Columbus School of Law

Financial Aid >Post Grad >CCRAA >LF25

The CCRAA extends to borrowers of Federal Loans the opportunity of loan forgiveness on the balance of interest and principal after 300 months (25 years) of on-time payments. Unlike the 10-year loan forgiveness provision, public service employment is not required and all Federal Loans, both "FFELP" and "Direct" Loans are eligible for the 25-year forgiveness provision.

Eligibility Criteria:

(1) Loan Forgiveness after 25 years is available for repayment of "Qualifying Federal Loans". This only includes Stafford, Grad PLUS, and Federal Consolidation Loans (FCL) of FFELP and Direct Lending. Private Loans are not eligible.

(2) Borrower must make 300 months (25 years) of "On-time Payments" under the Income-Base Repayment (IBR) plan, the Income-Contingent Repayment (ICR) plan, or the Standard Repayment plan based on a 10-year repayment schedule. The 300 qualifying months do NOT have to be consecutive payments, but the loans must never be in default. Loan payments made prior to Oct 1, 2007 and loan payments made on non-eligible loans (e.g. Private loans, etc) do NOT count towards the 300-month requirement.

Income-Contingent -vs- Income-Based Repayment

There are actually two "income-based" (lower case) payment plans. One has already been discussed. This was the Income-Based Repayment (upper case) option which, is a new program that will become available on July 1, 2009 and applies to all federal loans.

The current Direct Federal Loan program has had an Income Contingent Repayment (ICR) option which is similar to the new Income Based Repayment (IBR) plan. ICR is not as "generous" as the new IBR plan, but it can be used now (prior to July 2009) to count payments toward either the 25-year or 10-year forgiveness plan. In some cases, students (with Federal Direct Loans) may wish to begin with the Income Contingent Repayment (ICR) plan then switch to Income Based Repayment (IBR) on/after July 2009.

The ICR always bases monthly payments on the combined income of both the borrower and spouse. With IBR, spousal income is excluded if the taxpayers file separately.

Borrowers, particularly borrowers who are currently single, and are committed to public service employment for at least 10 years may benefit from obtaining a Federal Direct Consolidation Loan at the start of his or her repayment period. (Remember a "Direct" loan is required to benefit from the 10-Year forgiveness plan.) Then, after making payments under the Income Contingent Repayment (ICR) plan - which will likely be higher than under Income Based Repayment (IBR) plan - switch to the lower payments offered by Income Based Repayment (IBR) plan in July 2009.

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If you have any other questions about this loan forgiveness opportunity, please feel free to contact our office or contact your lender directly.