Department Publishes Final Regulations on 9/11 Loan Discharge

The U.S. Department of Education published final regulations on provisions authorized in the Third Higher Education Extension Act of 2006. These provisions authorize the discharge of the outstanding balance of certain Perkins, Federal Family Education Loan Program and direct loans for survivors of eligible public servants and other eligible victims of the Sept. 11, 2001, terrorist attacks.

The Department previously published interim final rules to provide for loan discharge to eligible family members and victims of the attacks. The final rules, effective Oct. 29, amend those interim final rules.

The following are some key changes in the final rules:

• Qualifying individuals must have sought medical assistance within 72 hours of the attacks. The interim final rules had indicated that the individuals must have sought medical help within 24 hours of the attack.
• The discharge provisions now include individuals who were aboard the aircraft used to perpetrate the terrorist acts.
• The parent of an eligible public servant may qualify for the discharge of a PLUS loan obtained for the child’s education or for discharge of the portion of a FFELP or Direct Consolidation loan that repaid a PLUS loan for that dependent.
• Regulations define the interest that the guarantor will remit to the lender in the claim payment when the loan is determined eligible for loan discharge.

If you have questions about these provisions, send e-mail to USA Funds^®’ policy experts.

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