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Business and Policy Areas
Business and Policy Areas

ED Takes Steps to Implement the College Cost Reduction and Access Act

January 22, 2008

The Department of Education has begun implementing changes made to federal student assistance programs by the College Cost Reduction and Access Act (CCRAA). Enacted last fall as part of the budget reconciliation process, the CCRAA decreases the interest rates charged students for subsidized loans under the Federal Family Education Loan and Direct Loan (FFEL) programs.  It also cuts subsidies for lenders, and launches a new program aimed at encouraging more students to pursue teaching careers.

On January 8, ED released a 41-page  "Dear Colleague" letter summarizing the provisions in CCRAA and subsequent technical corrections enacted in December. Topics covered include:

  • interest rate reductions for subsidized loans
  • extensions to military service and active duty student deferments
  • expansion of the economic hardship deferment
  • a new income-based repayment plan for FFEL and Direct borrowers
  • a new loan forgiveness provision for public service employment
  • mandatory increases to Pell grants
  • elimination of tuition sensitivity for Pell grants
  • a new program, Teacher Education Assistance for College and Higher Education (TEACH) grants
  • changes to lender and guaranty agency subsidies and requirements

Back to the Table

The Higher Education Act requires ED to use a collaborative process in developing regulations for Title IV programs. Two stakeholder committees convened in early January to discuss regulatory changes necessitated by the CCRAA.

The first team will tackle rules for the new TEACH Grant program, which provides up to $4,000 per year for undergraduate and graduate students pursuing a degree leading to a teaching career. Recipients must complete four years of service in designated low-income schools in certain high-need specialties; otherwise, the grant funds will convert to loans. This unusual provision raises several issues for the negotiations. With the new program becoming operational on July 1, the TEACH Grant committee has an ambitious schedule, due to the short time available to promulgate regulations.  Beth Stack, director of operations, Student Financial Services, University of Pittsburgh, represents NACUBO on this group.

The second team will address changes made to the federal loan programs. Issues on the table include the new income-based repayment plan for the FFEL and Direct Loan programs, military deferments, public service loan forgiveness, and the definition of a nonprofit holder of FFEL loans. The extent to which federal rules should preempt state laws seeking to regulate prohibited inducements and the relationships between schools and lenders is perhaps the most contentious issue on the group's agenda.  Anne Gross, NACUBO's vice president, regulatory affairs, serves on this committee.

You can find documents used by the negotiated rulemaking teams, plus summaries of the meetings, on ED's Web site. Please contact Anne Gross with your questions or concerns about the provisions.


NACUBO Contact:   Anne C. Gross, vice president, regulatory affairs, 202.861.2544