Direct Lending Borrowing to 150% of the Program Length NYSFAAA 45 Long Island, NY October 16, 2013 George Chin, Senior Federal Policy Consultant, AASCU

MAP-21 – (Moving Ahead for Progress in the 21 st Century Act) Extended the 3.4% interest rate for undergraduate subsidized loans for one year Established a 150% length of program limit for receiving subsidized loans for new borrowers on or after July 1, 2013.

Statutory Language (q) ELIGIBILITY FOR, AND INTEREST CHARGES ON, FEDERAL DIRECT STAFFORD LOANS FOR NEW BORROWERS ON OR AFTER JULY 1, 2013 – (1) In General – Notwithstanding subsection (a) or any other provisions of this title, any borrower who was a new borrower on or after July 1, 2013, shall not be eligible for a Federal Direct Stafford Loan if the period of time for which the borrower has received Federal Direct Stafford Loans, in the aggregate, exceeds the period of enrollment described in paragraph (3). Such borrower may still receive any Federal Direct Unsubsidized Stafford Loan for which such borrower is otherwise eligible.

Statutory Language (2) Accrual of Interest on Federal Direct Stafford Loans – Notwithstanding subsection (f)(1)(A) or any other provision of this title and beginning on the date upon which a borrower who is enrolled in a program of education or training (including a course of study or program described in paragraph(3)(B) or (4)(B) of section 484(b) ) for which borrowers are otherwise eligible to receive Federal Direct Stafford Loans, becomes ineligible for such loan as a result of paragraph (1), interest shall accrue. Such interest shall be paid or capitalized in the same manner as interest on a Federal Direct Unsubsidized Stafford Loan is paid or capitalized under section 428H(e)(2).

Statutory Language (3) Period of Enrollment- (A) In General – The aggregate period of enrollment referred to in paragraph (1) shall not exceed the lesser of – (i) a period equal to 150 percent of the published length of the educational program in which the student is enrolled; or (ii) in the case of a borrower who was previously enrolled in one or more other educational programs that began on or after July 1, 2013 and subject to paragraph (B), a period of time equal to the difference between -

Statutory Language (I) 150 percent of the published length of the longest educational program in which the borrower was, or is, enrolled; and (II) any periods of enrollment in which the borrower received a Federal Direct Stafford Loan.

Statutory Language (B) Regulations – The Secretary shall specify in regulation – (i) how the aggregate period described in subparagraph (A) shall be calculated with respect to a borrower who was or is enrolled in less than a full-time basis; and (ii) how such aggregate period shall be calculated to include a course of study or program described in paragraph (3)(B) or 4(B) of section 484(b), respectively.

Statutory Language (b) Inapplicability of Title IV Negotiated Rulemaking Requirement and Master Calendar Exception – Sections 482(c) and 492 of the Higher Education Act of 1965 (20 U.S.C. 1089(c), 1098a) shall not apply to the amendment made by subsection (a) or to any regulation promulgated under such amendment.

Regulation Interim Final Rule issued on May 16, 2013 Comments invited by July 1, 2013

Regulation - Definitions New (First Time) Borrower Maximum Eligibility Period Subsidized Usage Period Remaining Eligibility Period

New (First Time) Borrower An individual who has no outstanding balance of principal or interest on a Federal Direct Loan Program or FFEL Program loan on July 1, 2013, or on the date the borrower obtains a Federal Direct Program loan after July 1, 2013

Maximum Eligibility Period Statutorily called the aggregate period of enrollment. Generally 150% of the published length of the educational program in which the student is enrolled.

Subsidized Usage Period Generally equal to the number of days in the loan period divided by the number of days in the academic year, rounded down to the nearest quarter. Exceptions – receipt of a full annual loan limit in a period less than an academic year = 1 year If the amount received is less than the full annual limit and the student is enrolled HT, multiply by.5 and 3/4T, multiply by.75.

Remaining Eligibility Period Generally the difference between the Maximum Eligibility Period and the sum of the subsidized usage periods When the Remaining Eligibility Period is zero, the borrower loses eligibility for subsidized loans but can continue to receive unsubsidized loans

Remaining Eligibility Period If the borrower continues to enroll after the remaining eligibility period is zero, then interest accrues on the prior subsidized loans If the remaining eligibility period is less than a minimum loan period for the program type, a subsidized loan may not be disbursed.

Preparatory Coursework Limited to one twelve month period Counted in the sum of subsidized usage Maximum eligibility period is equal to the maximum period for the undergraduate program for which the coursework is required Maximum eligibility period for preparatory work for a graduate or professional program is equal to the maximum period for the most recent undergraduate program for which the student received a subsidized loan.

Teacher Certification Maximum Eligibility Period is 150% of the length of the certification program Only loans received for the teacher certification program are included in the subsidized usage period

New Data CIP Code Credential Level Program Length Enrollment Status Preparatory Work for UG Program Preparatory Work for Grad/Prof Program Teacher Certification Program