Sallie Mae 2008 Annual Report Download - page 223

for the lender’s continued FFELP participations and making of FFELP loans. Authorizes the Secretary
to contract for the servicing of purchased FFELP loans, including with selling lenders, as long as the
cost is not more than it would be otherwise.
The Higher Education Opportunity Act of 2008 reauthorized the loan programs of the HEA through
September 30, 2014. Major provisions, which became effective August 14, 2008 (unless stated otherwise),
include:
• Clarifies the repayment period and the terms for commencement of repayment of PLUS loans made on
or after July 1, 2008, (superseding ECASLA provisions) and makes available in-school deferment to
parent borrowers when the student beneficiary is enrolled and a 6-month post-enrollment deferment to
all PLUS borrowers following any period of enrollment of the borrower or the student beneficiary.
• Makes Section 207 of the Servicemembers Civil Relief Act applicable to FFELP loans, upon borrower
request, reducing the interest rate on such loans to 6% (which encompasses certain fees and other
charges), and establishes that as the applicable rate for calculating special allowance payments (for
loans made on or after July 1, 2008).
• Expands the criteria for disability discharge, including qualifying borrowers with a permanent disability
rating from the Veterans Administration.
• Requires a lender to provide information on the impact of interest capitalization when granting
deferment on for an unsubsidized Stafford loan or forbearance for any FFELP loan and, for
forbearance, to provide the borrower with specific information about interest and capitalization at least
every 180 days during the forbearance.
• Adds items that the lender must disclose before disbursement and items that the lender must disclose
before repayment.
• Requires a lender to provide a bill or statement that corresponds to each payment installment time
period and include specific disclosures (for loans with a first payment due on or after July 1, 2009).
• Requires a lender to provide specified information to borrowers who notify the lender of difficulty in
paying (for loans with a first payment due on or after July 1, 2009) and to borrowers who become
60 days delinquent (for loans that become delinquent on or after July 1, 2009).
• Eliminates guarantor and Department obligations for insurance and reinsurance in instances of
nondisclosure.
• Adds income-based repayment to plans the lender must offer (except for parent PLUS loans or
Consolidation loans that discharged such loans) and adds income-based repayment for FFELP borrow-
ers to repay defaulted loans to ED.
• Permits borrower eligibility for in-school deferment to be based on National Student Loan Data System
information.
• Adds prohibited inducements that can subject lenders and guarantors to disqualification from the
program and clarifies that both lenders and guarantors may provide technical assistance comparable to
that provided to schools by the Department.
• Allows FFELP borrowers to consolidate directly into the FDLP program to use the zero interest feature
available to servicemembers.
• Requires a consolidation lender to provide disclosures regarding any loss of benefits, availability of
repayment plans, and certain other information.
• Requires the guarantor to notify a borrower twice of options to remove a loan from default.
• Limits a borrower to loan rehabilitation once and, upon successful rehabilitation, provides for financial
and economic education materials to be available to the borrower and for removal of the default from
the borrower’s credit report.
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