Transcript Document

National Association of Student
Financial Aid Administrators
The following is a presentation prepared for:
VASFAA
Karen McCarthy
Division of Policy and Federal Relations
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Today’s Agenda
• Background and overview
• Who does what?
• Limit on subsidized loan eligibility
• Loss of interest subsidy
• Preparatory and teacher certification coursework
• School reporting requirements
• Loan counseling
• Questions?
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Background: How Did We Get Here?
Moving Ahead for Progress in the 21st Century Act
(MAP-21)
• Enacted July 6, 2012
• Extended the 3.4% interest rate for subsidized
loans until July 1, 2013
• Established a time limit for subsidized loan
eligibility for new borrowers on or after July 1, 2013
• Waived master calendar and negotiated
rulemaking requirements
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Background: How Did We Get Here?
Interim Final Rules
• Published May 16, 2013
• Effective immediately
• Comment period until July 1, 2013
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Who Does What?
COD
CPS
• Inform school of first-time borrower
and progress
• Inform first-time borrowers that
there’s a limit
NSLDS
• Determine eligibility for interest
subsidy
• Determine who is first-time
borrower
• Do eligibility calculations
• Reject loans for ineligible
borrowers
• Inform schools
Loan Servicers
• Communicate with borrower when
responsible for accruing interest
• Stop interest subsidy
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Who Does What?
School Responsibilities
• Reporting, reporting, and more reporting to NSLDS
and COD
• Updating your loan counseling, if you don’t use EDprovided counseling
• Updating loan periods and loan’s academic year in
COD when required
• Most challenging: explaining this to students when
they have questions!
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First-Time Borrowers
• Definition: has no outstanding balance on a FFEL or
Direct Loan when receiving a new Direct Loan on or
after July 1, 2013
• Example 1: student who has never borrowed before
and receives a Direct Loan on or after 7/1/13
• Example 2: student with outstanding balance on DL
pays off balance on or after 7/1/13, and later receives
a new DL
• Only first-time borrowers are subject to 150% rules
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Loss of Subsidized Loan Eligibility
• Borrower loses subsidized loan eligibility when he
or she receives subsidized loans for a period
exceeding 150% of the published length of the
borrower’s current educational program
• Length of time the student borrows subsidized
loan is key, not the amount of the loan
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Loss of Subsidized Loan Eligibility
Maximum eligibility period
– All subsidized usage periods
= Remaining eligibility period
• Student loses subsidized eligibility when
remaining eligibility period is zero or less
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Maximum Eligibility Period
150% of the published length of the borrower’s
current educational program
• Program should already have a published length
• Varies by program
• ED calculates by multiplying published length (reported
by school) by 1.5
• Measured in academic years (ED will convert if
published length is in months or weeks)
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Maximum Eligibility Period - Examples
Program Length
Maximum
Eligibility Period
2-year associate’s degree
3 years
2-year certificate
3 years
1-year certificate
1.5 years
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Loss of Subsidized Loan Eligibility
Maximum eligibility period
– All subsidized usage periods
= Remaining eligibility period
• Student loses subsidized eligibility when
remaining eligibility period is zero or less
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Subsidized Usage Period
Period of time for which the borrower receives a
subsidized loan
• Measured in loan academic years (corresponding to
period covered by loan limit)
• Calculated loan by loan
• Rounded down to nearest quarter of a year
• Calculated by ED
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Subsidized Usage Period
Days in loan period
Days in loan’s academic year
• Loan period: period of enrollment covered by
the loan
• Loan’s academic year: period used to track
annual loan limits (SAY/BBAY)
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Example 3: Subsidized Usage Period
• Semester-based program with fall and spring SAY
• Student borrows fall and spring semesters
• Loan period: August 23, 2013 – May 6, 2014
– 257 days
• Academic year: August 23, 2013 – May 6, 2014
– 257 days
Subsidized
usage period
Days in loan period
=
Days in academic year
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257
=
1.0 year
257
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Example 4: Subsidized Usage Period
• Semester-based program with fall and spring SAY
• Student borrows fall semester only
• Loan period: August 23, 2013 – December 12,
2013
– 112 days
• Academic year: August 23, 2013 – May 6, 2014
– 257 days
Subsidized
usage period
Days in loan period
=
Days in academic year
=
112
=
.44 year
257
(rounded down to .25 year)
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Enrollment Status Exception
• Calculated subsidized usage period is prorated by
enrollment status:
– ¾ time = .75
– ½ time = .50
• Proration occurs before any rounding
• One scenario where this is not applicable
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Example 3 Again: Subsidized Usage Period
• Semester-based program with fall and spring SAY
• Student borrows fall and spring semesters, but at
half-time status
• Loan period: August 23, 2013 – May 6, 2014
– 257 days
• Academic year: August 23, 2013 – May 6, 2014
– 257 days
Days in loan period
Subsidized
=
usage period
Days in academic year
257
=
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= 1.0 yr x .50 = .5 yr
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Annual Loan Limit Exception
• Only scenario where the amount borrowed matters
• When student receives the full subsidized annual loan
limit for a period less than 1 AY in length, subsidized
usage period is = 1 year
• Only happens in standard-term programs or nonstandard-term programs where terms are
substantially equal and at least 9 weeks in length
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Example 4 Again: Subsidized Usage Period
• Semester-based program with fall and spring SAY
• Third-year student borrows fall semester only, $5,500
• Loan period: August 23, 2013 – December 12, 2013
– 112 days
• Academic year: August 23, 2013 – May 6, 2014
– 257 days
Subsidized
usage period
Days in loan period
=
Days in academic year
=
112
=
.44 year
257
Student borrowed full annual loan limit so usage = 1.0 year
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Loss of Subsidized Loan Eligibility
Maximum eligibility period
– All subsidized usage periods
= Remaining eligibility period
• Student loses subsidized eligibility when
remaining eligibility period is zero or less
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Remaining Eligibility Period
How much subsidized loan eligibility a borrower
has remaining
• Eligibility lost when zero or less
• ED calculates
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Example 5: Remaining Eligibility Period
• Student receives 2 full years of subsidized loan
while enrolled in a 2-year AA program
Maximum eligibility period (3 years)
– All subsidized usage periods (2 years)
= Remaining eligibility period (1 year)
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Example 6: Remaining Eligibility Period
• Student receives 2 full years of subsidized loan
while enrolled in a 2-year AA program and then
transfers to 1-year certificate program
After year 2 in
AA program
Upon transfer
to 1-year
certificate
Maximum eligibility
period
3 years
1.5 years
Subsidized usage period
2 years
2 years
Remaining eligibility
period
1 year
-.5 years
No remaining eligibility
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Example 7: Remaining Eligibility Period
• Student receives 3 full years of subsidized loan
while enrolled in a 2-year AA program and then
transfers to 4-year BA program
After year 2 in
AA program
Upon transfer
to 4-year BA
program
Maximum eligibility
period
3 years
6 years
Subsidized usage period
3 years
3 years
0
No remaining eligibility
3 years
Remaining eligibility
period
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Loss of Interest Subsidy
Student subject to the 150% limit can lose interest
subsidy on all outstanding subsidized loans if:
• Has no remaining eligibility period;
• Did not complete the program; and
• Continued enrollment at least half time in certain
circumstances
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Loss of Interest Subsidy
• Subsidy loss effective on date of triggering
enrollment (not retroactive)
• Enrollment is trigger, not borrowing another loan
• No subsidy loss if enrollment is in:
– Graduate or professional program
– Prep coursework for enrollment in graduate or
professional program
– Teacher certification program where school
does not award credential
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Loss of Interest Subsidy
• Lost subsidy applies to all periods during which a
subsidy would apply (grace, deferment, etc.)
• A loan which loses its subsidy is still a subsidized
loan
– Not as significant now that subsidized loans and
unsubsidized loans have same interest rate
• A student may at some later point regain sub
eligibility (e.g., by enrolling in a longer program),
but a lost subsidy on an individual prior loan can
never be regained
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Example 8: Loss of Interest Subsidy
• Student receives 3 full years of subsidized loan
while enrolled in a 2-year AA program. Student
does not complete and enrolls for a 4th year
 No remaining eligibility period;
 Did not complete; and
 Continued enrollment
• Therefore, loss of interest subsidy
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Example 9: Loss of Interest Subsidy
• Student receives 3 full years of subsidized loan while
enrolled in a 2-year AA program. Student does not
complete and enrolls in a 4-year BA program
End of 3rd year
in AA program
Upon transfer
to 4-year BA
program
Maximum Eligibility
Period
3 years
6 years
All subsidized usage
periods
3 years
3 years
Remaining eligibility
period
0
3 years
No, student hasn’t
re-enrolled
No, student has
remaining eligibility
Subsidy loss?
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Preparatory Coursework
For enrollment in
an undergraduate
program
For enrollment in
a graduate
program
Maximum eligibility
period
150% of the program
for which prep
coursework is
preparing student
150% of the program
for which the borrower
most recently received
subsidized loan
Do subsidized usage
periods count against
maximum eligibility
period?
Yes
Yes
Can enrollment cause
loss of interest
subsidy?
Yes
No
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Teacher Certification Programs
Definition: programs that do not lead to degree or
credential from school, but lead to credential from
state that is required for teaching
• Subsidized usage periods from teacher cert programs
do not count against maximum eligibility periods for
non-teacher cert programs, and vice versa
• Borrower can’t lose interest subsidy on non-teacher
cert loans by enrolling in a teacher cert program
• Teacher cert loans never lose interest subsidy
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Unsubsidized Loan Eligibility
Student cannot receive unsubsidized loan eligibility
for a loan period until the student has received all
subsidized loan for which he or she is eligible
• Longstanding rule
• Ensures student receives most beneficial loan first
• Prevents circumvention of 150% rules
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School Reporting Requirements for
2013–14 and Beyond
To COD
• Loan period dates
• Loan’s academic year dates
• See GEN-13-13
To NSLDS
• Enrollment status: at least half-time or full-time
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School Reporting Requirements for
2014–15 and Beyond
To COD
• CIP
• Credential level
• Program length
• Length of Title IV academic year
• Flags for prep coursework and teacher certification
• Enrollment status (full time, ¾ time, half time)
• Payment period begin date
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School Reporting Requirements for
2014–15 and Beyond
To NSLDS
• CIP
• Credential level
• Program length
• Length of Title IV academic year
• Flags for prep coursework and teacher certification
• Enrollment status (full time, ¾ time, half time)
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Loan Counseling
• Entrance and exit counseling must include information
on 150% subsidized limit for first-time borrowers
completing counseling on or after July 1, 2013
• Recommended that first-time borrowers who
completed counseling before July 1, 2013 also receive
updated information
• As of June 28, studentloans.gov contains a link to a
PDF of the required information on 150% limit
• As of October, required information will be fully
incorporated into ED’s online counseling
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Resources
• NASFAA articles: search on “150%” from
www.nasfaa.org
• Recording and handout from ED session at NASFAA
conference:
http://www.nasfaa.org/conference/videos.aspx
• Federal Register 5/16/13: interim final rules
• GEN-13-13: reporting and updating of loan periods and
academic year
• ANN-13-08: links to recordings of ED webinars offered
in June
• Electronic announcements: 5/16/13, 6/20/13, 8/30/13
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Please send your questions to:
[email protected]
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