150% Limit on Direct Loan Interest Subsidy

Transcription

1 150% Limit on Direct Loan Interest Subsidy TASFAA 2015 Annual Conference Austin, Texas Rick Renshaw, FSA Training Officer Subsidized Loan Limit Statute: On July 6, 2012, the Moving Ahead for Progress in the 21 st Century Act (MAP-21) was enacted (P.L ) Regulations: Interim Final Regulations published on May 16, 2013 Revised Final Regulations published on January 16,

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

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

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

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

6 Subsidized Usage Subsidized Usage Subsidized Usage The period of time for which a borrower receives a Direct Subsidized Loan Calculated on loan-by-loan basis Measured in academic years and rounded to the nearest tenth of a year Includes only periods when Direct Subsidized Loan was received ED will calculate based on school-provided information 17 Loan & Academic Year Determine the Subsidized Usage Covered in DCL GEN-13-13, applies to all Direct Loans Loan period of enrollment for which borrower received loan Must be updated if student s actual enrollment or eligibility doesn t match originally reported loan period 18 6

7 Loan & Academic Year Academic year period to which the annual loan limit applies For credit-hour programs that use standard terms or non-standard SE9W terms, corresponds to calendar period of terms in SAY or BBAY For clock-hour programs or credit-hour programs that use non-standard NSE9W terms or do not use terms, corresponds to period of time required for borrower to complete a Title IV academic year s worth of coursework (BBAY) 19 Updating Loan s Student does not enroll for a payment period covered by the originally reported loan period Student withdraws from a payment period and all loan funds associated with the payment period are returned (R2T4) Student cancels all of a disbursement of a loan that is attributable to a payment period Student is not otherwise eligible for a loan for a payment period covered by the loan period 20 Updating Loan s - Continued The student (in clock-hour programs, nonterm programs, and non-standard term NSE9W programs) is not progressing to the next payment period as scheduled 21 7

8 Updating Academic Years Student is attending a program for which summer is not a required term, attends summer, and receives a loan for summer The student (in clock-hour programs, nonterm programs, and non-standard term NSE9W programs) is not progressing to the next payment period as scheduled 22 Calculating Subsidized Usage Number of days in the loan s loan period divided by number of days in the loan s academic Year Loan period Beginning and ending dates of period covered by loan Academic year Beginning and ending dates of the academic year used for annual loan limit progression Either a Scheduled Academic Year (SAY) or a Borrower Based Academic Year (BBAY) 23 Example 1: Usage Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for fall and spring semesters. Begin Date End Date Number of Days Loan August 27, 2015 May 17, Academic Year August 27, 2015 May 17,

9 Example 2: Usage Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for fall semester only. Begin Date End Date Number of Days Loan August 27, 2015 December 21, Academic Year August 27, 2015 May 17, Enrollment Status Exception Calculated Full-time = 1.00 subsidized usage period is prorated ¾-time = 0.75 by enrollment status ½-time = 0.50 Proration occurs before rounding 150% Direct Subsidized Loan Limit Electronic Announcement #8 Prorate Subsidized Usage based on enrollment status. 26 Example 3: Enrollment Status Exception Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for both semesters while enrolled half-time for both semesters. Begin Date End Date Number of Days Loan August 27, 2015 May 17, Academic Year August 27, 2015 May 17,

10 Annual Loan Limit Exception Only circumstance where dollars are considered is when a student receives a Direct Subsidized Loan in the amount of the annual loan limit. Borrow full annual loan limit Received for less than 1 AY Subsidized Usage = 1 Can only occur for standard-term programs or for non-standard-term programs that are substantially equal and are each at least nine weeks in length. 28 Example 4: Annual Loan Limit Exception Program is semester-based. Scheduled academic year includes the fall and spring semesters. Third year student receives loan of $5,500 for fall semester only. Loan August 27, 2015 Academic Year August 27, 2015 Begin Date End Date Number of Days December 21, May 17, Remaining 10

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

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

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

14 Example 1: Subsidy Loss Student received 6 years of Subsidized Loans while enrolled in a 4-year program. Student does not complete and enrolls for a 7 th year. No Remaining No Completion Enrolls Subsidy Loss Maximum All Subsidized Usage s Remaining Subsidy Loss 6 Years 6 Years 0 Years Yes, enrolled with no remaining eligibility and without completing 40 Example 2: Subsidy Loss Student is enrolled in a 2-year program and received 3 years of Subsidized Loans. Student enrolls for one more semester in the same program, and then transfers to a 4-year program. Before transfer Upon transfer Maximum 3 Years 6 Years All Subsidized Usage s 3 Years 3 Years Remaining 0 Years 3 Years Subsidy Loss Yes, borrower enrolled after eligibility loss. No, borrower enrolled in a longer program. Student regains eligibility to borrow Subsidized Loans upon transfer. Any new Subsidized Loans will have interest subsidy. Prior Subsidized Loans that lost subsidy do not regain subsidy. 41 Example 3: Subsidy Loss Student received 5 years of Subsidized Loans while enrolled in a 4-year program. Student completes the program and then enrolls in a 2-year program. No Remaining No Completion Enrolls Subsidy Loss End of year 5 Upon transfer Maximum 6 Years 3 Years All Subsidized Usage s 5 Years 5 Years Remaining 1 Year -2 Years Subsidy Loss No, borrower has remaining eligibility. No, borrower graduated from prior program

15 Example 4: Subsidy Loss Student received 5 full years of Direct Subsidized Loans while enrolled in a 4-year program. Student does not complete and then enrolls in a 2-year program. No Remaining No Completion Enrolls Subsidy Loss End of year 5 Upon transfer Maximum 6 Years 3 Years All Subsidized Usage s 5 Years 5 Years Remaining 1 Year -2 Years Subsidy Loss No, borrower has remaining eligibility. Yes, transfer caused borrower to exceed max. 43 Special Provisions Preparatory Coursework For Enrollment in an Undergraduate Program Maximum is 150% of program for which coursework is preparing. For Enrollment in a Grad/Professional Program Maximum is 150% of program for which borrower most recently received Direct Subsidized Loan. Subsidized Usage s count against maximum eligibility. Subsidized Usage s count against maximum eligibility. Enrolling could result in loss of interest subsidy. NOT possible to lose interest subsidy by enrolling

16 Non-Credential Teacher Certification Student enrolled in teacher certification coursework that does not lead to a credential offered by the school is eligible for Direct Loans Coursework must be required for certification by the state to teach elementary/secondary school Student may receive up to an annual loan limit of $5,500 in Subsidized DL for teacher certificate coursework 46 Non-Credential Teacher Certification Maximum eligibility period limited to 150% of published length of the teacher certification program Only subsidized loans received for teacher certification coursework are in included in the borrower s subsidized usage period Enrollment in teacher certification coursework counts only against the maximum eligibility period for the borrower s teacher certification coursework Enrollment in teacher certification coursework does not cause a borrower to become responsible for accruing interest on any subsidized loans 47 Loan Counseling 16

17 Entrance Counseling Resources StudentLoans.gov: December 2013 integrated information into counseling flow (entrance and exit) 150% EA #1: May 16, 2013 contains PDF of counseling information that is on StudentLoans.gov (may be used for entrance and exit) Resources/References The IFAP 150% Direct Subsidized Loan Limit Info webpage contains links to: Training materials DCLs, EAs and policy guidance Q & As address for questions 2014 FSATC Sessions GS4, #22, #23, and #27 Recorded 150% Loan Limit Webinars #4 and #5 Coming soon FSA Coach Intermediate course online training at the FSA E-Training Website 50 QUESTIONS? 17

18 My Contact Information Rick Renshaw Training Officer U.S. Dept. of ED Federal Student Aid Dallas Regional Office Help with Title IV Questions For Schools & Other Professionals Research and Customer Care Center (RCCC) For Students Federal Student Aid Information Center (FSAIC) FED-AID 53 My Supervisor Requests Your Feedback Mark Gerhard Supervisor of Training Officers U.S. Dept. of ED/Federal Student Aid Please use this link to complete your evaluation: Session Name: TASFAA % Sub Loan Limits 54 18