Military Action Affects Entitlements

President Clinton recently called armed forces reservists to active duty during the military action in Kosovo. The following information provides a summary of entitlement provisions available for borrowers called into service.

Deferment Eligibility
A military deferment is intended to cover active duty status in the U.S. Armed Forces (Army, Navy, Air Force, Marine Corps, and the Coast Guard). The deferment generally applies only to an active duty member of the U.S. Armed Forces who has an outstanding Federal Family Education Loan Program (FFELP) loan that was first disbursed before July 1, 1993, or has a PLUS loan that was first disbursed before August 15, 1983. Members of the National Guard or the Reserves who are serving in a full­time active duty status for a minimum of one year or in cases of a national emergency may qualify for the military deferment. Such borrowers are considered to be actively serving in the military. Note that this does not include a two­week active duty assignment for training status.

A borrower who requests a military deferment must provide the loan holder with documentation establishing that he or she is serving a period of full­time active duty status in the U.S. Armed Forces. Documentation may include a written statement from the borrower's commanding officer or personnel officer certifying the beginning and ending dates of the borrower's service.

In certain cases with military mobilization, the holder will be permitted to accept, during specific emergency periods, the borrower's request for the deferment and the supporting documentation from a close family member or an individual in a position to know the borrower's military status. In these cases the Department of Education (ED) will issue specific guidance for the processing of these military deferments.

Forbearance Eligibility
A FFELP loan holder is required to grant a mandatory administrative forbearance in certain cases of military mobilization. In these cases, the holder is not required to notify the borrower or endorser at the time forbearance is granted. A holder must grant forbearance to a borrower or endorser during any period, and during the 30 days following the period, when ED notifies the holder that forbearance must be granted for a military mobilization. A military mobilization is defined as a situation in which the U.S. Department of Defense orders members of the National Guard or the Reserves to active duty. A military mobilization also includes the assignment of other members of the Armed Forces to duty stations at locations other than the locations at which they are normally assigned, if the military mobilization involves the activation of the National Guard or the Reserves. The holder must require a borrower or endorser who requests forbearance because of a military mobilization to provide documentation showing that the borrower is subject to a military mobilization.

In-School and Grace Period
The Higher Education Amendments of 1998 (HEA) provide that a Stafford borrower with a loan in a grace period, or with a loan in an in-school status that would subsequently enter a grace period, who is called or ordered to active duty, is entitled to a military extension of the grace period for a period not to exceed three years. To qualify for this extension, the borrower must be called or ordered to active duty, on or after October 1, 1998, from a reserve component of the U.S. Armed Forces for a period in excess of 30 days. The maximum three-year military extension includes the time period necessary for a borrower to resume enrollment at the next available and regular, scheduled enrollment period.

If the borrower resumes at least half-time enrollment at the end of the military extension, the borrower is entitled to a new grace period at the end of the in-school period. If the borrower does not resume at least half-time enrollment, the borrower is entitled to a new grace period at the end of the military extension.

ED pays interest that accrues during the military extension for subsidized Stafford loans. Interest accruing on unsubsidized Stafford loans is the responsibility of the borrower.

Questions
For questions about entitlement provisions available for borrowers called to active duty, contact TG Customer Service at (800) 252-9743, ext. 4444, or send an message to customer.services@tgslc.org.