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The Higher Education Act of 1965 is a long and complicated piece of legislation. This complexity leads to more than just confusion. Unanticipated interactions between sections of the act have lead to many loopholes. This page presents a brief overview of the major loopholes. Many of these loopholes were first discovered and publicized by Mark Kantrowitz, publisher of FinAid, and have saved students and parents billions of dollars in interest.

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Education Loan Loopholes

The major education loan loopholes include:

• 0.25% Reduction in Interest Rates on 8.5% Fixed Rate PLUS Loans through Consolidation (Effective July 1, 2006.)

• Grace Period Loophole (still in effect)

• Early Repayment Status Loophole (Confirmed May 16, 2005, repealed effective July 1, 2006)

• Single Holder Rule Loopholes (Single Holder Rule repealed June 15, 2006)

• In-School Interest Rate Loophole (Rendered moot by the switch to fixed rates July 1, 2006)