150% DIRECT SUBSIDIZED LOAN LIMITS

AGENDA Overview Calculation components Adjusting, Updating, Notifications NSLDS processing CPS processing

OVERVIEW 150 % rule referred to as SULA (Subsidized Usage Limitation Applies) went into effect on 7/1/13 and impacts student with no outstanding balance on that date who subsequently borrow a direct loan A first time borrower is one who has no outstanding balance on or after 7/1/13 or who: Had loans prior to 7/1/13, but repaid them in full and are borrowing again after 7/1/13; or Had a TEACH grant convert to an unsub loan on or after 7/1/13; Students who borrow the maximum 150% and who do not complete the program and continue in the program or enrolls in a program of the same or lesser length loses the interest subsidy from that point forward on outstanding loans

OVERVIEW CONT’D DOE responsibilities include: Calculating maximum eligibility period, subsidized usage period, and remaining eligibility period Notifying students, servicers and schools of the MEP, SUP and REP and the loss of interest subsidy Monitoring compliance with the loan period and academic year reporting Institutional responsibilities include: Loan counseling expands what information the students are to receive which became effective on July 1, 2013 Beginning with the direct loan processing year (March/April) the school will begin to report additional information about the programs and the enrollment level of the students.

OVERVIEW CONT’D Program information CIP code Credential level Published length of program Length of TIV academic year Student’s enrollment level(FT, TQT, HT) Teacher certification program flag Flags for prep coursework Payment period begin date Academic year (not new) Loan period (not new)

CALCULATION COMPONENTS Maximum eligibility period (MEP) 150% of the published length of the program Subsidized usage period (SUP) Periods of subsidized borrowing Remaining eligibility period (REP) All of these components will be calculated in COD and they reflect period of time, not dollar amounts

MAXIMUM ELIGIBILITY PERIOD MEP is usually reported in years, but can also be reported in weeks or months Definitions for programs measured in months/weeks Month = 30 days Week = 7 days Calculation of program length in years Years = years Months = (30 days x # months reported)/(#weeks in the academic year X7) Weeks = # of published weeks/# weeks in the academic year Program length x 150% = maximum eligibility period

SUBSIDIZED USAGE PERIOD COD calculates the length of the loan period in days/length of the academic year in days with a few exceptions: If borrower receives full annual loan limit for less than a full academic year, the usage period will be 1. Proration is completed for ¾ time and ½ time students’ usage periods (except for non-term or clock hour programs) Loans fully cancelled or refunded within 120 days are not counted Rounds to the nearest tenth of a year Calculated on a loan-by-loan basis

SUBSIDIZED USAGE PERIOD, CONT’D Loan periods must be updated to include only periods during which the student retained loan proceeds (withdrawals) Academic years must be updated If summer term is not required, but student attends and receives loan BBAY if student is not progressing as scheduled Reporting of loan periods applies to all loan types, not just subsidized loans for any loan disbursed on or after 7/1/13.

REMAINING ELIGIBILITY PERIOD If the subsidized usage period is > than the remaining eligibility period the loan will reject. The loan can be “reconfigured” to reduce SUP to maintain some of the student’s eligibility by: Using a loan period with fewer terms (credit-hour, term based) Not packaging (borrowing) the full amount of the annual loan limit Attending less than full-time

SUP ADJUSTMENT EXAMPLE Remaining eligibility period is.7 of a year Student wants to borrow full loan for Original dates: Loan period 9/10/15 – 5/10/16 Academic year 9/10/15 – 5/10/16 SUP is 1.0 years Modified dates: Loan period is 9/10/15 – 12/20/15 Academic year remains the same SUP is now.5 of a year

12 Loan Periods and Academic Years SUP will be too high if … loan period is too long because it contains terms/payment periods where no disbursement was made/retained academic year is too short - less than school’s defined and/or less than regulatory 26 or 30 weeks SUP =

UPDATING If disbursements are made, update in COD by zeroing out unused disbursements and shortening loan period to period for which the disbursement was made. For clock hour or non-term programs if the student doesn’t progress, the loan period and academic year needs to be lengthened. If the student now decides to attend and borrow for the summer you can either extend the loan period (and academic year) or create a new loan period

NOTIFICATIONS COD generated messages and reports are sent to school whenever a change occurs Subsidized eligibility page on COD Disclosure statement for each accepted loan record sent to student with total SUP and REP SAR contains total SUP and notification if subsidy is lost Fed servicer notifies student if interest subsidy is lost Information is also on NSLDS

NSLDS NSLDS is fed data daily from COD Used by NSLDS to calculate eligibility for continued subsidy Includes student, award and disbursement data NSLDS is also updated by institutional enrollment data Displays SULA flag Subsidized usage page shows MEP, SUP, program level enrollment and REP COD calculates SUP and NSLDS calculates MEP and REP and determines if loan subsidy is lost

LOSS OF INTEREST SUBSIDY Students lose their interest subsidy on the date that their usage period exceeds their maximum eligibility Subsidy is lost for all periods including grace, deferments and forbearance periods Loss on interest subsidy is not retroactive, but interest will begin to accrue on the date that their subsidy was lost Students do NOT lose their interest subsidy if: They enroll in a graduate or professional program They enroll in prep coursework for a graduate or professional program They are enrolled in teacher certification program for which the school does not issue a certificate. This would be coursework necessary for the student to obtain their first state certification without the need for institutional certification. They complete the prior program and then transfer to another program.

LOSS OF INTEREST SUBSIDY CONT’D Remaining Eligibility Period <= 0 No Completion Triggering Enrollment Subsidy Loss

LOSS OF INTEREST SUBSIDY, CONT’D Examples: Student is enrolled in 4 year program, but doesn’t complete for 7 years. The student is no longer eligible for subsidized loans and they lose the interest subsidy. Student is enrolled in 4 year program and transfers to a 2 year program after attending 4 years without completing the program. The student is not eligible for subsidized loans for the 2 year program since the 2 year program has a maximum eligibility of 3 years and the student already used 3 years of subsidized loans. The student also loses the interest subsidy. Conversely, a student completes a 4 year program after using 4 years of subsidized loans. He then transfers to a 2 year program which has a maximum eligibility of 3 years. The student has no subsidized loan eligibility, but he does not lose the interest subsidy since he completed the previous program. Student uses the full 6 years of eligibility for his 4 year undergraduate program. He continues on to do a graduate program. The student maintains his interest subsidy.

NSLDS – LOSS OF SUBSIDY NSLDS distributes LOS data to the federal loan servicers daily Federal loan servicers apply the LOS and respond to NSLDS weekly LOS data is displayed on NSLDS after the federal loan servicer responds LOS data is sent to CPS and studentloans.Gov

CPS Receives data to identify first-time borrower Monitors first-time borrower enrollment Provides data to school and borrowers via the ISIR and SAR Comment code 267 – there is a limit to the total amount of subsidized federal student loans that you may receive. Please refer to studentaid.Gov…

UNSUBSIDIZED LOAN ELIGIBILITY Students must first borrow all available subsidized loans for which they are eligible before they can borrow and unsubsidized loans. If the borrower is eligible for $200 or less in subsidized loans, the student may borrow that amount, plus their remaining eligibility from the unsubsidized loan.

REFERENCES IFAP.ED.GOV – 150% DIRECT SUBSIDIZED LOAN LIMIT INFORMATION Q & A OR FSA TRAINING CONFERENCE PRESENTATION – SESSION 27

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