Communications and News Updates
Impact of Sequestration on Federal Direct Loan Programs
On August 2, 2011, Congress passed the Budget Control Act (BCA) of 2011, which put into place an automatic process of “across-the-board” Federal budget cuts, known as the sequester, to take effect if Congress failed to enact legislation to reduce the Federal deficit by March 1, 2013. As you are aware, Congress failed to enact the needed legislation.
A number of federal student aid programs are impacted, reducing funding and annual award amounts. However, the sequester does not change the annual or aggregate loan limits for the Direct Loan Programs, but does specify that loan fees paid by borrowers will increase.
- Direct Unsubsidized Loan fees will increase from 1.0% to approximately 1.05%.
- Direct Grad PLUS Loan fees will increase from 4.0% to approximately 4.20%
The Department of Education is preparing more detailed guidance for students and schools. Until such guidance is released, we will continue our normal procedures for Direct Loans with the old fee structure. We will update you when additonal information becomes available.
Public Service Loan Forgiveness
If you aspire to work in the public service sector, you'll find that the reward is not only emotional—but possibly monetary, as well. That's because the College Cost Reduction and Access Act of 2007 established a program that forgives some federal student loans under certain circumstances.
This government program provides forgiveness for the remaining balance (principal and interest) on eligible Direct Loans after the borrower makes 120 qualifying monthly payments while working in a qualifying public service position.
Only qualifying payments made after October 1, 2007 count towards PSLF; therefore, the first forgiveness of loan balances will not occur until October 2017 (at the earliest).
Any non-defaulted loan made under the Direct Loan Program may be eligible. These include:
- Direct Stafford Loans (subsidized and unsubsidized)
- Direct PLUS Loans, including Grad PLUS
- Direct Consolidation Loans
Other Federal Loans:
The following federal student loan programs may also be eligible for PSLF if they are consolidated into the Direct Loan Program*:
- Federal Family Education Loans - (Stafford, PLUS, and Consolidation Loans)
- Federal Perkins Loans
- Federal Perkins Loans
- Certain Health Professions and Nursing Loans
*Only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments needed for forgiveness.
1. Repayment Plans: Borrowers must not be in default on the loan(s) and must make 120 required monthly payments while in an eligible repayment plan. Eligible repayment plans include:
- Standard Repayment
- Income Contingent Repayment
- Income-based Repayment
- Other Direct Loan repayment plans, if certain conditions are met. For more information review: PSLF Program Q&As for Borrowers
2. Public Service Employment: Borrowers must be employed full-time (at least 30 hours per week) in a qualifying public service position (a) during the period in which he or she made each of the 120 monthly payments, (b) at the time of application for loan forgiveness, and (c) at the time the remaining principal and interest are forgiven.
Qualifying Public Service Jobs
“Qualifying public service jobs” include work in 501(c)(3) non-profit organizations, and most medical schools and teaching hospitals. Sample fields include:
- Emergency management
- Military service (active duty)
- Public safety
- Public health
- and more*
More details about Public Service Loan Forgiveness and Employer Certification Forms can be obtained at Federal Student Aid .
For more information, go to https://www.aamc.org/services/first/first_factsheets/112344/public_service_loan_forgiveness.html or contact our office.
North Carolina Forgivable Education Loans for Service Program (FELS)
If you were a North Carolina resident one year prior to matriculating into the MD Program, and you plan to work full time in NC after residency, you qualify for this loan forgiveness program!
The FELS or Forgivable Education Loan for Service program was established by the NC General Assembly in 2011. The first loans were available for the 2012-2013 academic year. It is a $14,000 forgivable loan to NC MD Students. The ONLY requirement for forgiveness is to work full-time in NC after residency!
If you are applying for the first time, go to www.cfnc.org/FELS
The deadline for this application is April 1, 2013.
Current FELS recipients will be automatically considered for renewal after spring grades are posted. You do NOT need to submit a new application.
If you need further information check it out on the CFNC website or contact us. We will be happy to talk to you about it.