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150% Direct Subsidized Loan Limit - Frequently Asked Questions



These Frequently Asked Questions provide information and operational guidance on implementing the 150% limit. Schools must review the interim regulations as published in the Federal Register on May 16, 2103 and associated guidance to ensure that they are in compliance with all of the 150% limit requirements.

The listing of Frequently Asked Questions will be updated periodically and include the date of the update. New and/or updated questions and answers will be marked NEW and appear in red font. If you have questions that have not been addressed, please submit them to the 150% Questions mailbox at 150Percent-Questions@ed.gov.  Please include the name of your school in the subject line.


Frequently Asked Questions (FAQ)

First-Time Borrowers [FTB]

Maximum Eligibility Period [MEP]

Subsidized Usage Period [SUP]

Remaining Eligibility Period [REP]

Loss Of Eligibility [ELIG]

Interest Subsidy [INT]

Entrance And Exit Counseling [CSL]

Preparatory Coursework [PREP]

Teacher Certification [TEACH]

Notifications [NTF]

Other [OTH]

Academic Year And Loan Period Reporting [AYLP]



First-Time Borrowers [FTB]

  • FTB-Q1: The 150% Direct Subsidized Loan Limit provision applies only to “first-time borrowers” on or after July 1, 2013. Who is a first-time borrower for purposes of this provision?

    FTB-A1:

    A first-time borrower is an individual who has no outstanding balance on a Direct Loan or on a FFEL Program loan on July 1, 2013, or on the date the borrower obtains a Direct Loan after July 1, 2013.

    For example, if a student had received FFEL and Direct Loans, graduated from his undergraduate program in May 2003, entered repayment, repaid all outstanding FFEL and Direct Loans in December 2014, and then returned to another undergraduate program in 2015, the student would be a first-time borrower.

    The Department will determine whether borrowers are “first-time borrowers” for purposes of the 150% limit, without requiring any additional reporting by schools. [December 20, 2013]

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  • FTB-Q2: Does a parent having a balance on a PLUS Loan taken for a dependent undergraduate student make the parent or the student a first-time borrower?

    FTB-A2:

    A first-time borrower is any individual who has no outstanding balance of a Direct Loan or a FFEL loan on July 1, 2013 or on the date the borrower obtains a Direct Loan after July 1, 2013. This includes receipt of PLUS Loans. Therefore, if the parent had fully repaid the PLUS loan before July 1, 2013, or when the parent obtains a first Direct Loan after that date, the parent would be a first-time borrower. However, receipt by the parent of a PLUS loan would not impact whether the student for whom the parent receives the PLUS loan is or is not a first-time borrower.

    Note that the Common Origination and Disbursement (COD) System, which will identify first-time borrowers, will not so identify borrowers who only receive Direct PLUS Loans. While such borrowers could be first-time borrowers, COD will not flag them as such unless they receive a Direct Subsidized or Unsubsidized Loan. [December 20, 2013]

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  • FTB-Q3: TEACH Grants can be converted to Direct Unsubsidized Loans. Does the receipt of a TEACH Grant affect whether a student is considered a first-time borrower and, therefore subject to the 150% limit?

    FTB-A3:

    Receipt of a TEACH Grant does not affect whether the student is a first-time borrower. However, the conversion of a TEACH Grant to a Direct Unsubsidized Loan may result in the recipient becoming a first-time borrower, depending on when the conversion occurs.

    If the TEACH Grant was converted to a Direct Unsubsidized Loan before July 1, 2013 and it had not been repaid, the student would have had an outstanding Direct Loan balance on July 1, 2013 and therefore, would not be a first-time borrower.

    Consider a TEACH Grant recipient who did not have an outstanding Direct Loan or FFEL loan balance on July 1, 2013. If the TEACH Grant is converted to a Direct Unsubsidized Loan on or after July 1, 2013, the student would be a first-time borrower and subject to the 150% limit. [December 20, 2013]

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  • FTB-Q4: How does loan consolidation affect the determination of whether a student is a first-time borrower for purposes of the 150% limit?

    FTB-A4:

    The fact that a borrower has consolidated all or some of his or her Direct Loans or FFEL loans does not affect the determination of whether the borrower is a first-time borrower. The loans that the borrower consolidated determine whether the borrower is a first time borrower. A borrower who has outstanding Direct Loans and/or FFEL loans on July 1, 2013 is not considered to be a first-time borrower. This does not change if the borrower later consolidates those loans into a Direct Consolidation Loan after July 1, 2013. If the borrower only has an outstanding balance on a Direct or FFEL Consolidation Loan made before July 1, 2013, the borrower is not a first time borrower. [December 20, 2013]

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  • FTB-Q5: A school believes that COD made an error in determining that a student was a first-time borrower on or after July 1, 2013. What steps must the school take to have COD remove the first-time borrower flag?

    FTB-A5:

    The school must contact the COD School Relations team to have the Department reevaluate whether the individual is a first-time borrower. The team can be reached by email at CODSupport@ed.gov or by phone at 1-800-848-0978. [July 13, 2015]

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Maximum Eligibility Period [MEP]

  • MEP-Q1: The 150% Direct Subsidized Loan Limit provision uses a calculation that includes the borrower’s “Maximum Eligibility Period”. What is a Maximum Eligibility Period?

    MEP-A1:

    A borrower’s Maximum Eligibility Period is a period of time that is equal to 150% of the published length of the student’s academic program. The Department will calculate a borrower’s Maximum Eligibility Period using information that is provided by the borrower's school to the Common Origination and Disbursement (COD) System and to the National Student Loan Data System (NSLDS). [December 20, 2013]

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  • MEP-Q2: If a borrower is simultaneously enrolled in two or more programs of differing lengths at one school, how is the borrower’s Maximum Eligibility Period calculated?

    MEP-A2:

    If the borrower receives a loan to cover enrollment in more than one academic program at the same school, the borrower’s Maximum Eligibility Period will be calculated based on the published length of the longest program.

    When submitting the origination record for the borrower’s Direct Loan to the COD System, the school should only report program information associated with the borrower’s longest program.

    When reporting enrollment information to NSLDS, the school must report separate enrollments for each of the borrower’s programs. [December 20, 2013]

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  • MEP-Q3: If a borrower is simultaneously enrolled in two or more programs of the same length at one school, which program should the school report on?

    MEP-A3:

    If the student is enrolled in separate programs that are of the same length, the school can choose which program’s information to report to COD. When reporting enrollment information to NSLDS the school must report separate enrollments for each of the borrower’s programs. [December 20, 2013]

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  • MEP-Q4: During a loan period, a borrower transfers from one academic program to another academic program with a different published length. Must the school update the Direct Loan origination record with information about the new program so that a new Maximum Enrollment Period can be determined?

    MEP-A4:

    If the student began attendance in one program and then transfers to another program there is no need to immediately update the program length that was previously reported to the COD System or NSLDS. Instead, the school would report the new program length to COD if and when it makes the next disbursement of the loan and to NSLDS when it submits its next enrollment reporting. If, because of the student’s enrollment in the shorter program, the student is no longer eligible for Direct Subsidized Loans, the school should cancel subsequent disbursements of the loan and update the loan period of the loan to only cover the payment period(s) for which the borrower will now be receiving the loan.

    If the student never began attendance in the first program before enrolling in the other program, and the school submitted its COD origination record or NSLDS enrollment reporting with information concerning the first program, then the student’s eligibility for the loan and for interest subsidy was based on a program in which the student never actually began attendance. For such a student, the school must update the COD origination record with information on the student’s actual program within 15 days of becoming aware that the student never began attendance in the program. The school must also update its prior reporting (if any) of the student’s enrollment in the prior program in NSLDS. [December 20, 2013]

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  • MEP-Q5: Some schools offer academic programs that are a combined undergraduate and graduate/professional program. How do schools report information to the COD System and NSLDS for loans made for attendance in one of these programs?

    MEP-A5:

    Consistent with longstanding guidance related to when students in such programs transition from undergraduate status to graduate/professional status (see, e.g., 2012-2013 FSA Handbook, Volume 1, Page 67 and Volume 3, Page 96), the school should report program information, including credential level and program length for the portion of the program when the student is considered to be an undergraduate student and, therefore, eligible for the Direct Subsidized Loan.

    For example, if the school offers a five-year BA/MA program, and the school treats the borrower as an undergraduate student during the first three years of the program, the school must report the length of the program as three for the periods of enrollment during which the student is considered an undergraduate. Similarly, the school must report the program’s credential level to the COD System as a bachelor’s degree program for any loan originated for the student’s enrollment in the program as an undergraduate student. For NSLDS, the school must report the program as a bachelor’s degree program for the duration of the student’s enrollment in the program as an undergraduate student.

    After the student becomes a graduate/professional student, the program length and credential levels reported for Direct Loans originated for the student’s enrollment in the program and NSLDS enrollment reporting must correspond to the graduate/professional portion of the program. In the example of the five-year BA/MA program, for which the school treats the student as being an undergraduate student for only the first three years of the program, the graduate component of the program should have a program length of two years reported to the COD System and NSLDS. [December 20, 2013]

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  • MEP-Q6: Maximum Eligibility Period is measured in years but some schools publish the length of their programs in months or weeks, not years. How will the Maximum Eligibility Period for such programs be calculated?

    MEP-A6:

    The Department will convert published program lengths that are reported in weeks or months to years. As part of the Direct Loan origination record, schools will report the length of the program’s Title IV academic year in weeks of instructional time (see 34 CFR 668.3). To convert the lengths of such programs into years, the Department will divide the number of days in the program’s length by the number of days in the program’s Title IV academic year. If the program is measured in weeks, the Department will use the first formula, below; if the program is measured in months, the Department will use the second formula, below.

         

    Length of Program =   (Weeks in Length of Program x 7)
    ---------------------------------------------------------------------------------------------------
    (Weeks in Program's Title IV Academic Year x 7 )


          
    Length of Program =   (Months in Length of Program x 30)
    ---------------------------------------------------------------------------------------------------
    (Weeks in Program's Title IV Academic Year x 7 )

    [December 20, 2013]

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  • MEP-Q7: How should schools report their programs’ published length?

    MEP-A7:

    The Department's regulations require each school to have established a normal time for completion for each of its academic programs. 34 CFR 668.41(a) defines normal time as "the amount of time necessary for a student to complete all requirements for a degree or certificate according to the school's catalog". The definition goes on to say, "This is typically four years for a bachelor's degree . . . two years for an associate degree . . . and the various scheduled times for certificate programs". Therefore, a school must have established a program's published length in time (years, months, or weeks), not just in credit or clock hours to comply with 34 CFR 668.41(d)(4) and 668.45 and must report that published length in time to COD and NSLDS.

    • If the school has published, in its catalog, on its website, or in any promotional materials, the length of the program in weeks, months, or years, the program length to be reported to COD and NSLDS must be the same as the program length that the school has published. Note: For gainful employment programs, the school must have published the program's length in weeks, months, or years on the school's website.

    • If the school has not published a program length and the program is an associate or bachelor's degree program, the program length to be reported should be 2 years or 4 years, respectively, unless the academic design of the program makes it longer or shorter than the typical, 2-year associate degree program or 4-year bachelor's degree program.

    • For all other programs for which the school has not published a program length, the program length is based on the school's determination of how long, in weeks, months, or years, the program is designed for a full-time student to complete.

    For more information, see 150% EA #17. [July 13, 2015]

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  • MEP-Q8: How should schools determine the length of an academic program when some students attend full-time while others attend part-time?program’s credential. How should such schools report their programs’ published length?

    MEP-A8:

    Schools should set the length of a program based on the amount of time in years, months, or weeks it would take a full-time student to complete the program.

    See MEP9 for additional information. [December 20, 2013]

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  • MEP-Q9: A school has a non-term or clock hour program with separate “tracks” – one for full-time students and one for part-time students. What program length should the school report?

    MEP-A9:

    These “tracks” are two different programs. The length for the first program is the normal time it takes full-time students to complete the program. The length for the second program is the normal time it takes part-time students (for whom the second program is specifically designed) to complete the program.

    If the school chooses to create two programs in this way, each student must be enrolled in one or the other program and not in both. Moreover, while it is permissible for a student who is enrolled in one of the programs to take occasional coursework in the other, the school must report the borrower as being in the program in which the borrower is taking the most of his or her courses. [December 20, 2013]

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  • MEP-Q10: A school has programs with published lengths that are not a fixed period of time, but are instead a range, for example, 18-22 weeks. What program length should the school report?

    MEP-A10:

    Published length must be a fixed period. The school must determine how long it normally takes a full-time student to complete the program, and report that length to the COD System and NSLDS. [December 20, 2013]

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  • MEP-Q11: A school allows students to be in an “undeclared” or “undecided” status as opposed to being enrolled in a specific academic program (major), at least for some period of time. What should the school report to the COD System and NSLDS for such students?

    MEP-A11:

    To be eligible for Title IV aid, a student must be a "regular student". Under 34 CFR 600.2, a regular student is one who is enrolled in a Title IV-eligible program for the purposes of receiving a degree, certificate, or other credential awarded by the school. Therefore, to be eligible for Title IV aid, a student whose major may be "undeclared" or "undecided" must still be enrolled in a program that leads to a degree, certificate, or other credential. Schools must report to the COD System and to NSLDS the program length associated with the program in which the student is enrolled.

    In addition to program length, schools are also required to report a CIP code for the student's program of study. For students who have not yet declared a major, schools may report using the CIP code 24.0102 (General Studies). CIP Code 24.0102 is not a valid CIP Code for gainful employment programs because such programs are not considered as leading to "gainful employment" for purposes of those regulations. [July 13, 2015]

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  • MEP-Q12: If a borrower is simultaneously enrolled in programs at more than one school, how does COD determine whether the borrower can receive a loan at either school?

    MEP-A12:

    If the borrower requests a loan to cover enrollment at more than one school—one loan per school—a Maximum Eligibility Period is calculated separately for each of the academic programs associated with the loan at each of the schools. COD will then compare the separate Maximum Eligibility Periods against the student's total Subsidized Usage Period, including the new loans, to determine whether the borrower has eligibility for each Direct Subsidized Loan.

    For example, if a borrower is simultaneously enrolled in a 1-year certificate program at School A (with a Maximum Eligibility Period of 1.5 years) and a 4-year bachelor's degree program at School B (with a Maximum Eligibility Period of 6 years), COD will evaluate the borrower's eligibility for the Direct Subsidized Loan originated by School A against the Maximum Eligibility Period of 1.5 years and will evaluate the borrower's eligibility for the Direct Subsidized Loan originated by School B against the Maximum Eligibility Period of 6 years. If, the borrower already has a Subsidized Usage Period of 3 years, COD will reject the origination record for the Direct Subsidized Loan at School A, and will accept the origination record for the Direct Subsidized Loan at School B.

    While a student may receive loans for simultaneous enrollment at more than one school, the schools must coordinate so that non-direct expenses (room and board, personal expenses, etc.) are not duplicated in the respective cost of attendances and that the borrower's loans do not exceed annual loan limits. [July 13, 2015]

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  • MEP-Q13: Students frequently transfer credits earned from enrollment in prior programs either at the same school or from a different school, to a new program of study. If such a transfer of credit reduces the time it takes the student to complete the new program, does that reduce program length for purposes of reporting and for determining the maximum eligibility period?

    MEP-A13:

    No. As stated in the answer to MEP1, a borrower's Maximum Eligibility Period is a period of time that is equal to 150% of the published length of the student's academic program, and therefore is not affected by a borrower's advanced standing in the program. And, as noted in MEP7, if the school does not have a published program length, the program length that the school reports to COD and to NSLDS should correspond to the period of time it would normally take a full-time student to complete all of the program's coursework. [July 13, 2015]

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  • MEP-Q14: A school offers a program that requires the student to have completed prior coursework to be admitted into the program. Can the school incorporate the prerequisite coursework into its determination of the program’s length?

    MEP-A14:

    Except for the two exceptions discussed below, no. The program length that a school reports to COD and NSLDS should correspond to the academic program in which the student is enrolled. Prerequisite coursework that is a condition of admission, but is not coursework the student must take to complete the program, is not part of the program, and must not be included in determining the program's length.

    The two exceptions are for bachelor's degree completion programs (see MEP15) and for special admission associate degree programs (see MEP16). [July 13, 2015]

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  • MEP-Q15: A school offers a program that leads to a bachelor’s degree but requires for admission to the program, students to have previously completed an associate degree, or at least two years of postsecondary coursework. What program length should be reported for such programs?

    MEP-A15:

    The program length for these programs should be reported as four years.

    These programs—"bachelor's degree completion programs"—are typically shorter than conventional bachelor's degree programs and often consist of only the final two years of coursework because they only admit students who have completed an associate degree or at least two years of postsecondary coursework. Such programs have a Maximum Eligibility Period that is based on the entire period of postsecondary education typically necessary for the student to receive the bachelor's degree. As noted in 150% EA #8, schools should report a Program Length of 4 years and a Special Program Indicator of "B" to COD and NSLDS for such programs even if the program offered by the school is shorter than 4 years. This program length of 4 years is designed to afford students sufficient additional eligibility to complete the program, accounting for the earlier coursework and any previously received Direct Subsidized Loans.

    Similarly, bachelor's degree completion programs that require for admission more than two years of postsecondary coursework, such as a prior bachelor's degree, also qualify for the exception and must be reported with a Program Length of 4 years and a Special Program Indicator of "B" to COD and NSLDS.

    Note that if a program admits some students who have an associate degree or at least two years of postsecondary coursework into a bachelor's degree program, but does not explicitly require the prior degree or coursework for admission to the program, the program is not considered a bachelor's degree completion program and must be reported using its actual program length. [July 13, 2015]

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  • MEP-Q16: A school offers a program that leads to an associate degree but requires the student to have previously completed an associate degree or at least two years of postsecondary coursework to be admitted into the program. What program length should be reported for such a program?

    MEP-A16:

    If the program qualifies as a "special admission associate degree program", it should be reported as having a Program Length of 4 years.

    A special admission associate degree program is a program that meets all of the following criteria:

    • Admits only students who have completed an associate degree or at least two years of postsecondary coursework;

    • Admits students on a competitive basis by using, for example, grades, test scores, or letters of recommendation, etc. (i.e., is not an "open admission" program); and

    • Prepares students to enter occupations that require state licensure.

    These programs have a Maximum Eligibility Period that is not based on the actual length of the associate degree program, which is typically two years, but on the entire period of postsecondary education typically necessary to qualify for licensure. Schools should report a Program Length of 4 years for such programs and a Special Program Indicator of "A" to COD and NSLDS. The longer reported program length is designed to afford students sufficient additional eligibility to complete the program, accounting for the coursework and any previously received Direct Subsidized Loans.

    Special admission associate degree programs that require more than two years of postsecondary coursework for admission into the program, such as a prior bachelor's degree, also qualify for the exception. A school should report a Program Length of 4 years for such programs and a Special Program Indicator of "A" to COD and NSLDS.

    As noted in MEP15, if a program admits some students that already have an associate degree or at least two years of postsecondary coursework, but does not explicitly require the prior degree or coursework for admission to the program, the program is not considered an associate degree completion program and must be reported using its actual program length. [July 13, 2015]

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Subsidized Usage Period [SUP]

  • SUP-Q1: The 150% Direct Subsidized Loan Limit provision uses a calculation that includes the borrower’s Subsidized Usage Periods. What is a Subsidized Usage Period?

    SUP-A1:

    A borrower’s Subsidized Usage Period is the period of time, expressed in years or portions of years, for which the first-time borrower received a Direct Subsidized Loan. The total of a borrower’s Subsidized Usage Periods is compared to the borrower’s Maximum Eligibility Period to determine if the borrower is eligible for additional Direct Subsidized Loans. [December 20, 2013]

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  • SUP-Q2: A student is receiving two Direct Subsidized Loans—one each for enrollment at two different schools, for example—at the same time. How will the Department calculate the Subsidized Usage Period?

    SUP-A2:

    The Department will prorate the loan period for each loan so that overlapping periods are counted only once. [December 20, 2013]

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  • SUP-Q3: If a borrower withdraws from school during the loan period, must the school update the Direct Loan origination record in the COD System so that the Subsidized Usage Period can be calculated correctly?

    SUP-A3:

    Whether updating is necessary depends on when the borrower withdrew from school and the result of the Return of Title IV Aid (R2T4) calculation. Withdrawals and other circumstances in which the borrower’s loan period may need to be updated, along with examples, are described in DCL GEN 13-13. In general, updating is required if the result of the R2T4 calculation is that all of the loan funds for a payment period will be returned. [December 20, 2013]

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  • SUP-Q4: As of what date should a borrower’s enrollment status be determined for submission to the COD System in the loan origination record? Should it be the expected enrollment status when the origination record is first submitted, the status as of the first day of the loan period, or the status on the day the school disburses the loan?

    SUP-A4:

    Schools must include, in the Direct Loan origination record, the borrower’s enrollment status (COD tag <EnrollmentStatus>) as it is on the day the school makes the initial disbursement of the loan for the payment period (COD tag <PaymentPeriodBeginDate>).

    If the school submits the origination record to COD before the loan’s first disbursement, the school should submit the student’s expected enrollment status. That enrollment status must be updated if it is different on the day of the initial disbursement of the loan for the payment period. Schools should not report subsequent changes to the borrower’s enrollment status within the payment period. For the next payment period, schools must report the student’s enrollment status as of the date the school makes the initial disbursement of the loan for the next payment period. [December 20, 2013]

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  • SUP-Q5: How will summer terms be treated for the purposes of calculating Subsidized Usage Periods?

    SUP-A5:

    Because the academic year that schools report and that is associated with the Subsidized Usage Period calculation is based on annual loan limit progression, how a summer term will be treated for the purpose of calculating Subsidized Usage Periods will depend on whether the school tracks annual loan limits using a Scheduled Academic Year or a Borrower-Based Academic Year.

    To ensure that Subsidized Usage Periods are calculated accurately, schools must report loan periods and the program’s academic year to the COD System consistent with the requirements outlined in DCL GEN 13-13. That letter includes a comprehensive discussion, with examples, of how summer loans impact reporting. In general, updating of the academic year is required when a student receives a Direct Loan for a summer that was not initially included in the school origination record.

    For schools that track annual loan limits using a Scheduled Academic Year, it is very important that schools only include a summer term in a Direct Loan’s academic year if: (1) the student actually is receiving loan funds for the summer; or (2) the summer term is a “required” term at the school. [December 20, 2013]

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  • SUP-Q6: Since borrowers’ enrollment status has not and will not be reported by schools until the 2014-2015 year, how will the Department calculate Subsidized Usage Periods for borrowers who were enrolled less-than-full-time during the 2013-2014 award year?

    SUP-A6:

    Until schools begin reporting enrollment status to the COD System for Direct Loans made for the 2014-2015 year, the Department will use the enrollment status reported by schools to NSLDS to adjust borrowers’ Subsidized Usage Periods in the COD System if that enrollment status is not full-time. Because NSLDS does not currently include an enrollment status of three-quarter-time, borrowers with an NSLDS reported enrollment status of at least half time, but less than full-time will have their Subsidized Usage Periods prorated based on half-time enrollment. See 150% Direct Subsidized Loan Limit: Electronic Announcement #3 for more information. [December 20, 2013]

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  • SUP-Q7: What effect does a leave of absence or a withdraw and return with 180 days have on a borrower’s Subsidized Usage Period? (This applies only to borrowers in non-term or clock hour programs)

    SUP-A7:

    The period of the leave of absence or the period during which the student was not enrolled is included in the Subsidized Usage Period. This is because the school is required to extend the loan period and academic year to account for the increased amount of time it will take the borrower to complete the program (the loan period) and the increased period of time to which the annual loan limit applies (the academic year). Because both the loan period and the academic year will be extended, including the leave of absence period and the period during which the student was not enrolled in the Subsidized Usage Period will have a negligible impact on the borrower’s Subsidized Usage Period.

    If the borrower does not return from a leave of absence, the period of the leave of absence will not be included in the Subsidized Usage Period, because the school would be required to update the loan period to end on the last day of the last payment period for which the borrower received a Direct Subsidized Loan. [December 20, 2013]

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  • SUP-Q8: A borrower is enrolled half time in a non-term or clock hour program. The Department does not acknowledge less-than-full-time enrollment for such programs for other purposes. Will the Department prorate the Subsidized Usage Periods based on an enrollment status of half time for such borrowers?

    SUP-A8:

    No. Consistent with the existing treatment of such borrowers in non-term and clock hour programs in other contexts, we will not prorate borrowers' Subsidized Usage Period based on the student's less-than-full-time enrollment. Schools must not, for Direct Loan records submitted to COD, report the enrollment status for a borrower in such a program as being anything other than full time.

    If a program has a half-time "track" or most borrowers take half the expected clock hours per week, it is likely that each "track" is actually a separate program (see MEP8). To ensure that borrowers are able to borrow Direct Subsidized Loans for the appropriate period of time, schools must accurately publish and report to the COD System and to NSLDS the actual length of their programs (see MEP7, MEP8, and MEP10 for more information). [July 13, 2015]

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  • SUP-Q9: If a borrower initially receives a Direct Subsidized Loan, but the school subsequently cancels the entire loan, does the original receipt of the loan create a Subsidized Usage Period?

    SUP-A9:

    No. If the school fully cancels a loan, there is no Subsidized Usage Period. Subsidized usage periods are only calculated if the amount of the loan is greater than zero. [December 20, 2013]

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  • SUP-Q10: When a school is required to return a calculated amount of Direct Loan funds as a result of a Return to Title IV Aid (R2T4) calculation, may the school voluntarily return all remaining loan funds to preserve the student’s Direct Subsidized Loan eligibility?

    SUP-A10:

    It depends on when such funds would be returned. Under the regulations, a return of loan funds that results in a reduction of the loan amount can only occur within 120 days of the date when the proceeds were disbursed or beyond 120 days to meet a statutory or regulatory requirement. Therefore, regardless of when a school returns the R2T4 required portion of the loan, that return will reduce the amount of the loan. However, additional funds returned to preserve the student’s loan eligibility will only be treated as a reduction on the loan amount if the funds are returned within 120 days following disbursement.

    Note: Before a school may return Direct Subsidized Loan funds that are not required by law or regulation, it must receive the borrower’s permission. And, the school may not assess the borrower a fee or require the borrower to pay the school for any institutional charges that were paid, but as a result of the return are now unpaid. [December 20, 2013]

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  • SUP-Q11: May at student voluntarily return all or a portion of loan funds to preserve the student’s Direct Subsidized Loan eligibility?

    SUP-A11:

    If as student wishes to return disbursed loan funds to preserve loan eligibility, he or she must do so within 120 days of the loan’s disbursement and must do so by returning the funds to the school and requesting that the school return the funds (using normal COD System and G5 processes). Any voluntary return after 120 days should not be made through the school. Instead the borrower should make a pre-payment on the loan by sending money to their federal loan servicer. Such a pre-payment will have no effect on the borrower’s Subsidized Usage Period calculation. [December 20, 2013]

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  • SUP-Q12: If a borrower fully repays a Direct Subsidized Loan, will this change the borrower’s Subsidized Usage Period?

    SUP-A12:

    No. Repaying a loan in full or consolidating the loan has no effect on a borrower’s Subsidized Usage Period.

    For example, if a borrower had a Subsidized Usage Period of 3 years, entered repayment, repaid all previously received Direct Subsidized Loans, and then returned to school, the borrower would still have a Subsidized Usage Period of 3 years. [December 20, 2013]

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  • SUP-Q13: If a borrower receives a loan in an amount that is equal to the annual loan limit but for a period that is less than an academic year, the borrower’s Subsidized Usage Period is one academic year. Does this annual loan limit exception apply to final periods of enrollment for which the school must prorate the annual loan limit?

    SUP-A13:

    No. Only the full annual loan limit amount specified in the HEA will cause the annual loan limit exception to apply. [December 20, 2013]

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  • SUP-Q14: Are Subsidized Usage Periods rounded? If so, how?

    SUP-A14:

    Yes. Subsidized Usage Periods are rounded up or down to the nearest tenth of a year. For example, a borrower with an unrounded Subsidized Usage Period of 0.44 years would have a rounded Subsidized Usage Period of 0.4 years, and a borrower with an unrounded Subsidized Usage Period of 0.45 years would have a rounded Subsidized Usage Period of 0.5 years. Rounding a Subsidized Usage Period is always the last step in the calculation. [July 13, 2015]

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  • SUP-Q15: In the regulations, there are exceptions to the calculation of Subsidized Usage Period both when a borrower receives a loan for the full annual loan limit for a loan period that is less than an academic year and when a borrower is enrolled part time. If the borrower receives a loan in the amount of the full annual loan limit while enrolled part-time for only part of the academic year, do both exceptions apply in the calculation of the loan’s Subsidized Usage Period?

    SUP-A15:

    Yes, both exceptions would apply. In such cases, the annual loan limit exception which sets the Subsidized Usage Period to one year when the loan amount equals the appropriate annual loan limit even when the loan period is less than the academic year would be applied first. Then the resulting Subsidized Usage Period would be prorated based on the student's part-time enrollment status. For example, if a second-year student receives a fall-only Direct Subsidized Loan of $4,500 (the full annual loan limit), the student's initial Subsidized Usage Period would be one year. However, if the student is enrolled half-time for that fall semester, the Subsidized Usage Period would be prorated to 0.5 years.

    Note: The annual loan limit exception only applies where the student receives a loan for the full annual loan limit expressly provided for in statute—$3,500, $4,500, or $5,500. It does not apply in cases where the student borrows up to his or her documented financial need that is less than the annual loan limit or when the annual loan limit is prorated based on the student's enrollment for a final period of study that is less than an academic year. [July 13, 2015]

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Remaining Eligibility Period [REP]

  • REP-Q1: A Remaining Eligibility Period is a student’s remaining period of time for which the borrower may receive Direct Subsidized Loans under the 150% limit. When does a borrower lose eligibility for additional Direct Subsidized Loans?

    REP-A1:

    A borrower loses eligibility for additional Direct Subsidized Loans when the borrower has a Remaining Eligibility Period of zero (or less). [December 20, 2013]

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  • REP-Q2: A student has a Remaining Eligibility Period that is shorter than the minimum length of a loan period for the program in which the student is enrolled and therefore, the school cannot originate a Direct Subsidized Loan. Can the school originate a Direct Unsubsidized Loan to the student instead?

    REP-A2:

    Yes. In this situation, the student is effectively ineligible for a Direct Subsidized Loan. Therefore, the school could award the student a Direct Unsubsidized Loan for the full amount of the student’s eligibility – the base amount plus the appropriate additional Direct Unsubsidized Loan amount. This is similar to the circumstance in which a student who has reached his or her maximum aggregate subsidized loan eligibility and therefore is eligible for only Direct Unsubsidized Loans. [December 20, 2013]

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  • REP-Q3: A borrower has a Remaining Eligibility Period that is less than a full academic year, but the borrower is eligible for a Direct Subsidized Loan in the amount of the full annual loan limit for a period of enrollment that is an academic year in length. If the borrower receives a Direct Subsidized Loan for a period that is less than an academic year in the amount of the full annual loan limit, then the loan’s Subsidized Usage Period will be one year, which is more than the borrower’s Remaining Eligibility Period. Can the school make a Direct Subsidized Loan to this borrower? If so, for what period? Can this borrower receive any Direct Unsubsidized Loan funds?

    REP-A3:

    A borrower in the circumstance described in this question cannot receive a Direct Subsidized Loan in the amount of the full annual loan limit, because it would cause the borrower to have a Subsidized Usage Period of one year, which is greater than their Remaining Eligibility Period. The COD System would reject a Direct Loan origination record for the borrower in this circumstance. However, this does not mean that the borrower cannot receive any Direct Subsidized Loans. This is similar to the circumstance in which a student has approached his or her maximum aggregate subsidized loan eligibility is not eligible for the full, subsidized loan amount. The borrower could receive a Direct Subsidized Loan that is less than the Direct Subsidized Loan annual loan limit for a loan period that is less than a full academic year.

    For example, a third-year dependent student has a Remaining Eligibility Period of 0.5 years and is enrolled in a semester-based program. The borrower has an EFC and COA that would support the awarding of a Direct Subsidized Loan of $5,500 and a Direct Unsubsidized Loan of $2,000.

    Although the borrower has a Remaining Eligibility Period of 0.5 years (corresponding to a single semester in this example), the borrower cannot receive a Direct Subsidized Loan in the amount of $5,500 for a loan period covering one semester because receiving the full amount of the subsidized annual loan limit for a period that is less than an academic year would cause the Subsidized Usage Period to be one year, which is greater than the borrower’s Remaining Eligibility Period. For the same reason, the borrower may not receive a Direct Subsidized Loan (in any amount) for a loan period covering the full academic year, because that would also result in a Subsidized Usage Period equal to one. [December 20, 2013]

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  • REP-Q4: Can a student decline to borrow all or a portion of a Direct Subsidized Loan and receive only a Direct Unsubsidized Loan or a larger Direct Unsubsidized Loan to avoid the consequences of the 150% limit?

    REP-A4:

    No. Under section 484(b) of the HEA and 34 CFR 685.301(a)(7) , a borrower must first receive the total amount of the borrower's Direct Subsidized Loan eligibility for the loan period before the borrower may receive a Direct Unsubsidized Loan for the same loan period, unless the borrower has less than $200 of Direct Subsidized Loan eligibility. For more information on this topic, please refer to Volume 3, page 142 of the 2015-2016 FSA Handbook.

    Sometimes students do not accept all of the Direct Subsidized Loan funds offered to them, but accept the Direct Unsubsidized Loan funds offered to them. To ensure compliance with the provisions prioritizing origination and disbursement of Direct Subsidized Loan funds prior to Direct Unsubsidized Loan funds, schools are not required to receive active confirmation from borrowers before reallocating the student's aid package so that the student receives his or her maximum Direct Subsidized Loan eligibility, but must notify the student that the final aid package is different from the aid package that the student accepted.

    For borrowers with a Remaining Eligibility Period for Direct Subsidized Loans of less than one year, COD will reject a loan origination in the amount of the full (not prorated) annual loan limit. In such cases, schools may originate a loan for an amount that is less than the annual loan limit and then originate a Direct Unsubsidized Loan in an amount up to the limit of the borrower's eligibility. [July 13, 2015]

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Loss Of Eligibility [ELIG]

  • ELIG-Q1: If a borrower reaches his or her Maximum Eligibility Period for Direct Subsidized Loans but has eligibility remaining under the Direct Subsidized Loan aggregate loan limit, can a school continue to award the student Direct Subsidized Loans that do not have an interest subsidy?

    ELIG-A1:

    No. If a borrower reaches his or her Maximum Eligibility Period, the borrower loses eligibility for Direct Subsidized Loans (and may also lose interest subsidy, depending on subsequent enrollment).

    Note that the opposite is also true. A borrower who has reached the subsidized aggregate loan limit has no remaining eligibility for Direct Subsidized Loans, even if the borrower has remaining subsidized eligibility under the 150% limit. Such a borrower may still be eligible for Direct Unsubsidized Loans. [December 20, 2013]

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Interest Subsidy [INT]

  • INT-Q1: A borrower who has lost eligibility for additional Direct Subsidized Loans is simultaneously enrolled in two programs of differing lengths. How will the Department determine whether the borrower keeps or loses interest subsidy on loans previously received?

    INT-A1:

    Schools must report program-specific enrollment to NSLDS. If the enrollment dates of the shorter program are either the same as, or completely within, the enrollment dates of the longer program, the determination of whether the borrower loses interest subsidy will be based on the length of the longer program. [December 20, 2013]

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  • INT-Q2: How does a school determine and report to NSLDS a student’s enrollment status at the program level?

    INT-A2:

    For a full discussion of how a school should determine a student's enrollment status, please see Dear Colleague Letter GEN-14-17. [July 13, 2015]

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  • INT-Q3: How does a school determine and report to NSLDS a student’s “Program Begin Date”?

    INT-A3:

    A student's "Program Begin Date" is the beginning date of the first payment period of the student's first enrollment in the program. The "Program Begin Date" does not "reset" if the student withdraws and later re-enrolls in the program. NSLDS will use the program begin date as part of its analysis to determine if and as of what date a borrower should lose interest subsidy. [July 13, 2015]

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  • INT-Q4: For which programs is a school required to report a student’s enrollment to NSLDS?

    INT-A4:

    A school must report a student's enrollment to NSLDS for all academic programs in which the student is enrolled at the school, regardless of whether the student receives Title IV aid for attendance in the program, Title IV aid is offered to those enrolled in the program, or the program is a Title IV "eligible program".

    If a student is not enrolled in any program (see OTH7 for the definition of a program), the school would not report the student's program-level enrollment to NSLDS. In this case, the school should set the "Program Indicator" in the NSLDS enrollment reporting file layout to "N", which allows NSLDS to accept the campus-level enrollment without a program-level enrollment reporting record. [July 13, 2015]



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  • INT-Q5: Which schools are required to report program-level enrollment to NSLDS?

    INT-A5:

    All schools that participate in the Title IV programs, both domestic and foreign, undergraduate and graduate, are required to report, in addition to campus-level enrollment information, program-level enrollment to NSLDS .

    Schools that do not participate in the Title IV programs, but which are considered "eligible institutions" for the purpose of allowing students to receive an in-school deferment on a prior loan must not report program-level enrollment status to NSLDS. Such schools should provide campus-level enrollment information to NSLDS and setting the "Program Indicator" in the NSLDS enrollment reporting file layout to "N". [July 13, 2015]

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Entrance And Exit Counseling [CSL]

  • CSL-Q1: The Department published the 150% limit regulations on May 16, 2012, which was after some first-time borrowers who will be subject to the limit had already completed entrance counseling. Are schools required to provide these borrowers with additional counseling before disbursing their Direct Subsidized Loans?

    CSL-A1:

    It is critical that schools communicate information about these important changes to borrowers as part of entrance and exit counseling. Without this information, borrowers could be affected by the 150% limit (1) without knowing about the limit, (2) without understanding how it is calculated, and (3) without understanding the significant financial implications for them if they reach or exceed the limit.

    To comply with the interim final regulations, institutions must ensure that first-time borrowers begin receiving counseling on the 150% limit beginning July 1, 2013. The Department encourages schools to provide first-time borrowers who completed entrance counseling before July 1, 2013, with the additional counseling.

    On May 16, 2013, the Department posted an electronic announcement that contained the entrance counseling materials that were integrated into the entrance counseling on StudentLoans.gov. In addition, on June 28, 2013, the Department updated its entrance counseling information on StudentLoans.gov to provide the counseling information required under the 150% regulations. [December 20, 2013]

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Preparatory Coursework [PREP]

  • PREP-Q1: The Maximum Eligibility Period for preparatory coursework necessary for enrollment in a graduate/professional program is based on the length of the program for which the student most recently received a Direct Subsidized Loan. Must the school report a program length to the COD System when originating a Direct Subsidized Loan for the preparatory coursework?

    PREP-A1:

    No. Schools are not required to report program length for preparatory coursework necessary for enrollment in a graduate or professional program. The COD System, when evaluating the borrower’s Direct Subsidized Loan eligibility under the 150% limit, will determine the program length of the program for which the borrower most recently received a Direct Subsidized Loan. In instances where the borrower received a Direct Subsidized Loan before program-level information was collected in the COD System or the borrower has never received a Direct Subsidized Loan, the COD System will determine the program length to be 12-months, which is the maximum period of eligibility for Direct Loans received for preparatory coursework.

    Note that his does not apply to loans originated for a student’s enrollment in preparatory coursework necessary for enrollment in an undergraduate program. Such enrollment will be treated just like any undergraduate academic program, requiring schools to report information about the program that the student is taking the preparatory coursework to enter. [December 20, 2013]

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  • New Item PREP-Q2: A student is enrolled in preparatory coursework necessary for enrollment in an undergraduate program. How should the school report program-level information for the student to COD and NSLDS?

    PREP-A2:

    For both COD and NSLDS, the school must report the CIP Code and program length associated with the program that the student is taking the coursework to enter, a credential level of “99”, and a special program indicator of “U”.

    In the case of a student who is taking the preparatory coursework at one school for enrollment in a program at another school, the school at which the student is taking the preparatory coursework must report the CIP Code and program length of the program at the other school regardless of whether the school offers a program with the same CIP Code or program length.

    For example, a student who is taking preparatory coursework at a community college to enter an bachelor’s degree program in engineering would likely report a program length of 4 years even if the community college does not offer any 4-year programs and would report a CIP Code that corresponds to engineering even if the community college does not offer any engineering programs. [October 19, 2015]

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  • New Item PREP-Q3: A student is enrolled in preparatory coursework necessary for enrollment in a graduate or professional program. How should the school report program-level information for the student to COD and NSLDS?

    PREP-A3:

    For COD, the school must report the CIP Code associated with the program that the student is taking the coursework to enter, a credential level of “99”, a special program indicator of “P”, and the number of weeks of instructional time in the school’s Title IV academic year.

    For NSLDS, the school must report the CIP Code and program length associated with the program that the student is taking the coursework to enter, a credential level of “99”, and a special program indicator of “P”.

    In the case of a student who is taking the preparatory coursework at one school for enrollment in a program at another school, the school at which the student is taking the preparatory coursework must report the CIP Code and, to NSLDS only, program length of the program at the other school regardless of whether the school offers a program with the same CIP Code or program length.

    For example, a student who is taking preparatory coursework at a 4-year university to enter a graduate medical program would likely report a CIP Code that corresponds to medicine even if the 4-year university does not offer any medical programs. [October 19, 2015]

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Teacher Certification [TEACH]

  • TEACH-Q1: The interim final regulations provide special rules for borrowers who are enrolled in teacher certification programs where the school awards no academic credential. Do the special rules apply to borrowers who are in such programs to receive a second certification or a recertification from the state that is required to maintain the borrower’s license to teach in the state?

    TEACH-A1:

    Yes, the same rules apply to these borrowers. Note that the Subsidized Usage Periods, if any, from prior teacher certification programs (but not from enrollment in other programs) will count against a borrower’s Maximum Eligibility Period when the borrower enrolls in a second or recertification teacher certification program. [December 20, 2013]

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  • New Item TEACH-Q2: A student is enrolled in a program for which the school does not offer a credential, but is necessary for a professional credential or certification from a State that is required for employment as a teacher in an elementary or secondary school in that State. How should the school report program-level information for the student to COD and NSLDS?

    TEACH-A2:

    For COD and NSLDS, the school must report the CIP Code and program length associated with the program, a credential level of “99”, and a special program indicator of “T”.

    If the school confers a credential for completing the teacher preparation program, such as a post-baccalaureate certificate or a graduate or professional certificate, the school should report the credential level associated with the credential the school confers (not a credential level of “99”) and should not report a special program indicator of “T”. [October 19, 2015]

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Notifications [NTF]

  • NTF-Q1: Will the Department notify borrowers of their Remaining Eligibility Period under the 150% limit?

    NTF-A1:

    Yes, beginning with the 2014-2015 release of the COD System. The Department will provide this information to borrowers through the COD System disclosure statements that are provided to the borrower. The notice will include the borrower’s Subsidized Usage Period associated with the loan that is the subject of the disclosure, the total of the borrower’s Subsidized Usage Periods (including for the loan that is the subject of the disclosure), and the borrower’s Remaining Eligibility Period for enrollment in the borrower’s current program. [December 20, 2013]

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  • NTF-Q2: What information about the 150% limit will the Department provide to a student on the Student Aid Report (SAR) and to the school on an Institutional Student Information Records (ISIRs)?

    NTF-A2:

    Starting with the 2014-2015 FAFSA process that will begin in January of 2014, both SARs and ISIRs will provide information on whether the student is (or will be if a Direct Loan is received) a first-time borrower who is subject to the 150% limit. The ISIR will also include the sum of the borrower’s Subsidized Usage Periods to date and indicate whether the borrower has become responsible for accruing interest on any Direct Subsidized Loans because of reaching the 150% limit. The Department will not provide information about the student’s Maximum Eligibility Period or Remaining Eligibility Periods on the SAR or ISIR because the 150% limit is based on the length of the borrower’s educational program and it is not possible at the time that SARs and ISIRs are produced to know which program the borrower will attend.

    Starting with the 2013-2014 release of COD, the COD System began sending a warning edit to schools when the school originated or disbursed a Direct Loan to a first-time borrower who is subject to the 150% limit. The COD System will continue sending this warning edit to schools until the 2014-2015 release of COD, at which points schools should rely on information they receive on ISIRs. [December 20, 2013]

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  • NTF-Q3: Will schools and students be notified of the loans that have lost interest subsidy as a result of a borrower enrolling in a program that caused the loss of interest subsidy?

    NTF-A3:

    Yes. The borrower’s federal loan servicer will inform the borrower if the borrower’s Direct Subsidized Loans have lost interest subsidy. In addition, this information will be available to schools and students in NSLDS. [December 20, 2013]

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Other [OTH]

  • OTH-Q1: How does the 150% limit interact with the 150% maximum time frame for satisfactory academic progress?

    OTH-A1:

    Because all other eligibility requirements continue to apply to a first-time borrower seeking Direct Subsidized Loans, satisfactory academic progress requirements, including the 150% maximum time frame, continues to apply. Satisfactory academic progress evaluations and the 150% limit apply separately to borrowers. Thus, a student who has failed satisfactory academic progress may not receive any additional Title IV aid, regardless of whether the student has remaining Direct Subsidized Loan under the provisions of the 150% limit. [December 20, 2013]

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  • OTH-Q2: How does the 150% limit interact with the aggregate loan limit?

    OTH-A2:

    All other borrower eligibility requirements continue to apply to first-time borrowers. This means, for example, that a borrower who has reached the subsidized aggregate loan limit is not eligible to receive any additional Direct Subsidized Loans, even if the borrower has remaining subsidized eligibility under the 150% limit.

    The reverse is also true. A borrower who has reached the 150% limit for subsidized loans cannot receive any additional Direct Subsidized Loans, even if he or she has remaining eligibility under the subsidized annual or aggregate loan limit. The 150% limit and other borrower eligibility rules apply independently, and a borrower’s eligibility for Direct Subsidized Loans may be limited either by the 150% rule or by one or more other borrower eligibility requirements. See ELIG1 for more information. [December 20, 2013]

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  • OTH-Q3: Can a student appeal the application of the 150% limit, to either regain eligibility for Direct Subsidized Loans or have interest subsidy reinstated?

    OTH-A3:

    No. Neither students nor schools can appeal or challenge the application of the 150% limit. However, if there is a reporting error that causes a borrower to lose eligibility for or interest subsidy on Direct Subsidized Loans, the Department will work to correct such errors. Such a correction, depending on a borrower’s circumstances, may result in a reinstatement of Direct Subsidized Loan eligibility and/or eligibility for interest subsidy or eligibility for Direct Subsidized Loans. [December 20, 2013]

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  • OTH-Q4: How is remedial coursework treated under the 150% limit?

    OTH-A4:

    Direct Subsidized Loans received for enrollment in remedial coursework, as distinguished from preparatory coursework, is treated the same as any other undergraduate coursework. [December 20, 2013]

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  • OTH-Q5: What is the difference between Credential Level 4 (post-baccalaureate certificate program) and Credential Level 8 (graduate/professional certificate) in COD and NSLDS?

    OTH-A5:

    A post-baccalaureate certificate program is a program that, while designed for students who have at least a bachelor's degree, has been classified by the school as an undergraduate rather than a graduate/professional level program (Credential Level 4).

    A certificate program that is designed for students who do not have a bachelor's degree is not a post-baccalaureate certificate program. Instead, the program is considered an undergraduate diploma/certificate program (Credential Level 1).

    A graduate/professional certificate program is a program that is designed for students who have completed at least a bachelor's degree and has been classified by the school as a graduate/professional program (Credential Level 8). [July 13, 2015]

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  • OTH-Q6: A community college has an eligible program that is at least two academic years in length and that is acceptable for full credit toward a bachelor’s degree, but which does not lead to an associate degree or to any other credential awarded by the community college. What credential level should the school report for this program?

    OTH-A6:

    The school should report a credential level of 99 (non-credential programs) for this program. The school should also report a "Special Program Indicator" value of "N" (not applicable) for the program. [July 13, 2015]

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  • OTH-Q7: How is a program defined for the purposes of the 150% limit?

    OTH-A7:

    For purposes of the 150% limit, and the attendant reporting requirements to COD and NSLDS, a program is defined as the unique combination of the school's OPEID and the program's CIP Code, credential level, and program length.

    To be considered a "program", the coursework must generally lead to a degree, certificate, or other credential awarded by the school. For the purposes of the 150% limit, the only time that coursework that does not lead to a degree, certificate, or other credential is when the student is enrolled in preparatory coursework or teacher certification coursework under 34 CFR 668.32(a)(1)(ii)-(iii), in a "transfer program" under 34 CFR 668.8(c)(2), or in a comprehensive transition and postsecondary program for students with intellectual disabilities under 34 CFR 668.231.

    See DCL GEN-14-17 for more information about how this definition impacts reporting to NSLDS.

    Note: the definition of a program is different for other purposes, such as for the gainful employment regulations. [July 13, 2015]

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Academic Year And Loan Period Reporting [AYLP]

  • AYLP-Q1: What are the principles that govern which periods should be included in a loan period

    AYLP-A1:

    Only a payment period during which a student has received and kept Direct Loan funds should be included in a loan period. If a student did not receive Direct Loan funds for a payment period, for example, a semester, then the payment period must not be included in the loan period. [December 20, 2013]

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  • AYLP-Q2: What are the principles that govern which periods should be included in an academic year?

    AYLP-A2:

    The academic year that schools report with Direct Loan originations is the period to which the annual loan limit applies.

    For standard-term programs and non-standard-term programs that have terms that are substantially equal to each other and are each at least nine weeks in length, the dates that schools report must coincide with the calendar period of the school’s Scheduled Academic Year or Borrower-Based Academic Year, whichever it is using to track annual loan limits for the student. Therefore, an academic year that is reported as only one term is never correct.

    For non-term programs and non-standard-term programs that have terms that are not substantially equal to each other and are not each at least nine weeks in length, the dates that schools report must coincide with the calendar period that it would take the student to complete both the number of weeks of instructional time and credit or clock hours in the school’s academic year (that it defined under 34 CFR 668.3). [December 20, 2013]

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  • AYLP-Q3: A school uses a scheduled academic year consisting of fall and spring semesters, with the summer term treated as a trailer to the scheduled academic year. The school’s current practice is to originate Direct Loans with an academic year that includes the summer term even though the summer is not a required term in the school’s scheduled academic year, and regardless of whether or not the student will be attending the summer term or receiving a Direct Loan for the summer term. Is this permissible?

    AYLP-A3:

    Schools that do not require attendance in the summer term may not include the dates of the summer term in the Direct Loan’s academic year unless the student is attending the summer term and receiving a Direct Loan for that term. [December 20, 2013]

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  • AYLP-Q4: Will all loan types necessarily have the same loan period and academic year dates?

    AYLP-A4:

    No. There are circumstances in which different loan types would have different loan periods or academic years. For example, if a school uses a scheduled academic year consisting of fall and spring semesters, with the summer term treated as a trailer to the scheduled academic year, and the student receives all Direct Subsidized Loan eligibility for fall and spring, does not receive all Direct Unsubsidized Loan eligibility for the fall and spring semesters, and then attends the summer term and requests a loan, the Direct Subsidized Loan would have a loan period and academic year consisting of the fall and spring semesters, and the Direct Unsubsidized Loan(s) would have loan period(s) and academic year(s) spanning the fall, spring, and summer terms. [December 20, 2013]

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  • AYLP-Q5: A school uses a scheduled academic year consisting of fall and spring semesters, plus the following summer term. Summer is a required term in the school’s scheduled academic year. The school originates Direct Loans with an academic year that includes the summer term. Is this permissible?

    AYLP-A5:

    Yes. It is not only permissible, but required. Unlike a school that does not require attendance in the summer term as part of its scheduled academic year, if the summer term is required, the dates of the summer term must be included in the academic year reported to the COD System. [December 20, 2013]

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  • AYLP-Q6: A school generally uses a scheduled academic year consisting of the fall and spring semesters, with the summer term treated as a trailer to the scheduled academic year. However, the school uses a borrower-based academic year for students who begin attendance in the spring or summer. When reporting the academic year dates for a borrower-based academic year, should the school include the summer term in the academic year period if the summer term is not a required term in the school’s scheduled academic year and the student will not be receiving a loan for the summer?

    AYLP-A6:

    Yes. The school must include the summer term because it is part of the borrower-based academic year. For schools that offer programs in a scheduled academic year, the number of terms in a borrower-based academic year equals the number of terms in the school’s scheduled academic year (note that in counting the number of terms in the scheduled academic year, a summer header or trailer is not included). A borrower-based academic year must begin with a term in which the student is enrolled (but not necessarily receiving a loan), and consists of any two consecutive terms (at a school that uses semesters) or any three consecutive terms (at a school that uses quarters or trimesters).

    For example, in a semester-based program with a scheduled academic year consisting of the fall and spring semesters, a borrower-based academic year would consist of any two consecutive terms. If a student begins attendance in the spring semester, the borrower-based academic year would include the spring and summer terms. The school would include the summer term when reporting the academic year dates because the summer term is part of the borrower-based academic year. [December 20, 2013]

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  • AYLP-Q7: A school has a clock-hour program that is 540 clock hours in length and 18 weeks of instructional time. Students in the program are scheduled to complete 30 clock hours per week. The school’s defined academic year under 34 CFR 668.3 is 900 clock hours and 26 weeks of instructional time. What loan period and academic year should the school use to originate a Direct Loan for a student who will start enrollment in the program on January 6, 2014?

    AYLP-A7:

    Loan periods are the periods of enrollment for which a loan is intended. The minimum period for which the school can originate a Direct Loan for this type of program is the lesser of the length of the program or an academic year. Because this program is less than one academic year (it is not at least 26 weeks of instructional time and 900 clock hours), the loan period is the length of the program. As a result, the loan period will start on the date that the student begins enrollment in the program—January 6, 2014—end when the student is scheduled to complete the program—18 weeks after January 6, 2014. If there are no breaks following the student’s start of the program that would cause instructional time to be different from calendar time, the loan period would end on or about May 16, 2014.

    The academic year that the school must report is the period to which the annual loan limit applies. Because all clock hour programs track annual loan limits using a borrower-based academic year (BBAY), the academic year will start on the date that the student begins enrollment in the program—January 6, 2014. For clock hour programs, the annual loan limit applies to the BBAY period during which a student would complete the number of weeks of instructional time and clock hours associated with the school’s academic year definition under 34 CFR 668.3. For this program, that period is the time it would take a student to complete 26 weeks of instructional time or 900 clock hours, whichever is later. If there are no breaks following the student’s start of the program that would cause instructional time to be different from calendar time, the student would complete 26 weeks of instructional time on July 11, 2014, and would complete 900 clock hours on August 8, 2014 (900 clock hours divided by 30 clock hours per week is 30 weeks). Because August 8, 2014 is later than July 11, 2014, the BBAY for annual loan limit purposes ends on the later of the two dates, and the academic year end date for this student is on or about August 8, 2014. [December 20, 2013]

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  • AYLP-Q8: A student transferred into a school from another school in the middle of the academic year. Which academic year dates should the new school use when originating a Direct Loan?

    AYLP-A8:

    Consistent with guidance in the 2012-2013 FSA Handbook, Volume 3, Pages 112-115, the answer depends on whether the student is transferring into a term-based program or into a non-term-based program.

    If the student is transferring into a standard-term program or a non-standard term program where each term is substantially equal to the other and are each at least nine weeks in length, the school would originate a Direct Loan with academic year dates that correspond to the new school’s scheduled or borrower-based academic year.

    If the student is transferring into a non-term-based program (both credit-hour and clock-hour programs) or non-standard-term programs where each term is not substantially equal to the other and are not each at least nine weeks in length, the academic year depends on whether the new school accepts credits/clock-hours from the prior school.

    If the school does accept credits/clock-hours from the prior school, the start date and end date of the academic year are the start date and end date of the academic year at the prior school. Information on prior loans’ academic years is available in COD.

    If the school does not accept credits/clock-hours from the prior program, the start date of the academic year is the start date of the academic year at the prior school and the end date of the academic year is the end date of the borrower-based academic year at the new school.

    Note that the Loans II final regulation (published on November 1, 2013) modified the applicable regulatory provision that governs this rule. The new rule will require all non-term and non-standard-term programs to provide the treatment to all borrowers that may only currently be provided to borrowers for whom the new institution accepts transfer credits from the prior institution. This new regulatory provision is one that the Department has designated for early implementation, at the discretion of each institution. For more information, please see 78 FR 65768, 65773, 65839. [December 20, 2013]

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  • AYLP-Q9: How should a school report the loan period and academic year in instances where the student is enrolled in a non-term or clock-hour program and goes on an approved leave of absence?

    AYLP-A9:

    The school should include the leave of absence in the loan period and academic year that it reports. If the student does not return from the leave of absence, the school must update the Direct Loan origination record’s loan period so that it corresponds to the end date of the last payment period for which the borrower received (and retained) a Direct Loan (see SUP7). [December 20, 2013]

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  • AYLP-Q10: What is the timeframe for reporting to COD updates to loan periods or academic years?

    AYLP-A10:

    Schools must update reported loan periods and academic years, as with any other adjustment to an origination record, within 15 days of the date that the school became aware of the need to make an adjustment.

    For non-term or clock hour programs or non-standard-term programs whose terms are not substantially equal to each other and are not each at least nine weeks in length, whose loan periods and academic years may need to be updated to account for students’ progression through the program, schools may delay reporting updates to loan periods and academic years until the student completes the period of enrollment for which the loan is intended or when the student withdraws.

    Note that the Return to Title IV (R2T4) rules provide 45 days from the date of the student’s withdrawal to perform the R2T4 calculation. If a school is required to update a loan period because the R2T4 calculation requires the return of all loan funds received for a payment period, the school would not become aware of the need to update the loan period until the R2T4 calculation has been completed. Therefore, when an R2T4 is required, the school must update the loan period in COD within 15 days of having completed the R2T4 calculation. [December 20, 2013]

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  • AYLP-Q11: How should a school report loan period and academic year dates for students in quarter or trimester programs who attend for the first term of the scheduled academic year, but not the second (middle) term, and who then resume attendance for the third (final) term of the academic year.

    AYLP-A11:

    If the school knows in advance that the student will not attend the middle term in a quarter- or trimester-based program, it should handle the reporting consistent with example 6, option 1 in DCL GEN 13-13. That is, the school would originate two separate loans, one with a loan period covering the dates of the first term and a second loan with a loan period covering the dates of the third term. Both loans would have academic years that cover the full scheduled academic year at the school—that is, all three quarters or trimesters.

    If the school originated one loan for all three terms because it did not know in advance that the student would not be attending the middle term, it must update the origination record for that loan consistent with example 2 in DCL GEN 13-13. That is, since the original loan record likely would have had a loan period that covered all three terms, the school would update the loan period dates to reflect that the student was only enrolled for the first term. If the student returns for the third term and is eligible for a loan, the school would originate a separate Direct Loan with a loan period covering that term only. Both loans would have academic years that cover the full scheduled academic year at the school—that is, all three quarters or trimesters. [December 20, 2013]

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  • AYLP-Q12: A school is cancelling/inactivating a loan (i.e., reducing the loan amount to $0). Is the school required to update the loan period or academic year for the loan?

    AYLP-A12:

    No. If the loan is totally cancelled/inactivated, the school is not required to update the loan period or academic year because cancelled/inactivated loans do not have associated Subsidized Usage Periods. However, schools should be sure to reduce the loan amount(s) and all disbursement amounts to $0. If in the future the school activates the loan by increasing the loan amount from zero, it must ensure that loan period and academic year are updated. [July 13, 2015]

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