150% Limit on Direct Loan Interest Subsidy

Transcription

1 150% Limit on Direct Loan Interest Subsidy SCASFAA 2014 Annual Conference Myrtle Beach, South Carolina Rick Renshaw, FSA Training Officer Subsidized Loan Limit Statute: On July 6, 2012, the Moving Ahead for Progress in the 21 st Century Act (MAP-21) was enacted (P.L ) Regulations: Interim Final Regulations published on May 16, 2013 Revised Final Regulations published on January 16,

2 Final Regulations Regulations effective immediately upon publication Revises 34 CFR , , and Additional guidance can be found on IFAP through the 150% Direct Subsidized Loan Limit Information Page LoanLimitInfo/index.html 4 First-Time Borrower Applies only to first-time borrowers as of July 1, 2013: Students who have no outstanding balance on a FFEL or Direct Loan when receiving a Direct Loan on or after July 1, Example A Student has never borrowed before Student enrolls in August 2013 Student receives a Direct Loan Student is a first-time borrower Example B Student received FFEL and Direct Loans prior to July 1, 2013 Student pays off all FFEL and Direct Loans in 2015 Student enrolls in 2017 Student receives a new Direct Loan in 2017 Student is a first-time borrower 5 Consequence: Loss Borrower loses eligibility for additional Subsidized Direct Loans when borrower has received Subsidized Direct Loans for 150% of their current academic program. Generally measured in time, not dollars. If eligibility is lost, borrower still eligible for Unsubsidized Direct Loans. 6 2

3 Consequence: Interest Subsidy Loss Lost eligibility due to 150% limit Did not complete program Enrolls in program of equal or shorter length Subsidy loss Based on enrollment, not borrowing, or requesting aid. 7 Components Maximum - 150% of the published length of the educational program in which borrower is currently enrolled Subsidized Usage of time for which a borrower received a Direct Subsidized Loan (permanent) Remaining Difference between the Maximum and the total of all Subsidized Usage s 8 Determining When is Lost Maximum All Subsidized Usage s Remaining 150% limit is met and further eligibility is lost when Remaining is zero (or less). 9 3

4 Maximum Maximum Maximum eligibility period is 150% of the published length of educational program in which borrower is currently enrolled Each academic program has a maximum eligibility period that is based on the published length of the program May be reported in years, months, or weeks Take published length of program in academic years and multiply by 1.5 COD will determine based on school-provided information 11 Converting Months or Weeks To Years If the published length of the program is measured in months or weeks, ED will convert the school reported months or weeks to years (or portions of years) Number of days in the months or weeks Number of days in the Title IV academic year Month = 30 days Week = 7 days 12 4

5 Maximum Examples Program Length 4-Year Bachelor s Degree 2-Year Associate s Degree 1-Year Certificate Program 18-Week Certificate Program X 1.5 X 1.5 X 1.5 X 1.5 Maximum 6.00 Years 3.00 Years 1.50 Years 27 Weeks 13 Converting Months or Weeks To Years Months Example Credit hour school defines its Title IV Academic Year as 30 weeks: 210 days Program A s published length is 7 months: 210 days 210 days divided by 210 days = 1.00 years Program B s published length is 15 months: 450 days 450 days divided by 210 days = 2.14 years Program C s published length is 12 months: 360 days 360 days divided by 210 days = 1.71 years 14 Converting Months or Weeks To Years Weeks Example Clock hour school defines its Title IV Academic Year as 26 weeks: 182 days Program A s published length is 18 weeks: 126 days 126 days divided by 182 days = 0.69 years Program B s published length is 35 weeks: 245 days 245 days divided by 182 days = 1.35 years Program C s published length is 48 weeks: 336 days 336 days divided by 182 days = 1.85 years 15 5

6 Subsidized Usage Subsidized Usage Subsidized Usage The period of time for which a borrower receives a Direct Subsidized Loan Calculated on loan-by-loan basis Measured in academic years and rounded to the nearest tenth of a year Includes only periods when Direct Subsidized Loan was received ED will calculate based on school-provided information 17 Calculating Subsidized Usage Number of days in the loan s loan period divided by number of days in the loan s 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 6

7 Example 1: Usage Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for fall and spring semesters. Begin Date End Date Number of Days Loan August 27, 2013 May 17, Academic Year August 27, 2013 May 17, Example 2: Usage Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for fall semester only. Begin Date End Date Number of Days Loan August 27, 2013 December 21, Academic Year August 27, 2013 May 17, Enrollment Status Exception Calculated subsidized usage period is prorated by enrollment status Proration occurs before rounding Full-time = 1.00 ½-time = 0.50 ¾-time = 0.75 Prorate Subsidized Usage based on enrollment status. 21 7

8 Example 3: Enrollment Status Exception Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for both semesters while enrolled half-time for both semesters. Begin Date End Date Number of Days Loan August 27, 2013 May 17, Academic Year August 27, 2013 May 17, Annual Loan Limit Exception Only circumstance where dollars are considered is when a student receives a Direct Subsidized Loan in the amount of the annual loan limit. Borrow full annual loan limit Received for less than 1 AY Subsidized Usage = 1 Can only occur for standard-term programs or for non-standard-term programs that are substantially equal and are each at least nine weeks in length. 23 Example 4: Annual Loan Limit Exception Program is semester-based. Scheduled academic year includes the fall and spring semesters. Third year student receives loan of $5,500 for fall semester only. Loan August 27, 2013 Academic Year August 27, 2013 Begin Date End Date Number of Days December 21, May 17,

9 Loan & Academic Year Determine the Subsidized Usage Covered in DCL GEN-13-13, applies to all Direct Loans Loan period of enrollment for which borrower received loan Must be updated if student s actual enrollment or eligibility doesn t match originally reported loan period 25 Loan & Academic Year Academic year period to which the annual loan limit applies For credit-hour programs that use standard terms or non-standard SE9W terms, corresponds to calendar period of terms in SAY or BBAY For clock-hour programs or credit-hour programs that use non-standard NSE9W terms or do not use terms, corresponds to period of time required for borrower to complete a Title IV academic year s worth of coursework (BBAY) 26 Updating Loan s 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 payment period are returned (R2T4) Student cancels all of a disbursement of a loan that is attributable to a payment period Student is not otherwise eligible for a loan for a payment period covered by the loan period 27 9

10 Updating Loan s - Continued The student (in clock-hour programs, nonterm programs, and non-standard term NSE9W programs) is not progressing to the next payment period as scheduled This is a non-exhaustive list 28 Updating 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, nonterm programs, and non-standard term NSE9W programs) is not progressing to the next payment period as scheduled 29 Remaining 10

11 Determining When Limit Is Met Maximum All Subsidized Usage s Remaining 150% limit is met and further eligibility is lost when Remaining is zero (or less). 31 Example 1: Remaining Student receives 5 full years of Direct Subsidized Loans while enrolled in a 4-year BA program. Maximum All Subsidized Usage s Remaining Maximum All Subsidized Usage s Remaining 6 Years 5 Years 1 Year 32 Example 2: Remaining Student receives 3 years of Direct Subsidized Loans while enrolled in a 2-year program. Student then transfers to a 4-year program. Maximum All Subsidized Usage s Remaining After year 3 of 2-year program Upon transfer to 4-year program Maximum 3 Years 6 Years All Subsidized Usage s 3 Years 3 Years Remaining 0 Years 3 Years 33 11

12 Example 3: Remaining Student receives 1 year of Direct Subsidized Loans while enrolled in a 2-year program. Student transfers to a 1-year clock-hour program. Maximum All Subsidized Usage s Remaining After year 1 of 2- year program Upon transfer to 1- year cert. program Maximum 3 Years 1.5 Years All Subsidized Usage s 1 Year 1 Year Remaining 2 Years 0.5 Years Minimum loan period length in a clock-hour program is lesser of length of program or academic year. School cannot disburse a Direct Subsidized Loan to this student. 34 Loss of Interest Subsidy Benefits Loss of Interest Subsidy Benefits No Remaining No Completion Enroll Subsidy loss Subsidy loss is effective on the date of the triggering enrollment

13 Enrollment Types: Subsidy Loss 1 Student lost eligibility 2 Student lost eligibility 3 Student had remaining eligibility Enrolled at least ½ time in same undergraduate program Enrolled at least ½ time in an undergraduate program of equal or lesser length Student enrolled at least ½ time in shorter undergraduate program where usage maximum 37 Enrollment Types: No Subsidy Loss Enrollment in a graduate or professional program Enrollment in preparatory coursework necessary for enrollment in a graduate or professional program Enrollment in a teacher certification program where school does not award an academic credential 38 s of Interest Subsidy Borrower with interest subsidy: In-school Grace Repay - Std. Defer. Forbear. Repay - IBR/PAYE* Borrower who lost interest subsidy: In-school Grace Repay. Std. Defer. Forbear. Repay IBR/PAYE Subsidized Unsubsidized 39 13

14 ED s responsibility Which interest is the borrower s? Subsidized Interest accrued before subsidy loss Interest accrued after subsidy loss Borrower s responsibility Subsidy loss is not retroactive to the date of disbursement or from the date of the loss of eligibility. Loss of subsidy is from the date of the enrollment that caused the loss of subsidy. 40 Example 1: Subsidy Loss Student received 6 years of Subsidized Loans while enrolled in a 4-year program. Student does not complete and enrolls for a 7 th year. No Remaining No Completion Enrolls Subsidy Loss Maximum All Subsidized Usage s Remaining Subsidy Loss 6 Years 6 Years 0 Years Yes, enrolled with no remaining eligibility and without completing 41 Example 2: Subsidy Loss Student is enrolled in a 2-year program and received 3 years of Subsidized Loans. Student enrolls for one more semester in the same program, and then transfers to a 4-year program. Before transfer Upon transfer Maximum 3 Years 6 Years All Subsidized Usage s 3 Years 3 Years Remaining 0 Years 3 Years Subsidy Loss Yes, borrower enrolled after eligibility loss. No, borrower enrolled in a longer program. Student regains eligibility to borrow Subsidized Loans upon transfer. Any new Subsidized Loans will have interest subsidy. Prior Subsidized Loans that lost subsidy do not regain subsidy

15 Example 3: Subsidy Loss Student received 5 years of Subsidized Loans while enrolled in a 4-year program. Student completes the program and then enrolls in a 2-year program. No Remaining No Completion Enrolls Subsidy Loss End of year 5 Upon transfer Maximum 6 Years 3 Years All Subsidized Usage s 5 Years 5 Years Remaining 1 Year -2 Years Subsidy Loss No, borrower has remaining eligibility. No, borrower graduated from prior program. 43 Example 4: Subsidy Loss Student received 5 full years of Direct Subsidized Loans while enrolled in a 4-year program. Student does not complete and then enrolls in a 2-year program. No Remaining No Completion Enrolls Subsidy Loss End of year 5 Upon transfer Maximum 6 Years 3 Years All Subsidized Usage s 5 Years 5 Years Remaining 1 Year -2 Years Subsidy Loss No, borrower has remaining eligibility. Yes, transfer caused borrower to exceed max. 44 Special Provisions 15

16 Preparatory Coursework For Enrollment in an Undergraduate Program Maximum is 150% of program for which coursework is preparing. For Enrollment in a Grad/Professional Program Maximum is 150% of program for which borrower most recently received Direct Subsidized Loan. Subsidized Usage s count against maximum eligibility. Subsidized Usage s count against maximum eligibility. Enrolling could result in loss of interest subsidy. NOT possible to lose interest subsidy by enrolling. 46 Non-Credential Teacher Certification Student enrolled in teacher certification coursework that does not lead to a credential offered by the school is eligible for Direct Loans Coursework must be required for certification by the state to teach elementary/secondary school Student may receive up to an annual loan limit of $5,500 in Subsidized DL for teacher certificate coursework 47 Non-Credential Teacher Certification Maximum eligibility period limited to 150% of published length of the teacher certification program Only subsidized loans received for teacher certification coursework are in included in the borrower s subsidized usage period Enrollment in teacher certification coursework counts only against the maximum eligibility period for the borrower s teacher certification coursework Enrollment in teacher certification coursework does not cause a borrower to become responsible for accruing interest on any subsidized loans 48 16

17 Teacher Certification in No way COD can assume enrollment in Teacher Certification Program Schools must provide ad-hoc reporting to COD starting in February 2014 Number of impacted schools and borrowers is limited 150% EA #4 10/25/ % EA #10 02/28/ Teacher Certification in Ad-hoc reporting file includes: Borrower last name Borrower first name Borrower SSN Borrower DOB Loan s Award ID Boolean indicator (True/Yes) 50 Short-Term Programs in First-time borrowers are always eligible to receive their first Subsidized Loan under the 150% limit Most borrowers will not receive a second loan before schools begin using COD that will track the 150% limit for schools Possible for students in short-term programs to have 150% eligibility limitation School must make own determination can use ED developed spreadsheet 150% EA #5 11/12/ % EA #11 3/10/

18 Short-Term Programs in First-time borrowers In shortterm programs Receiving second loan for School using COD for School determines eligibility For this specific purpose only a short-term program is one that is shorter than: 1.5 years 10 months 40 weeks 52 ED and School Responsibilities 150% Direct Sub Loan Limit CPS COD NSLDS Servicers Inform school of first-time borrower and progress toward limit Inform student that they are subject to a limit Determine who is a first-time borrower Calculate maximum and remaining eligibility period and subsidized usage period Reject loans for ineligible borrowers Inform schools Calculate maximum eligibility period Determine eligibility for interest subsidy Inform schools Inform servicers Stop subsidy Communicate with borrower 54 18

19 150% Direct Sub Loan Limit Basic Formula Maximum (MEP) Total Subsidized Usage (SUP) Remaining (REP) Maximum (MEP) Calculated by COD based on disbursement records. Calculated by NSLDS based on Enrollment Reporting Subsidized Usage (SUP) Calculated by COD and sent to NSLDS Remaining (REP) Calculated by COD based on disbursement records. Calculated by NSLDS based on Enrollment Reporting 55 COD Reporting Requirements COD Reporting Requirements COD will - Calculate and report to schools - Maximum Subsidized Usage s Remaining. Determine when student no longer eligible for Direct Subsidized Loans, based on program Will edit and reject 57 19

20 Loan and Academic Year Reporting Loan Date Reporting to COD Effective for all loans, schools must Correctly report to COD the SAY/BBAY dates and the Loan dates; and Update such dates, when necessary For all loans for all borrowers where the loan has a first disbursement date of on or after July 1, 2013 Incorrect reporting could result in a borrower improperly losing eligibility for Direct Subsidized Loans 58 Loan and Academic Year Reporting Guidance and examples related to how schools must report a Direct Loan s academic year dates and loan period dates to COD are included on Dear Colleague Letter GEN-13-13,posted to IFAP on May 10, % Loan and AY Reporting Webinar #1 Recording posted to IFAP under ANN For all loans for all borrowers where the loan has a first disbursement date of on or after July 1, Academic Year Reporting A Direct Loan s academic year tags in the COD schema are <AcademicYearBeginDate> and <AcademicYearEndDate> Schools must populate these tags with the exact beginning and ending dates of the loan s 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 may not be included in the academic year dates unless the student will actually be receiving a Direct Loan for the summer 60 20

21 Loan Reporting A Direct Loan s loan period tags in the COD schema are <FinancialAwardBeginDate> and <FinancialAwardEndDate> 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 61 Borrower and Program Information Beginning with , schools will report to COD additional student and program information Student s 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 or Preparatory Coursework Payment Begin Dates - prorate Sub Usage when payment period enrollment is less than full time 62 Enrollment Status Reporting Electronic Announcement - 8/30/13 Alternative method for COD to obtain enrollment statuses for loans made for the year NSLDS does not currently have a three-quarter time enrollment status (will add a 3/4 status in future) All Subsidized Usage s for 13/14 Direct Subsidized Loans with an enrollment status of H in NSLDS for any portion of a loan period will be prorated on the basis of half-time enrollment even if the borrower is or was actually enrolled on a 3/4 -time basis COD calculation of Sub Usage starts March

22 NSLDS Reporting Requirements 150% Direct Sub Loan Limit NSLDS Phases Identifying First-Time Borrowers Calculating Maximum s Tracking Subsidized Usage s Loss of Subsidy 65 NSLDS Responsibilities NSLDS will determine when continued or new enrollment results in loss of interest subsidy benefits. If yes, NSLDS will notify federal loan servicer that borrower is responsible for accruing interest Federal loan servicer will notify borrower of interest responsibility 66 22

23 New NSLDS Reporting Requirements When reporting enrollment information to NSLDS, school must include for program in which the borrower is enrolled - CIP Code Credential Level Length of program in years, months, or weeks If applicable, preparatory coursework or teacher certification coursework for which school does not award an academic credential % Direct Sub Loan Limit Identifying First-Time Borrowers COD, with help from NSLDS, is the primary identifier of first-time borrowers COD sends the Subsidized Usage Limit Applies (SULA) Flag to federal loan servicers Subsidized Usage Limit Applies (SULA) Flag is reported to NSLDS from federal loan servicers % Direct Sub Loan Limit Identifying First-Time Borrowers SULA flag will display on the NSLDSFAP Website SULA flag will be included on: Financial Aid History (FAH) Transfer Student Monitoring (TSM) Prescreening and Post screening Institutional Student Information Record (ISIR) Post screening Reason Code 25 will be added for changes to a SULA status for

24 150% Direct Sub Loan Limit New Loan Types D0 & D9 New Loan Types: D0 for Direct Subsidized (SULA Eligible) loans D9 for Direct Consolidation Subsidized (SULA Eligible) loans % Direct Sub Loan Limit New Loan Types D0 & D9 New D0 & D9 loan types will display on: NSLDS Websites NSLDS Reports Financial Aid History (FAH) Transfer Student Monitoring (TSM) Conversion of D0 loan type for the Central Processing System (CPS) and New D0 loan type will be converted as D1 for New D0 loan type will appear as D0 for % Direct Sub Loan Limit Enrollment Reporting Changes Schools will be required to report individual student s program-level enrollment data to NSLDS Campus-Level (Record Type 1) Certifying 8-digit OPEID Move To 8-digit OPEID Student Name, SSN, and DOB Student Physical Address Student Phone Number Certification Date Enrollment Status Enrollment Status Effective Date Anticipated Completion Date Term Begin and End Dates Program-Level (Record Type 2) Classification of Instructional Program (CIP) Code Program Credential Level Published Program Length Publish Program Length Measurement (Years, Months, Weeks) Weeks Title IV Academic Year Special Program Indicator Program Enrollment Status Program Enrollment Status Effective Date Student s Program Begin Date Student (Record Type 3) Student Address 72 24

25 Loan Counseling Entrance Counseling Resources StudentLoans.gov: June 28 contains a link to PDF of counseling information (entrance only) StudentLoans.gov: December integrated information into counseling flow (entrance and exit) 150% EA #1: May 16 contains PDF of counseling information that is on StudentLoans.gov (may be used for entrance and exit) Resources/References An IFAP webpage similar to GE webpage has been created containing: Training materials DCLs, EAs and policy guidance Q & As address for questions FSATC Sessions #28, also #12 and #15 Recorded 150% Loan Limit Webinars #1, #2, and #

26 QUESTIONS? My Contact Information Rick Renshaw Training Officer U.S. Dept. of ED Federal Student Aid Dallas Regional Office Your Atlanta Regional Training Team Dave Bartnicki, Training Officer Mike Roberts has retired. We are currently searching for a replacement. The job posting closed on March

27 My Supervisor Requests Your Feedback Mark Gerhard Supervisor of Training Officers U.S. Dept. of ED/Federal Student Aid Please use this link to complete your evaluation: Session Name: SCASFAA % Sub Loan Limits 79 27