[blindlaw] Education Department issues loan repayment regulations, ABA Washington Letter, November 2008

[Nightingale, Noel]

Since many on this list are practicing for public interest or governments, I thought the below article would be of interest.

Link:
http://www.abanet.org/poladv/wl/08nov/#no7

Text:
Education Department issues loan repayment regulations

The Department of Education issued final regulations Oct. 23 to implement P.L. 110-84 (H.R. 2669), a new law that provides, among other things, student loan forgiveness and repayment options for those who accept low-paying public interest employment, including legal positions.

The new law, enacted in September 2007, provides for cancellation of loans under the William Ford Direct Loan program for borrowers who make 120 monthly payments on those loans while employed in qualifying public service positions. The act also allows those in public interest positions to consolidate other qualifying federal student loans into the direct loan programs for the purposes of pursuing loan forgiveness. In addition, borrowers can opt for the Ford program's income-contingent repayment option and, by July 2009, for a more generous income-based repayment option that caps a borrower's monthly payments at an affordable percentage of his or her net income.

"We believe that these changes provide vital tools necessary to bridge a gap between growing demands on the public sector in the delivery of critical services and the increasing insurmountable inability of higher education graduates with substantial student loan debt loans to be able to afford to take these usually lower-paying positions," ABA Governmental Affairs Director Thomas M. Susman wrote in a letter to the Education Department commenting on the regulations when they were proposed last summer.

According to the regulation announcement, most of the 1,700 comments received by the Education Department addressed the public service loan forgiveness program and came from law schools, law students, legal aid centers, clinics and associations, public interest attorneys and public defenders.

In response to some of the comments, including those from the ABA, the regulations clarified that October 1, 2007, was the effective date for the beginning of the public service loan forgiveness program and that the law requires that qualifying payments must be made while the borrower is providing the qualifying full-time service. The department will develop a form for borrowers to use to apply for the public service loan forgiveness program that will include an employer certification section and instructions regarding supporting documentation.

For the purposes of the program, the regulations set "full-time" to mean 30 hours per week or as an employer prescribes, whichever is longer. They also clarified that persons working part-time but otherwise qualifying could aggregate their hours to meet the 30-hour full-time threshold.

In addition, the department included intergovernmental or public regional agencies in the definition of "government" in the regulations.

The department also will be developing regulations for P.L. 110-315 (H.R. 4137), a Higher Education Act reauthorization bill signed by the president Aug. 14 that includes the following four new loan forgiveness and repayment programs to benefit public interest lawyers.

The John R. Justice Prosecutors and Defenders Incentive Act. Offers state and local prosecutors and public defenders $10,000 per year in exchange for a one-time renewable three-year commitment.
The Legal Assistance Loan Repayment Program. Provides civil legal assistance lawyers with $6,000 per year in renewable three-year contracts up to $40,000;
Loan Forgiveness for Service in Areas of National Need. Provides no more than $2,000 per year for five years to public sector employees that include those in public interest legal services such as prosecutors, public defenders, or legal advocates in low-income communities at non-profit organizations.
Perkins Loan Cancellation for Public Service. Includes a percentage of loan cancellation based on years of service for persons in specified public service jobs that include federal public defenders and community defenders.
With the exception of the John R. Justice program, P.L. 110-315 prevents those benefiting from one loan forgiveness/repayment program from also benefiting from another, including the programs under P.L. 110-84.