Lenders Encouraged to Consider Economic-Hardship-Deferment Requests According to Department’s Clarification

The U.S. Department of Education recently clarified that lenders may continue to grant economic-hardship deferment based on a borrower’s certification of that borrower’s eligibility under the debt-to-income ratio criterion expressed in section 2, number 6 of the Economic Hardship Deferment Request form.

Some lenders had interpreted the statutory changes of the College Cost Reduction and Access Act as ending this option for economic-hardship deferment, and have denied borrowers deferment based on their interpretation of the law’s impact. Based on the Department’s clarification, USA Funds^® asks lenders and loan-servicers to amend procedures to ensure that borrowers applying for loan deferment under these provisions receive every consideration with respect to their deferment eligibility.

Changes to the economic-hardship-deferment criteria may be part of the negotiated-rulemaking discussions scheduled to begin late this year or in early 2008. USA Funds will keep lenders and schools informed of changes that result from that process as they develop.

You will need Adobe Reader to access the Economic Hardship Deferment Request form on the USA Funds Web site.