Return from military leave

[30Rock]

I realize that the Service Members Civil Relief Act (SCRA) states that if the loan is greater than 6% the service member can send a notice upon return from duty asking to lower the loan rate to 6%.

We have a plan sponsor trying to put a spin on this to say can the rate be lower than 6%. SCRA says the loan rate cannot exceed 6%.

My view is that this only helps if lets say the original loan is 9% interest and upon return from military leave he wants to reduce it to 6% this is ok. But lower than 6%??

[RCK]

I do not see any grounds for decreasing the rate to less than 6%.

As I understand it, within 180 days after return from service, the servicemember can request a reduction in the loan rate FOR THE PERIOD OF SERVICE, and any interest in excess of 6% is 'forgiven'.

The concept seems pretty straightforward. You would have to go back and recalculate the existing loan balance based on the actual cashflow and 6%, but that is just arithmetic.

And the only way that the rate is less than 6% is if the original rate was less than 6%.