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 , Moving Ahead for Progress in the 21th Century Act (MAP 21), enacted July 6, 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, Regulations effective immediately upon publication Revises 34 CFR , , and Comment period ends on July 1, See May 16 Electronic Announcement on IFAP.May 16 Electronic Announcement

Changes Limits Direct Subsidized Loan eligibility for first-time borrowers as of July 1, 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, 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 borrowers 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 LengthMaximum Eligibility Period 5-Year Bachelors Degree X Years 4-Year Bachelors Degree X Years 2-Year Associates Degree X Years 1-Year Certificate Program X 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 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 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.May 16 Electronic Announcement 12

School Responsibilities – Reporting Beginning with schools will report to COD and to NSLDS additional student and program information – Students 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 loans, schools must – Correctly report to COD a Direct Loans Academic Year and Loan Period dates; and Update such dates, when necessary. See Dear Colleague Letter GEN GEN 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 loans loan period divided by number of days in the loans 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 schools Direct Loan academic year is the fall and spring terms. Fall begins on August 27, spring ends on May 17 There 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 =

Calculating Subsidized Usage Period Example 2 – Semester based schools Direct Loan academic year is the fall and spring terms. Fall begins on August 27, spring ends on May 17 There 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 = 0.44 Rounded down to next lowest.25 =

Reporting of Academic Year and Loan Period 21

Dear Colleague Letter GEN 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 Loans 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 Loans academic year tags in the COD schema are and. Schools must populate these tags with the exact beginning and ending dates of the loans 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 Loans loan period tags in the COD schema are and. 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 Updating Examples (DCL-GEN-13-13) 26

Example 1: Borrower Attends for Full Academic Year 27 Student Enrollment Pattern AnticipatedActual Fall and Spring Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 26, 2013May 9, 2014No Update Academic YearAugust 26, 2013May 9, 2014No Update

Example 2: Borrower Withdraws After Completing One Semester 28 Students Enrollment Pattern AnticipatedActual Fall and SpringFall Only Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 26, 2013 May 9, 2014August 26, 2013 December 20, 2013 Academic YearAugust 26, 2013 May 9, 2014No Update

Example 3: Borrower Completes Fall Semester but Withdraws During Spring Semester - All Spring Funds Returned 29 Students Enrollment Pattern AnticipatedActual Fall and SpringFall, Withdrew in Spring Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 26, 2013 May 9, 2014August 26, 2013 December 20, 2013 Academic YearAugust 26, 2013 May 9, 2014No Update

Example 4: Borrower Attends Spring Semester Only 30 Students Enrollment Pattern AnticipatedActual Spring Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJanuary 6, 2014May 9, 2014No Update Academic YearAugust 26, 2013 May 9, 2014No Update

Example 5: Borrower Expects to Attend for Fall and Spring Semesters, but Begins Attendance in Spring Semester 31 Students Enrollment Pattern AnticipatedActual Fall and SpringSpring Only Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 26, 2013 May 9, 2014January 6, 2014 May 9, 2014 Academic YearAugust 26, 2013 May 9, 2014No 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 Students Enrollment Pattern AnticipatedActual Fall and SpringFall, 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 Schools Reporting to COD for Fall-Spring Loan InitiallyUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 26, 2013 May 9, 2014No Update Academic YearAugust 26, 2013 May 9, 2014August 26, 2013 August 1, 2014 Schools Reporting to COD for Summer-Only Loan InitiallyUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodMay 24, 2014August 1, 2014 No Update Academic YearAugust 26, 2013 August 1, 2014 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 Schools Reporting to COD for Fall-Spring-Summer Loan InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 26, 2013 May 9, 2014August 26, 2013 August 1, 2014 Academic YearAugust 26, 2013 May 9, 2014August 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 Students Enrollment Pattern AnticipatedActual 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 Schools Reporting to COD for Summer-Only Loan InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodMay 20, 2014August 1, 2012 No Update Academic YearMay 20, 2014May 8, 2015No Update Schools Reporting to COD for Fall-Spring Loan InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodAugust 25, 2014 May 8, 2015No Update Academic YearMay 20, 2014May 8, 2015No 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 Schools Reporting to COD for Summer-Fall-Spring Loan InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodMay 20, 2014May 8, 2015No Update Academic YearMay 20, 2014May 8, 2015No Update

Example 8: Borrower Only Attends for Spring Semester (Borrower-based Academic Year 38 Student Enrollment Pattern AnticipatedActual Spring Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJanuary 6, 2014 May 9, 2014No Update Academic YearJanuary 6, 2014 August 1, 2014 No Update

Example 9: Borrower Enrolled in Clock-Hour Program That is One Academic Year in Length 39 Students Enrollment Pattern AnticipatedActual Length of Program Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJuly 29, 2013 January 31, 2014No Update Academic YearJuly 29, 2013 January 31, 2014No Update

Example 10: Borrower Enrolled in Clock-Hour Program That is One Academic Year in Length, Withdraws Between Payment Periods 40 Students Enrollment Pattern AnticipatedActual Length of ProgramWithdrew After First Payment Period Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJuly 29, 2013 January 31, 2014July 29, 2013 October 25, 2013 Academic YearJuly 29, 2013 January 31, 2014No 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 Students Enrollment Pattern AnticipatedActual Length of ProgramWithdrew From Second Payment Period Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJuly 29, 2013 January 31, 2014July 29, 2013 October 25, 2013 Academic YearJuly 29, 2013 January 31, 2014No Update

Example 12: Borrower Enrolled in Clock-Hour Program That is Less Than One Academic Year in Length 42 Students Enrollment Pattern AnticipatedActual Length of Program Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJuly 1, 2013September 20, 2013 No Update Academic YearJuly 1, 2013December 27, 2013No Update

Example 13: Borrower Enrolled in Clock-Hour Program, Fails to Progress As Scheduled 43 Students Enrollment Pattern AnticipatedActual Length of Program, Timely Progression Length of Program, Untimely Progression Schools Reporting to COD InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodJuly 1, 2013September 20, 2013 July 1, 2013October 4, 2013 Academic YearJuly 1, 2013December 27, 2013July 1, 2013January 10, 2014

Example 14: Borrower Attends for the Fall Quarter, Does not Attend for Winter Quarter, Does Attend for Spring Quarter 44 Students Enrollment Pattern AnticipatedActual Fall, Winter, and SpringFall 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 Schools Reporting to COD for Initial Fall-Winter-Spring Loan InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodSeptember 25, 2013 June 6, 2014 September 25, 2013 December 6, 2013 Academic YearSeptember 25, 2013 June 6, 2014 No Update Schools Report to COD for Subsequent Spring-Only Long InitialUpdated Begin DateEnd DateBegin DateEnd Date Loan PeriodMarch 31, 2014June 6, 2014 No Update Academic YearSeptember 25, 2013 June 6, 2014 No Update

QUESTIONS? 46