Sallie Mae 2009 Annual Report Download - page 247

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 HEA 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 HEA 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. 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, as well as some borrowers with extenuating circumstances. 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.
Parent PLUS Loan Auction Pilot Program. The 2007 legislation creates a pilot program for parent
PLUS loans on July 1, 2009. The Secretary will administer an auction for each state every two years with two
winning eligible lenders. Competing lenders will bid based on the amount of SAP the lender is willing to
receive from the Secretary, not to exceed CP plus 1.79%. Winning lenders will originate parent PLUS loans to
institutions in the state. The Secretary will guarantee 99% of principal and interest against losses from default.
PLUS loans will be exempt from lender loan fees. Originating lenders may consolidate PLUS loans and be
exempt from paying a consolidation rebate fee. This program has not been implemented.
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.
A-12