Understanding Satisfactory Repayment Arrangement [Education]: Key Insights
Definition & Meaning
A satisfactory repayment arrangement refers to specific conditions under which a borrower can regain eligibility for federal student aid or consolidate a defaulted loan. To qualify, borrowers must make a certain number of consecutive, voluntary, and on-time payments on their loans. This arrangement aims to provide a structured path for borrowers to manage their debt responsibly and regain access to financial aid resources.
Legal Use & context
This term is primarily used in the context of federal student loans under the Higher Education Act (HEA). It is relevant in legal practices involving education law, particularly when addressing loan defaults and eligibility for federal financial aid. Borrowers can utilize legal forms and templates to create repayment plans or to apply for loan consolidation, which can help them manage their student debt effectively.
Real-world examples
Here are a couple of examples of abatement:
(Hypothetical example) A borrower named Sarah has defaulted on her federal student loans. To regain eligibility for federal aid, she makes six consecutive monthly payments of $200 each, directly from her bank account. After completing these payments, she successfully restores her eligibility.
(Hypothetical example) John has a defaulted loan and wants to consolidate it. He makes three consecutive payments of $150 each on time. After fulfilling this requirement, he is able to consolidate his loan into a new repayment plan.
Relevant laws & statutes
Key regulations governing satisfactory repayment arrangements are found in the Higher Education Act (HEA) and Title 34 of the Code of Federal Regulations (CFR), specifically 34 CFR 685.102 and 34 CFR 685.220. These laws outline the requirements for borrowers seeking to regain eligibility or consolidate their loans.