What happens when a participant with an outstanding loan balance goes on a leave of absence?
If a participant goes on an approved leave of absence without pay (or is receiving a rate of pay that is less than the amount of the loan repayment), no loan repayments are required for one year. However, the term of the loan cannot be extended past five years from the original loan request. Further, the loan repayment amount after the leave of absence must not be less than the payment required under the terms of the original loan. Examples: • Ben Baker requests a loan of $2,000 to be paid over three years. After the first year, he goes on an approved leave of absence without pay. He returns after one year and resumes his loan repayments. He pays off his loan in full after four years. (He would not be allowed to extend his loan for five years because his payment amount would be less than the payment required under the original loan.) • Kemp Baker requests a loan of $2,000 to be paid over five years. After the third year, he goes on an approved leave of absence without pay. He returns t
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