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June 01, 2010
HCERA Frequently Asked Questions
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The passing of the Health Care and Education Reconciliation Act of 2010 (HCERA) means changes for federal student loans. It’s natural to wonder how this new student loan legislation will impact you.
To help you understand what to expect, American Student Assistance® (ASA) answered some frequently asked questions about HCERA. If your questions are not addressed here, feel free to Ask American Student Assistance.
Will HCERA affect my relationship with ASA®?
No. You can continue to expect neutral, honest federal student loan solutions from ASA. Our focus is helping you manage your federal student loan debt, and we will keep providing you with the debt management information, counseling, and advice that matter most to you.
Will HCERA impact my ability to receive federal student loans?
No—but it may impact how you receive those loans. Currently, there are 2 ways to receive federal student loans: from the U.S. Department of Education via the Direct Loan (DL) program and from participating lenders within the Federal Family Education Loan Program (FFELP). Starting July 1, 2010, DL will be the sole provider of federal student loans, which include Stafford, PLUS, and federal Consolidation loans.
What if I received Stafford, PLUS, or federal Consolidation loans in the past—will those be affected?
No, the terms and conditions of those loans—along with your current loan holder—will not change based on this legislation.
After July 1, 2010, what happens to my existing loans for this year?
Very little. Lenders deliver loan funds in multiple disbursements. If your first disbursement of a FFELP loan was delivered before July 1, 2010, your lender will fund your subsequent disbursements. However, if the first disbursement of your FFELP loan is not scheduled for before July 1, 2010, you will need to reapply for federal aid through DL.
Does this change the way I apply for federal student loans?
The steps will stay the same to apply for financial aid. However, if you previously received loans via FFELP, you will need to complete a new Master Promissory Note to obtain additional federal loans through DL.
Could I end up with federal loans from both FFELP and DL?
Yes. To keep track of all your federal student loans, check out the National Student Loan Data System. This is the U.S. Department of Education’s central database for all federal student loan information—it has information like who holds each of your federal student loans and the amount you currently owe.
To avoid dealing with multiple lenders, can I consolidate my federal loans while I’m in school?
Yes, but only from July 1, 2010, to June 30, 2011. To qualify, you must have at least 1 loan from 2 of the following sources: DL, FFELP, or ED via the Loan Purchase Commitment Program. You must also have entered repayment on at least 1 of those loans. If you consolidate while you’re in school, you will lose the grace period for any loans not yet in repayment. Consolidating your loans will create a Direct Consolidation loan. Remember, there are pros and cons of consolidation.
How does this legislation change the income-based repayment (IBR) schedule?
This legislation reduces payments under IBR from 15% of your discretionary income to 10%. It also decreases the amount of time it takes to have loans forgiven—from 25 years to 20. However, these changes are only for borrowers first taking out loans on or after July 1, 2014.
Does HCERA increase loan limits or decrease interest rates?
No, loan limits and interest rates will remain the same for the different types of financial aid.
