The “New” 150% Rule

150 % - it’s now more than just SAPSubsidized Loan Limits and new COD & NSLDS Reporting Requirements

Christian Zimmermann

College of Southern Maryland

2014 Tri-State Fall Conference

November 11, 2014

Agenda

• The 150% Limit• Who does this effect & what are the consequences?• Determining Interest Subsidy Usage

• Maximum Eligibility Period vs. Subsidized Usage Period• Loss of Interest Subsidy – Triggers

• COD Reporting Requirements• New requirements in 2014-15• Other COD changes

• NSLDS Reporting Requirements• New requirements in 2014-15• Other NSLDS changes

• Additional Resources

What is the 150% rule?

• Implemented as part of the Moving Ahead for Progress in the 21st Century Act (MAP-21, Public Law 112-141)

• Two major components:

• Added a new provision to the Direct Loan statutory requirements that “limits a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150 percent of the borrower’s educational program (“the 150% limit”).

• In addition, the provision also causes “borrowers who have exceeded the 150 percent limit to lose the interest subsidy” on their Direct Subsidized Loans.

Who Does The 150% Limit Effect?• First Time Borrowers on or after July 1, 2013

• An individual who no outstanding balance on a Direct Loan or FFEL Program loan as of July 1, 2013, or

• On the date the borrower obtains a Direct Loan after July 1, 2013

• Who is responsible for determining “first-time borrowers”?• ED will determine who is a “first-time” borrower• This information will be communicated to borrowers and institutions

“First-Time” Borrower Examples

Student has never borrowed

before

Student enrolls in August 2013

Student receives a

Direct Loan

Student is a first-time borrower

Student received FFEL / Direct

Loans prior to July 1, 2013

Student pays off all FFEL / Direct Loans in 2014

Student enrolls in January 2015

Student receives a new Direct Loan

in Spring 2015

Student is a first-time borrower

Example A

Example B

“First-Time” Borrower Examples

Student A • Graduated with Bachelor’s

Degree in 2003• Borrowed through FFEL program • As of July 1, 2013 has $5,000 in

remaining loan balance• Enrolls in a undergraduate

certificate program for Fall 2013

Is he considered a first time borrower?

Student B• Graduated with Bachelor’s Degree in

2003• Borrowed through FFEL program • As of July 1, 2013 has $5,000 in

remaining loan balance• Pays off remaining loan balance Nov

1, 2013• Enrolls in a undergraduate certificate

program for Spring 2014

Is she considered a first time borrower?

“First-Time” Borrower Examples - continuedStudent A • Graduated with Bachelor’s Degree

in 2012• Received the equivalent of 400%

Pell LEU • Never borrowed through Direct

Loan or FFEL Program• Enrolls in a undergraduate

certificate program for Fall 2013

Is he considered a first time borrower?

Student B• Graduated with Bachelor’s Degree in

2003• Borrowed through FFEL program • As of July 1, 2013 has $5,000 in

remaining loan balance• Pays off remaining loan balance Nov

1, 2013• Enrolls in a graduate certificate

program for Spring 2014

Is she considered a first time borrower?

Consequence 1: Eligibility Loss

• A borrower loses eligibility for additional Direct Subsidized Loans when the borrower has received Direct Subsidized Loans for 150% of their current academic program.

• Generally measured in time, not dollars

• If Subsidized Loan eligibility is lost, borrower remains eligible for Unsubsidized Loans.

When Is Eligibility Lost?

Maximum Eligibility Period

All Subsidized

Usage Periods

Remaining Eligibility Period

150% limit is met and further eligibility is lost when Remaining Eligibility Period is zero (or less).

Maximum Eligibility Period

• Maximum Eligibility Period is 150% of the published length of the borrower’s current or upcoming academic program

• Varies by program• Multiply published length of program by 1.5• Measured in academic years or portions• ED will calculate using school –reported information

Maximum Eligibility Period Examples

1 year certificate program 2 year Assoc. Degree 4 year Bachelor Degree

Converting Months/Weeks To Years• If program’s published length is in months or weeks, ED will convert to

years (or portions of years):

• Month = 30 days• Week = 7 days

Days in Program

Days in Title IV Academic Year= Program Length

Subsidized Usage Period

• A Subsidized Usage Period is the period of time for which a borrower receives a Direct Subsidized Loan

• Calculated on a loan-by-loan basis• Measured in academic years or portions• Rounded down to the nearest quarter of a year• Includes only periods when a Direct Subsidized Loan received• ED will calculate using school-reported information

• Ensure your institution is providing accurate information to COD / NSLDS

Calculating Subsidized Usage Period

Days in Loan Program

Days in Title IV Academic Year Subsidized Usage Period =

Loan Period:

Period of enrollment for which the loan is intended

Academic Year:

Period used to track annual loan limits (SAY/BBAY)

Example: Subsidized Usage

• Program is semester-based. Scheduled academic year includes the fall and spring semesters. Student receives loan for fall semester only.

Days in Loan Program

Days in Title IV Academic Year Subsidized Usage Period =

Begin Date End Date Number of Days

Loan Period August 27, 2014 December 21, 2013 117

Academic Year August 27, 2014 May 17, 2014 264

117264 Subsidized Usage Period = = 0.44 Years

Round down to

nearest quarter year= 0.25 Years

Enrollment Status Exception

• Calculated subsidized usage period is prorated by enrollment status

• Proration occurs before rounding

Full Time = 1.0

¾ Time = 0.75

½ Time = 0.50

Example: Enrollment Status

• 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.

Days in Loan Program

Days in Title IV Academic Year Subsidized Usage Period =

Begin Date End Date Number of Days

Loan Period August 27, 2014 May 17, 2014 264

Academic Year August 27, 2014 May 17, 2014 264

264264 Subsidized Usage Period = = 1.00 Year

Prorate

due to enrollment= 0.50 Years

Annual Loan Limit Exception

Only circumstance when dollars are considered is when a student receives a Direct Subsidized Loan in the amount of the annual loan limit.

Can only occur for standard-term programs or for non-standard-term programs that are substantially equal and are each at least 9 weeks in length

Received for less than 1 AY

Subsidized Usage Period =

1 Year

Borrow full annual loan

limit

Example: Annual Loan Limit

• Program is semester-based. Scheduled academic year includes the fall and spring semesters. Second year student receives loan of $ 4,500 for fall semester only.

Days in Loan Program

Days in Title IV Academic Year Subsidized Usage Period =

Begin Date End Date Number of Days

Loan Period August 27, 2014 December 21, 2013 117

Academic Year August 27, 2014 May 17, 2014 264

117264 Subsidized Usage Period = = 0.44 Years

annual

loan limit= 1.00 Years

Reminders

The Department of Education will calculate Subsidized Usage Period based on information submitted by school.

The school needs to ensure they are submitting the correct information to COD.

If loan period changes from original submission to COD, school must update loan record (Examples: student doesn’t enroll for 2nd semester of loan, student cancels all of a disbursement in a payment period, student borrows loan funds in summer term after borrowing in fall &/or spring)

Consequence 2: Interest Subsidy LossMAP-21 established circumstances in which a new borrower may lose eligibility for interest subsidy for previously disbursed Subsidized Loans.

• From the Federal Register: “Establishing new Direct Loan Program regulations that provide that new borrowers who are ineligible for Direct Subsidized Loans as a result of these provisions and enroll in a program for which the borrower would otherwise be eligible for a Direct Subsidized Loan become responsible for accruing interest on all previously received Direct Subsidized Loans during all future periods, beginning on the date of the triggering enrollment.”

What does that mean?

Loss of Interest Subsidy Benefits

No Remaining Eligibility

Period

No Program Completion

Enroll in a new payment

period

Subsidy Loss

Enrollment Types: Subsidy Loss

1 2 3

Student lost eligibility

Student lost eligibility

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

Examples of Interest Subsidy LossDoes the student become responsible for paying the interest that accrues on my Direct Subsidized

Loans because . . .Yes No

They are no longer eligible for Direct Subsidized Loans and stay enrolled in their current program? They are no longer eligible for Direct Subsidized Loans, did not graduate from their prior program, and are enrolled in an undergraduate program that is the same length or shorter than their prior program?

They transferred into the shorter program and lost eligibility for Direct Subsidized Loans because they have received Direct Subsidized loans for a period that equals or exceeds their new, lower maximum eligibility period, which is based on the length of the new program?

They were no longer eligible for Direct Subsidized Loans, did not graduate from their prior program, and are enrolled in an undergraduate program that is longer than their prior program?

They lose eligibility for Direct Subsidized Loans and immediately withdraw from their program? They graduated from their prior program prior to or upon meeting the 150% limit, and enroll in an undergraduate program that is the same length or shorter than their prior program?

They enroll in a graduate or professional program? They enroll in preparatory coursework that they are required to complete to enroll in a graduate or professional program?

They enroll in a teacher certification program (where their school does not award an academic credential)?

X

X

X

X

X

X

X

X

X

Periods of Interest Subsidy

• Borrower with interest subsidy:

• Borrower who lost interest subsidy:

In School Grace Repay – Std. Deferment ForbearanceRepay

IBR/PAYE

In School Grace Repay. – Std. Deferment Forbearance Repay IBR/PAYE

Subsidized Period

Unsubsidized Period

Reminders

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.

COD Reporting Requirements

• Prior to 2014-15 schools were responsible for reporting:• Loan Period Dates• Academic Year Dates

• Starting in 2014-15 schools must report the following:• CIP• Credential Level• Program Length• Length of Title IV Academic Year• Flag for Prep Coursework / Teacher Certification• Enrollment Status (full-time ¾ time, ½ time)• Payment Period Begin Date

• Effective date: July 1, 2014

COD Reporting Requirements

Institutions must ensure academic programs are properly set up in student information system (Banner, Colleague, Powerfaids, etc.)

• Are your academic programs Title IV “eligible”?• Do the program lengths in SIS match the catalog?• Do the academic programs have the correct CIP codes?

• Use the CIP 2010 Crosswalk (http://nces.ed.gov/ipeds/cipcode/crosswalk.aspx?y=55)

If institution has Gainful Employment programs, similar setup.

COD Reporting Requirements

COD Reporting Requirements

Changes to COD

• If the borrower is subject to 150% subsidized usage period:• Loan will be rejected at the origination if Subsidized Usage Period >

Remaining Eligibility Period

• Whenever a school submits an origination or disbursement record COD will

• Calculate Subsidized Usage Periods, including the new loan• Inform school of borrower’s Maximum Eligibility, Subsidized Usage, and

Remaining Eligibility Periods

• COD will inform the borrower in a disclosure statement

NSLDS Reporting Requirements

• Previous Reporting Requirements• Enrollment Status – ½ time and Full-time

• New Program Level Reporting Requirements – Effective October 1, 2014• CIP• Credential Level• Program Length• Length of Title IV Academic Year• Flags for Prep Coursework & Teacher Certification• Enrollment Status – ½ time, Full-time & ¾ time

• 60-day enrollment reporting requirement – Effective July 1, 2014

• Dear Colleague Letter GEN-14-07

Changes to NSLDS

• Modified professional access and student view to display 150%-related information

• Modified reports available to schools to include 150%-related information

• Pass information about student’s current Subsidized Usage Period and whether the student has lost interest subsidy to CPS, for inclusion on the SAR/ISIR

• Inform Direct Loan servicers of borrowers enrollment and loss of interest subsidy

Changes to NSLDS

Additional Resources

• IFAP 150% Direct Subsidized Loan Limit Info (right column) of homepage (http://ifap.ed.gov/150PercentDirectSubsidizedLoanLimitInfo/index.html)

• Loan Period & Academic Year Information: DCL GEN-13-13, GEN-14-07, GEN-14-17

• 150% Direct Subsidized Loan Limit – Electronic Announcements: #1-15• Additional COD System Implementation for the 2013-2014 Award Year

(updated June 28, 2013)• 2014-2015 COD Technical Reference• Updated NSLDS Enrollment Reporting Guide (July 23, 2014)• 150% Limit Training http://ifap.ed.gov/150PercentDirectSubsidizedLoanLimitInfo/Training.html

Thank You