(Nov. 8, 2007) On November 1, the Department of Education published final regulations in the Federal Register (Vol. 72 FR 61960-62011). These regulations reflect recent changes in the Higher Education Act (HEA) and are the product of a year-long negotiated rulemaking that concluded April 18. The internal Negotiating Committee on Student Loans, formed April 24 by Secretary of Education Margaret Spellings, completed the regulations. The final regulations also address certain provisions of the "College Cost Reduction and Access Act of 2007" (P.L. 110-84) that became effective on October 1.
The regulations preserve the current definition of the economic hardship deferment debt-to-income ratio pathway, which is of great importance to medical residents. The existing debt-to-income ratio that allows medical residents to qualify for economic hardship deferment and postpone payment of their educational loans for up to three years had been eliminated by the College Cost Reduction and Access Act. According to a letter from Assistant Secretary of Education Terrell Halaska to House Education and Labor Ranking Member Howard "Buck" McKeon (R-CA), the Department will continue to offer the economic hardship deferment for borrowers that meet the debt-to-income ratio qualifying criteria. The letter does not indicate any end date for the debt-to-income ratio pathway. The letter also states the Department's intentions to publish a Dear Colleague Letter on this issue. AACOM supported postponing the elimination of the debt-to-income ratio in an October 30 letter to Secretary Spellings.
The regulations include a change in another provision of the economic hardship deferment that will increase the debt-to-income ratio by 50 percent, making more residents eligible for the deferment. Previously, a resident's monthly income less monthly loan payments could not exceed 220 percent of the federal poverty line for a family of two. Under the new regulations, a resident's monthly income less monthly loan payments can reach up to 330 percent of the federal poverty line for the borrower's family size.