Congress Passes Technical Corrections to Reauthorization

The U.S. Congress has passed legislation making technical corrections to the Higher Education Act. Although the measure primarily corrects typographical errors in the Higher Education Opportunity Act, which reauthorized student aid programs, the legislation contains the following substantive provisions:

• To help borrowers rehabilitate defaulted loans and clean up their credit records, the measure permits guarantors that are unable to find lenders willing to purchase rehabilitated loans to instead assign them to the U.S. Department of Education. The legislation also allows rehabilitated loans purchased by lenders after Oct. 1, 2003, and before July 1, 2010, to be eligible for the Department’s loan purchase programs.
• The measure permits lenders and guarantors to provide entrance counseling in addition to exit counseling without running afoul of prohibited inducement guidelines.
• The legislation includes provisions affecting education aid to veterans and their survivors. The measure updates the definition of veteran’s benefits and moves up to July 1, 2009, the exclusion of those benefits from the calculation of a student’s estimated financial assistance, so the new GI Bill benefits won’t be counted against a student’s EFA. The measure also provides an Iraq and Afghanistan Service Grants scholarship in the amount of the maximum Pell Grant award to students whose parents or guardians died during military service in Iraq or Afghanistan after Sept. 11, 2001.

President Obama is expected to sign the legislation.