Sallie Mae 2006 Annual Report Download - page 211

graduated, income-sensitive and extended repayment schedule, if applicable, to all borrowers entering
repayment.
Grace Periods, Deferral Periods and Forbearance Periods. After the borrower stops pursuing at least a
half-time course of study, he must begin to repay principal of a Stafford Loan following the grace period.
However, no principal repayments need be made, subject to some conditions, during deferment and
forbearance periods.
For borrowers whose first loans are disbursed on or after July 1, 1993, repayment of principal may be
deferred while the borrower returns to school at least half-time. Additional deferrals are available, when the
borrower is:
• enrolled in an approved graduate fellowship program or rehabilitation program; or
• seeking, but unable to find, full-time employment (subject to a maximum deferment of 3 years); or
• having an economic hardship, as defined in the Act (subject to a maximum deferment of 3 years); or
• serving on active duty during a war or other military operation or national emergency, or performing
qualifying National Guard duty during a war or other military operation or national emergency (subject
to a maximum deferment of 3 years, and effective July 1, 2006 on loans made on or after July 1,
2001).
The Higher Education Act also permits, and in some cases requires, “forbearance” periods from loan
collection in some circumstances. Interest that accrues during forbearance is never subsidized. Interest that
accrues during deferment periods may be subsidized.
PLUS and SLS Loan Programs
The Higher Education Act authorizes PLUS Loans to be made to graduate or professional students
(effective July 1, 2006) and parents of eligible dependent students and previously authorized SLS Loans to be
made to the categories of students now served by the Unsubsidized Stafford Loan program. Only borrowers
who have no adverse credit history or who are able to secure an endorser without an adverse credit history are
eligible for PLUS Loans. The basic provisions applicable to PLUS and SLS Loans are similar to those of
Stafford Loans for federal insurance and reinsurance. However, interest subsidy payments are not available
under the PLUS and SLS programs and, in some instances, special allowance payments are more restricted.
Loan Limits. PLUS and SLS Loans disbursed before July 1, 1993 were limited to $4,000 per academic
year with a maximum aggregate amount of $20,000.
The annual and aggregate amounts of PLUS Loans first disbursed on or after July 1, 1993 are limited
only to the difference between the cost of the student’s education and other financial aid received, including
scholarship, grants and other student loans.
Interest. The interest rate for a PLUS or SLS Loan depends on the date of disbursement and period of
enrollment. The interest rates for PLUS Loans and SLS Loans are presented in the following chart. Until
July 1, 2001, the 1-year index was the bond equivalent rate of 52-week Treasury bills auctioned at the final
auction held prior to each June 1. Beginning July 1, 2001, the 1-year index is the weekly average 1-year
constant maturity Treasury yield determined the preceding June 26.
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