On September 27, 2007, President Bush signed into law the College Cost Reduction and Access Act of 2007 (CCRAA), which makes numerous changes to the Title IV student aid programs. As with the Higher Education Reconciliation Act of 2005 (HERA), the CCRAA is a budget reconciliation bill, so many of the beneficial increases in student grant aid were offset by cuts in federal spending on student loan programs. A summary of the bill is provided below.

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H.R. 2669
Title: College Cost Reduction and Access Act
Sponsor: Rep. Miller, George [CA] introduced 6/12/2007)
Cosponsors: (31)
Latest Major Action: 9/27/2007 Signed by the President.
Status: On agreeing to the conference report Agreed to by the Yeas and Nays: 292 - 97.
Summary: The bill includes many of the provisions found in legislation previously proposed in the 110th Congress. It provides for changes to several areas of the HEA:

Loan terms and repayment

• Establishes a new income-based repayment option for borrowers, under which a borrower's loan payments will not exceed 15 percent of discretionary income or 15 percent of the amount that a borrower's (and spouse's if applicable) adjusted gross income exceeds 150 percent of the poverty line, divided by 12. PLUS loans made on behalf of a dependent student and Consolidation loans that include such PLUS loans are not eligible for this repayment option.
• Removes the three-year limitation on the military deferment and extends the deferment through 180 days following demobilization. Available to FFEL, Direct loan, and Perkins loan borrowers, regardless of the date the loan was disbursed.
• Creates a new 13-month deferment for borrowers returning from active duty, and who were enrolled in an eligible institution prior to being called or ordered to active duty.
• Establishes a Direct loan forgiveness program for public service employees.
• Reduces the fixed interest rate for undergraduate subsidized Stafford loans (FFEL and Direct) from 6.8% to 3.4% over 4 years:
  • For loans first disbursed on or after July 1, 2008, and before July 1, 2009, the rate will be 6.0%;
  • For loans first disbursed on or after July 1, 2009, and before July 1, 2010, the rate will be 5.6%;
  • For loans first disbursed on or after July 1, 2010, and before July 1, 2011, the rate will be 4.5%;
  • For loans first disbursed on or after July 1, 2011, and before July 1, 2012, the rate will be 3.4%
  • For loans first disbursed on or after July 1, 2012, the rate will revert back to 6.8%.

Changes to FFELP administration

• Reduces the special allowance payment (SAP) for for-profit lenders by 55 basis points for Stafford and Consolidation loans (85 basis points for PLUS loans) for loans first disbursed on or after October 1, 2007.
• Reduces the SAP for not-for-profit lenders by 40 basis points for Stafford and Consolidation loans (70 basis points for PLUS loans) for loans first disbursed on or after October 1, 2007.
• Reduces the guarantor collection retention rate from 23% to 16%, effective October 1, 2007.
• Reduces the guarantor Account Maintenance Fee from 0.10% to 0.06%.
• Increases the lender paid origination fee for FFELP loans first disbursed on or after October 1, 2007, from 0.5% to 1.0%.
• Eliminates the exceptional performer designation, effective October 1, 2007; lenders designated as exceptional performers prior to October 1, 2007, may retain that designation for the remainder of the year for which it was made.
• Requires a pilot program to auction FFELP parent PLUS loans for new borrowers on or after July 1, 2009.
• Reduces lender insurance from 97% to 95% for loans disbursed on or after October 1, 2012. Lender of last resort loans and exempt claims will remain insured at 100%.

Grants to students and need analysis

• Repeals tuition sensitivity in the Pell Grant Program, effective for award years beginning on or after July 1, 2007;
• Increases the maximum Pell grant award annually beginning in 2008-2009, from the current $4,310, as follows:
  • $4,800 for the 2008-09 and 2009-10 award years
  • $5,000 for the 2010-11 and 2011-12 award years
  • $5,400 for the 2012-13 award year;
• Establishes a new TEACH (Teacher Education Assistance for College and Higher Education) Grant Program for teacher candidates who meet eligibility criteria and agree to a teaching commitment. The awards, up to $4000 per year (not to exceed a total of $16,000 for undergraduate students or $8,000 for graduate students), will be available to qualified teacher candidates beginning July 1, 2008.
• Increases the income levels necessary to qualify for the simplified needs test and auto-zero EFC beginning July 1, 2009.
• Increases the income protection allowance beginning July 1, 2009.

Text of Bill

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