Summary of Federal Laws

 

Financial Aid Programs

 

Servicemembers' Civil Relief Act of 2003 (formerly Soldiers and Sailors Civil Relief Act of 1940)
50 USC app. 502 et. seq.

 

Signed by the President on Dec. 19, 2003, this law replaces the Sailors' Civil Reflief Act of 1940.

 

 

Of relevance to institutions of higher education is the provision at 50 U.S.C. app. 527 which addresses debts incurred before military service and states in relevant part as follows:

 

 Interest Rate Limitation:  

 

An  obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemembers's spouse jointly, before the servicemember enters military service shall not bear interest at a rate of excess of 6 percent during the period of military service.  

 

****Note that pursuant to 20 USC § 1078(d), the 6% cap is inapplicable to student loans. ****

 

 

 

 

Resources

Homeland Security web page on SCRA

 

Added 10/26/99.
NAFSAA link added 10/9/01

updated 1/11/07 to add note that 6% cap not applicable to student loans and to clarify updates to law
links updated 6/23/08 rab