USA Funds University. Moving Ahead for Progress in the 21 st Century Act. CCCSFAAA 2013 Fall Training

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1 USA Funds University Moving Ahead for Progress in the 21 st Century Act CCCSFAAA 2013 Fall Training

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3 Moving Ahead for Progress in the 21 st Century Act Overview P.L Federal Register Vol. 78, No. 95. In July 2012, President Obama signed the Moving Ahead for Progress in the 21 st Century Act referred to as MAP-21 resulting in two key changes to subsidized Stafford loans for certain borrowers: u Limits subsidized Stafford loan eligibility. u Loss of interest subsidy. On May 16, 2013, the U.S. Department of Education published the Interim Final Rule regarding MAP-21, and regulations became effective on the date of publication. These changes apply to subsidized Stafford loan borrowers who meet the definition of first-time borrower on or after July 1, Affected undergraduate students may borrow subsidized Stafford loans for up to 150 percent of the published length of their educational programs. Borrowers who exceed the 150 percent limitation: u Do not qualify for subsidized Stafford loans for future enrollment unless they enroll in a longer program of study. u Lose interest subsidy for all prior loans when they: Receive subsidized loans to fund enrollment for 150 percent of the length of a program of study; AND Did not complete the program of study; AND Continue to be enrolled on at least a half time basis in the same program, a different program of the same length, or a program of shorter duration. Trainer s Tidbit P.L The projected savings from MAP-21 was earmarked to cover the temporary extension of the 3.4 percent interest rate on newly disbursed subsidized Stafford loans through June 30, However, the MAP-21 provisions themselves have no published end date. 1

4 First-Time Borrowers 34 CFR (f). Only students who are first-time borrowers on or after July 1, 2013, are affected by the MAP-21 provisions. Is the student a first-time borrower? Yes No Has no outstanding principal balance on a Direct or FFELP loan on July 1, Has no outstanding principal balance on the date the borrower obtains a Direct Loan after July 1, X X Loss of Subsidized Loan Eligibility HEA Sec. 455(q). 34 CFR (a). 34 CFR (f). A first-time borrower may receive subsidized Stafford loans for a period of time not to exceed 150 percent of the published length of the educational program. A student cannot receive subsidized Stafford loans beyond this timeframe, unless the borrower enters a longer educational program. Has an outstanding principal balance on a Direct or FFELP loan on July 1, 2013, and does not borrow any additional Direct Loans. Has an outstanding principal balance on a Direct or FFELP loan on July 1, 2013, and borrows additional Direct Loans on or after July 1, Pays in full all Direct or FFELP loans before July 1, 2013, and does not borrow any additional Direct Loans. X X X Trainer s Tidbit The 150 percent limitation has no effect on unsubsidized Stafford loan or PLUS loan eligibility. Pays in full all Direct or FFELP loans before July 1, 2013, and borrows additional Direct Loans on or after July 1, X Consolidates Direct or FFELP loans, where any of the underlying loans were obtained prior to July 1, Borrows only Perkins loans on or after July 1, X X NOTES 2

5 Loss of Interest Subsidy HEA Sec. 455(q). 34 CFR (a). 34 CFR (f). Once the borrower loses eligibility for interest subsidy, the borrower is responsible for the accruing interest even if no new loans are obtained. Interest on the previously borrowed loans will begin to accrue in the same manner as interest on unsubsidized loans; any unpaid interest will be capitalized. Once the interest subsidy on a loan is lost, it cannot be regained. The borrower is responsible for accruing interest during periods that would otherwise be subsidized, including: u At least half-time attendance. u Grace period. u Deferment. u Repayment that otherwise may have been subsidized under the Income-Based or Pay As You Earn repayment options. A first-time borrower who completes the program within the 150 percent timeframe and borrows subsidized loans for that entire timeframe no longer can borrow additional subsidized Stafford loans, but retains interest subsidy on previously received loans. Conversely, a first-time borrower who completes the program within the 150 percent timeframe but borrows subsidized loans only for a portion of the timeframe will have some remaining subsidized eligibility and the outstanding loans will retain their interest subsidy. Determining Eligibility HEA Sec. 455(q). 34 CFR (f). Dear Colleague Letter GEN Department of Education webinar, June 11. The Department defines and calculates three components to determine if borrowers have reached their maximum subsidized Stafford loan eligibility: maximum eligibility period, subsidized usage period and remaining eligibility period. ED calculates each of these components based on information that schools report, making the schools accurate and timely reporting of and corrections to loan period start and end dates, academic year start and end dates, and student withdrawal dates even more critical. NOTES 3

6 Maximum Eligibility Period 150 percent of the published length of the borrower s current academic program. Schools must report the academic program length in years, months or weeks. The MEP will be calculated and displayed in the Common Origination and Disbursement system, based on the school-provided information. Example Program Length 150 Percent 5 years 7.5 years 4 years 6 years 2 years 3 years 20 weeks 30 weeks The MEP will be displayed in academic years. If the school reports programs either in months or weeks, those figures will be converted into the number of academic years, based on the number of calendar days in the school s defined academic year. Number of days in the months or weeks of program length Number of days in the school s academic year Example The school s defined academic year is 32 weeks, or 224 days (32 weeks x 7 days per week = 224 days). Every month is considered to have 30 days. Program Length Conversion to Days (Based on 7 days per week or 30 days per month) Program Length (Based on 224 days per academic year) Maximum Eligibility Period (150 percent) 16 weeks 112 days 112 / 224 = 0.50 years 0.75 years 20 weeks 140 days 140 / 224 = 0.63 years 0.94 years 30 weeks 210 days 210 / 224 = 0.94 years 1.41 years 3 months 90 days 90 / 224 = 0.40 years 0.60 years 6 months 180 days 180 / 224 = 0.80 years 1.20 years NOTES 4

7 Subsidized Usage Period The period of time during which the borrower receives subsidized Stafford loans. The SUP generally does not take into account the amount a student borrows, but only the period of time for which subsidized Stafford loans are received. The SUP is determined by dividing the number of days in the borrower s loan period by the number of days in the borrower s academic year. The result is rounded down to the nearest quarter of a year. Number of days in borrower s loan period Number of days in borrower s academic year Result is rounded down to nearest quarter of a year. Example: Scheduled Academic Year Jacobs College has a semester-based academic year made up of the fall and spring terms. The fall term begins on August 29, and the spring term ends on May 20. There are 269 days in the loan period and academic year. If a student received a subsidized loan for both terms, the loan period begins on August 29 and ends May 20. The SUP would be: 269 days in loan period 269 days in academic year = 1.0 SUP Example: Borrower-Based Academic Year Allen Technical School offers clock-hour programs with a borrower-based academic year. There are 182 days in the loan period and academic year. If a student received a subsidized loan for the entire academic year, the SUP would be: 182 days in loan period 182 days in academic year = 1.0 SUP Full Annual Amount Borrowed Exception In the case of a standard term program or a non-standard term program with substantially equal nine-week terms, if the student borrows the full annual subsidized loan limit for a loan period that is shorter than a full academic year, the SUP would be considered to be 1.0. Example A first-year student attending Jacobs College receives a subsidized loan of $3,500 for the fall semester only. There are 119 days in the loan period and 269 days in the academic year. 119 days in loan period 269 days in academic year = 0.45 SUP 0.45 would be rounded DOWN to 0.25, but SUP is 1.0 The calculated subsidized usage period would be 0.45, which ordinarily would be rounded down to The subsidized usage period would be considered to be 1.0 because the student is receiving the full annual subsidized loan amount for the fall only. 5

8 Enrollment Status Exception If the student s enrollment status is less than full time, the subsidized usage period will be adjusted. For three-quarter time enrollment, the calculated subsidized usage period will be multiplied by 0.75, and for half-time enrollment, the calculated subsidized usage period will be multiplied by Example Jacobs College has 269 calendar days in the academic year, consisting of fall and spring terms. There are also 269 days in the loan period if the student borrows for both terms. If a student receives a subsidized Stafford loan for three-quarter time enrollment for both fall and spring terms, the subsidized usage period would be: 269 days in loan period 269 days in academic year = 1.0 SUP 1.0 SUP X 0.75 enrollment adjustment = 0.75 adjusted Subsidized Usage Period Remaining Eligibility Period Determined by comparing the Maximum Eligibility Period to the total of all Subsidized Usage Periods. The 150 percent limitation is met when the Remaining Eligibility Period is equal to or less than zero. Maximum Eligibility Period Subsidized Usage Period = Remaining Eligibility Period NOTES 6

9 Changing Programs When a first-time borrower changes programs or transfers from one program to another, ED will re-calculate the borrower s maximum eligibility period and remaining eligibility period based on the criteria related to the borrower s new program as reported by the school. The subsidized usage period will be based on subsidized Stafford loans borrowed during the prior program(s). Transferring to a shorter program may result in the borrower losing eligibility for subsidized Stafford loans and becoming responsible for accruing interest. Conversely, transferring to a longer program may result in gaining additional eligibility for subsidized Stafford loans; however, any prior loans for which the borrower already lost interest subsidy will continue to accrue interest. Examples Mallory receives three full years of subsidized loans while she is enrolled in a two-year program. She then transfers to a four-year program. 4-year program X 150% = 6-year Maximum Eligibility Period 6-year Maximum Eligibility Period 3-year Subsidized Usage Period = 3 years Remaining Eligibility Period Davis receives three full years of subsidized loans while he is enrolled in a four-year program and does not complete that program. He then transfers to a two-year program. 2-year program X 150% = 3-year Maximum Eligibility Period 3-year Maximum Eligibility Period 3-year Subsidized Usage Period = 0 years Remaining Eligibility Period Davis cannot borrow additional subsidized loans, and if he enrolls half time or above, he loses interest subsidy on his existing loans. Reid is enrolled in an 18-week certificate program at a school with a 36-week academic year. He borrowed subsidized Stafford loans for the entire program length, which is 0.50 academic years. The resulting subsidized usage period also would be calculated at 0.50 years. Reid transfers to a two-year program. His remaining eligibility is calculated as follows: 2-year program X 150% = 3-year Maximum Eligibility Period 3-year Maximum Eligibility Period 0.50-year Subsidized Usage Period = 2.50 years Remaining Eligibility Period 7

10 Special Coursework Provisions HEA Sec. 455(q). 34 CFR (f). Borrowers enrolled in preparatory coursework for either undergraduate or graduate programs, or in teacher certification coursework, are affected by MAP-21. Teacher Certification Coursework HEA Sec. 484(b). 34 CFR (a). 34 CFR (f). 34 CFR (a). Students enrolled in coursework leading to teacher certification for which the school offers no academic credential are limited to subsidized loan eligibility equivalent to 150 percent of the length of the program. Several aspects of this provision are unique to these programs: u Only subsidized loans received for teacher certification coursework are counted; no subsidized loans borrowed for prior enrollment are taken into consideration. u Borrowers in these programs who exceed the 150 percent limit: Will not lose the interest subsidy on loans obtained for teacher certification coursework. Cannot receive additional subsidized loans for the remainder of their current programs. u Subsidized loans obtained for teacher certification coursework are not taken into consideration when determining eligibility for any other eligible program in which the student may enroll. Trainer s Tidbit Federal Register, Vol. 78, No. 95. These teacher certification provisions apply only to coursework required for state certifications or credentials necessary for employment. If the school awards academic credentials for the coursework in question, the student would be subject to regular annual loan limits (rather than the $5,500 limit) along with the MAP-21 rules that apply to any previous periods of enrollment in other programs of study. Example Thomas used six years of subsidized Stafford loan eligibility to complete a four-year program. He decides to enroll in teacher certification coursework, which is scheduled to be completed in one academic year. His eligibility for subsidized loans is not affected by his enrollment in a prior program. As a result, he has 1.5 years of eligibility for subsidized loans based on his enrollment in teacher certification coursework. Undergraduate Preparatory Coursework HEA Sec. 455(q). HEA Sec. 484(b). 34 CFR (a). 34 CFR (f). Some schools allow students to take coursework that prepares them for enrollment in an undergraduate degree or certificate program. Students pursuing this type of coursework may obtain Stafford or parent PLUS loans for up to 12 consecutive months, beginning on the first day of the first loan period. u The relevant loans received for preparatory coursework are included when determining if a student has received loans for 150 percent of the program length. u The maximum eligibility period is not extended when students enroll in preparatory coursework. Example Jonah previously enrolled in preparatory coursework for one year and received a subsidized loan for which the Department calculated a subsidized usage period of 1.0. He enrolls in a two-year undergraduate program. Jonah s two-year program would allow eligibility for a maximum of three years of subsidized borrowing. The preparatory coursework counts toward that three-year maximum, so he has two years to complete the program of study before the MAP-21 provisions apply. 8

11 Graduate Preparatory Coursework HEA Sec. 455(q). HEA Sec. 484(b). 34 CFR (a). 34 CFR (f). The act of enrolling in graduate preparatory coursework, in and of itself, will not result in loss of interest subsidy on previously obtained loans. The maximum eligibility period for students enrolled in graduate preparatory coursework will be based on the most recent undergraduate program for which they received subsidized loans. These students may borrow subsidized loans for any remaining eligibility period, for up to 12 consecutive months. Borrowers enrolled in graduate preparatory coursework who have reached the maximum eligibility period for their undergraduate programs cannot receive subsidized loans, but they will retain the interest subsidy on previously obtained loans if it was not previously lost due to MAP-21. Example Carla used the six-year maximum eligibility period to complete a four-year degree and is returning to school to complete preparatory coursework necessary to enroll in a graduate program. Because she used all six years of eligibility to complete the four-year program, she has no remaining eligibility for subsidized loans. She may, however, still qualify for unsubsidized loans, if she has not yet reached the aggregate loan limit. Carla does not lose interest subsidy on her prior undergraduate loans based on her attendance in the preparatory coursework because she completed the previous program within the 150 percent limit. Loan Counseling Entrance Counseling 34 CFR (a). Electronic Announcement, May 16, The Interim Final Rule mandates that entrance counseling include the following information regarding the 150 percent limitation for affected first-time borrowers: u How the Department determines the maximum eligibility period, remaining eligibility period and subsidized usage periods. u Limit eligibility for subsidized loans to no more than 150 percent of the published length of the program. u Possible loss of eligibility for subsidized loans if the borrower exceeds the maximum timeframe. u Possible responsibility to pay interest that accrues on any subsidized loans already disbursed if the borrower exceeds the maximum timeframe. u How accruing interest affects the borrower s total loan debt. u If the borrower exceeds the maximum timeframe, possible future accrual of interest may affect prior subsidized loans and subsidized portions of Consolidation loans during: In-school and grace periods. Periods of authorized deferment. Certain periods during which subsidized loans are repaid under the income-based and Pay As You Earn repayment plans. Schools must provide the additional information to firsttime borrowers who complete entrance counseling on or after July 1, Entrance counseling at began including links to information about the 150 percent limitation on June 28, ED indicated plans to integrate updated entrance counseling requirements in October Trainer s Tidbit Electronic Announcement, May 16, The Department also encourages, but does not require, schools to provide the additional entrance counseling information to borrowers who completed counseling prior to July 1, 2013, because some of those borrowers will be subject to the new 150 percent provisions. 9

12 Exit Counseling 34 CFR (b). Electronic Announcement, May 16, For first-time borrowers on or after July 1, 2013, exit counseling requirements now also must include: u How the Department determines the maximum eligibility period, remaining eligibility period and subsidized usage periods. u The sum of the student s subsidized usage periods at the time exit counseling is provided. u Possible loss of eligibility for subsidized loans. u The consequences of borrowing additional subsidized loans for enrollment in additional undergraduate programs. u Possible responsibility to pay accruing interest on subsidized loans and subsidized portions of Consolidation loans during: In-school and grace periods. Periods of authorized deferment. Certain periods during which subsidized loans are repaid under the income-based and Pay As You Earn repayment plans. u The impact of accruing interest on total borrower debt. u That ED will notify the borrower once the responsibility for accruing interest on subsidized Stafford loans begins. u That NSLDS will reflect whether a borrower is responsible for accruing interest and if there is any remaining eligibility for subsidized Stafford loans. Reporting Requirements Federal Register, Vol. 78, No. 95. Electronic Announcement, May 16, Dear Colleague Letter GEN Electronic Announcement, June 20, Common Origination and Disbursement System For all Direct Loans attributed to the processing year, a school must ensure that it is accurately reporting to COD a loan s academic year and loan period dates, and updating those dates when necessary. In addition, for loans, schools must report to COD and update or correct student and program information including: u Enrollment level, such as full time, three-quarter time or half time. u Classification of Instructional Program code. u Credential level. u Length of program in years, months or weeks. u Special program flag, such as for teacher certification or preparatory coursework. The Department has indicated that a school s failure to accurately report required information may result in audit findings and potential fines or other sanctions. NOTES 10

13 Academic Year and Loan Period Length Academic years and loan periods reported to COD must reflect the student s anticipated enrollment, and must be updated if the borrower: u Does not attend as planned. u Receives loan funds for a different period than originally reported. u Is not eligible or does not receive a Stafford or PLUS loan for the period. u Withdraws and the entire amount of the loan for the period was returned. u Fails to progress to the next payment period or academic year as scheduled. Trainer s Tidbit A summer term that is treated as either a header or a trailer to a Scheduled Academic Year is only included in the academic year dates that the school reports to COD if the student receives Direct Loan funds for the summer term. National Student Loan Data System Schools will be required to report to NSLDS additional information regarding their student loan borrowers. The information will include: u Classification of Instructional Program code. u Credential level. u Length of program in years, months or weeks. u Borrower s enrollment status at the time of reporting. u Indicator that the borrower is enrolled in preparatory coursework for undergraduate or graduate programs, if applicable. u Indicator that the borrower is enrolled in teacher certification coursework when the institution does not offer an academic credential, if applicable. The Department will use the information in NSLDS to determine if a borrower is responsible for the accruing interest on subsidized loans. The information also will be shared with federal loan servicers. NOTES 11

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15 References, Resources and Websites Moving Ahead for Progress in the 21st Century Act Federal Legislation or Regulations Moving Ahead for Progress in the 21st Century Act P.L July 6, William D. Ford Federal Direct Loan Program Interim Final Rule. 78 FR May 16, Code of Federal Regulations U.S. Department of Education Electronic Announcement Subject: 150% Direct Subsidized Loan Limit: Electronic Announcement #2 Phase One of COD System Changes Scheduled for June 28-30, June 20, Electronic Announcement Subject: 150% Direct Subsidized Loan Limit: Electronic Announcement #1 Interim Final Regulations Published. May 16, U.S. Department of Education Webinar Subject: 150% Direct Subsidized Loan Limit Webinar #1; Academic Year and Loan Period Reporting. Presented June 4 and 6, U.S. Department of Education Webinar Subject: 150% Direct Subsidized Loan Limit Webinar #2; Overview of Provisions. Presented June 11, 12 and 13, USA Funds Electronic Glossary of Terms and Definitions USA Funds Ask Policy USA Funds Ask Policy SM is a resource for schools and lenders who have questions about specific policies or other issues related to the full range of Title IV federal student aid. 13

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17 Appendices Appendix A New Acronyms Relating to MAP-21 Appendix B Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, 2013 Appendix C Entrance Counseling Fact Sheet Appendix D Exit Counseling Fact Sheet 15

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19 Appendix A New Acronyms Relating to MAP-21 Acronym Name Notes SULA D0 MEP SUP SLEU Subsidized Usage Limit Applies Direct Stafford Subsidized Maximum Eligibility Period Subsidized Usage Period Subsidized Loan Eligibility Used A flag identifying first-time borrowers. u In NSLDS, will populate as either Y or N. When flag is set to Y, a SAR comment will be triggered. u Beginning January 2014, SULA will appear on: NSLDS websites and reports. Financial Aid History. Transfer Student Monitoring ISIR. New loan type reported from federal loan servicers identifying SULA-eligible loans. u Appears on: NSLDS websites and reports. Financial Aid History. Transfer Student Monitoring. u Beginning January 2014, will appear on: ISIR. School Portfolio Report. Calculated by COD, the amount of time a new borrower may receive subsidized Stafford loans, which is 150% of the reported length of a borrower s current educational program. u Beginning March 2014, will appear on : NSLDS reports and websites. Financial Aid History. Transfer Student Monitoring. Calculated by COD, the period of time during which the borrower receives a SULAeligible loan. u Tentatively scheduled for March 2014 and will appear on: NSLDS websites and reports. Financial Aid History. Transfer Student Monitoring ISIR. Calculated by COD, the amount of eligibility used for borrowers whose SULA flag is set to Y. u Will appear on: NSLDS websites and reports. Financial Aid History ISIR. Provided from the 2013 NASFAA Conference presentations. 17

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21 Appendix B Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, Maximum eligibility period to receive Direct Subsidized Loans There is a limit on the maximum period of time (measured in academ ic years) that you can receive Direct Subsidized ized Loans. In general, you may not receive Direct Subsidized Loans for more than 150% of the the publis hed length of any progr For example, if you are enrolll ed in a 4- for which you can receive Direct Subsidized Loans is 6 years (150% of 4 years = 6 years). If you are enrolled in a 2-year asso ciate degree program, the maximum period for which you can receive Direct Subsidized Loans is 3 years (150% of 2 years = 3 years). Your maximum eligibility period is based on the published length of your current program. This m eans that you r maximum el igibility period can change if you change program s. Also, if you receive Dire ct Subsidized ized Loans for one program and then change to another program, the Direct Subsidized Loans you received for the earlier program will g enerally count against your ne w maximum eligibility period. Periods that count against you r maximum eligibility period The periods of time that count against your maximum eligibility period are periods of which yo u received Direct Subsidized Loans. For example, if you are a full -time student and you receive a Direct Subsidized Loan that covers the fall and spring semesters (a full academic year), this will count as one year against your maximum eligibility period. If you re ceive a Direct Subsidized Loan for a period of enrollment that is shorter than a full academic year, the period that counts against your maximum usage period will generally be reduced accordingly. With one exception, the amount of a Direct Subsidized Loan you receive for a period of enrollment does not affect how much of your maximum eligibility period you have used. That is, even if you receive a Direct Subsidized Loan in an amount that is less than the full annual loan lim it, that lesser amount does not reduce the amount of your maximumm eligibility period you have us ed. The one exception applies if you receive the fu ll annual loan limit for a loan period that does not cover the whole academ ic year. In that case, the loan will count as one year against your maximum eligibility period regardle ss of your enrollment status (half- time, three-q uarter time, or full- time). For example, if you are a full -time student and you receive a Direct Subs i dized Loa n that covers the fall semester but not the spring semester, this will cou nt as one- half of a year against your maximum eligibility period. 19

22 Effect of borrowing while enrolled part-time If you receive a Direct Subsidized Loan when you are enrolled less than full- time, the period that is counted against your maximum eligibility period will be reduced. For example, if you are enrolll ed h alf- time and receive a Di rect Subsidized Loan for a period of enrollment that covers a full academic year, this will count as only one-half of a year a gainst your maximum eligibility peri od. L oss of eligibility for additional D irect Subsidized Loans a nd becoming responsible e for paying interest on Direct Subsidized Loans After you have received Direct Subsidized ized Loans for your maximum eligibility period, you are no longer eligible to receive additional Direct Subsidized ized Loans. However, you may continue Direct Subsidized Loans for your maximumm eligibility period, w e will no longer (with certain exceptions) pay the interest that accrues on your Direct Subsidized Loans for periods when to receiv e Direct Unsubsidized Loans. we would normally would have done so. chart below p rovides examples of these T he In addition, if you continue to be enrolled in any undergrad rgraduate program after you have received circ umstance s. Do I becomee responsible for paying the in terest that accrues on my Dire ct Subsidized Loans Yes No because... I am no longer eligible for Direct Subsidized ized Loans and I stay enrolled in my current program? X I am no longer eligible for Direct Subsid ized Loans, did not graduate from my prior program, and X am enrolled in an undergraduate program that is the same length or shorter than my prior program? I transferred into the shorter program and lost eligibility for Direct Subsidized Loans because I have X re ceived Dire ct Subsidized loans for a pe riod that equals or exceeds my ne w, lower maximum eligibility period, w hich is based on the length of the new program? I was no longer eligible for Direct Subsid ized Loans, did not graduate from my prior program, and X am enrolled in an undergraduate pro gram that is longer than my prior program? I lose eligibility for Direct Subsidized Loans and immediately withdraw from my program? X I graduated from my prior program prior to or upon meeting the 150% lim it, and enroll in an X undergradu ate program that is the same length or shorter than my prior program? I enroll in a graduate or professional program? X I e nroll in p re paratory coursework that I am required to complete to enro ll in a graduate or X professional program? I enroll in a teacher certification program (where my school does not award an academic X credential)? Remember, your maximum eligibility period can change if you enroll in a different program. So, if you received Direct Subsidized Loans for your maximumeligibility period for one program and then enroll in a longer program, you will not become responsible for interest t that accrues on your Direct Subsidized Loans. If you meet any of the conditions on the prior page, y ou will become responsible for the interest that accrues on your Direct Subsidized Lo ans, from the date of your enrollment after meeting the 150% li mit, during periods when we would have normally paid the interest for you. Below is a chart that summarizes the periods when we normally pay the interest on your Dire ct Subsidized ized Loans, and an explanation and what happens a fter you become responsible for the interest. 2 of 3 20

23 During wh hat period am I responsible fo r paying the interest on my Direct Subsidized Loans... While enrolled in school at least half-time During my grace period on loans first disbursed (paid out) July 1, 2013 through June 30, 2014 During my grace period on loans first disbursed (paid out) July 1, 2014 or after During deferment periods During certain periods of repayment un der the Income- Base d Repayment or Pay As You Earn Plan During forbearance periods During all other periods of repayment Befor fore meeting the 150% limit? No Yes No No A fter me eting the 150% limit? Yes Yes Yes Yes No Yes Yes Yes Yes Yes If you be come responsible for the interest that accrues on your Direct Subsidized Loans, any interest that you do not pay will be capitalized (ad ded t o your loan principal balance) at the end of the grace, deferment, or other p eriods. Capitalized interest increases your loan principal, increases your monthly payment amount under most Direct Loan repayment plans, and causes you to pay more interest over the life of your loan. Your federa ral loan servicer will notify you if you become responsible for paying the interest on your Dire ct Subsidized Loans. Regaining eligibility for Direct Subsidized Loans If you become ineligible for Direct Subsidized Loans because you have received Direct Subsidized Loans f or your m aximum eligibility period, yo u may again become eligible to receive Direct Subsidized Lo ans if you enroll in a new program that is longer than your previous program. If you regain eligibility to receive additional Direct Subsidized Loans because you enrolled a program that is longer than your prior program and you previously became responsible for paying all of the interest that accrues on your Direct Subsidized Loans, we will pay the interest t that accrues on your new loan s d uring th e periods described in the ch ar t above. 3 of

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25 Appendix C Entrance Counseling Fact Sheet Entrance Counseling Requirements Entrance Counseling for Stafford and Grad PLUS Loan Borrowers A first-time Stafford and Grad PLUS loan borrower must complete entrance counseling prior to the disbursement of the student s first Stafford or Grad PLUS loan installment. The borrower must be provided with comprehensive information on loan terms and conditions and borrower responsibilities during an in-person counseling session, on a separate form the borrower must sign and return to the school, or as part of an online presentation provided the borrower acknowledges receipt of the information. If entrance counseling is conducted online, the school must ensure the borrower receives the materials and completes the counseling, which could include completion of interactive testing on the borrower s understanding of the loan terms and conditions. Stafford loan entrance counseling must contain information about*: Use of the Master Promissory Note. Importance/seriousness of repaying the loan. Consequences of default (adverse credit, litigation, federal delinquent debt collection procedures, federal offset). Requirement to repay the loan even if the borrower does not complete his program of study or complete his program within the normal time frame for completion, can t find a job or is otherwise unhappy with his school. Sample monthly payment amounts based on a range of debt of Stafford loan borrowers (or Stafford loan and PLUS loan borrowers, if borrowers have both loan types) or the average debt of other borrowers in the same program at the same school. The option to pay interest that accrues on unsubsidized Stafford and Grad PLUS loans while in school, and information explaining how interest accrues and is capitalized when not paid. The effect of accepting the loan on the borrower s eligibility for other types of aid. The definition of half-time enrollment during regular and summer terms and the consequences of not maintaining at least half-time enrollment. The importance of contacting the appropriate school offices if the borrower withdraws so that exit counseling can be provided, including information on repayment options and loan consolidation. Information on the National Student Loan Data System and how the borrower can access his information. The name and contact information the borrower can use to ask questions about loan terms and conditions or rights and responsibilities. *Loan counseling for first-time borrowers on or after July 1, 2013, also must contain information about: How the Department determines the maximum eligibility period, remaining eligibility period and subsidized usage period. Limit on eligibility for subsidized Stafford loans to no more than 150 percent of the published length of the program. Possible loss of eligibility for subsidized Stafford loans if the borrower exceeds the maximum timeframe. Possible responsibility to pay interest that accrues on subsidized Stafford loan(s) already disbursed if the borrower exceeds the maximum timeframe. How accruing interest affects the borrower s total loan debt. Possible future accrual of interest may affect prior subsidized Stafford loans and subsidized portions of Consolidation loans during the in-school and grace periods, periods of authorized deferment and certain periods during which subsidized Stafford loans are repaid under the income-based and Pay As You Earn repayment plans if the borrower exceeds the maximum timeframe. 23

26 Grad PLUS entrance counseling must contain information about*: Sample monthly payment amounts based on a range of debt of Grad PLUS loan borrowers (or PLUS loan and Stafford loan borrowers, if the borrower has both loan types) or the average debt of other borrowers in the same program at the same school. The option to pay interest on the PLUS loan while in school. If the borrower has a prior Stafford loan: Maximum interest rate for both loan types. Periods when interest accrues for both loan types. When repayment begins for both loan types. If the borrower does not have a prior Stafford loan: Use of the MPN. Importance/seriousness of repaying the loan. Consequences of default (adverse credit, litigation, federal delinquent debt collection procedures, federal offset). Requirement to repay the loan even if the borrower does not complete his program of study or does not complete his program of study within the normal time frame for completion, can t find a job or is otherwise unhappy with his school. The effect of accepting the loan on the borrower s eligibility for other types of aid. Information explaining how interest accrues and is capitalized when not paid and the borrower s option to pay interest on unsubsidized Stafford and PLUS loans while enrolled. The definition of half-time enrollment during regular and summer terms and the consequences of not maintaining at least half-time enrollment. The importance of contacting the appropriate school offices if the borrower withdraws so that exit counseling can be provided, including information on repayment options and loan consolidation. Information on NSLDS and how the borrower can access his information. The name and contact information the borrower can use to ask questions about loan terms and conditions or rights and responsibilities. 24

27 Appendix D Exit Counseling Fact Sheet Exit Counseling Requirements Exit Counseling for Stafford and Grad PLUS Loan Borrowers A school must conduct exit counseling before a borrower ceases to be enrolled at least half time. If the borrower fails to complete exit counseling as scheduled, the school must ensure that the borrower participates in counseling provided via interactive means or it must mail the exit counseling materials to the borrower s last known address within 30 days after the school learns the borrower did not complete the scheduled counseling. Exit counseling must contain information about*: Use of the Master Promissory Note. Importance/seriousness of repaying the loan. Consequences of default (adverse credit, litigation, federal delinquent debt collection procedures, federal offset). Requirement to repay the loan even if the borrower does not complete the program of study or does not complete the program of study within the normal time frame for completion, can t find a job or is otherwise unhappy with the school. Average monthly payment amount based on the student s debt or average indebtedness of Stafford or Grad PLUS loan borrowers at that school (or borrowers with Stafford and Grad PLUS loans, if the borrower has both loan types). All available repayment options and the different features of each plan, including sample monthly payment amounts and the difference in interest and total payments under each plan. Debt management strategies that are designed to facilitate repayment of the loan and explain the borrower s option to prepay, pay on a shorter repayment schedule and change repayment plans. Forbearance, deferment and loan discharge information, including discharge benefits for a Federal Family Education Loan Program borrower who consolidates into the Federal Direct Loan Program. Ombudsman contact information. Information on the National Student Loan Data System and how the borrower can access loan information, and how to use NSLDS to identify which loan servicer is servicing each outstanding loan, and how NSLDS can be used to obtain loan status information, and a copy (paper or electronic) of information the Department of Education makes available under 485(d) of the Higher Education Act. Information about loan consolidation including: The effect on interest and fees to be paid and the length of repayment. The effect on the benefits of underlying loans such as grace periods, deferment, cancellation and forgiveness. The option to prepay, accelerate payment and change repayment plans. Certain tax filers may qualify for tax deductions based on payment of interest on student loans. In addition, the school must collect from the borrower: Name. Address. Social Security number. References. Driver s license number and state. Expected permanent address. Address of next of kin. Name and address of expected employer. *Loan counseling for first-time borrowers on or after July 1, 2013, also must contain information about: How the Department determines the maximum eligibility period, remaining eligibility period and subsidized usage period. The sum of the student s subsidized usage periods at the time exit counseling is provided. The possible loss of eligibility for subsidized Stafford loans. How the borrower may use NSLDS to determine if he is responsible for accruing interest on a subsidized Stafford loan(s) and if the borrower has remaining eligibility for subsidized Stafford loans. The consequences of continued Stafford loan borrowing and enrollment in additional undergraduate programs. The possible responsibility to pay accruing interest on subsidized Stafford loans and subsidized portions of Consolidation loans during in-school, grace and deferment periods as well as certain periods of repayment under the income-based or Pay As You Earn repayment plans. The impact of accruing interest on total borrower debt. F 25

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30 Special Note These materials are for the benefit of financial aid professionals and other campus administrators. They are intended to provide current facts and information and are not intended to be legal advice. These materials contain information related to Federal Title IV student aid programs and have neither been reviewed nor approved by the U.S. Department of Education. You are encouraged to seek your own competent legal counsel in connection with the topics covered in these materials. USA Funds disclaims all responsibility for any claim arising from reliance on the information provided. Copyright 2013 United Student Aid Funds, Inc. All Rights Reserved. Questions regarding the content of this publication should be addressed to USA Funds University, P.O. Box 6028 Indianapolis, IN or by calling (317)