College Cost Reduction Act – Basic Facts and New Resources to Help You

Update, July 1, 2009! Check out this post about applying for Income-based repayment from your lender!

This July 1st, the College Cost Reduction and Access Act (CCRAA) of 2007 will take effect and includes provisions to make undergraduate and graduate education more affordable for aspiring social-impact professionals.

The CCRAA is a complicated piece of legislation that, if you take advantage of it, can help you retire college and grad school debt early.

The main programs that the CCRAA has created include:

Income-Based Repayment (IBR) — Caps monthly direct and guaranteed (FFEL) student loan payments based on the borrower’s income and family size. According to IBRinfo, “For most eligible borrowers, IBR loan payments will be less than 10 percent of their income – and even smaller for borrowers with low earnings. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.” Besides taking out the right kind of loan to start with (or consolidating your loans into the Direct Loan Program), it’s important to note that if you get married, your spouse’s income counts when calculating your monthly payment.

Public Service Loan Forgiveness (PSLF) — Retires the direct or guaranteed (FFEL) student loan debt of public service professionals who’ve been making ten years of qualified payments on their loans. Counting as “public service” includes 501(c)(3) nonprofit employment; government (federal, state, local, tribal), military, public school and college employment; and national service participation (like AmeriCorps and Peace Corps). Read the fine print of what counts as “qualified payments.”

You can put both of these new programs to work for you — so you can make income-contingent payments for ten years, and then retire your debt, if you qualify for participation. Also note that it’s really all up to you to access the programs and to keep track of your payment and employment records so that you can prove your eligibility.

Resources to Help You

Many twists and turns exist in the path to understanding the new law as you try to take full advantage of these programs for yourself, your students, or corps members in your program. Below are some places to learn more:

Equal Justice Works has launched a Student Loan Debt Relief Resource Center and podcast show to break down the facts. Also check out EJW’s blog with news and updates about public interest issues. EJW’s focus is to make the public interest law careers affordable for new lawyers. But their tools and resources are accessible to anyone who is taking on student loan debt in order to pursue a career in service to others. The resource center includes calculators, forums, links to more information. EJW’s Heather Jarvis appeared at Brooklyn Law School last year, explaining the CCRA (link to the video.)

IBRinfo is a nonprofit source of information about the new programs. IBRinfo includes overviews of the programs, and information about who is eligible and how to access the benefits of the programs. IBRinfo also includes news, and lets you sign up for alerts.

Also check out this F.A.Q. from the National Council of Nonprofits.

To learn more about public service grad school options, check out the Idealist.org Public Service Graduate Education Resource Center, including the Idealist Grad School Blog Project.

And coming soon to cities throughout the U.S., the Idealist.org Graduate Degree Fairs for the Public Good.

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• Low-Income, High-Debt Program for Student Borrowers Starts in July
• Summer of Service Creates Positive Alternatives for Middle School Students
• Senate Committee Hearing Thursday on the Public Lands Service Corps
• IBRinfo