Current
Higher Education Act Reauthorization
Current authority for the Higher Education Act (HEA) expired on
September 30, 2003; however, several extensions have been enacted,
making no policy changes but allowing uninterrupted administration
of the programs authorized under the law. On September 3, 2007,
President Bush signed the "First Higher Education Extension
Act of 2007" (P.L. 110-44) to extend HEA through July 31, 2007.
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Background
Title IV of the Higher Education Act of 1965 authorizes the use
of federal loan, grant, and scholarship programs to help students
meet the financial requirements of pursuing post-secondary, graduate
or professional education.
Through the Federal Stafford Loan Program many students are able
to enter and complete educational programs that train health professionals.
This program is a federally guaranteed, low-interest-rate loan for
students. There are two types of Federal Stafford loans: subsidized
(need-based) and unsubsidized (non-need-based). Both types allow
deferment of payments until the student leaves school. The government
pays the interest on a subsidized loan while the student is in school.
With unsubsidized loans, the interest begins accruing when the loan
is funded, although interest payments can be deferred until principal
payments begin.
Health professions students may borrow a maximum of $40,500 per
year ($8,500 subsidized/$32,000 unsubsidized), to a total of $65,500
subsidized and an aggregate amount of $189,125 (subsidized and unsubsidized).
Each loan carries a six-month grace period following graduation
or non-enrollment before repayment begins. Borrowers may delay the
actual repayment of loans by applying for deferments and/or forbearance.
The government continues to pay subsidies during the grace period
and during the periods of deferment.
Federal Stafford loans are offered either through the William D.
Ford Federal Direct Loan (Direct Loan) Program, or through the Federal
Family Education Loan (FFEL) Program, the private alternative to
the Direct Loan program. Under the Direct Loan program, loans are
originated by colleges and universities, rather than banks or guaranty
agencies, and the Department of Education, on behalf of the federal
government, provides the capital. Under the FFEL program, funding
is provided by individual lending institutions, which provide their
own private capital.
The Federal Perkins Loan Program is a need-based loan available
to undergraduate, vocational, and graduate students enrolled or
accepted for enrollment at participating schools. A qualified student
may borrow up to $5,000 for each year of graduate or professional
school to a maximum of $30,000 (including any Federal Perkins Loans
borrowed as an undergraduate). The interest rate for the Federal
Perkins Loan is fixed at 5 percent. Repayment begins nine months
after graduation and can be deferred for two years during medical
residency. Students have ten years to repay this loan.
Contacts
Matthew Shick, Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 828-0525
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