Congress has demonstrated its commitment to providing education benefits to members of the armed forces who are interested in pursuing postsecondary education since the enactment of the Servicemen’s Readjustment Act of 1944, also known as the GI Bill of Rights. Since that time other programs have been implemented to meet the educational needs of servicemembers, including the current Montgomery GI Bill, which provides education assistance to veterans and active duty, Reserve, and National Guard servicemembers. As of fiscal year 2007, active duty servicemembers can receive up to $1,075 monthly for a maximum of 36 months, while Reservists can receive up to $309 monthly for a maximum of 36 months. In fiscal year 2005, another program, the Reserve Educational Assistance Program, was implemented to provide benefits for Reservists who are called or ordered to active duty in response to a war or national emergency. Those who meet the length of service requirement can receive up to $827 toward their education, per month for 36 months. Congress has also given the Army, Navy, Marines, Air Force, and Coast Guard the ability to provide tuition assistance to active duty servicemembers and members of the Reserves and National Guard. These servicemembers can currently receive up to $4,500 in tuition assistance benefits annually. In addition to these targeted programs, servicemembers may be eligible to participate in the federal student financial aid programs authorized by Title IV of the Higher Education Act, which authorizes federal grant and loan programs for all eligible students. Specifically, if their military education benefits, income, and assets do not fully cover the estimated cost of attendance, servicemembers may be eligible for federal Pell grants, which do not have to be repaid, as well as federally subsidized Stafford and Perkins student loans, on which the federal government pays the interest while the borrower is in school. Servicemembers, like other borrowers, may also qualify for unsubsidized federal Stafford and PLUS loans if they do not demonstrate financial need. Because these loans are not subsidized by the federal government, borrowers are responsible for paying all of the interest that accrues on the loan from the time the loan is disbursed until it is paid in full. The Higher Education Relief Opportunities for Students (HEROES) Act of 2003 was enacted to recognize the difficulties that postsecondary students and federal student financial aid recipients serving on active duty may experience in transitioning in and out of college and repaying their student loans. The law covers individuals who are serving on active duty, during a war, other military operation or national emergency, including members of the National Guard serving on full-time active duty and Reserves who are called to active duty. The law extends much of the relief that Congress initially provided in the HEROES Act of 2001, following the tragic events of September 11, 2001. Specifically, the HEROES Act of 2003 authorizes the Secretary of Education to waive or modify any statutory or regulatory provisions relating to federal student financial aid to minimize the financial impact and administrative requirements for individuals who are serving on active duty. The law requires Education to report to Congress on the impact of its efforts within 15 months of exercising its authority. While the law does not require postsecondary schools to assist students who leave for active duty service, it encourages them to provide tuition refunds for incomplete coursework and to minimize reapplication requirements. Federal student financial aid provisions include a number of options designed to allow any federal student loan borrowers—whether serving on active duty in the military or not—to postpone repayment. For example, borrowers are not expected to make payments on their loans while enrolled in school on at least a half-time basis, while completing a graduate fellowship, or for the first 6 or 9 months after they have left school, known as the grace period. There are also options that allow borrowers to postpone repayment if they are having difficulty meeting their repayment schedule. Borrowers may qualify for a deferment if they have been unable to find full-time employment or can demonstrate economic hardship. Additionally, members of the armed forces may qualify for a military deferment while they are serving on active duty during a war, other military operation, or national emergency. Borrowers who are not eligible for any of the deferment options can request forbearance, a temporary period during which loan payments are either reduced or postponed. While borrowers do not have to make loan payments during in-school, grace, deferment, or forbearance periods, whether or not they are responsible for paying the interest that continues to accrue depends on the type of loan and postponement, as shown in table 1. Education has implemented HEROES by waiving and modifying certain federal student financial aid provisions to ease the financial impact and administrative burden of meeting aid obligations for recipients serving on active duty. The extent to which servicemembers are benefiting from these waivers and modifications is not known, however, because Education has not collected key information that would allow it to assess the impact of these changes as required by HEROES. To help federal student financial aid recipients who are serving on active duty avoid negative financial consequences, such as loan default, Education has expanded opportunities to avoid or postpone repayment of federal student grants and loans. Students who leave school for active duty service no longer have to return or repay federal grant funds for academic terms they were unable to complete. Moreover, students who leave school for active duty service are considered to be still enrolled in school, which means that they do not yet have to begin repaying their student loans. Similarly, Education has expanded opportunities to postpone repayment for borrowers serving on active duty who are out of school or enrolled less than half-time. Specifically, under the HEROES waivers, if borrowers were in a grace period at the time of departure, lenders are required to maintain loans in a grace period for up to 3 years while the borrower is performing active duty service and provide borrowers with a full 6-month or 9-month grace period once they return, depending on the type of loan. Borrowers in repayment no longer have to provide their lender written documentation of active duty service to have loan repayment suspended for up to 1 year. Instead, under the HEROES waivers, lenders must suspend loan payments based on verbal notification from borrowers or another reliable source. Figure 1 illustrates the options available to suspend or postpone loan repayment for federal student loan borrowers serving on active duty. Education’s waivers and modifications also cover borrowers who had already defaulted on their student loans at the time of departure. Specifically, Education has waived the provisions that require schools and guaranty agencies to attempt to collect on defaulted loans while the borrower is performing active duty service. Education has also waived requirements related to getting loans out of default. Specifically, once a borrower has defaulted on a loan, he or she can usually “rehabilitate” it by making 12 consecutive on-time payments. To ensure that borrowers on active duty service are not penalized, Education has waived the requirement so that any payments that are missed during active duty service or during a 3-month transition period upon return will not be treated as an interruption. The waivers and modifications also encourage schools to use their professional judgment in determining financial need for students whose family income has been affected by active duty service, regardless of whether the student or the student’s parent or spouse is serving on active duty. Education’s waivers and modifications allow financial aid administrators to consider more current financial information than what students typically submit when applying for federal student financial aid if it reduces the amount the student and his or her family would be expected to pay toward the cost of attendance. For example, the expected family contribution for the 2006-2007 academic year would typically be calculated using financial information from the 2005 calendar year, but the waivers and modifications allow financial aid administrators to use financial information from the 2006 calendar year for those serving on active duty and their spouses and dependents. Financial aid administrators need not make this adjustment if doing so will provide no financial benefit to the student, such as in cases in which active duty service leads to an increase in income. Education’s waivers and modifications also ease the administrative, or “paperwork,” burden federal student financial aid recipients may experience when they are serving on active duty. For example, Education has made allowances for borrowers who have to depart quickly by requiring lenders to accept notification from someone acting on the borrower’s behalf, such as a spouse or parent. Education has also relaxed the requirement that postsecondary schools obtain written authorization from a borrower regarding the disbursement of financial aid when military service would make complying with this requirement difficult. Under the waivers and modifications, borrowers serving on active duty also have more time to cancel a student loan. While borrowers normally have 14 days from receiving notification from their school that their loan has been credited to their account to cancel all or a portion of their student loan, borrowers serving on active duty have 60 days. Education officials told us that when they developed the waivers and modifications, they began by considering which federal student financial aid provisions could have negative financial consequences for individuals eligible for relief under HEROES and then conducted internal brainstorming sessions to identify options for relief. The officials said the process was guided by the understanding that Education was charged with waiving and modifying existing statutory and regulatory provisions, not creating new regulations or spending additional funds. Prior to issuing the waivers and modifications, Education officials reached out to industry groups, such as the National Association of Student Financial Aid Administrators and the National Council of Higher Education Loan Programs, to discuss the changes being considered and elicit additional ideas on how to best assist students and federal student financial aid recipients serving on active duty.