College Cost Reduction and
Access Act (CCRAA)
P.L. 110-84
Duke School of Law
January 15th, 2008
What is the CCRAA?
The College Cost Reduction and Access Act of
2007 (effective July 1, 2009) helps high debt
borrowers in two main ways:
1. Lowers monthly student loan payments on federally
guaranteed student loans (Income Based Repayment or
IBR) whether or not they’re in public service.
2. Cancels remaining debt for public service employees
after 10 years of public service employment (Loan
Forgiveness for Public Service) and after 25 years for all
other students.
Lowered Monthly Student Loan
Payments
Monthly loan payments can be reduced by
choosing the “income-based repayment” (IBR)
option.
IBR reduces monthly payments but may
increase the total cost of the loan(s) since more
interest will accrue.
What’s the big picture in IBR?
Example: John owes $100,000 in qualifying
debt at 7.45% interest and takes a job paying
$40,000 to start.
He elects the income-based repayment (IBR)
plan. In his first year, John’s monthly
payments under IBR are $309 (as opposed
to $1185 under standard ten-year
repayment).
As John gets annual salary increases of 5%, his
monthly payments under IBR gradually rise,
until in year 10 his monthly payments are $526.
Forgiveness at 25 years if not in public service.
What Loans are eligible for IBR?
All federal direct loans (FDLP) and
federally guaranteed loans (FFELP) are
eligible including:
subsidized and unsubsidized Federal
Stafford Loans
Federal Grad PLUS loans (but not Parent
PLUS loans)
Federal Direct Consolidation Loans.
What loans are not eligible for IBR?
Loans made by a state or private lender and not
guaranteed by the federal government are never
eligible.
Parent PLUS loans are not eligible for IBR.
Federal Perkins Loans are only eligible when
part of a Federal Direct Consolidation Loan.
Borrowers should seek advice before
consolidating a Perkins loan because Perkins
loans include cancellation provisions.
Interest on Subsid