September 3, 2008

Higher Education Opportunity Act Changes to PLUS Loans

The Higher Education Opportunity Act (HEOA), signed by the President on August 14, 2008, makes several changes that affect PLUS loans. The changes are effective for PLUS loans first disbursed on or after July 1, 2008, and include the following regulatory provisions.

Note: several of the HEOA PLUS loan provisions change stipulations found in the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA).

• The repayment period begins at final disbursement and excludes periods of deferment and forbearance.
• The first payment due date must be established no later than 60 days after final disbursement.
• If agreed to by the borrower, the interest during deferment may be paid or capitalized no more frequently than quarterly.
• If requested by the Parent PLUS loan borrower, the loan may be deferred during any period when the student for whom the loan was obtained is enrolled at least half-time.
• If requested by the Parent PLUS or Grad PLUS loan borrower, the loan may be deferred for a six-month period after the parent or student for whom the loan was obtained or the Grad PLUS borrower cease to be enrolled at least half-time.
• Both Parent PLUS loan and Grad PLUS loan borrowers have the option of beginning repayment immediately or deferring repayment for the in-school period as well as the six-month period afterward.

The HEOA also identifies in-school deferments available to Parent PLUS loan and Grad PLUS loan borrowers and eliminates the 89-day delinquency waiver provision set forth in the ECASLA.