Serving Those Who Serve Our Country Moderator – Ashley Norwood, ASA Presenter – Ed Brandt, ACS, a Xerox Company Presenter – Kristi Davis, Edfinancial

Servicemembers Civil Relief Act (SCRA)

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Background Signed into law on December 19, 2003, the Servicemembers Civil Relief Act (SCRA), expanded and improved the former Soldiers' and Sailors’ Civil Relief Act (SSCRA) of 1940 The SCRA is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Background The Higher Education Opportunity Act (HEOA), amended section 428(d) of the HEA to provide that FFEL and Direct Loan program loans are subject to the provision in section 207 of the Servicemembers Civil Relief Act (50 U.S.C. 527) that limits the interest rate on a borrower’s loan to six percent during periods of qualifying military service 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Definitions Title 10 Title 10 of the United States Code outlines the role of Armed Forces and the legal basis for the roles, missions and organization of each of the Services as well as the United States Department of Defense Title 14 Title 14 of the United States Code outlines the role of the United States Coast Guard Title 32 Title 32 of the United States Code outlines the role of the United States National Guard The National Guard is established under Title 32, but members are frequently activated to support the DoD, in which case their orders are covered under Title 10 If National Guard members are activated to support a State and not the DoD, then the members are not covered (title 32 is paid by the state and title 10 is paid by the Federal government; only title 10 is covered by SCRA) SCRA Sec. 101 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Definitions Servicemember — The term ‘‘servicemember’’ means a member of the uniformed services, as that term is defined in section 101(a)(5) of title 10, United States Code Military Service — The term ‘‘military service’’ means— In the case of a servicemember who is a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard— Active duty, as defined in section 101(d)(1) of title 10, United States Code, and In the case of a member of the National Guard, includes service under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under section 502(f) of title 32, United States Code, for purposes of responding to a national emergency declared by the President and supported by Federal funds; In the case of a servicemember who is a commissioned officer of the Public Health Service or the National Oceanic and Atmospheric Administration, active service; and Any period during which a servicemember is absent from duty on account of sickness, wounds, leave, or other lawful cause Period of Military Service — The term ‘‘period of military service’’ means the period beginning on the date on which a servicemember enters military service and ending on the date on which the servicemember is released from military service or dies while in military service SCRA Sec. 101 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Definitions The term “uniformed services” means— The armed forces; The commissioned corps of the National Oceanic and Atmospheric Administration; and The commissioned corps of the Public Health Service SEC. 101(a)(5) of title 10, United States Code 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Definitions Duty Status— The term “active duty” means full-time duty in the active military service of the United States. Such term includes full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned; such term does not include full-time National Guard duty The term “active duty for a period of more than 30 days” means active duty under a call or order that does not specify a period of 30 days or less The term “active service” means service on active duty or full-time National Guard duty The term “active status” means the status of a member of a reserve component who is not in the inactive Army National Guard or inactive Air National Guard, on an inactive status list, or in the Retired Reserve SEC. 101(d)(1) of title 10, United States Code 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Definitions Duty Status— The term “full-time National Guard duty” means training or other duty, other than inactive duty, performed by a member of the Army National Guard of the United States or the Air National Guard of the United States in the member's status as a member of the National Guard of a State or territory, the Commonwealth of Puerto Rico, or the District of Columbia under section 316, 502, 503, 504, or 505 of title 32 for which the member is entitled to pay from the United States or for which the member has waived pay from the United States SEC. 101(d)(1) of title 10, United States Code 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Definitions Duty Status— The term “active Guard and Reserve duty” means active duty performed by a member of a reserve component of the Army, Navy, Air Force, or Marine Corps, or full-time National Guard duty performed by a member of the National Guard pursuant to an order to full-time National Guard duty, for a period of 180 consecutive days or more for the purpose of organizing, administering, recruiting, instructing, or training the reserve components SEC. 101(d)(1) of title 10, United States Code 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Benefits The SCRA limits the amount of interest that may be collected on debts of persons in military service to 6% “Interest” includes service charges and fees (such as late charges) The SCRA states that no interest above 6% can accrue for credit obligations during the period of military service, nor can that excess interest become due once the period of military service ends, instead that portion above 6% is permanently forgiven The annual interest rate is limited to 6% for qualifying periods of service on/after enactment of HEOA (08/14/2008) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Benefits The monthly payment must be reduced by the amount of interest saved during the covered period: The amount of any periodic payment due from a servicemember shall be reduced by the amount of the interest forgiven ED verbally agreed during Negotiated Rulemaking that the $50.00 minimum payment requirement still applies SCRA Sec. 207(a)(3) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Benefits As long as the debt was incurred before the borrower’s military service began, the interest rate cap applies to any joint consolidation loan or other co-borrowed loan The SCRA interest rate limit does not apply to an endorser to a PLUS loan made to a parent or a graduate/professional student unless that individual is also performing eligible military service For purposes of this restriction, a loan is considered incurred by an endorser when the Endorser Addendum to the PLUS Loan Master Promissory Note is signed, and the requirement that the debt be incurred before military service is based on that date NPRM Preamble, Page 36565 and DCL GEN-08-12 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Requirements The 6% interest rate limitation is only applicable to loans obtained before military service Potential trap for the unwary student loan borrower: Even though the underlying loans were taken out prior to the period of military service, a consolidation loan taken out after that date will not qualify for SCRA benefits The debt-before-service date on a consolidation loan is the date the consolidation loan was made as a new debt, not the disbursement date of the underlying loans repaid by the consolidation loan NPRM Preamble, Page 36565 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Requirements Current regulation requires that the borrower submit a written request and copy of military orders For this purpose, the term “in writing” may include a borrower’s email request and the term “copy of the borrower’s military orders” includes a scanned copy of the orders attached to that email request A borrower’s written request and copy orders may be provided up to 180 days after the military service end date Borrowers serving before the effective date of the change in the HEA may not receive a refund of the interest paid in excess of the SCRA six percent limit before August 14, 2008, the HEOA date of enactment NPRM Preamble, Page 36565 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida SAP The HEOA amended § 682.302 to provide that for FFEL Program loans first disbursed on or after July 1, 2008 that are subject to the SCRA interest rate cap, a lender’s special allowance payment is calculated as it otherwise would be under program requirements, except that the applicable interest rate is six percent NPRM Preamble, Page 36565 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Potential Pitfalls Servicers granting borrowers the SCRA 6% interest rate for 12 months and then requiring them to re-apply Difficulty reading orders to determine service period Retroactive adjustments not being made 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Best Practices The servicemember only needs to apply once! When orders have missing/unclear end dates: Utilize the Department of Defense Manpower Data Center (DMDC) database to verify continued eligibility prior to scheduled end dates Absent specific end date information, extend the eligibility period and monitor regularly until exit information is confirmed After the rate reduction is applied, ensure that any payments that were previously received during the timeframe now covered by the lower rate are reapplied (more should go towards principal) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Best Practices Be proactive When borrowers apply for any military benefit (forbearance, deferment, no interest accrual), give them information about the SCRA and check to see if they are eligible Ensure monitoring is in place to prevent a loan that is already at a rate of less than 6% from being increased over the SCRA limit (monitor variable interest rate loans that are receiving the SCRA benefit) Perform internal audits to review accounts and ensure the SCRA rate is being applied correctly Review new hire training materials and call center scripts Provide additional/recurring training to staff 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website https://www.dmdc.osd.mil/appj/scra/ This Department of Defense website is the official source of servicemembers' active duty status for the purpose of SCRA compliance The website will enable you to input identifying information along with a specific Active Duty Status Date and determine if the individual: Is on active duty on the date in question, Has left active duty within 367 days of the date in question, or Has been notified of call-up to active duty before the date in question Reports on active duty dates from September 30, 1985 to present Reports Title 10 active duty periods of more than 30 days in length Note: Coverage under the SCRA is broader in some cases and includes some categories of persons on active duty for purposes of the SCRA who would not necessarily be eligible for a deferment/forbearance related to military service 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website Can request up to 250,000 records in a file Uploads are limited to 50 requests within a 24-hour period Upload files must be formatted correctly to allow DMDC database to read and process information Three critical fields for validating a match: SSN Last Name Active Duty Status Date 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Defense Manpower Data Center (DMDC) SCRA Website Can use to update a borrower’s SCRA benefit dates (extend “end date” based on continued active duty status) Allows the ability to proactively identify borrowers who may be eligible for the SCRA interest rate reduction (and or deferment/forbearance) but are not aware of the benefits available Outreach 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Deferments

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Available Deferments Military Service Deferment Post-Active Duty Deferment Armed Forces Deferment (pre-7/1/93 borrowers) Public Health Deferment (pre-7/1/93 borrowers) National Oceanic and Atmospheric Administration (NOAA) Deferment (pre-7/1/93 borrowers) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment Available to all FFELP borrowers who are performing qualifying service No cumulative time limit Generally no time limit per request, except for the service period being certified at that time (or confirmed by military order) Deferment covers qualifying service period, plus 180 days in cases where an actual end-of-military-service date is provided 73 FR 37694, page 37697; Dear Colleague Letter GEN-08-01, pages 5-6 Even Parent PLUS borrowers are eligible, though they must be performing the service themselves. A Parent PLUS borrower cannot receive the deferment as a result of their dependent student being a qualifying servicemember. So, if you are granting the deferment based on an unknown end-of-service date, you cannot add 180 days to the end date you’ve established. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment Qualifying Service. The borrower must be: Serving on active duty during a war, other military operation, or national emergency; or Performing qualifying National Guard duty during a war, other military operation, or national emergency Seems simple enough, but these conditions are further defined… 34 CFR 682.210(t)(1) These terms were further 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment Qualifying active duty service is service by a borrower who is: A Reserve member ordered to active duty under 10 U.S.C. 12301(a), 12301(g), 12302, 12304, or 12306, or a retired member ordered to active duty under 10 U.S.C. 688, for service in connection with a war, contingency operation, or national emergency An active member reassigned to a duty station away from where they are normally assigned, in connection with a war, contingency operation, or national emergency. “Active duty” excludes active duty for training or attendance at a service school There are no restrictions as to where the active duty service is performed, as long as it is demonstrably “in connection” with a war, contingency operation, or national emergency. For purposes of the deferment, “national emergency” is the ongoing emergency first declared shortly after 9/11, as well as any subsequent national emergency that may be declared by the President specifically in response to terrorist attacks. There has been a lot of uncertainty around whether basic training, for example, falls under the active duty exclusion indicated in the last bullet. In April 2013, in response to an NCHER inquiry, ED opined that basic training would likely never be part of what the law deems “qualifying active duty service” and therefore would not qualify for the military service deferment. 20 U.S.C 1088(d)(4); 34 CFR 682.210(t)(3) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment Qualifying National Guard duty is service by a borrower who is: On full-time National Guard duty, as defined in 10 U.S.C. 101(d)(5), under a call to active duty service authorized by the President or Defense Secretary for a period of more than 30 consecutive days under 32 U.S.C. 502(f). This training or other duty must be in connection with a war or other military operation, or a national emergency declared by the President and supported by federal funds. 20 U.S.C 1088(d)(5); 34 CFR 682.210(t)(4) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment Other features of the deferment: Can be requested by the borrower, or by a representative of the borrower Initial 12 months can be requested by the borrower or borrower’s representative, even verbally, without supporting documentation Eligible for simplified processing, provided servicer can accommodate the same exact deferment period that was granted by ED or the other FFELP servicer If the deferment is granted based on a request by the borrower’s representative, the servicer must notify the borrower that the deferment was granted on this basis and offer them the opportunity to cancel the deferment and resume repayment. “Simplified processing” is where a servicer can use a written or verbal deferment request from the borrower or borrower representative plus a notification from another one of the borrower’s loan servicers that the same deferment was already granted by that other servicer. ED clarified in the 2007 Final Rule (72 FR 61960) that this was only possible if the loan account could accommodate the exact same begin and end dates that were applied by the other servicer. 34 CFR 682.210(t)(7) and (8); 34 CFR 682.210(s)(iii) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment Can be requested via the federal MIL form, a new version of which is slated to be released in the near future A borrower who qualifies for this meets the eligibility criteria for the SCRA, though not necessarily vice versa NCHER members, during the recent public review periods for the new MIL, urged ED to consider allowing the borrowers to use the MIL as the vehicle for their SCRA request, but ED declined. However, ED will likely include language encouraging borrowers to separately request SCRA benefit There are no nuances to the Military Service Deferment eligibility requirements that would render a borrower eligible for the deferment but ineligible for SCRA. However, the SCRA eligibility requirements are much broader, so a borrower who qualifies for that will not necessarily qualify for the Military Deferment. ED indicated they do not have the authority to require the borrower to make a certification that would accompany a formal request for the SCRA on the MIL form, since such a certification would open the borrower to penalties under 20 U.S.C 1097. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Service Deferment One possible pitfall: In 2011, ED declined to allow servicers to grant the SCRA benefit based solely on the borrower’s submission of a certified MIL form, opining that the borrower still had to submit a separate written request and a copy of their orders So, what if you receive a certified MIL form, along with orders (for purposes of the SCRA benefit) indicating military service, such as active duty for training or NOAA active service, that would render the borrower ineligible for the deferment? Might Reauthorization resolve this type of discrepancy? In their Reauthorization recommendations to Congress in August 2013, NCHER urged the legislators to consider aligning the eligibility requirements for the deferment and the SCRA benefit. ED letter to CBA, EFC, NCHER, and SLSA, dated 6/27/11 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Post-Active Duty Student Deferment Service: National Guard, retired member or other reserve component ordered to active duty, including active State duty. Borrower: Must have been enrolled at an eligible school at least half-time when ordered to active duty, or no more than six months prior to the date of the order Active State duty could be either a call-up from a Governor under State law and paid for with State funds or a call-up from a Governor, with the approval of the President or Defense Secretary, that is paid for with federal funds. As with the Military Service deferment, active duty for training and attendance at a service school would not be qualifying service, nor would a full-time permanent position in the National Guard absent a call-up to active duty as previously described. Like the Military Grace Extension, the call to active duty for PADS Deferment does not have to be in conjunction with a qualifying war, military operation or national emergency. 34 CFR 682.210(u)(1) and (2) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Post-Active Duty Student Deferment Request: Can also be requested via the federal MIL form Length: 13 months after conclusion of active duty service period If borrower qualifies for both 180-day Military Deferment extension and PADS deferment, the periods run concurrently Deferment ends immediately if borrower returns to school on at least a half-time basis during the 13 months Like the Military Service deferment, this deferment also qualifies for the “simplified processing” treatment, again as long as the exact dates applied by the other servicer can be accommodated. Since a borrower can request the SCRA retroactively (up to 180 days after leaving active duty service), some may use the request for this deferment as the impetus for the SCRA request. However, the SCRA eligibility criteria do not include National Guard State duty, so some borrowers who qualify for this deferment will not qualify for the SCRA for their prededing active duty service period. 34 CFR 682.210(u)(1), (3), and (4) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Old Armed Forces Deferment Only available to pre-7/1/93 Stafford and SLS borrowers and PLUS loans made before 8/15/83 Requires only active duty service; not limited to service in connection with a war, contingency operation, or national emergency Limited to three years over the life of the borrower’s loan Eligibility for this would also qualify borrower for SCRA Reservists and National Guard members must be on full-time active duty that is expected to last for at least one year, absent a national mobilization order for Reservists. Can be requested via the federal PUB form In fact, ED recently indicated that they were intending to include language in the next version of the PUB form (current version expires in July 2015) encouraging applicants to send in a separate written request for the SCRA benefit, along with a copy of their orders. The three-year limit is a joint maximum, with the Public Health and NOAA deferments, meaning a borrower cannot receive a full three years of each. The last provision means that a borrower who qualifies for SCRA may not qualify for this deferment, even if they were a pre-7/1/93 borrower. If an eligible borrower received extra months of this deferment via the HEROES waiver that expired on 9/30/12, that service time is to be “excluded” from the 3-year limit. Therefore the borrower would be eligible for any remaining time of their 3-year limit. If the borrower no longer has any time left of their 3-year limit, they would have to qualify for the Military Service Deferment, which of course has more stringent eligibility requirements. 34 CFR 682.210(b)(2)(i) and 34 CFR 682.210 (i) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida 38

Public Health Service Deferment Only available to pre-7/1/93 Stafford and SLS borrowers and PLUS loans made before 8/15/83 Borrower must be a full-time officer in the Commissioned Corps of the United States Public Health Service Limited to three years over the life of the borrower’s loan (including Armed Forces and NOAA deferment months) Eligibility for this would also qualify borrower for SCRA, and vice versa Can be requested via the federal PUB form 34 CFR 682.210(b)(2)(i) and 34 CFR 682.210(j) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida 39

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida NOAA Deferment Only available to “new borrowers” between 7/1/87 and 6/30/93 Borrower must be on active duty status in the National Oceanic and Atmospheric Administration Corps Limited to three years over the life of the borrower’s loan (including Armed Forces and Public Health Service deferment months) Only active commissioned officers of NOAA would also qualify for SCRA Can be requested via the federal PUB form 34 CFR 682.210(b)(3)(ii) and 34 CFR 682.210(p) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida 40

Higher Education Relief Opportunities for Students (HEROES) Act of 2003

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Provides ED with specific waiver authority to assist borrowers affected by a war, other military operation, or national emergency First signed into law on 8/18/03 (P.L. 108-76), but with expiration date of 9/30/05 Extended through 9/30/07, via P.L. 109.78 Made permanent on 9/30/07, via P.L. 110-93 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Waivers have been issued by ED via Federal Register updates: On 12/12/03, ED issued 68 FR 69312 establishing the regulatory waivers and making them valid through 9/30/95 On 10/20/05, ED issued 70 FR 61037 extending the waivers, without changes, through 9/30/97 On 12/26/07, ED issued 72 FR 72947 extending the waivers, without changes, through 9/30/12 On 9/27/12, ED issued 77 FR 59311 extending the waivers through 9/30/17, but with two longstanding waivers removed and a new one added 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Four “categories” of affected individuals Category 1: borrowers who are Serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency Living or working in an area declared a disaster area in connection with a national emergency, or Suffering economic hardship as a direct result of a war or other military operation or national emergency Not every waiver will apply to all three categories of borrower; some are contingent upon actual military service. The first bullet was a precursor to the eligibility requirements that were later established for the Military Deferment, as the statutory and regulatory definitions of qualifying active duty and National Guard duty are the same. One slight variation is the definition of “national emergency”, which in the HEROES is any emergency declared by the President but in the Military Deferment regulations is only national emergencies stemming from terrorist attacks. 68 FR 69312, pages 69312-69313; 77 FR 59311 , pages 59312-59313 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 1 borrowers: Need Analysis: School can use more current total income when determining student’s expected family contribution (EFC) Professional Judgment: School has more flexibility when making adjustments for students Verification of AGI and Taxes Paid: School can accept borrower’s self-certifying statement of non-filing plus W2’s; IRS form 4868 not required Grant overpayments: Student not required to return unearned grant funds; school not required to report overpayment or deny further eligibility With EFC, school can use the lesser of the student’s total income from the preceding tax year or the student’s total income from the first calendar year of the current award year. 68 FR 69312, pages 69313-69314; 77 FR 59311, pages 59313-59314 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Category 2: borrowers who are Serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency Living or working in an area declared a disaster area in connection with a national emergency, or 68 FR 69312, pages 69314-69315; 77 FR 59311, page 59314 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers: Postwithdrawal Disbursements: Student has at least 45 days, instead of 14, to accept or decline Leaves of Absence: Student not required to provide a written request Title IV Credit Balances: School can contact borrower within 14 days to determine his/her preference and wait up to 45 days for a response, or simply pay the borrower On credit balances, if student (or PLUS borrower) does not respond within 45 days, school must return funds to the appropriate Title IV aid program. Normal circumstances require a full payment of the credit balance within 14 days. 68 FR 69312, page 69315; 77 FR 59311, page 59314 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Request for Loan Cancellation: School must allow the borrower up to 60 days, instead of 14, to request a cancellation Student/Parent Authorizations: School can accept verbal authorizations for disposition of Title IV funds Satisfactory Academic Progress: Student’s status as HEROES-eligible can be deemed a special circumstance 68 FR 69312, page 69315; 77 FR 59311, pages 59314-59315 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Grace Period: Borrower entitled to up to three years of additional grace status, including time necessary to re-enroll in next available term, while an affected individual. Borrower must be given full six or nine-month grace period afterward. In many of the situations, beginning with this one, the borrower may qualify for the Military Deferment, which may turn out to be a more advantageous option because the deferment period includes the 180-day period following the borrower’s demobilization date and is not limited to three years per tour of duty. You may therefore find that many of the waivers, beginning with this one, are really only beneficial to the borrowers who are not military servicemembers but are living or working in a disaster area. 68 FR 69312, pages 69315-69316; 77 FR 59311, page 59315 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): In-school Period: Borrower entitled to up to three years of additional in-school status, including time necessary to re-enroll in next available term, while an affected individual. Borrower must be given full six or nine-month grace period afterward. 68 FR 69312, page 69316; 77 FR 59311, page 59315 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): In-school or Fellowship Deferment: Borrowers entitled to up to three years of additional deferment status, including time necessary to re-enroll in next available term or resume the fellowship program, while an affected individual. On subsidized Stafford loans, deferment interest subsidy applies during this period 68 FR 69312, page 69316; 77 FR 59311, page 59315 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Mandatory Administrative Forbearance: If the borrower is not eligible for a Military Deferment, he/she can get up to one year of military mobilization forbearance, plus a three-month transition period, based on a written or verbal request from the borrower, a member of the borrower’s family, or any other reliable source. No supporting documentation required, unless borrower needs an extension of the initial 12 or 15-month period 68 FR 69312, page 69316; 77 FR 59311, pages 59315-59316 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Collection of Defaulted Loans: Guarantor can stop collection of defaulted loans immediately upon notification from the borrower, a member of the borrower’s family, or any other reliable source that the borrower is HEROES-eligible. This suspension of collection activity must include a three-month transition period following the borrower’s HEROES-eligible status. ED will apply this waiver to loans they already hold The guarantor must document why collection was suspended but is not required to obtain evidence of the borrower’s HEROES-eligible condition. 68 FR 69312, page 69316; 77 FR 59311, page 59316 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Teacher Loan Forgiveness: Borrowers whose qualifying teaching service is interrupted based on their HEROES-eligible status can pick up where they left off, in terms of accruing the requisite number of consecutive teaching years The period of interruption includes a three-month transition period This could also apply if and when the forgiveness program established in law for Civil Legal Assistance attorneys is funded. 68 FR 69312, pages 69316-69317; 77 FR 59311, page 59316 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Loan Rehabilitation: Defaulted borrowers whose progress toward loan rehabilitation (nine on-time payments over ten months) is interrupted based on their HEROES-eligible status can pick up where they left off, once their HEROES-eligible status ends The period of interruption includes a three-month transition period Payments made by the borrower during the interruption period still count toward the 9 and do not trigger the end of such period. The new version of the waiver, effective 10/1/12, refers to an “agreement or arrangement” with the borrower during the HEROES interruption period. 68 FR 69312, page 69317; 77 FR 59311, page 59316 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Reinstatement of Title IV Eligibility: Defaulted borrowers whose progress toward regaining Title IV eligibility (six consecutive on-time payments) is interrupted based on their HEROES-eligible status can pick up where they left off, once their HEROES-eligible status ends The period of interruption includes a three-month transition period Payments made by the borrower during the interruption period still count toward the 6 and do not trigger the end of such period. 68 FR 69312, page 69317; 77 FR 59311, page 59316 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers (continued): Consolidation of Defaulted Loans: Defaulted borrowers whose progress toward completing their satisfactory repayment arrangements (three consecutive on-time payments) in order to consolidate their loans into Direct without having to commit to ICR or IBR can pick up where they left off, once their HEROES-eligible status ends The period of interruption includes a three-month transition period 68 FR 69312, page 69317; 77 FR 59311, pages 59316-59317 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 2 borrowers – new as of 10/1/12: Annual reevaluation requirements for IBR and ICR: If a reported HEROES-eligible condition prevents a borrower from renewing their IBR or ICR payment on time, lender/servicer must extend current payment up to 39 months No clarification in 77 FR 59311 as to how this relief must be requested NCHER working with ED to establish best practices Even though it is not listed as one of the repayment plans eligible for this waiver, we believe ED’s intent was to include Pay As You Earn, since the annual reevaluation requirements mirror those for IBR and the waiver language in 77 FR 59311 refers to 34 CFR 685.209 as a whole (which includes Pay As You Earn). 77 FR 59311, page 59317 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Category 3: borrowers who are serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency One remaining waiver under this category, re. Institutional Charges and Refunds: Schools are encouraged to provide flexibility with regard to refunds and re-enrollment requirements, for students who are HEROES-eligible Not every waiver will apply to all three categories of borrower; some are contingent upon actual military service. The first bullet was a precursor to the eligibility requirements that were later established for the Military Deferment, as the statutory and regulatory definitions of qualifying active duty and National Guard duty are the same. One slight variation is the definition of “national emergency”, which in the HEROES is any emergency declared by the President but in the Military Deferment regulations is only national emergencies stemming from terrorist attacks. 68 FR 69312, pages 69317-69318; 77 FR 59311, page 59317 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Category 4: borrowers who are Dependents or spouses of people who are on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency Not every waiver will apply to all three categories of borrower; some are contingent upon actual military service. The first bullet was a precursor to the eligibility requirements that were later established for the Military Deferment, as the statutory and regulatory definitions of qualifying active duty and National Guard duty are the same. One slight variation is the definition of “national emergency”, which in the HEROES is any emergency declared by the President but in the Military Deferment regulations is only national emergencies stemming from terrorist attacks. 68 FR 69312, page 69318; 77 FR 59311, page 59317 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 Regulatory waivers for Category 4 borrowers: Verification Signatures: HEROES-eligible parent not required to provide a signed statement confirming relevant numbers of family members Required Signatures for FAFSA, SAR, and ISIR: Student can obtain necessary signatures from a high school counselor or FAA when parent is HEROES-eligible and unable to sign 68 FR 69312, page 69318; 77 FR 59311, page 59317 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES Act of 2003 ED allowed the following waivers to expire as of 9/30/12: Return of Title IV Funds: School could exclude applied non-Title IV aid (e.g., state grants) when calculating unearned funds to return. ED deemed this waiver detrimental to affected individuals. Pre-7/1/93 Military Deferment Extension: Borrowers could use unlimited additional months of this deferment while performing HEROES-eligible service. ED deemed this unnecessary due to the unlimited availability of the Military Deferment 77 FR 59311, page 59312 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida HEROES and the SCRA Borrowers who qualify for HEROES by performing active duty service or qualifying National Guard duty also qualify for SCRA, though they may require additional documentation for SCRA Borrowers who qualify for HEROES for any other reason do not qualify for SCRA Of course, this only applies to loans, including Consolidation Loans, the borrower acquired before entering active duty service. Loans obtained after the borrower entered military service may still qualify for a HEROES waiver, but not SCRA. 77 FR 59311, pages 59312-59313; 50 USC 511(2) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Extension of the Stafford Loan Grace Period

Military Grace Extension Qualifications Must be in grace or in-school status when called Must be a member of a reserve component of the U.S. Armed Forces called or ordered to active duty for more than 30 days Duration Any one extension cannot exceed 3 years The 3 years includes the period between the borrower’s release and the next available enrollment period. The eligibility for this benefit is one of the things that is expanded by the HEROES waivers, as explained in Slide 15. Note that the military grace extension under 682.209 will continue to be in place after 9-30-12. The call to active duty under the 682.209 military grace extension does not have to be in conjunction with a qualifying war, military operation or national emergency. However, for National Guard under HEROES, it does. §682.209(a)(5) 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Grace Extension Grace Period Borrower entitled to full grace period after 3-year grace extension If 3-year extension and grace period expire while borrower is still on active duty, the borrower is eligible for the Military Deferment and 13-month Post Active Duty Student deferment §682.209(a)(5); §682.210(t) and (u) The 3-year extension period may include any time between the members release from service and the start of the next enrollment period at the borrower’s school. But it may not exceed 3 years. For example, if the borrower is released after 2 years and 10 months and the next enrollment period begins in 6 months, the borrower’s extension period will end in 2 months (end of the 3-year extension period) and the borrower will enter the grace period. However, as the borrower will enroll before the 6-month grace period expires, the borrower’s in-school status is maintained on the loan. If the borrower’s active duty is longer than 3 years and 6 months, the borrower’s loan will be eligible for the Military Deferment for the remainder of the borrower’s active duty service. Because this was a member of the Reserve component that was called to active duty within 6 months of half-time enrollment, the borrower will receive the PADSD, which we will talk about next. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Mandatory Forbearance

Dept. of Defense (DOD) Student Loan Repayment Program Documents the beginning and ending dates that the Department of Defense considers the borrower to be eligible for repayment under the Student Loan Repayment Programs As of 11/1/13 (though only a requirement as of 7/1/14), covers all repayment programs administered by the DOD, not just the Active Duty Loan Repayment Program Requires military orders, letter from commanding officer, or a copy of the DOD Repayment authorization form 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Active Military State Duty Active military state duty as a member of the National Guard, includes members that are in a retired status Activated by the state Governor for more than 30 consecutive days Paid for with state or federal funds Borrower qualifies for a Post-Active Duty Student Deferment but doesn’t qualify for a Military Service Deferment or other deferment while engaged in active military state duty Begins on the day after the end of grace for a Stafford loan that has not entered repayment or begins on the day after the end of the in-school deferment for a FFELP loan in repayment 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Mandatory Administrative Forbearance

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida General Information The lender MUST grant a mandatory administrative forbearance when applicable. Does not require the borrower’s request or a forbearance agreement between the lender and borrower Lender must notify the borrower that the forbearance has been granted and indicate the date that payments should resume Any outstanding delinquency before the beginning date of the forbearance cannot be resolved by the mandatory administrative forbearance 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Mobilization Defined as a situation in which the U.S. Department of Defense orders member of the National Guard or the Reserves to active duty under Title 10 U.S.C. §§ 688, 12301(a) & (g), 12302, 12304 and 12306. Includes the assignment of other member of the Armed Forces to duty stations at locations other then the locations they are normally assigned, if the military mobilization involves the activation of the National Guard or the Reserves This is a “must” forbearance 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Mobilization Length – Period specified by the Department or guarantor plus 30 days following the period Borrower or endorser are required to provide documentation showing that the borrower is subject to a military mobilization as described in the DOD section 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Military Mobilization The borrower or endorser who requests an extension this forbearance must provide documentation showing that the borrower is subject to a military mobilization as described in the previous slide HEROES Act of 2003 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

Administrative Forbearance

Military Mobilization Administrative forbearance can’t exceed 3 months Continuation of the forbearance beyond the 3-month period based on the same situation requires supporting documentation and an agreement with the borrower or endorser 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida More Information NCHER e-Library e-Library > Reference Materials > Military Info-Operational > Benefits Q and A Frequently Asked Questions related to each of the available benefits for servicemembers. HEROES Act Waiver Chart A matrix showing the various regulatory waivers under the HEROES Act. Military Deferment Case Studies Scenarios and lender actions when applying the Military Service Deferment and Post-Active Duty Student Deferment. Military Deferment Qualifications Military Deferment eligibility criteria, with case studies. Military Orders with Comments A series of military order copies with hand-written comments indicating whether the service qualifies the borrower for benefits. Servicemember Benefit Matrix A chart indicating various forms of military service and the federal education loan benefits that apply to each. Useful Military Websites Useful Military websites for both lenders/servicers and borrowers 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida Questions 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida