1. Nautochia Webb October 28, 2015 U.S. Department of Education Awarding & Processing Direct Loans NYSFAAA

2. Agenda Direct Loan Basics Academic Year Subsidized Usage Limit Applies (SULA) Calculations Prorating Annual Loan Limits Transfer Students Resources 2

3. Direct Loan Basics 3

4. William D. Ford Federal Direct Loan Program (“Direct Loan” or “DL”) Loan types include Subsidized Stafford (Sub) - Only for undergraduates Unsubsidized Stafford (Unsub) - For undergraduates, graduates, and professional students PLUS Loan for Graduate and Professional Students ( unsubsidized) PLUS Loan for Parents (unsubsidized) - For parents of dependent students 4

5. Regulations at 34 C.F.R.§685 (link from IFAP) Source of funds is the U.S. Treasury Money is transmitted via ED’s G5 system Signed MPN or eMPN required Counseling required – Entrance & Exit Direct Loan Basics 5

6. 6 Loan Limits Students are subject to annual and aggregate loan limits Dependent upon the student’s financial aid package, student may not be eligible to borrow the full amount

7. Annual Loan Limits Year Dependent Undergraduate Independent Undergraduate And Dep. Undergrad whose parent can’t borrow PLUS Graduate/ Professional Student 1 st $5,500 (maximum $3,500 subsidized) $9,500 (maximum $3,500 subsidized) Up to $20,500 each academic year (all unsubsidized) 2 nd $6,500 (maximum $4,500 subsidized) $10,500 (maximum $4,500 subsidized) 3 rd and Beyond $7,500 (maximum $5,500 subsidized) $12,500 (maximum $5,500 subsidized) 7

8. Aggregate Loan Limits Dependent Undergraduate $31,000 combined sub/unsub No more than $23,000 in sub Independent Undergraduate* $57,500 combined sub/unsub No more than $23,000 in sub Grad/Professional $138,500 combined sub/unsub No more than $65,500 in sub * Also for dependent students whose parents are unable to obtain a PLUS loan 8

9. General Loan Awarding Principles Must award subsidized before awarding unsubsidized Base Amount may be all subsidized, all unsubsidized, or a combination. Subsidized amount may not exceed the Base Amount Annual Loan Limit includes the Base Amount and Additional Unsubsidized 9

10. Reminder: All general Title IV student eligibility requirements also apply Student must: Be enrolled at least half- time Meet eligibility requirements, except for: Preparatory coursework Teacher certification coursework School must: –Determine Pell eligibility before loans –Determine loan eligibility Subsidized eligibility before Unsubsidized No Adverse Credit history for PLUS borrowers Aggregate limits Other Title IV eligibility requirements General Direct Loan Requirements 10

11. Direct Loan Interest Rates – 2015-16 Direct Loans first disbursed on or after July 1, 2015 but before July 1, 2016 Undergrad Sub and Unsub – 4.29% (cap 8.25%) Grad Unsub – 5.84% (cap 9.5%) PLUS – 6.84% (cap 10.5%) Consolidated Loans – weighted average of underlying loans rounded up to the next higher one-eighth of one percent (no cap) 11

12. Direct Loan Fees – 2015-16 Direct Loan Fees for FY 2015 and FY 2016 Loan TypeImpacted Loans Loan Fee Percent Fee Example Direct Subsidized Loans and Direct Unsubsidized Loans FY 2015 First disbursed on or after October 1, 2014 and before October 1, 2015 1.073 $59.01 on a $5,500 loan FY 2016 First disbursed on or after October 1, 2015 and before October 1, 2016 1.068 $58.74 on a $5,500 loan Direct PLUS Loans (Parent and Grad/Prof Student FY 2015 First disbursed on or after October 1, 2014 and before October 1, 2015 4.292 $429.20 on a $10,000 loan FY 2016 First disbursed on or after October 1, 2015 and before October 1, 2016 4.272 $427.20 on a $10,000 loan Loan fee calculations that result in more than two decimal places must be truncated (not rounded) to two digits after the decimal point (cents) Direct Loans first disbursed on or after July 1, 2015 but before July 1, 2016 12

13. Subsidized Stafford Loan Eligibility Subsidized loans are need-based COA – EFC – EFA = Loan Eligibility (U p to the Annual Subsidized Amount) Interest is subsidized during: In-School Grace periods Deferments School must determine eligibility before eligibility for unsubsidized loans 13

14. Limit on how many years a “first-time borrower” may receive subsidized loans.  Applies to first-time borrowers on or after July 1, 2013. A first-time borrower is one who –  Has no balance on any FFEL or Direct Loan on July 1, 2013, or  Receives first Direct Loan (any type) on or after July 1, 2013 Subsidized Loan Eligibility Limit or 14

15.  Condition - When student has received Direct Subsidized loans for a period of time that is equal to 150% of the published length of the student’s current academic program  Result - Student may not receive additional subsidized loans for enrollment in that program or any program of equal or lesser length Subsidized Loan Limit – 150% Rule 15

16.  Students maximum time to receive subsidized loans is established based on the length of the program the student is enrolled in  Remaining subsidized eligibility is calculated by subtracting from maximum eligibility for the program, the time the student has already received subsidized loans for enrollment in any program Subsidized Loan Limit – 150% Rule 16

17. Determining When 150% Limit is Met Maximum Eligibility Period Total Subsidized Usage Periods Remaining* Eligibility Periods *150% Limit is met when Remaining Eligibility Period equals zero or less than zero 17

18. Determining When 150% Limit is Met Remaining Eligibility < 1 year: Students can receive Direct Subsidized Loan if: The school can originate a Direct Subsidized Loan in compliance with all Direct Loan origination rules as provided in the regulations at 34 CFR 685.301, with particular attention to the applicable minimum loan period rules, and The loan's loan period, academic year, enrollment status, and loan amount results in a Subsidized Usage Period that is equal to or less than the student's Remaining Eligibility Period For questions about the 150% limit, please email 150Percent-Questions@ed.gov.150Percent-Questions@ed.gov 18

19. Determining When 150% Limit is Met COD Reporting = Accurate Enrollment Reporting All pending Direct Loan disbursements were reduced to zero. All loan amounts equal the total amounts disbursed. The borrower’s correct enrollment status was reported. Loan period have been adjusted to include only those payment periods (terms) for which the borrower received and retained an actual disbursement. Academic year dates reflect the defined length of a program’s academic year, and the dates were adjusted, when or if appropriate. 19

20. Unsubsidized Stafford Loan Eligibility Unsubsidized loans are not need-based COA – EFA = Unsubsidized Loan Amount (Not to exceed the annual loan limits) May replace EFC in packaging Borrower is responsible for interest May be paid or may allow to capitalize School determines eligibility AFTER awarding subsidized loans 20

21. Direct Unsubsidized Loan Eligibility Student can only receive an unsubsidized loan (base or additional) for a loan period if the student has been awarded the full amount of his or her eligibility for a subsidized loan Student who is not awarded his or her full subsidized loan eligibility may not receive any unsubsidized loan for the same loan period 21

22. Unsubsidized Loan Flexibility For dependent Undergraduates whose parents are unable to borrow PLUS loans Due to adverse credit or Due to exceptional circumstances May receive additional DL funds (same amounts as Independent Undergraduates) Flexibility extends for one Academic Year 22

23. Unsubsidized Loan Flexibility FAA may use PJ to award Unsubsidized loans to dependent students without parental data Parent must certify cessation of support and refusal to complete the FAFSA School must document both items Not a Dependency Override (D/O) Student may receive up to his/her maximum dependent loan eligibility (Unsubsidized) Student not eligible for any other Title IV aid 23

24. PLUS Loans PLUS Loans: May replace EFC Have no Annual/Aggregate limit Borrower must have no adverse credit School must offer Sub and Unsub before awarding PLUS Amounts may not exceed COA – EFA Available for: Parents of dependent undergrads Graduate/professional students 24

25. Refusal to award a Loan In Direct Loan Subsidized, Unsubsidized, and PLUS, a school has the authority to – Refuse to originate loan or Originate a loan at less than the amount requested by the student Must be done on an individual student basis Must provide student with written explanation 34 CFR 685.301(a)(8) 25

26. Awarding Subsidized Loans COA – EFC – EFA = Need 26

27. Subsidized Eligibility - Tom Subsidized Loan can be up to $3,500 of $5,500, but cannot exceed need EFA is: Pell of $4,580 Scholarship of $6,500 Remaining Need = $2,720 Tom is a 1st year Dependent Student (Annual Loan Limit = $5,500) COA$15,000 - EFC 1,200 - EFA$11,080 =Sub DL $ 2,720 27

28. Awarding Unsubsidized Loans COA – EFA = Eligibility 28

29. Unsubsidized Eligibility - Tom Unsubsidized Loan can be up to $2,780 ($5,500 - $2,720 in sub), but total aid cannot exceed COA EFA is: Pell of $4,580 Scholarship of $6,500 Sub Loan of $2,720 Remaining Eligibility = $1,200 Tom is a 1st year Dependent Student (Annual Loan Limit = $5,500) COA$15,000 - EFA$13,800 =Unsub DL $ 1,200 29

30. Awarding PLUS COA – EFA = Eligibility 30

31. Patrick’s Parent PLUS Eligibility Patrick - 1 st year Dependent student: COA$20,000 -EFA$9,500 =PLUS eligibility$10,500 Loan limit = COA-EFA EFA now includes –$4,000 Pell –$3,500 Subsidized loan –$2,000 Unsubsidized loan EFC not considered Patrick’s parents may borrow $10,500 31

32. Patrick’s Increased Unsubsidized Eligibility: (If Parents denied PLUS, or if Patrick were Independent) Patrick - 1 st year student (loan limit $9,500) COA$20,000 - EFA$7,500 = Remaining Need $12,500 EFA includes: –$4,000 Pell –$3,500 Subsidized loan EFC not considered Patrick may borrow the lesser of: COA – EFA = $12,500, or $9,500 - $3,500 = $6,000 (Annual Loan Limit-Sub Limit = Eligibility) In an Unsubsidized loan 32

33. Scheduled Academic Year (SAY) Fixed period of time, usually corresponds to school’s official academic calendar Generally begins at same time each year Example – fall/winter/spring or fall/spring Summer term may be either a “header” or “trailer” Summer mini-sessions may be treated as single term or individual terms

34. Scheduled Academic Year (SAY) Loan period may include only portion of SAY Programs offered in SAY may –Use BBAY –Alternate between SAY and BBAY provided academic years do not overlap Once SAY has passed, student is eligible for new annual loan limit

35. Borrower-Based Academic Year Does not have fixed beginning and ending dates –“Floats” with student’s attendance and progression BBAY must be used for any program that does not meet definition of program allowed to use SAY

36. Who Can Use Either and/or Both? Credit-hour programs offered in a Scheduled Academic Year –SAY uses a traditional academic calendar with at least two semesters/trimesters or three quarters in fall through spring, OR –Comparable academic calendar with nonstandard SE9W terms Each term is at least 9 weeks in length Term lengths are within 2 weeks of each other

37. Scheduled Academic Year (SAY) Standard Term-based Program 2-Year Semester-Based Credit-Hour Program Academic year = 24 Credits and 30 Weeks FallSpring 1 st SAY $3,500* FallSpring 2 nd SAY $4,500* * Student in this example is a first-year dependent student who chooses to borrow only the base amount

38. SAY Eligibility for New Annual Loan Limit: Example 1 FallSpring 1 st SAY $3,500* FallSpring 2nd SAY $3,500* Loan Period 1 *Student in this example is a first-year dependent student who chooses to borrow only the base amount. Student does not advance to next grade level. Loan Period 2

39. SAY Eligibility for New Annual Loan Limit: Example 2 FallSpring SAY $5,500 Fall Spring SAY $4,500 Summer Loan Period 1 Loan Period 2 Loan Period 3 $1,000* $3,500* $5,500* Student in this example is a second-year dependent student who chooses to borrow only the base amount. Student advances a grade level from Summer to Fall and chooses again to borrow only the base amount.

40. Borrower Based Academic Year 1 (BBAY1) Standard term credit-hour programs and comparable academic calendars with nonstandard SE9W may use BBAY1 BBAY must include the same number of terms as the school’s definition of an academic year Student becomes eligible for new annual loan limit after BBAY calendar period has elapsed

41. BBAY1 Floats with student’s enrollment, but student must attend first term of BBAY Mini-sessions must be combined as single term If BBAY includes summer, may be shorter in weeks/hours than statutory academic year definition –Full-time must be defined as 12 credits

42. BBAY1 Standard Term-based Program Two Year Semester-Based Credit-Hour Program Academic year = 24 Credits and 30 Weeks 1 st BBAY $3,500 2 nd BBAY $4,500 Spring 15 weeks Summer 10 weeks Student in this example is a first-year dependent student who chooses to borrow only the base amount. Student advances a grade level from spring to summer by completing enough credits to do so. Fall 15 weeks

43. BBAY1 Standard Term-based Program Two Year Semester-Based Credit-Hour Program Academic year = 24 Credits and 30 Weeks SpringSummer 1 st BBAY $3,500 FallSpring 2 nd BBAY $4,500 Student in this example is a first-year dependent student who chooses to borrow only the base amount. Student advances a grade level from summer to fall by completing enough credits to do so. 43

44. Grade Level Progression Completion of credits determines grade level progression Do not confuse grade level progression with eligibility for a new annual loan limit Schools may develop own grade level standards but at a minimum must equal the minimum academic year definition Students in standard or nonstandard SE9W programs who advance to a higher grade level within an academic year may receive additional funds

45. Grade Level Progression in the Same Academic Year Students in programs offered in standard terms or nonstandard SE9W terms who advance to a higher grade level within an academic year may receive additional funds

46. Prorating Annual Loan Limits Annual loan limits must be prorated when –The student is enrolled in a program that is shorter than a full academic year or –The student is enrolled in a remaining period of study shorter than a full academic year For standard and nonstandard SE9W terms, if the remaining period contains fewer terms than in the school’s defined academic year

47. Loan Proration Required for periods of study shorter than full academic year only when known in advance No retroactive proration required when student originally enrolls for full year but completes program earlier

48. Loan Proration Prorated loan limits are then used in the awarding process to determine student eligibility Proration is NOT required for –PLUS loans –Graduate students –Teacher certification –Preparatory coursework

49. Prorating for a Program Shorter Than a Full Academic Year Multiply the applicable loan limit by the lesser of: Hours enrolled in program Hours in the defined academic year Or Weeks enrolled in program Weeks in the defined academic year 49

50. Program Shorter Than an Academic Year Program Length is 22 credit-hours and 28 weeks Defined academic year is 24 credit-hours and 30 weeks Credits 22 =.92 24 Weeks 28 =.93 30 Annual Base Amount $3,500 X 22 = $3,208 24 Annual Unsubsidized (above base) $2,000 X 22 = $1,833 dependent $6,000 X 22 = $5,500 independent 24 50

51. EFC and COA Must Reflect Loan Period Loan amounts for periods that are not equal to one academic year must be prorated The EFC that most reasonably corresponds to the number of months in the loan period must be used to award the loan The COA that reflects the costs incurred during the loan period must be used 51

52. Prorating Remaining Periods Shorter than an Academic Year Multiply the applicable loan limit by: Hours remaining in program of study Hours required for defined Academic Year Unlike proration for programs shorter than an academic year, only the hours are used. 52

53. Remaining Periods Shorter Than an AY 6 credits 15 weeks Remaining Portion of program must be prorated Program length is 30 semester credit-hours and 45 weeks Academic year defined as 24 credit-hours and 30 weeks Year 2 Loan Limits Year 1 Loan Limits 12 credits 15 weeks Annual Base Amount $4,500 X 6 = $1,125 24 Annual Unsubsidized (above base) $2,000 X 6 = $500 dependent $6,000 X 6 = $1,500 independent 24 53

54. Single Term Loans A single term loan is one with a loan period of just one semester, trimester or quarter Must use COA, EFC and EFA for only that one term to calculate loan eligibility Multiple disbursement required unless school is exempt due to low cohort default rates

55. Overlapping Academic Years– Transfer Students Must adjust loan for any amounts received in previous program if academic year overlaps new school’s academic year Initially restricted to grade level annual loan limit at transfer school minus funds used at original school Ineligible for new loan limit until student completes academic year from original school

56. Transfer Student Example #1 Original School 9/8/15 5/13/16 Withdraws 11/13/15 Loan Limit $3,500 / $2,000 Spring Transfer School 11/17/15 5/20/16 Remaining $1,750 / $1,000 Winter Spring Eligible for New Loan Limit Fall Sub: $1,750 Unsub: $1,000 Withdrawn Not Disbursed Sub: $875 Unsub: $500

57. Transfer Student Example #1 Original School – Semester Based Loan Period: 9/8/2015 to 5/13/2016 Grade Level One Dependent: $3,500/$2,000 Student Withdraws : 11/13/15 Amount Disbursed: $1,750 / $1,000 Transfer School – Quarter Based Start Date: 11/17/15 Grade Level One Dependent: $3,500/$2,000 Winter Quarter: 11/17/15 to 2/19/16 Spring Quarter: 2/22/16 to 5/20/16 Amount Disbursed: $1,750/$1,000

58. Transfer Student Example #2 Original School 9/8/155/13/16 Withdraws 12/11/15 Sub: $2,250 Unsub: $1,000 Withdrawn Not Disbursed Loan Limit $4,500/$2,000 FALLSpring Transfer School 1/12/16 5/27/16 Sub: $1,250 Unsub: $1,000 Loan Limit $3,500 / $2,000 Spring Eligible for New Loan Limit First year Student at School B Sub: $3,500 – $2,250 Remaining = $1,250 Unsub: $2,000 – $1,000 Remaining = $1,000

59. Transfer Student Example #2 Original School – Semester Based Loan Period: 9/8/2015 to 5/13/2016 Grade Level Two Dependent: $4,500/$2,000 Student Withdraws 12/11/15 Amount Disbursed: $2,250/$1,000 Transfer School – Semester Based Start Date: 1/12/16 Student doesn’t have enough credits to be grade level two at this school Grade Level One Dependent: $3,500/$2,000 Loan Period: 1/12/16 to 5/27/16 59

60. Obtaining Academic Year Dates A school can obtain specific begin and end dates of the prior school’s academic year by: –obtaining documentation from the prior school, OR –look for the academic year dates of Direct Loans originated by the prior school on the “award detail information page” in COD 60

61. Transfer Student Example School A’s Academic Year 9/18/14 Withdrew 11/29/2014 School B Loan Period 12/15/14 3/13/15 0 0 School B: New Loan period may begin on 3/14/15 School A: Used $1,750 Sub and $1,000 Unsub School B: Student eligible for remaining $1,750 Sub and $,1000 Unsub 61

62. Transfer Student Example Student attends School A with an academic year beginning 9/18/14 and ending 3/13/15 Student withdraws from School A on 11/29/14 As grade level 1 student, this student received $1,750 in Sub and $1,000 in Unsub Student begins attendance at School B as a grade level 1 student on 12/15/14 Student may only receive remaining portion of loan not used until completion of School A’s academic year 62

63. Resources 63

64. Resources FSA Handbook Volume 3, Chapters 1 and 5 Dear Colleague Letters and Electronic Announcements Federal Register dated May 16, 2013 (FR 28953) Electronic Announcement #19 (Updated October 8, 2015) Electronic Announcement #20 (October 19, 2015) Site Links https://studentaid.ed.gov/types/loans https://studentloans.gov Direct Loan Training on IFAP www2.ed.gov/offices/OSFAP/training/specific.html 64

65. 65 Questions? Thank You!

66. Contacts New York School Participation Team –Main Number: 646-428-3750 New York Training Officer –Nautochia Webb: 646-428-3758 Nautochia.Webb@ed.gov 66

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