Interest Rate; Recalculation

  1. Law
  2. Georgia Code
  3. Education
  4. Postsecondary Education
  5. Scholarships, Loans, and Grants
  6. Georgia Student Finance Authority
  7. Education for Public Service Student Loan
  8. Interest Rate; Recalculation

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  1. Subject to the provisions of Code Section 20-3-405.4, the annual interest rate for any EPS Student Loan shall be converted to 1 percent retroactive to the origination date of the EPS Student Loan for each student who:
    1. Completes his or her course of study and earns the degree with a cumulative grade point average no lower than 2.0 on a 4.0 scale; and
    2. Completes the number of years of public service required by this paragraph:
      1. If a student has earned one degree with the assistance of one or more EPS Student Loans, the annual interest rate for each such EPS Student Loan shall be converted to 1 percent after the completion of five years of public service; or
      2. In the case of a student who has earned two degrees with the assistance of two or more EPS Student Loans, the interest rate for any EPS Student Loan used for the first degree shall be converted to 1 percent after the student has completed five years of public service. The interest rate for any EPS Student Loan used for the second degree may be converted to 1 percent after the student has completed ten years of public service, or the student may elect to apply the sixth through tenth years of public service to convert the EPS Student Loans used for the first degree to interest-free loans under subsection (b) of this Code section.

        In the case of a student whose public service preceded the student's earning of the degree, the conversion of the EPS loans to 1 percent shall be on the date the student earns the degree.

  2. Subject to the provisions of Code Section 20-3-405.4, an EPS Student Loan for the first degree may be converted to an interest-free loan retroactive to the origination date of the EPS Student Loan for each student who:
    1. Completes his or her course of study and earns the degree with a cumulative grade point average no lower than 2.0 on a 4.0 scale; and
    2. Completes the number of years of public service required by this paragraph, and for conversion of one or more EPS Student Loans, completes five years of public service in addition to:
      1. The service required by subparagraph (a)(2)(A) of this Code section, for a total of ten years of public service, if the student earned one degree with the assistance of EPS Student Loans, or the student may elect to apply the fifth through tenth years of public service to conversion of EPS loans for a second degree to 1 percent loans; or
      2. The service required by subparagraph (a)(2)(B) of this Code section, for a total of 15 years of public service, to convert the loan or loans for the second degree if the student earned two degrees with the assistance of EPS Student Loans.

        In the case of a student whose public service preceded the student's earning of the degree, the conversion of the EPS loans to interest-free loans shall be on the date the student earns the degree.

  3. When the annual interest rate is converted to 1 percent in accordance with subsection (a) of this Code section, the authority shall recalculate the balance owed on the loan to reflect the retroactive change in the interest rate.
  4. The steps of the recalculation required by subsections (a) and (c) of this Code section shall include the following:
    1. Calculate the total interest paid by the student on the loan to date;
    2. Calculate the total principal paid by the student on the loan to date;
    3. Calculate the total of fees other than interest paid by the student on the loan to date;
    4. Calculate the current balance owed on the loan by subtracting the principal paid by the student on the loan to date from the original amount borrowed;
    5. Calculate the amount of interest due on the loan from its origination to date at the rate of 1 percent;
    6. Subtract the amount of interest due at 1 percent calculated in paragraph (5) of this subsection from the total interest paid by the student to date calculated in paragraph (1) of this subsection;
    7. Add the difference calculated in paragraph (6) of this subsection to the principal paid by the student to date in paragraph (2) of this subsection; this sum shall become the new total principal paid by the student on the loan; and
    8. Subtract the new principal paid calculated in paragraph (7) of this subsection from the original amount borrowed by the student in this loan to produce the new balance owed by the student on the loan. If the new principal paid calculated in paragraph (7) of this subsection equals or exceeds the original amount borrowed by the student in this loan, the new balance is zero.
  5. When an EPS Student Loan is converted to an interest-free loan in accordance with subsection (b) of this Code section, the authority shall recalculate the balance owed on the loan to reflect the retroactive change in the interest rate. This recalculation shall be based upon the loan as it exists when it is converted to an interest-free loan.
  6. The steps of the recalculation required by subsections (b) and (e) of this Code section shall include the following:
    1. Calculate the total interest paid by the student on the loan to date;
    2. Calculate the total principal paid by the student on the loan to date;
    3. Calculate the total of fees other than interest paid by the student on the loan to date;
    4. Calculate the current balance owed on the loan by subtracting the principal paid by the student on the loan to date from the original amount borrowed;
    5. Add the amount of interest calculated in paragraph (1) of this subsection to the principal paid by the student to date in paragraph (2) of this subsection; this sum shall become the new total principal paid by the student on the loan; and
    6. Subtract the new principal paid calculated in paragraph (5) of this subsection from the original amount borrowed by the student in this loan to produce the new balance owed by the student on the loan. If the new principal paid calculated in paragraph (5) of this subsection equals or exceeds the original amount borrowed by the student in this loan, the new balance is zero.

(Code 1981, §20-3-405.3, enacted by Ga. L. 2008, p. 626, § 4/SB 169; Ga. L. 2009, p. 8, § 20/SB 46.)


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