A list of the primary legislative changes:
- Direct Loan repayment programs (i.e., standard, graduated, & extended repayment options) to be aligned with the FFEL program.
- Eliminates in-school consolidation option (effective 7/1/06).
- Increases the amount of wages that can be garnished from 10% to 15%.
- Reduces the number of payments needed to rehabilitate a defaulted loan.
- Eliminates spousal consolidation loans (effective 7/1/06).
- Allows students to earn more money without negatively impacting their eligibility for federal financial aid.
- New aid available for need-based, Pell Grant-eligible undergraduates with focus on math and science.
- Expanded loan forgiveness provisions for [qualified math, science, and special education] teachers. Qualified teachers can receive up to $17,500 in loan forgiveness (up from $5,000).
- Expansion of PLUS loans to graduate and professional students, allowing them to borrow up to the cost of attendance on their own behalf.
- Reduction of origination fees (fees students pay when taking out student loan).
- Interest rates on loans disbursed after 7/1/06 will be set at a fixed rate of 6.8% for Stafford loans and 8.5% for PLUS loans (8.5% PLUS loan provision not applied to Direct PLUS loans at this stage – obvious oversight).
- Increased loan limits on federal loans during first two years (does not, however, increase aggregate borrowing limits): Effective 7/1/07, first year undergrad borrowing increase to $3,500 from $2,625 and to $4,500 from $3,500 for second-year undergrads.
- Unsubsidized borrower loan limits will increase to $12,000 from $10,000 for graduate students.
