Key elements of ExCEL

Key elements of ExCEL

  • Loan limits would mirror those in the Direct Loan Program. New borrowers could borrow IDEA loans up to the combined amount they could have borrowed from the subsidized and unsubsidized Stafford programs for their academic level (except that total would all be unsubsidized.) Graduate and professional students who could have borrowed an additional amount above their unsubsidized Stafford eligibility under the Grad PLUS program would be able to borrow that same amount in additional IDEA funds. The additional amount representing what would have been Grad PLUS would carry slightly different terms.
  • Origination fees would still be charged: 1 percent for the initial annual limit, but 4 percent for any additional amount corresponding to current Grad PLUS borrowing.
  • The interest cap would be calculated when the borrower’s in-school deferment ends. The cap would be 50 percent of the total amount outstanding on the day after the borrower is no longer enrolled at least half-time.
  • The repayment obligation would generally be 15 percent of income above 150 percent of the poverty line for the borrower’s household size, as reported in exemptions on the tax return. Borrowers exempt from tax filing based on income level would be assumed to have a repayment amount of zero. 
  • Like federal income tax, withholding would be based on projected earnings and remitted by the employer to the IRS. 
  • An in-school deferment would continue while the borrower is enrolled at least half-time, although interest would accrue and, if not paid during enrollment, be capitalized at the end of the in-school period. Interest would accrue, but not be capitalized, between the in-school period and the commencement of repayment. Interest would not be capitalized at any time once the repayment period begins.
  • Loan cancellation and discharge would be available for many of the conditions currently allowed for Stafford loans (death or disability, teaching, service in areas of national need, and civil legal assistance attorneys), but public service forgiveness would be eliminated for IDEA loans.
  • Although payment would be made through the IRS, the Department of Education would maintain contact with the borrower, sending quarterly statements. 
  • All new borrowers after the bill’s effective date (July 1, 2014) would only be able to borrow IDEA loans. Federal Direct Unsubsidized Loans and Grad PLUS would continue to be made until June 30, 2019, to students with outstanding Direct Loan Program loans. Subsidized Direct Loans would be eliminated. However, a current borrower could borrow IDEA loans instead, if all outstanding Direct loans are consolidated into an IDEA Consolidation loan.

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