On September 27, 2007 President Bush signed the College Cost Reduction Act of 2007. The following are highlights of this bill as it relates to the Federal Family Education Loan (FFEL) Program:

I. Effective October 1, 2007

  • Economic hardship criteria for deferment redefined as minimum wage or 150% of poverty level
  • Improved military benefits beyond the 3 year limitation
  • Special allowance payments to lenders reduced
  • Lender origination fee increased
  • Exceptional performance status eliminated, phase-out based on end-of-year that designation was made

II. Effective July 1, 2008

  • Decrease in interest rates on undergraduate subsidized Stafford Loans
    • 6.0% for loans on which the first disbursement is made on or after 7/1/08 thru 6/30/09
    • 5.6% for loans on which the first disbursement is made on or after 7/1/09 thru 6/30/10
    • 4.5% for loans on which the first disbursement is made on or after 7/1/10 thru 6/30/11
    • 3.4% for loans on which the first disbursement is made on or after 7/1/11 thru 6/30/12
  • Public service loan forgiveness in the Federal Direct Loan Program begins

III. Effective July 1, 2009

  • Parent PLUS Loans for new borrowers after 7/1/09 will be made by only two lenders designated by USED from the results of government sponsored auction
  • GRAD PLUS borrowers may be eligible for income contingent repayment of their loans


HESC’s Office of Regulatory Compliance will be working with other industry partners and will share the results of that analysis of this bill with our program participants. If you have any questions, please contact this office at (518) 473-3986 or at askpolicy@hesc.org.

Date posted: 9/28/07