquidity.
Provisions of the new law:
- Increase the Annual Unsubsidized Dependent Undergraduate Stafford Loan Limit by $2,000 and increase the aggregate limit to $31,000.
- Increase the Annual Unsubsidized Independent Undergraduate Stafford Loan Limit by $2,000 for the first two years of undergraduate study and increase the aggregate limit to $57,500.
- Allow Parent PLUS Loan borrowers to defer repayment until six months after the student ceases to be enrolled at least half-time.
- Temporarily allow up to 180 days delinquency on a home mortgage or medical payments if the PLUS borrower is not more than 89 days delinquent on the repayment of any other debt.
- Permit the Secretary of Education to designate “LLR” on an institutional basis.
- Clarify that existing law gives ED the authority to advance federal funds to guaranty agencies in the event they don’t have sufficient capital to originate new loans and carry out LLR requirements.
- Waive the origination fee for LLR loans.
- Delay Parent PLUS auctions until July 1, 2010.
Please note this Legislative Update provided a summary of HR 5715 that incorrectly included the following two amendments:
Lender of Last Resort
On May 5, ED released GEN-08-05/FP-08-05, providing additional guidance to guaranty agencies regarding the LLR, which is designed to ensure that borrowers have continued access to Federal Family Education Loan Program (FFELP) loans. The letter outlines LLR implementation details and provides a ‘questions and answers’ (Q&A) attachment. It’s important to note that Q&A item 37 advises that schools that help a student find a conventional lender after being turned down for a loan will not be in violation of the preferred lender list requirements published in the November 1 Federal Register, which are effective July 1, 2008.
Additional LLR guidance is expected from ED now that the President has signed the Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715). While OGSLP and others in the FFELP community are hopeful that LLR won’t be needed, we’re working to prepare for the program in the event it becomes necessary for any students. Preparation tasks include:
- Daily conference calls of the NCHELP (National Council of Higher Education Loan Programs) LLR task force, which has been meeting with ED officials to discuss development of agency LLR plans. This includes advocating for “school certification” of LLR eligibility as opposed to borrower-based approaches.
- Working with the Oklahoma Student Loan Authority (OSLA), the state’s designated lender of last resort, to prepare operationally for the program.
- Planning outreach efforts to inform schools and students about the availability of LLR loans, should the need arise.
For additional information and assistance, please contact your School/Lender Support Representative or Penny Gandy, School/Lender Services Manager, or call the department number at 800.247.0420, ext. 4329. We’re here to help!
Higher Education Act Update
A one-month extension of programs under the Higher Education Act (HEA) of 1965 – until May 31, 2008 - is expected to be signed by the President this week. The anticipated action would be the twelfth extension of the HEA, as the law has not been fully renewed since 1998.
OGSLP will continue to keep you informed about HEA and other legislative activity. We encourage you to visit our Legislation Page often to view important updates and access more detailed information. If you have questions, please contact our Policy, Compliance, and Training department at (405) 234-4432 or firstname.lastname@example.org.