For training/discussion purposes only April 2014 150% Direct - PDF document

For training/discussion purposes only April 2014 150% Direct Subsidized Loan Limit - How it Affects Your School and Your Students Ohio PACE Spring Conference April 2014 Agenda • Regulations, definitions and calculations • School reporting requirements • Departmental responsibilities 2 Regulations Definitions and Calculations 3 Byron Scott U.S. Department of Education 1

For training/discussion purposes only April 2014 Subsidized Loan Limitation • Public Law 112-141 established a limit of how many years a student may receive subsidized loans • Applies to “first - time” borrowers on or after July 1, 2013 • First-time borrower is one who – − Has no balance on any FFEL or Direct Loan on July 1, 2013 − Receives first Direct Loan (any type) on or after July 1, 2013 4 Subsidized Loan Limitation • When student has received subsidized loans for 150% of the published time of the academic program – − The student may not receive any additional subsidized loans for that program or any program of equal or lesser length − Borrower still eligible for unsubsidized loans • Generally measured in time, not dollars • Special calculation for transfer students and less- than-full-time students 5 Subsidized Loan Limitation • Law waived requirement for negotiated rulemaking and publication of regulations in accordance with master calendar • Interim Final Rule published May 16, 2013 − Effective upon publication − Revised 34 CFR 685.200, 685.202 and 685.304 • Final regulations published January 17, 2014 − Final regulations effective March 18, 2014  http://www.ifap.ed.gov/fregisters/attachments/FR011714.pdf 6 Byron Scott U.S. Department of Education 2

For training/discussion purposes only April 2014 Components • Maximum Eligibility Period - 150% of the published length of the educational program in which borrower is currently enrolled • Subsidized Usage Period – Period of time for which a borrower received a Direct Subsidized Loan • Remaining Eligibility Period – Difference between the Maximum Eligibility Period and the total of all Subsidized Usage Periods 7 Determining When 150% Limit Is Met Maximum Eligibility Period less Total of Subsidized Usage Periods equals Remaining Eligibility Period *150% Limit Met when Remaining Eligibility Period equals zero (or less than zero) 8 Maximum Eligibility Period • Maximum eligibility period is 150% of the published length of the borrower’s current or upcoming educational program − Varies by program − Multiply published length of program by 1.5 − Measured in academic years or portions − ED will calculate using school-reported information 9 Byron Scott U.S. Department of Education 3

For training/discussion purposes only April 2014 Two Exceptions • Bachelor’s degree -completion programs have MEP of 6 years − Only admit students who have completed associate degree or 2 years of prior coursework • Special admission associate degree programs have MEP of 6 years − Only admit students who have completed associate degree or 2 years of prior coursework  Admits student on a competitive basis (no open enrollment)  Prepares students for occupation requiring licensure from state (for example, Nursing) 10 Subsidized Usage Period • Subsidized Usage Period – The period of time for which a borrower receives a Direct Subsidized Loan − Calculated on loan-by-loan basis − With one exception, not related to amount of loan − Measured in academic years and rounded up or down to the nearest tenth of a year − Includes only periods when Direct Subsidized Loan was received − COD will calculate based on school-provided information 11 Calculating Subsidized Usage Period • Number of days in the loan period divided by number of days in the l oan’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) • Likely not the same as the Title IV academic year because of breaks and summers 12 Byron Scott U.S. Department of Education 4

For training/discussion purposes only April 2014 Calculating Subsidized Usage Period 𝑇𝑣𝑐𝑡𝑗𝑒𝑗𝑨𝑓𝑒 𝑉𝑡𝑏𝑕𝑓 𝑄𝑓𝑠𝑗𝑝𝑒 = 𝐸𝑏𝑧𝑡 𝑗𝑜 𝑀𝑝𝑏𝑜 𝑄𝑓𝑠𝑗𝑝𝑒 𝐸𝑏𝑧𝑡 𝑗𝑜 𝐵𝑑𝑏𝑒𝑓𝑛𝑗𝑑 𝑍𝑓𝑏𝑠 Loan Period: Period of enrollment for which loan is Academic Year: Period intended used to track annual loan limits (SAY/BBAY) 13 Subsidized Usage Period Academic Year Title IV academic year must be defined 1. Minimum of 900 clock hours and 26 weeks of instruction a. Academic year used to determine Direct Loan 2. annual loan limits Use BBAY period, which includes all calendar weeks a. • Subsidized usage period usually based on second definition 14 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) – Days in Academic Program = Program Length Days in Title IV Academic Year Month = 30 days Week = 7 days • This is the exception where the Title IV defined academic year is used 15 Byron Scott U.S. Department of Education 5

For training/discussion purposes only April 2014 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, round to 0.70 − Program B’s published length is 35 weeks: 245 days • 245 days divided by 182 days = 1.35 years, round to 1.40 − Program C’s published length is 48 weeks: 336 days • 336 days divided by 182 days = 1.85 years, round to 1.90 16 Converting Weeks or Months to Years • Program is 600 clock hours and 20 weeks of instruction Scheduled academic year is 900 clock hours and 26 weeks of instruction • Student receives a subsidized DL for the program Begin Date End Date Number of Days Loan Period August 27, 2013 January 13, 2014 140 Academic Year August 27, 2013 February 24, 2014 182 Subsidized Usage Period = 140/182 = .76 Years Rounded to .8 Years 17 Determining When Eligibility is Lost All Maximum Remaining Subsidized Eligibility Eligibility Usage Period Period Periods 150% limit is met and further eligibility is lost when Remaining Eligibility Period is zero (or less) 18 Byron Scott U.S. Department of Education 6

For training/discussion purposes only April 2014 Subsidized Loan Limitation - Transfers • Students’ maximum time to receive subsidized loans is established based on the length of the program in which the student is enrolled • Remaining subsidized eligibility is calculated by subtracting from maximum eligibility the time the student has already received subsidized loans 19 Remaining Eligibility Period Calculation Examples • Student receives 3 years of subsidized loans while enrolled in a 2-year program − Student transfers to a 4-year BA program  Student has 3 years of remaining subsidized loan eligibility • Student receives 3 years of subsidized loans while enrolled in a 4-year BA program − Student enrolls in a 2-year AA program  Student has no remaining subsidized loan eligibility 20 Remaining Eligibility Period Calculation • Borrower enrolls in a 2-year program with maximum eligibility period of 3 years − Receives 2.5 years of subsidized loans − Has 0.5 years remaining eligibility in that program • Borrower enrolls in a 1-year clock hour program − Minimum permissible loan period is program length of one year − Student cannot borrow because remaining eligibility period is less than minimum permissible loan period − No loss of subsidy because borrower has remaining eligibility – does not matter that loan can’t be made 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. 21 Byron Scott U.S. Department of Education 7

For training/discussion purposes only April 2014 Loss of Interest Subsidy Benefits Enrolls in Lost eligibility Did not program of due to 150% complete Subsidy loss equal or limit program shorter length Based on enrollment, not borrowing or requesting aid!! 22 Loss of Interest Subsidy Benefits • A student who loses eligibility for additional subsidized loans loses interest subsidy on previously received subsidized loans if – − Student did not complete program  AND continues on at least a half-time basis in same program  OR enrolls in another undergraduate program of the same or shorter length • Effective on the date of the student’s continued or new enrollment 23 Interest Subsidy Loss • Loss of subsidy begins the date of the enrollment that causes the loss of subsidy − Not retroactive to date of disbursement, or date of loss of eligibility for additional subsidized borrowing • Department is responsible for interest accrued before subsidy loss • Borrower is responsible for interest accrued after subsidy loss 24 Byron Scott U.S. Department of Education 8