150% Direct Subsidized Loan Limit The Basics

150% Direct Subsidized Loan Limit

The Basics

Heather Fountain

Agenda

• Terminology and Definitions• Determining Eligibility• CPS and NSLDS• School Reporting• Updating Loan Records

Agenda

• Beginning Attendance• Return of Title IV Aid• Cost of Attendance Proration• Award Proration• 150% Subsidized Loan Limits• 600% Pell Limit• Satisfactory Academic Progress• Scholarships

Terminology and Definitions

First-Time Borrowers

• Affects only first-time borrowers as of July 1, 2013.• First-time undergraduate borrowers who have 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, 2013• Example: Borrower had a balance on July 1, 2013 but paid it

off in full prior to receiving loans after July 1, 2013.

Loss of Subsidized Loan Eligibility

• First-time undergraduate borrowers are no longer eligible for Direct Subsidized Loans once the borrower has received Direct Subsidized Loans for a period that is 150% of the published length of the borrower’s current educational program.

• No effect on Unsubsidized Loan or PLUS Loan eligibility.

• No change to lifetime loan limits. 150% is in addition to, not in place of.

New Acronyms

• Maximum Eligibility Period (MEP) - 150% of the published length of the educational program in which borrower is currently enrolled.

• Subsidized Usage Period (SUP) - Period of time for which a borrower received a Direct Subsidized Loan.

• Remaining Eligibility Period (REP) - Difference between the Maximum Eligibility Period and the total of all Subsidized Usage Period.

Agenda


Determining Eligibility


Maximum Eligibility Period

Minus

Subsidized Usage Period

Equals

Remaining Eligibility Period

MEP-SUP=REP


• 150% limit is reached when Remaining Eligibility Period equals zero (or less than zero)

• ED calculates these components based on the information schools provide

• Timely reporting of information and corrections is important!

Subsidized usage period

• Period of time during which the borrower receives subsidized loans.

• SUP does not take into account the amount borrowed, only the period of time for which subsidized loans are received.

• Result is rounded up or down (as appropriate) to the nearest tenth of a year.

• Calculated by COD based on school provided information.

Number of days in the borrower’s loan period Number of days in borrower’s academic year

Example

• Scheduled Academic Year– Smith College has a semester-based academic year

made up of fall and spring terms. The fall term begins on August 29 and the spring term ends on May 18. There are 267 days in the loan period and academic year.

– The student received a subsidized loan for both terms.• How many days are in the loan period?• How many days are in the academic year?• What is the subsidized usage period?

267 days in the loan period__________________________

267 days in the academic year= 1.0 SUP

Exceptions

• Student’s SUP will be adjusted for enrollment less than full time.

• SUP will be multiplied by – 0.75 for three-quarter time enrollment– 0.50 for half-time enrollment

• Example: Smith College has 267 days in their loan period and academic year. If a student receives a subsidized loan for three-quarter time enrollment for both terms, the SUP would be adjusted accordingly.

267 days in loan period267 days in academic year

= 1.0 SUP

1.0 SUP x 0.75 enrollment adjustment = 0.75 SUP0.75 SUP would then be rounded up to equal 0.8 adjusted SUP

Exceptions

• For standard term programs or non-standard term programs with substantially equal and at least nine-week terms– If the full annual subsidized loan limit is borrowed for a loan

period that is shorter than a full academic year, the SUP would be considered 1.0.

• Example: A freshman student attending full-time at Smith College receives $3500 in subsidized loans for the fall semester only. There are 119 days in the loan period and 267 days in the academic year.

• Because student received full annual subsidized loan amount for fall only and was enrolled full-time, SUP is considered to be 1.0.

119 days in loan period267 days in academic year = 0.45 SUP

0.45 would be rounded up to 0.50, but SUP is 1.0

Exceptions

• Example: A freshman student attending half-time at Smith College receives $3500 in subsidized loans for the fall semester only. There are 119 days in the loan period and 267 days in the academic year.

• Because student received full annual subsidized loan amount for fall only, SUP is considered to be 1.0.

• However, because student was only enrolled half-time, we must prorate based on enrollment.


= 0.45 SUP

0.45 would be rounded up to 0.50, but SUP is 1.01.0 x 0.5 enrollment adjustment = 0.5 SUP

Exceptions

• Example: A graduating senior attending full-time at Smith College receives his maximum prorated eligibility of $2750 in subsidized loans for the fall semester only. There are 119 days in the loan period and 267 days in the academic year.

• Because the student is enrolled in his final period of enrollment and is subject to proration of his loans, he is not considered to have borrowed the full annual loan limit and therefore not subjected to the increased SUP of 1.0.


= 0.45 SUP

0.45 would be rounded up to 0.50 SUP

Remaining Eligibility Period

• Compares the Maximum Eligibility Period to the total of all Subsidized Usage Periods.

• 150% limit met when Remaining Eligibility Period is equal to or less than zero.

Loss of Interest Subsidy Benefits

• A first time borrower who has no remaining eligibility for subsidized loans; loses interest subsidy on subsidized loans if the borrower– Received subsidized loans to fund enrollment for 150

percent of the length of the program of study

AND– Did not complete the program

AND– Continues enrollment on at least half-time basis in

the same program

OR– Enrolls in another program of the same or shorter

length on at least a half-time basis.

Loss of Interest Subsidy Benefits

• Borrower responsible for interest triggered from the date of continued or subsequent (at least half-time) enrollment in an eligible undergraduate program of equal or lesser length.– Whether or not student continues Direct Loan borrowing. Unpaid accrued interest is capitalized in same manner as for Direct

Unsubsidized Loans. Responsible for loans accruing interest during

• Periods of at least half-time enrollment• Grace Period• Deferment Periods• Certain periods when repaying under Pay As You Earn or Income-Based

Repayment plans– Loan remains a Direct Subsidized loan.

• Lost interest subsidy on a loan cannot be regained.

Changing Programs

• ED will re-calculate the MEP and REP based on criteria related to the borrower’s new program as reported by the school.

• How might this affect a student’s eligibility?

Changing Programs Example

• Transferring to a longer program– Meredith receives 3 full years of subsidized loans while

she was enrolled in a 2 year program. She then transfers to a 4 year program.

– What is her MEP in the 4 year program?– Does she have any remaining eligibility?

4 year program x 150% = 6 year Maximum Eligibility Period

6 year Maximum Eligibility Period

- 3 year Subsidized Usage Period______________________________

3 year Remaining Eligibility Period

Changing Programs Example

• Transferring to a shorter program– David receives 3 full years of subsidized loans while he

is enrolled in a 4 year program and does not complete that program. He then transfers to a 2 year program.

– What is his MEP for the 2 year program?– Does he have any remaining eligibility?– Has he lost interest subsidy?

2 year program x 150% = 3 year Maximum Eligibility Period

3 year Maximum Eligibility Period

- 3 year Subsidized Usage Period______________________________

0 year Remaining Eligibility Period

Agenda


CPS and NSLDS

• ED/FSA will track, calculate, and inform students and institutions.

• Schools will report accurate data about student’s program, enrollment and loan period; and will update when needed.

• Direct Loan Servicers will inform students of loss of subsidy benefits.

CPS

• CPS – Codes and comments on SARs and ISIRs beginning with 2014-15 FAFSA processing.

NSLDS

• New Borrower• Subsidized Usage

Period• Loss of Subsidy

Indicator

Agenda


School Reporting

School Reporting

• Each time a school submits an origination or disbursement record COD will:– Calculate SUP including the new loan– Inform the school of the borrower’s maximum

eligibility period, subsidized usage period, and remaining eligibility period.

– Reject loan if student has no remaining eligibility period.

• COD will also inform borrower in a disclosure statement.

School Reporting

• Loan Date Reporting to COD – Effective for all 2013-2014 loans, schools must– Correctly report to COD a direct loan’s

academic year and loan period dates; and – Update these dates when necessary

• Incorrect reporting could result in borrower losing eligibility for subsidized loans or receiving a subsidized loan incorrectly.

Reporting loan period & academic year

• Loan Period – period of enrollment for which the borrower received the loan.

• Academic Year – period to which the annual loan limit applies.

• Determines the Subsidized Usage Period

School reporting

• Beginning with 2014-2015 schools will report to COD and to NSLDS additional student and program information– Student’s Enrollment Level (FT, TQT, HT)– CIP Code– Credential Level (Certificate, Diploma, Degree)– Program Length– Length of Title IV Academic Year– Flags for Prep Coursework– Flags for Teacher Certification– Payment Period Begin Date

Enrollment reporting

• Schools will need to work with Registrar and/or servicers to report current enrollment information.

• ED reminder: Schools are liable for enrollment reporting even if a third party servicer is used for tracking.

• Deadline for new enrollment reporting was October 1.

Maximum eligibility period

• Schools must report the academic program length in years, months or weeks

• MEP will display in the COD system in academic years

Program Length 150 Percent (MEP)

5 years 7.5 years

4 years 6 years

2 years 3 years

20 weeks 30 weeks

Number of days in the month or weeks of program lengthNumber of days in the school’s academic year

Example

• A school’s defined academic year is 32 weeks, or 224 days (32 weeks x 7 days per week = 224 days). Every month is considered to have 30 days.

Program LengthConversion to Days (Based on 7 days per week or

30 days per month)

Program Length (Based on 224 days

per academic year)

Maximum Eligibility Period (150 percent)

16 weeks 112 days 112/224 = 0.50 years 0.75 years



3 months 90 days 90/224 = 0.40 years 0.60 years

6 months 180 days 180/224 = 0.80 years 1.20 years

Maximum Eligibility Period Exceptions

• Certain 2 year bachelor’s degree programs that meet specific criteria are considered equivalent to those bachelor’s degree programs that are 4 years in length. – Bachelor’s degree program AND– Requires associate degree OR – Successful completion of at least two years of

postsecondary coursework from an eligible program as a prerequisite for admission.

• Must report program length as 4 years.– Ensures 6 years of maximum eligibility.

Maximum Eligibility Period Exceptions

• Associate degree programs that are designed specifically to confer a more specialized credential after completion of two years or postsecondary coursework.– Must require as a pre-requisite to admission

• Student successfully completed an associate degree OR• At least two years of postsecondary coursework in an eligible

program AND• Program must be a selective admission program AND• Provide academic qualifications necessary for a profession that

requires licensure or a certification by the State in which the program is offered.

– Must report program length as 4 years.

Preparatory Coursework • Undergraduate preparatory coursework

– Can receive Federal Direct loans for up to 12 consecutive months, beginning on the first day of the first loan period.

– Loans received while taking preparatory coursework are included when determining if a student has received loans for 150% of the program length.

• Graduate preparatory coursework– Enrolling will not cause loss of interest subsidy on previous

loans.– MEP based on most recent undergraduate program in

which they received subsidized loans.• May borrow subsidized loans for any REP, up to 12 months.

– If MEP has been reached• May not receive subsidized loans for graduate preparatory

coursework.• Will retain interest subsidy on previously obtained loans, if not

previously lost.

Examples

• Undergrad Preparatory Coursework– Nicholas previously enrolled in preparatory coursework for one

year and received a subsidized loan for which ED calculated a SUP of 1.0. He then enrolls in a 2 year undergraduate program.

• What is his MEP for the 2 year undergraduate program?• Does the preparatory coursework count toward this eligibility period?

• Graduate Preparatory Coursework– Sarah used the 6 year MEP to complete a 4 year degree. She is

returning to school to complete preparatory coursework to enroll in a graduate program.

• Does she have any remaining eligibility for subsidized loans?• Is she eligible for unsubsidized loans?• Does she lose her interest subsidy on previously received subsidized

loans?

Teacher Certification

• Teacher certification programs in which the school offers no academic credential are limited to subsidized loan eligibility equivalent to 150% of the length of the program.

• Unique aspects to consider– Only subsidized loans received for teacher certification coursework

are counted; no subsidized loans borrowed for prior enrollment are taken into consideration.

– Borrowers in these programs who exceed 150 percent• Will not lose interest subsidy on loans obtained for this coursework.• Cannot receive additional subsidized loans for the remainder of their

program.

– Subsidized loans received while taking teacher certification coursework are not taken into consideration when determining eligibility for any other eligible program the student may enroll.

Example

Matthew has used 6 years of subsidized loan eligibility to complete a 4 year program. He decides to enroll in teacher certification coursework, which he is scheduled to complete in 1 academic year.

• Is his eligibility for subsidized loans affected by his enrollment in a prior program?

• What is his MEP for the teacher certification coursework?

• What are the consequences if he exceeds 1.5 years of enrollment in the teacher certification coursework?

Agenda


Updating Loan Records

Loan Periods

• Student does not enroll for a payment period covered by the originally reported loan period.

• Student withdraws from a payment period and all loan funds associated with the period are returned (R2T4).

• Student cancels an entire payment period’s disbursement.

• Student is no longer eligible for a loan for a payment period covered by the loan period.

• Applies to all Direct Loan types for all students.

Example

Student Enrollment Pattern

Anticipated Actual

Fall and Spring Fall Only

School’s Reporting to COD

Initial Updated

Begin Date End Date Begin Date End Date

Loan Period August 26, 2014 May 9, 2015 August 26, 2014 December 20, 2014

Academic Year August 26, 2014 May 9, 2015 No Update No Update

• Borrower withdraws after completing one semester.

Academic Years

• Student is attending a program for which summer is not a required term. Attends summer and receives a loan for summer.

• The student (in clock hour programs, non-term programs, and non-standard term NSE9W programs) is not progressing to the next payment period as scheduled.

Example

Student Enrollment Pattern

Anticipated Actual

Fall and Spring Fall, Spring, Summer

• Borrower initially attends fall and spring semesters and then plans to attend for the summer term (trailer).

• The school has two options.

Option 1

School’s Reporting to COD for Fall-Spring Loan

Initial UpdatedBegin Date End Date Begin Date End Date

Loan Period August 26, 2014 May 9, 2015 No Update No Update

Academic Year August 26, 2014 May 9, 2015 August 26, 2014 August 1, 2015

• 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.

School’s Reporting to COD for Summer-Only Loan


Loan Period May 24, 2015 August 1, 2015 No Update No Update

Academic Year August 26, 2015 August 1, 2015 No Update No Update

Option 2

School’s Reporting to COD for Fall-Spring-Summer Loan


Loan Period August 26, 2014 May 9, 2015 No Update August 1, 2015

Academic Year August 26, 2014 May 9, 2015 August 26, 2014 August 1, 2015

• 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 loan.

Eligibility for Direct Unsubsidized Loans

• Student can only receive an unsubsidized loan (base or additional) for a loan period if the student has received the full amount of his or her eligibility for a subsidized loan.

• Student who does not receive his or her full subsidized loan eligibility may not receive any unsubsidized loan for the same loan period.


• Example: Based on COA and EFC a second year dependent student is eligible for the full annual subsidized loan amount.

Base amount Subsidized loan

Base amount Unsubsidized loan

Additional amount Unsubsidized loan

$4500

$0

$2000


• Example: Based on COA and EFC a second year dependent student is eligible for the full annual subsidized loan amount.

– Base amount Subsidized loan – Base amount Unsubsidized loan – Additional amount Unsubsidized loan

$4000

$0

$0


• Example: Based on COA and EFC a second year dependent student is eligible for less than the full annual subsidized loan limit.

– Base amount Subsidized loan – Base amount Unsubsidized loan– Additional amount Unsubsidized loan

$4000

$500

$2000

Questions?

150% Direct Subsidized Loan Limit The Basics

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