The College Cost Reduction and Access Act (H.R. 2669) was signed into law on September 27, 2007. The Act provides debt relief for graduates who are repaying federal student loans. 

The summary below is merely a general overview of a comprehensive law and it is not intended to provide complete information or to address all issues relating to the Act.

There are two major provisions of the new law that will impact law students and graduates: 

Public Service Loan Forgiveness (PSLF)

The College Cost Reduction and Access Act creates federal loan forgiveness for graduates working in a broad category of public service jobs. 

Generally speaking, a public service job is defined by the Act as a full-time job in public interest law services, government, military, emergency management, public safety, law enforcement, public health, public education, social work, child care, public library sciences, or any other job at a non-profit 501 (c)(3) organization. The final regulations issued October 23, 2008 provide some additional guidance on eligible employment types.

The government will forgive any outstanding federal loan balance once you have made 120 loan payments (generally, 10 years) while working in an eligible public service position. This portion of the law took effect on July 1, 2009. However, graduates making payments on a Direct Loan could begin “counting” their 120 payments as of October 1, 2007.  Students will be advised of the best way to begin taking advantage of this upon graduation.  Any loan payment made prior to graduation would not be included in the ten year period for forgiveness, so students need not be concerned with this now. Graduates with FFELP loans would be required to consolidate their federal loans into the Direct Loan Program to be eligible for the forgiveness. 

More detailed information on the loan forgiveness provisions can be found in the resource links below.

Income-Based Repayment (IBR)

Section 203 of the Act creates a new loan repayment option that reduces monthly federal loan payments for all high debt/low income borrowers. Income-based repayment (IBR) places an annual ceiling on federal loan payments which is based on the borrower’s income. This portion of the law took effect on July 1, 2009. 

In general, loan payments would be limited to 15% of discretionary income, where discretionary income is defined as adjusted gross income minus 150% of the poverty level for the borrower’s family size. For more detailed information on the formula used to determine the monthly payment, utilize the IBR calculator on finaid.org. 

In addition to reducing the monthly payment required, the income-based repayment program also requires the government to pay any unpaid interest on the subsidized portions of the loans for up to three years after the borrower elects the IBR option.   

After 25 years of payment, the government will write-off any unpaid principal and accrued interest. 

More detailed information on Income-Based Repayment can be found in the resource links below.

Resource Links for Further Information:

Final Regulations issued by Department of Education on October 23, 2008 (pdf)

Equal Justice Works:
Public Service Loan Forgiveness Information - Comprehensive information about Public Service Loan Forgiveness including which jobs qualify, which loans are covered, and how to earn forgiveness. Tools include calculators, downloadable worksheets, podcasts and an interactive forum.
PSLF Basic Checklist
Income Based Repayment Information - Comprehensive information about the Income Based Repayment plan including which borrowers are eligible, what you can expect your payments to be, and how to sign up. Tools include calculators, downloadable worksheets, podcasts and an interactive forum.

Department of Education:
PSLF Web Page
PSLF Questions and Answers
IBR Questions and Answers

IBRinfo.org - Project on Student Debt's web site specific to Income-Based Repayment (IBR) and Public Service Loan Forgiveness. Register your email to receive notification of important developments.

Detailed public service loan forgiveness information from finaid.org

National Association of Student Financial Aid Administrators (NASFAA) Summary of the College Cost Reduction and Access Act

Article: Federal Student Loan Repayment Assistance for Public Interest Lawyers and Other Employees of Governments and Nonprofit Organizations (PDF), 36 Hofstra Law Review 36 (1). Philip G. Schrag.
This article provides an analysis of the College Cost Reduction and Access Act by Philip G. Schrag, Professor of Law and Director of the Center for Applied Legal Studies at Georgetown University.

Income Based Repayment Plan calculator from finaid.org

Direct Loan Consolidation Web Site

Direct Loan Consolidation Process Information