150% Direct Subsidized Loan Limit Webinar #1

Academic Year and Loan Period Reporting

June 4, 2013 and June 6, 2013

Overview

2

Law and Regulations Public Law 112-141, Moving Ahead for Progress in the

21th Century Act (MAP 21), enacted July 6, 2012. Amended the HEA to set a new limit on Direct Subsidized Loan eligibility.

Waive requirement for negotiated rulemaking and master calendar.

ED published Interim Final Rule on May 16, 2013. Regulations effective immediately upon publication Revises 34 CFR 685.200, 685.202, and 685.304. Comment period ends on July 1, 2013. See May 16 Electronic Announcement on IFAP.

Changes Limits Direct Subsidized Loan eligibility for first-time

borrowers as of July 1, 2013. No effect on unsubsidized or PLUS eligibility.

First-time borrower is a borrower who has no outstanding balance of principal or interest on a Direct Loan or FFEL loan on July 1, 2013, or on the date the borrower obtains a Direct Loan after July 1, 2013. Borrower who had loan balance and paid off in full prior to receiving loans on/after July 1, 2013, becomes “first-time borrower”.

4

Consequences First-time borrower is no longer eligible for Direct

Subsidized Loans once the borrower has received Direct Subsidized Loans for a period of 150% of the length of the borrower’s educational program.

Unless the borrower completed the program, continuing enrollment or enrollment in another undergraduate program of equal or lesser length results in the borrower losing interest subsidy benefits on outstanding subsidized loans, effective from the date of the continuing or new enrollment.

5

Components

Maximum Eligibility Period –150% of the published length of the educational program in which borrower is currently enrolled.

Subsidized Usage Period – Period of time for which a borrower received Direct Subsidized Loans.

Remaining Eligibility Period – Difference between the Maximum Eligibility Period and the Subsidized Usage Periods.

6

Maximum Eligibility Period Examples

Program Length Maximum Eligibility Period

5-Year Bachelor’s Degree

X 1.5 7.50 Years

4-Year Bachelor’s Degree

X 1.5 6.00 Years

2-Year Associate’s Degree

X 1.5 3.00 Years

1-Year Certificate Program

X 1.5 1.50 Years

7

Transfers Examples –

First time borrower received two years of subsidized loans while enrolled in a two-year program then, transfers to a four-year program. Borrower has a Remaining Eligibility Period of

four years. First time borrower received three years of

subsidized loans while enrolled in a four-year program, then transfers to a two-year program.

Borrower has a Remaining Eligibility Period of zero years.

8

Loss of Subsidy Benefits A first time borrower who loses eligibility for

additional subsidized loans, loses interest subsidy on subsidized loans received from July 1, 2013, if

Borrower did not complete the program and - Continues enrollment in same program; or Enrolls in another program of the same or

shorter length. Effective on date of continued or new enrollment. Borrower B from previous slide would have lost

interest subsidy upon enrolling in the two-year program.

9

Responsibilities

10

Department Responsibilities ED/FSA will track, calculate, and inform students

and institutions. CPS - Codes and comments on SARs and ISIRs

beginning with 2014-15 FAFSA processing. NSLDS – New Borrower NSLDS – Subsidized Usage Period NSLDS – Loss of Subsidy Indicator COD – Reports to schools COD – Editing and enforcement Direct Loan Servicers – Loss of Subsidy Benefits.

11

School Responsibilities -Counseling Loan Counseling –

Beginning July 1, 2013, schools must include in entrance counseling for first-time borrowers additional information as required by the new regulations at 34 CFR 685.304.

Encourage schools to provide to first-time borrowers who complete counseling prior to July 1.

Beginning June 28, 2013, entrance counseling materials on StudentLoans.gov will include information regarding the 150 percent limit.

See May 16 Electronic Announcement on IFAP.

12

School Responsibilities – Reporting Beginning with 2014-2015 schools will report to COD

and to NSLDS additional student and program information – Student’s Enrollment Level (FT, TQT, HT) Classification of Instructional Program Code (CIP) Credential Level (Certificate, Diploma, Degree) Length of Program – years, months, weeks Special Program Flag – Teacher Certification,

Preparatory

13

School Responsibilities

Loan Date Reporting to COD – Effective for all 2013-2014 loans, schools must – Correctly report to COD a Direct Loan’s Academic Year and Loan Period dates; and

Update such dates, when necessary. See Dear Colleague Letter GEN-13-13. Incorrect reporting could result –

In a borrower improperly losing eligibility for Direct Subsidized Loans.

14

Calculations

15

Components

Maximum Eligibility Period – 150% of the published length of the educational program in which borrower is currently enrolled.

Subsidized Usage Period – Period of time for which a borrower received Direct Subsidized Loans.

Remaining Eligibility Period – Difference between the Maximum Eligibility Period and the Subsidized Usage Periods.

16

Determining When 150% Limit Is Met

Maximum Eligibility Period,

less

Total Subsidized Usage Periods

equals

Remaining Eligibility Period.

150% Limit Met when Remaining Eligibility Period equals zero (or less than zero).

17

Calculating Subsidized Usage Period

Number of days in the loan’s loan period divided by number of days in the loan’s academic year. Loan period – Beginning and ending dates of period covered by loan.

Academic year – Beginning and ending dates of the academic year used for annual loan limit progression. Either a Scheduled Academic Year (SAY) or a

Borrower Based Academic Year (BBAY)

18

Calculating Subsidized Usage Period Example 1 – Semester based school’s Direct Loan

academic year is the fall and spring terms. Fall begins on August 27, spring ends on May 17There are 264 calendar days in the academic year.

Student receives a Direct Subsidized Loan to cover attendance for both fall and spring.Loan period begins August 27 and ends May 17.There are 264 calendar days in the loan period.

Subsidized Usage Period = 264/264 = 1.00

19

Calculating Subsidized Usage Period Example 2 – Semester based school’s Direct Loan

academic year is the fall and spring terms. Fall begins on August 27, spring ends on May 17There are 264 calendar days in the academic year.

Student receives a Direct Subsidized Loan to cover attendance for fall term only.Loan period begins August 27 and ends Dec 21.There are 117 calendar days in the loan period.

Subsidized Usage Period = 117/264 = 0.44Rounded down to next lowest .25 = 0.25

20

Reporting of Academic Year and

Loan Period

21

Dear Colleague Letter GEN-13-13

Dear Colleague Letter GEN-13-13 ,posted to IFAP on May 10, 2013, provides guidance and examples to schools related to how they must report a Direct Loan’s academic year dates and loan period dates to COD. Effective for all loans with a first disbursement on

or after July 1, 2013, even loans already originated.

22

COD Schema

23

COD Academic Year Schema Tags

A Direct Loan’s academic year tags in the COD schema are <AcademicYearBeginDate> and <AcademicYearEndDate>.

Schools must populate these tags with the exact beginning and ending dates of the loan’s academic year (the period to which the annual loan limit applies). A summer term that is treated as a header or trailer to a Scheduled Academic Year must be included in the academic year dates only if the student will actually be receiving a Direct Loan for the summer.

24

COD Loan Period Schema Tags

A Direct Loan’s loan period tags in the COD schema are <FinancialAwardBeginDate> and <FinancialAwardEndDate>. These tags must be populated with the exact dates of the loan period of the loan, and may need to be updated based on the student's actual enrollment or other eligibility issues.

25

Reporting and UpdatingExamples

(DCL-GEN-13-13)

26

Example 1: Borrower Attends for Full Academic Year

27

Student Enrollment PatternAnticipated Actual

Fall and Spring Fall and Spring

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period August 26, 2013 May 9, 2014 No Update No Update

Academic Year August 26, 2013 May 9, 2014 No Update No Update

Example 2: Borrower Withdraws After Completing One Semester

28

Student’s Enrollment PatternAnticipated Actual

Fall and Spring Fall Only

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period August 26, 2013 May 9, 2014 August 26, 2013 December 20,

2013Academic Year August 26, 2013 May 9, 2014 No Update No Update

Example 3: Borrower Completes Fall Semester but Withdraws During Spring Semester - All Spring Funds Returned

29

Student’s Enrollment PatternAnticipated Actual

Fall and Spring Fall, Withdrew in Spring

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period August 26, 2013 May 9, 2014 August 26, 2013 December 20, 2013

Academic Year August 26, 2013 May 9, 2014 No Update No Update

Example 4: Borrower Attends Spring Semester Only

30

Student’s Enrollment Pattern

Anticipated Actual

Spring Spring

School’s Reporting to COD

Initial Updated

Begin Date End Date Begin Date End Date

Loan Period January 6, 2014 May 9, 2014 No Update No Update

Academic Year August 26, 2013 May 9, 2014 No Update No Update

Example 5: Borrower Expects to Attend for Fall and Spring Semesters, but Begins Attendance in Spring Semester

31

Student’s Enrollment Pattern

Anticipated Actual

Fall and Spring Spring Only

School’s Reporting to COD

Initial Updated

Begin Date End Date Begin Date End Date

Loan Period August 26, 2013 May 9, 2014 January 6, 2014

May 9, 2014

Academic Year August 26, 2013 May 9, 2014 No Update No Update

Example 6: Borrower Initially Attends Fall and Spring Semesters and Subsequently Plans to Attend for Summer Term (Trailer)

The school has two options:

• Option 1: Originate a new loan for the summer term and extend the academic year ending date for the existing fall-spring loan to include the summer term.

• Option 2: Increase the loan amount of the existing fall-spring loan and extend both the loan period and the academic year ending dates to include the summer term.

32

Student’s Enrollment Pattern

Anticipated Actual

Fall and Spring Fall, Spring and Summer

Example 6: Borrower Initially Attends Fall and Spring Semesters and Subsequently Plans to Attend for Summer Term (Trailer) cont.

Option 1: Originating a New Loan

33

School’s Reporting to COD for Fall-Spring LoanInitially Updated

Begin Date End Date Begin Date End DateLoan Period August 26, 2013 May 9, 2014 No Update No Update

Academic Year August 26, 2013 May 9, 2014 August 26, 2013 August 1, 2014

School’s Reporting to COD for Summer-Only LoanInitially Updated

Begin Date End Date Begin Date End DateLoan Period May 24, 2014 August 1, 2014 No Update No Update

Academic Year August 26, 2013 August 1, 2014 No Update No Update

Example 6: Borrower Initially Attends Fall and Spring Semesters and Subsequently Plans to Attend for Summer Term (Trailer) cont.

Option 2: Extending the Academic Year and Loan Period for the Existing Loan

34

School’s Reporting to COD for Fall-Spring-Summer Loan

Initial Updated

Begin Date End Date Begin Date End Date

Loan Period August 26, 2013 May 9, 2014 August 26, 2013 August 1, 2014

Academic Year August 26, 2013 May 9, 2014 August 26, 2013 August 1, 2014

Example 7: Borrower Attends for the Summer Term (Header) and is Expected to Enroll for Fall and Spring Semesters

When the school originates a Direct Loan for Scott, it has two options:

• Option 1: Originate a loan for the summer term only

• Option 2: Originate a loan for the entire academic year, including the summer term and fall and spring semesters

35

Student’s Enrollment Pattern

Anticipated Actual

Summer, Fall and Spring Summer, Fall and Spring

Example 7: Borrower Attends for the Summer Term (Header) and is Expected to Enroll for Fall and Spring Semesters cont.

Option 1: Originating a summer-only loan

36

School’s Reporting to COD for Summer-Only LoanInitial Updated

Begin Date End Date Begin Date End DateLoan Period May 20, 2014 August 1, 2012 No Update No Update

Academic Year May 20, 2014 May 8, 2015 No Update No Update

School’s Reporting to COD for Fall-Spring LoanInitial Updated

Begin Date End Date Begin Date End DateLoan Period August 25, 2014 May 8, 2015 No Update No Update

Academic Year May 20, 2014 May 8, 2015 No Update No Update

Example 7: Borrower Attends for the Summer Term (Header) and is Expected to Enroll for Fall and Spring Semesters cont.

Option 2: Originating a loan for the full academic year

37

School’s Reporting to COD for Summer-Fall-Spring LoanInitial Updated

Begin Date End Date Begin Date End DateLoan Period May 20, 2014 May 8, 2015 No Update No Update

Academic Year May 20, 2014 May 8, 2015 No Update No Update

Example 8: Borrower Only Attends for Spring Semester (Borrower-based Academic Year

38

Student Enrollment PatternAnticipated Actual

Spring Spring

School’s Reporting to COD

Initial Updated

Begin Date End Date Begin Date End Date

Loan Period January 6, 2014

May 9, 2014 No Update No Update

Academic Year January 6, 2014

August 1, 2014 No Update No Update

Example 9: Borrower Enrolled in Clock-Hour Program That is One Academic Year in Length

39

Student’s Enrollment PatternAnticipated Actual

Length of Program Length of Program

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period July 29, 2013 January 31, 2014 No Update No Update

Academic Year July 29, 2013 January 31, 2014 No Update No Update

Example 10: Borrower Enrolled in Clock-Hour Program That is One Academic Year in Length, Withdraws Between Payment Periods

40

Student’s Enrollment PatternAnticipated Actual

Length of Program Withdrew After First Payment Period

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period July 29, 2013 January 31, 2014 July 29, 2013 October 25, 2013

Academic Year July 29, 2013 January 31, 2014 No Update No Update

Example 11: Borrower Enrolled in Clock-Hour Program That is One Academic Year in Length, Withdraws During Payment Period

All Funds Returned for Payment Period

41

Student’s Enrollment PatternAnticipated Actual

Length of Program Withdrew From Second Payment Period

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period July 29, 2013 January 31, 2014 July 29, 2013 October 25, 2013

Academic Year July 29, 2013 January 31, 2014 No Update No Update

Example 12: Borrower Enrolled in Clock-Hour Program That is Less Than One Academic Year in Length

42

Student’s Enrollment PatternAnticipated Actual

Length of Program Length of Program

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period July 1, 2013 September 20, 2013 No Update No Update

Academic Year July 1, 2013 December 27, 2013 No Update No Update

Example 13: Borrower Enrolled in Clock-Hour Program, Fails to Progress As Scheduled

43

Student’s Enrollment PatternAnticipated Actual

Length of Program, Timely Progression

Length of Program, Untimely Progression

School’s Reporting to CODInitial Updated

Begin Date End Date Begin Date End DateLoan Period July 1, 2013 September 20, 2013 July 1, 2013 October 4, 2013

Academic Year July 1, 2013 December 27, 2013 July 1, 2013 January 10, 2014

Example 14: Borrower Attends for the Fall Quarter, Does not Attend for Winter Quarter, Does Attend for Spring Quarter

44

Student’s Enrollment Pattern

Anticipated Actual

Fall, Winter, and Spring Fall and Spring

The school must originate the Direct Loan similar to what is done for a summer term:

• The original loan that covered the fall, winter, and spring terms must be updated to cover only the fall term.

• The school must originate another loan for the spring term if and when the student returns.

Example 14: Borrower Attends for the Fall Quarter, Does not Attend for Winter Quarter, Does Attend for Spring Quarter

45

School’s Reporting to COD for Initial Fall-Winter-Spring LoanInitial Updated

Begin Date End Date Begin Date End DateLoan Period September 25, 2013 June 6, 2014 September 25, 2013 December 6, 2013

Academic Year September 25, 2013 June 6, 2014 No Update No Update

School’s Report to COD for Subsequent Spring-Only LongInitial Updated

Begin Date End Date Begin Date End DateLoan Period March 31, 2014 June 6, 2014 No Update No Update

Academic Year September 25, 2013 June 6, 2014 No Update No Update

QUESTIONS?

46