College Cost Reduction and Access Act of 2007
The College Cost Reduction and Access Act (CCRAA) was signed into law on September 27,
2007. The law creates a new loan repayment program and loan forgiveness option for
borrowers. Borrowers who meet the requirements outlined in the law may be eligible to have a
portion of their student loan debt forgiven.
There are two separate and distinct components:
1) Income-based repayment (IBR) and
2) Loan Forgiveness
INCOME-BASED REPAYMENT (IBR)
The Income Based Repayment option takes effect beginning July 1, 2009. Loan payments will
be limited to 15 percent of a borrower's discretionary income or 15 percent of the amount that a
borrower's adjusted gross income exceeds 150 percent of the poverty line, divided by 12.
Borrowers may remain in IBR more than 10 years. Borrowers currently repaying loans
according to income-contingent repayment or income-sensitive repayment plans will have the
choice to continue in their current plans or may participate in the program created by this law.
Which loans are eligible for IBR?
• All Federal Direct Loans (FDL) and federally guaranteed loans (FFEL) are eligible
for IBR including: subsidized and unsubsidized Federal Stafford loans; Federal Grad
PLUS loans and Federal Direct Consolidation loans.
• 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.
Loan Forgiveness cancels the remaining debt after 10 years of public service employment and
after 25 years for all other borrowers.
The Secretary of Education will cancel the balance of any interest and principal due on any
Federal Direct Loan - including Direct Stafford, PLUS, or Consolidation Loan - that is not in
default of a borrow