College Cost Reduction and Access Act (CCRAA)

New Legislation Affecting Loan Repayment for Public Service Employees

The College Cost Reduction and Access Act (CCRAA) will allow many public service employees to obtain forgiveness on the balance of their Federal student loans after completing 10 years in qualifying employment and 10 years of qualifying payments. Two important provisions of CCRAA are Income-Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF).

Income-Based Repayment

IBR is a new payment option for federal student loans. Starting July 2009, the program is designed to help borrowers keep their loan payments affordable with payment caps based on their income and family size. IBR loan payments will be less than 10 percent of their income for most qualified borrowers - and even lower for borrowers with small earnings. The most attractive benefit of IBR is the potential to forgive remaining debt, if any, after 25 years of qualifying payments.

Public Service Loan Forgiveness

The PSLF program targets federal aid borrowers who work in public service jobs, very broadly defined to include jobs in federal, state and municipal government entities and nonprofit 501(c)(3) organizations. Borrowers in the military, serving full time in Americorps or the Peace Corps, and many who work in public schools and colleges will also qualify. PSLF will forgive remaining debt after 10 years of eligible employment and qualified loan payments. Borrowers may elect to use PSLF and IBR together to keep payments low.

To learn more about the bill and its potential benefits for public service employees, please review the information at the following links: