The College Cost Reduction and Access Act of 2007 (CCRAA) was signed into law in September 2007 and provides for lower monthly student loan payments on federally guaranteed student loans and cancels remaining debt for public servants after 10 years of public service employment.
Resources: Excellent materials on the CCRAA are provided by Equal Justice Works. It includes an overview, checklist, calculator tools to help you determine your own benefits, summaries of qualifying employment and loans, webinars, videos and pod casts on how the CCRRA affects law school students, as well as a student debt forum to post questions, receive answers, and join discussions with others concerned about student debt.
The website of the Fordham Law Financial Aid Office contains an overview and summary of the CCRAA as well as links to the full-text and final regulation, and a scholarly article on the law. The staff of the Financial Aid Office include national experts on the CCRAA who are available for individual counseling sessions with students and alumni.
Income Based Repayment (IBR): The newly created repayment program, income based repayment (IBR), significantly reduces monthly payments for high debt/low income borrowers with “partial financial hardship.” Annual educational debt payments under IBR are capped at 15% of discretionary income (defined as adjusted gross income minus 150% of the poverty level for the borrower’s family size).
Spouse’s Income and IBR: A married borrower who files a separate Federal income tax return will have the amount of the borrower's income-based repayment calculated solely on the basis of the borrower's student loan debt and adjusted gross income, rather than on the combined income of the borrower and the spouse.
Student Loans Eligible for IBR: All Federal Direct Loans (FDL) and federally guaranteed loans (FFEL) are eligible including: subsidized and unsubsidized Federal Stafford loans; Federal Grad PLUS loans (but not Parent PLUS loans); and Federal Direct Consolidation loans; however only Federal Direct loans (including Federal Direct Consolidation loans) are eligible for Loan Forgiveness for Public Service.
Student Loans Ineligible for IBR: Loans made by a state or private lender and not guaranteed by the federal government are never eligible. Also, Parent PLUS loans are not eligible for IBR. Federal Perkins Loans are only eligible when part of a Federal Direct Consolidation Loan. Borrowers should seek advice before consolidating a Perkins loan because Perkins loans include cancellation provisions.
Example: Using the same example above, Jane Justice started out owing $100,000 in qualifying debt at 6.8% interest and took a full-time public service job with a starting salary of $40,000 with annual increases of 5%. Jane stayed in public service and paid $49,132 over 10 years under the IBR plan. The federal government cancels $118,868, the principal and interest remaining.
Public service employment: CCCA defines “public service employment” broadly as
Calculate Your Potential Benefits under the CCRAA: There are a number of resources available that will: