1. Eric Hardy and Patrick Kennedy | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals 150% - A Life Cycle View Session #27

2. Agenda Recap and Overview COD Processing -- the system of record for SULA usage NSLDS Processing – the system of record for Loss of Subsidy CPS Processing Questions and Answers 2

3. On July 6, 2012 President Obama signed into Public Law 112- 141, the elimination of the subsidy on Direct Subsidized Stafford Loans when a “first-time borrower” enrollment exceeds 150% of the published program length (150% Direct Subsidized Loan Limit Electronic Announcement #1) 150% Subsidy Loan Limit 3

4. Identify “first-time borrower” starting July 1, 2013 (Phase 1) Identify when a borrower reaches the 150% threshold and take appropriate actions (Phase 2) Continuously monitor “first-time borrower” enrollment to evaluate future enrollment impacts to students’ 150% limitations (Phase 2) 150% Subsidy Loan Limit 4

5. The 150% Subsidy Limit – Overview 5  SULA: Subsidized Usage Limit Applies  First-time borrower: Any borrower who had no balance on a DL/FFEL student loan on 7/1/2013 or afterwards at the time they obtain a loan  Maximum Eligibility Period (MEP): Set at 150% of the published length of the program the borrower is enrolled in  Subsidized Usage Period (SUP): Measured in years, the amount of subsidized usage of the loan [# days in loan period/# of days in academic year]  Remaining Eligibility Period (REP): Borrower’s remaining eligibility for subsidized loans: MEP - ∑SUPs = REP

6. With Release 13.0 the Common Origination and Disbursement System (COD) began to determine a borrower’s remaining subsidized eligibility by calculating a subsidized usage period for each Direct Subsidized Loan originated for first-time borrowers. COD also prevents the origination of Direct Subsidized Loans for borrowers who have reached their maximum subsidized eligibility limits for the program for which the loan is intended. If SULA=Yes 150% Time Limit The 150% Subsidy Limit - Overview 6

7. Identifying “New Borrowers” 7 Each time a new applicable award, or maintenance to an existing award that changes the disbursement release indicator (DRI) to true or changes the Earliest Disbursement Date (EDD) to be on or after July 1 st 2013 is submitted, the COD System will evaluate the borrower to determine if the SULA Flag should be set to ‘Yes’. When evaluating the SULA flag for a borrower, the COD System will check the customer record on both the COD System and/or from the NSLDS Borrower Outstanding Balance (BOB) file when applicable. DLS or DLU accepted by COD EDD on or after 7/1/13 At least 1 disbursement DRI=true Continue borrower evaluation

8. Identifying “New Borrowers” 8 The COD System sets the SULA flag at the borrower level. The SULA Date is populated on the COD View Person Information page.

9. Calculating Usage & Remaining Eligibility 9 The COD System uses the calculated values for the Maximum Subsidized Eligibility Period, Loan Period Length, Academic Year Length, payment period Length, and Enrollment Status ---- to calculate a borrowers Subsidized usage and remaining eligibility.

10. Maximum Subsidized Eligibility Period 10 MSEP ~ The Maximum Subsidized Eligibility Period is the maximum period of time in which a student may receive a subsidized loan based on the published program length reported for the loan. It is equal to 150% of the calculated published program length in academic years.

11. Academic Year Length 11 The Academic Year Length for Direct Subsidized Loans is the number of days between and including the Academic Year Begin Date and Academic Year End Date submitted. Note: The reason for the ‘+1’ in the formula is to include the begin and end dates in the time period.

12. Loan Period Length 12 The Loan Period Length is the period of time between and including the Financial Award Begin and End dates. The Subsidized Usage Period for a DL Subsidized loan is a ratio between the Loan Period Length and the Academic Year Length, prorated by Enrollment Status. Changes to the Loan Period Length will cause a change to the Subsidized Usage Period.

13. Loan Period Length 13 Example: A student has 3 DL Subsidized loans each with different and overlapping loan periods. The Loan Period Length will be calculated as follows:

14. payment period Length 14 The payment period Length is a length of time that each disbursement is intended to provide financial aid for a student. Each student’s Direct Subsidized Loan is divided into payment periods. payment period Length is at the disbursement level, with one for each disbursement payment period Length is calculated when enrollment status varies across disbursements for a DL Subsidized award When a student’s enrollment is consistent across an award’s payment periods COD is able to calculate subsidized eligibility at the DL Subsidized award level using Loan Period Length.

15. payment period Subsidized Usage Period 15 For DL Subsidized awards that have enrolment statuses that vary across disbursements, it is necessary to calculate the payment period Subsidized Usage Period for each disbursement in order to calculate the Subsidized Usage Period for the entire DL Subsidized award. The COD System calculates the ratio between the payment period Length and the Academic Year Length, and then prorates the resulting value by the student’s Enrollment Status for the relevant disbursement.

16. Anticipated and Actual SUP 16 A Subsidized Usage Period will be calculated for each DL Subsidized award with SULA flag set to ‘Yes.’ A Subsidized Usage Period is the calculated subsidized usage of an individual DL Subsidized award. Each Subsidized Usage Period is classified as an Actual or Anticipated Subsidized Usage Period depending on whether the DL Subsidized award has at least one actual disbursement. DLS contains at least 1 actual disbursement Actual Subsidized Usage Period DLS contains no actual disbursements Anticipated Subsidized Usage Period

17. Actual Subsidized Usage Period 17 The COD System will calculate an Actual Subsidized Usage Period for a DL Subsidized award when at least one disbursement for the award is submitted or stored with DRI= ‘True.’ The following formula is used when Enrollment Statuses are consistent across all disbursements: When the enrolment statuses vary across the award’s disbursements, the Actual Subsidized Usage Period is the sum of payment period Subsidized Usage Periods.

18. Anticipated Subsidized Usage Period 18 The COD System will calculate the Anticipated Subsidized Usage Period for a DL Subsidized award when all of the disbursements are submitted or stored with a DRI=‘False.’ The following formula will be used when the Enrollment Statuses are consistent across all disbursements: When the enrolment statuses vary across the award’s disbursements, the Anticipated Subsidized Usage Period is the sum of payment period Subsidized Usage Periods.

19. SUP Loan Limit Exception 19 ~ exception to the rules for the Subsidized Usage Period calculation. When the following three conditions are met, a different Subsidized Usage Period calculation will be used: A Borrower receives a DL Subsidized award with an award amount equal to the annual subsidized limit for his/her grade level A Loan Period Length on a DL Subsidized award is less than the Academic Year Length A Loan Period on a DL Subsidized award does not overlap with the Loan Period on any other active DL Subsidized award for that borrower Student Level CodeAnnual Subsidized Limit 0$3,500 1 2$4,500 3$5,500 4 5

20. Sum Actual SUP 20 A Sum Actual Subsidized Usage Period will be calculated, stored, and returned at the student level when borrower has SULA flag set to ‘Yes’. The Sum Actual Subsidized Usage Period will include all Actual Subsidized Usage Periods for the borrower. Note: No Anticipated Subsidized Usage Periods will be included. Actual SUP Sum Actual SUP

21. Sum Anticipated and Actual SUP 21 The Sum Anticipated Subsidized Usage Period will include all Actual Subsidized Usage Periods for the borrower and the one Anticipated Subsidized Usage Period for that award ~~ to show what the Actual Subsidized Usage Period would be if that Anticipated award was changed to be an Actual. Note: Anticipated Subsidized Usage Periods for other awards will not be included in the calculation. Student Actual SUP Award Anticipated SUP Award Sum Anticipated SUP

22. Remaining Anticipated and Actual SEP 22 RSEP ~ Remaining Anticipated and Remaining Actual Subsidized Usage Periods will be calculated, or recalculated. The Remaining Subsidized Usage Period is stored at the award level because it is the remaining subsidized eligibility that the particular award is for. Maximum Subsidized Eligibility Period Sum Subsidized Eligibility Period Remaining Subsidized Eligibility Period

23. SULA Calculations - Displays 23

24. SULA Calculations - Displays 24

25. Remaining Anticipated and Actual SEP 25 If an incoming DL Subsidized award origination causes the Anticipated or Actual Remaining Subsidized Usage Period on the award being processed to be less than zero, the award will be rejected with Edit 206 ~~ The Remaining Subsidized Eligibility Period is less than zero for this award. Remaining Subsidized Usage Period =0 New DLS Originated New DLS rejected for edit 206

26. System Generated Response 26 The COD System creates and send a SULA system generated response for person, award, or disbursement level SULA calculation changes on Direct Subsidized Loan awards. The new award year specific system generated response are sent to the SAIG mailbox of the reporting school of a borrower where SULA- related calculations have been changed. The SULA system generated response (Document type SU) is sent using message class, CRSUAYOP (AY=award year). COD receives new/updated DL information or Enrollment data from NSLDS New information causes SULA calculations on existing awards to change System Generated response sent to School to notify of changes

27. System Reporting 27 COD sends Direct Loan data to NSLDS on a daily basis to be used by NSLDS for SULA calculation purposes. The daily records includes student, award, and disbursement information for Subsidized, Unsubsidized, and Direct PLUS Loans for activity that was accepted or triggered during the prior processing day. COD sends DL data to NSLDS NSLDS uses data from COD to calculate subsidy

28. NSLDS – Display SULA Flag Display of Subsidized Usage Limit Applies (SULA) Flag Indicates whether the borrower is subject to the 150% Direct Subsidized Loan Limit provision Sent to NSLDS by Federal Loan Servicers after the SULA Flag is received from the COD 28

29. Subsidized Usage Web Page A link to the Subsidized Usage Page has been added under the Enrollment Summary page The Subsidized Usage Page displays information about a student’s: Maximum Eligibility Period Subsidized Usage Period Sum SUP Loan-Level SUP Program-level Enrollment Remaining Eligibility Period 29

30. Subsidized Usage Web Page 30

31. NSLDS – Maximum Eligibility Period The Maximum Eligibility Period is 150% of the published length of borrower’s current educational program. Calculated by COD based on disbursement records Multiply published length of program by 1.5 NSLDS will calculate using Enrollment Reporting information Schools will be required to report individual student’s program-level enrollment data to NSLDS 31 Maximum Eligibility Period (MEP)

32. NSLDS – Maximum Eligibility Period School sends Enrollment School Code on grant and loan disbursement records to COD. COD sends grant and loan data to NSLDS and Federal Loan Servicers NSLDS uses the Enrollment School Code from COD and Servicers to place aid recipients on Enrollment Rosters NSLDS sends the Enrollment Roster to the SchoolSchool Responds with Certified Enrollment Maximum Eligibility Period (MEP) 32

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34. NSLDS - Subsidized Usage Period 34 Subsidized Usage Period (SUP) – Calculated by COD and sent to NSLDS COD calculates the Subsidized Usage Period (SUP) for each loan and sends to NSLDS NSLDS displays the SUP on the NSLDS websites NSLDS includes the SUP in TSM, FAH, and select NSLDS Reports Total Subsidized Usage Period (SUP)

35. NSLDS – REP Remaining Eligibility Period 35 Remaining Eligibility Period (REP) – Difference between MEP and SUP, calculated by NSLDS NSLDS determines if Loss of Interest Subsidy should occur on a borrower’s loan based on the borrower’s Remaining Eligibility Period (REP) and the borrower’s program-level enrollment status Remaining Eligibility Period (REP)

36. NSLDS – Loss of Subsidy NSLDS determines if Loss of Interest Subsidy should occur on a borrower’s loan based on the borrower’s Remaining Eligibility Period (REP) and program-level enrollment status. 36 Remaining Eligibility Period < 0 No Completion Triggering Enrollment Subsidy Loss

37. NSLDS – Loss of Subsidy Example #1 – No Loss of Subsidy OCT 2014 JAN 2015 APR 2015 JUL 2015 OCT 2015 JAN 2016 APR 2016 JUL 2016 OCT 2016 JAN 2017 APR 2017 JUL 2017 Program A Full Time 10/01/14 – 12/31/15 Published Program Length = 2 Years Max = 3 Loan #2 10/01/15 – 06/30/16 SUP = 1 Loan #1 10/01/14 – 04/30/15 SUP = 1 Loan #3 10/01/16 – 06/30/17 SUP = 1 Program B Full Time 10/01/15 – 06/30/17 Published Program Length = 2 Years Max = 3 37

38. NSLDS – Loss of Subsidy Example #1 – No Loss of Subsidy 38 REP <= 0 No completion New Enrollment Loss of Subsidy Borrower’s Condition at the End of the Loan Period Is the REP <= 0?Yes Is the Loan Period Begin Date earlier than a graduation? No Is there new qualifying enrollment?No This borrower does not lose subsidy on their loans as there is no qualifying enrollment.

39. NSLDS – Loss of Subsidy Example #2 - New Enrollment After Loan Period OCT 2014 JAN 2015 APR 2015 JUL 2015 OCT 2015 JAN 2016 APR 2016 JUL 2016 OCT 2016 JAN 2017 APR 2017 JUL 2017 Program A Full Time 10/01/14 – 12/31/15 Published Program Length = 2 Years Max = 3 Loan #2 10/01/15 – 06/30/16 SUP = 1 Loan #1 10/01/14 – 04/30/15 SUP = 1 Loan #3 10/01/16 – 06/30/17 SUP = 1 Program B Full Time 10/01/15 – 03/31/17 Published Program Length = 2 Years Max = 3 Program C Full Time 07/15/17 – 12/31/17 Published Program Length = 2 Years Max = 3 LoS 07/15/17 39

40. NSLDS – Loss of Subsidy Example #2 – New Enrollment after Loan Period 40 REP <= 0 No completion New Enrollment Loss of Subsidy Borrower’s Condition at the End of the Loan Period Is the REP <= 0?Yes Is the Loan Period Begin Date earlier than a graduation? No Is there new qualifying enrollment?Yes This borrower loses subsidy on their loans effective on the first day of qualifying enrollment.

41. NSLDS – Loss of Subsidy Example #3 - Subsidy Protected by Graduation OCT 2014 JAN 2015 APR 2015 JUL 2015 OCT 2015 JAN 2016 APR 2016 JUL 2016 OCT 2016 JAN 2017 APR 2017 JUL 2017 Program A Full Time 10/01/14 – 12/31/15 Published Program Length = 2 Years Max = 3 Loan #2 10/01/15 – 06/30/16 SUP = 1 Loan #1 10/01/14 – 04/30/15 SUP = 1 Program B Full Time 10/01/15 – 07/31/17 Published Program Length = 2 Years Max = 3 Loan #3 10/01/16 – 06/30/17 SUP = 1 G Program C Full Time 07/15/17 – 12/31/17 Published Program Length = 2 Years Max = 3 41

42. NSLDS – Loss of Subsidy Example #3 – Subsidy Protected by Graduation 42 REP <= 0 No completion New Enrollment Loss of Subsidy* Borrower’s Condition at the End of the Loan Period Is the REP <= 0?Yes Is the Loan Period Begin Date earlier than a gradation? Yes Is there new qualifying enrollment on the day after the end of the loan period? Yes This borrower does not lose subsidy on any loan with a Loan Period Begin Date earlier than the Graduation Date.

43. 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 studentoans.gov 43 NSLDS CPS SL.gov FLS

44. The NSLDS FAP now displays the new Loss of Subsidy warning icon for borrowers who have lost interest subsidy any: D0 - Direct Stafford Subsidized (SULA Eligible) loans D9 - Direct Consolidation Subsidized (SULA Eligible) loans 44 A field has been added to Loan Summary for (D0) and (D9) loans to display the status of the interest subsidy: NSLDS – Loss of Subsidy

45. Identify “first-time borrower” starting July 1, 2013 Identify when a borrower reaches the 150% threshold and take appropriate actions Continuously monitor “first-time borrower” enrollment to evaluate future enrollment impacts to students’ 150% limitations CPS Impacts 45

46. The following NSLDS fields were added to the ISIR record: A SAR Comment 267 will be triggered when SULA Flag is set to Y There is a limit to the total amount of subsidized Federal student loans that you may receive. Please refer to studentaid.gov under Types of Aid, Loans for more information Reason Code 25 will be added to the NSLDS Post-screening for a Subsidized Usage Limit Applies Flag status change 46 CPS Impacts: First-Time Borrower AddedFIELD #Value Subsidized Usage Limit Applies Flag (SULA) 444Y/N Subsidized Loan Eligibility Used field (SLEU) 445999v999

47. NSLDS added two new Loan Types in order for servicers to track which loans should be adjusted when losing subsidy. 47 CPS Impacts NSLDS Loan Program Codes Definition D9Direct Consolidated Stafford Subsidized Loan where all or an underlying portion of the consolation loan is eligible for loss of subsidy under the 150% Regulation D0Direct Stafford Subsidized Loan subject to the 150% regulation

48. New NSLDS Post screening Reason Codes: 48 CPS Impacts: New for 2015-16 Post screening Reason Code Definition 26Created to monitor for a change in Confirmed Loan Subsidy Status 27Created to monitor for decreases in the Subsidized Usage Period

49. QUESTIONS? 49