Military Mobilization

The U.S. Department of Education has recently released the following guidance for treatment of students and borrowers who have been ordered to active military duty and for active duty military personnel whose duty station has been changed as a result of a military mobilization.  The NHHEAF Network is committed to helping our customers through this difficult time.

FFELP, TREE^SMor LEAF^SM loans are in an in-school, in-school deferment, or grace period status

If a borrower's loan is in an in-school status or an in-school deferment status, or in a grace period status when the borrower is ordered to active duty or reassigned, we will maintain the loan in that status during the period of the borrower's active duty service or reassignment, plus the time necessary for the borrower to resume enrollment in the next regular enrollment period that is reasonably available to the borrower, if the borrower is planning to go back to school.  However, this maintenance of loan status may not exceed a total of 3 years, including the period of time necessary for the borrower to resume enrollment.  Additionally, if the loan was in a grace period status at the time the borrower was ordered to active duty, the period of time during which the borrower served on active duty will be excluded from the grace period in order to ensure that the borrower receives the full grace period in the future.

Borrowers whose FFELP, TREE^SMor LEAF^SM are in repayment

If a borrower's loan is in repayment we will grant the borrower a forbearance or deferment based upon the request of the borrower, a member of the borrower's family, or another reliable source.

Borrowers whose FFELP loans are in default status

If a borrower is in default on a loan, we will, upon being notified that the borrower has been called to active duty or reassigned, cease all collection activities for the expected period of the borrower's military service.  Collection activities must resume no later than 30 days after the end of the borrower's military service.

Applicability of the Soldiers' and Sailors' Civil Relief Act of 1940

The Soldiers' and Sailors' Civil Relief Act of 1940 only applies if an FFEL guaranty agency or a Perkins school lender is suing a borrower who is covered by that Act.  That Act prevents a creditor from obtaining a default judgment in court.  It does not prohibit other collection efforts. A borrower's interest rate is not affected by the provision of the Act restricting interest charged to certain borrowers in military service, because section 428(d) of the Higher Education Act states that no provision of any law which limits the interest rate on a loan shall apply to the FFEL Program.

Alternative loans, TREE^SM, LEAF^SM, and ALPS^SM, will bear an interest rate not to exceed 6% as defined by this act for the period of military mobilization.

Higher Education Reconciliation Act of 2005 Military Deferment   

For loans first disbursed on or after July 1, 2001, there is a new military deferment available for qualifying duty. The deferment shall not last more than three years, and applies only to periods during which borrowers are serving on active duty during a war or other military operation or national emergency or performing qualifying National Guard duty during those times. In some cases, a borrower may be eligible for a military deferment on loans first disbursed on or after July 1, 2001, but ineligible for the deferment on older loans. As a result, not all active duty military personnel are eligible for this new deferment. This loan deferment does not authorize the refunding of any loan repayment already made by a borrower at the time of the deferment is granted. A borrower consolidating loans first disbursed on or after July 1, 2001, is eligible for the new deferment on the entire Consolidation loan, but only if all of the borrower's Title IV loans included in the Consolidation Loan were first disbursed on or after July 1, 2001.