The Higher Education Reconciliation Act of 2005 (HERA)
The Higher Education Reconciliation Act of 2005 (HERA) changed some of the terms of Federal Stafford, PLUS, and Consolidation Loans made under the Federal Family Education Loan Program (FFELP). As a result, certain terms of the loan(s) you received under your Federal Stafford or Federal PLUS Loan Master Promissory Note (MPN) or your Federal Consolidation Application/Promissory Note now differ from the terms found in your Promissory Note(s) and Borrower’s Rights and Responsibilities Statement(s).
The following information describes the changes that may affect you.
- For Stafford Loan borrowers only, during the in-school, grace, and deferment periods and during any period in which you are on active-duty military service, your lender will postpone and align principal payments on your outstanding FFELP loans, except for Federal PLUS Loans and Federal Consolidation Loans.
- A loan is eligible for discharge if it is determined that the borrower’s eligibility for the loan was falsely certified as a result of a crime of identity theft.
- Effective for consolidation applications received on or after July 1, 2006, a married couple may no longer borrow a Federal Consolidation Loan as joint borrowers.
- Effective for July 1, 2006, for loans with a first disbursement made on or after July 1, 2001, a deferment is available for a period of up to three years during which a borrower is serving on active duty during a war or other military operation or national emergency, or performing qualifying National Guard duty during a war or other military operation or other national emergency. For Consolidation Loan borrowers, all of the Title IV loans included in the Federal Consolidation Loan must have been disbursed on or after July 1, 2001 in order to be eligible for this deferment.