Academic Years, Academic Calendars, Payment Periods, and Disbursements

This chapter discusses the academic year, academic calendar, payment period, and disbursement requirements for awarding aid across the Federal Student Aid (FSA) programs. Additional information about requirements for particular FSA programs is provided in Volumes 6 through 9.

Every eligible program must have a defined academic year. A school may have different academic years for different academic programs. For example, a school may choose to define the academic year for a term-based program differently from a non-term program. In some cases, the academic year definition must be different for different programs, such as in the case of a clock-hour program and a credit-hour program. For FSA purposes, the academic year is defined in weeks of instructional time and credit or clock hours. The program’s academic year does not have to coincide with the school’s academic calendar (see “Academic year definition and effect on awards” later in the chapter). A school may treat two versions of the same academic program (day and night, for example) as separate programs and define different academic years for each version. If a school establishes separate versions of a program, with different academic years, but allows individual students to take courses from both versions, it must be able to demonstrate in which program the student is actually enrolled. Generally, to be considered enrolled in a particular program or version of a program, a student must be taking the majority of their coursework in that program. Although a school may have different academic years for different programs, it must use the same academic year definition for all FSA awards for students enrolled in a particular program, and for all other FSA program purposes.

For both undergraduate and graduate programs, the law and regulations require an academic year to include a minimum number of weeks of instructional time.

Note: See Volume 2 for information about academic year requirements for direct assessment programs, which do not measure academic progress using credit or clock hours. The number of weeks of instructional time is based on the period that generally begins on the first day of classes in the academic year and ends on the last day of classes or the last day of examinations, whichever is later. Schools that provide 2- or 4-year associate or baccalaureate degree programs may apply to the Department if they want to request approval to establish a full academic year of less than 30 weeks of instructional time. The Department is permitted to grant a reduction for good cause to no less than 26 weeks of instructional time. These requests are handled on a case-by-case basis. To request approval, contact the School Participation Division that oversees your school (see Volume 2).

For all FSA programs, a week of instructional time is any period of seven consecutive days in which –

The term "asynchronous coursework" refers to coursework that students generally complete on their own schedule, at any time. This is in contrast to "synchronous coursework," in which students and their instructors are in communication at the same time. For information on distance education and correspondence coursework, see Volume 2. Instructional time does not include scheduled breaks and activities not included in the definition of "academic engagement" (see Volume 5 for more information) or periods of orientation or counseling. Therefore, the weeks of instructional time may be less than the number of calendar weeks that elapse between the first day of classes and the last day of classes or examinations. Note that the Department has not set a regulatory standard for the number of hours of instructional time that make up one day of instruction. This has been left to the reasonable interpretation of schools and their accrediting agencies. Although most programs are at least one academic year in length, some eligible programs are shorter than an academic year. See Volume 2, Chapter 2 for more detail on the requirements for such programs.

Weeks of instructional time:

For undergraduate educational programs, the law and regulations set the following minimum standards for coursework earned by a full-time student in an academic year:

For graduate and professional programs, there is no minimum number of hours in an academic year.

The FSA academic year that a school defines for a program must meet the regulatory minimums for both clock or credit hours AND weeks of instructional time, as described above. In some instances, the defined academic year for a program may not coincide with the academic calendar of the school. For example, a school might define the academic year for a program as containing 24 semester hours and 30 weeks of instructional time but have an academic calendar consisting of four 8-week nonstandard terms (i.e., 32 weeks of instructional time). This would affect the calculation of Pell Grant awards, as explained in Volume 7. As discussed later in this chapter and in Volume 8, the timing of disbursements and, for the Direct Loan Program, annual loan limit progression will be affected if a program is an academic year in length in credit or clock hours but not in weeks of instructional time, or for a program longer than an academic year in length, if a student’s completion of the credit or clock hours in the program’s academic year does not coincide with completion of the weeks of instructional time in the academic year.

Schools offer programs with many kinds of academic calendars that differ from the traditional fall-spring school year. For the FSA programs, academic calendars may be one of the following types:

In a standard term or nonstandard term academic calendar, a term is generally a period in which all classes are scheduled to begin and end within a set time frame, and academic progress is measured in credit hours. In a non-term academic calendar, classes do not begin and end within a set time frame, such as a term. Academic progress in a non-term program can be measured in either credit or clock hours. In some cases (as discussed below), a program with terms must be treated as a non-term program for FSA purposes. A subscription-based academic calendar is used only by subscription-based programs. A subscription-based program is a term-based program in which the school charges a student for each term on a subscription basis with the expectation that the student will complete a specified number of credit hours (or the equivalent) during that term. However, classes in a subscription-based program are not required to begin or end within a specific timeframe in each term, as is the case in a term-based calendar that is not subscription-based. For more detail on subscription-based programs, see Volume 2. A subscription-based academic calendar consists of "subscription periods" that are either standard terms or substantially equal nonstandard terms (for guidance on when terms are considered to be substantially equal in length, see “Payment periods for programs using standard terms or substantially equal nonstandard terms” later in this chapter). Substantially equal nonstandard terms may be of any length, but if they are not at least nine weeks in length, the program must use BBAY 3 for purposes of monitoring Direct Loan annual loan limit progression (see Volume 8 for more information on BBAY 3). Nonstandard terms that are not substantially equal in length are not permissible in a subscription-based academic calendar. The term "subscription period" is synonymous with "term" and "payment period" (payment periods are covered later in this chapter). Except for the fact that classes are not required to start and end within a term, the rules and requirements for term-based programs that are not subscription-based also apply to subscription-based programs. These requirements include:

Whether an academic calendar is standard term, nonstandard term, non-term, or subscription-based has implications for how aid is awarded and disbursed under the FSA programs.

Semesters and trimesters contain between 14 and 21 weeks of instructional time. However, a summer term in a program using semesters or trimesters may contain fewer than 14 weeks. An academic calendar that uses semesters or trimesters traditionally has three terms, one each in the fall, spring, and summer, two of which comprise an academic year. For example, in a program using an SAY calendar, fall and spring would comprise an academic year. In a program using a BBAY calendar, an academic year could consist of any two consecutive terms such as spring-summer or summer-fall. Academic progress is measured in semester or trimester credit hours, and full time is at least 12 semester or trimester credits. Quarters contain between nine and 13 weeks of instructional time. As with programs using semesters or trimesters, a summer term in a quarterbased program may contain fewer than nine weeks. An academic calendar using quarters typically includes four terms in the fall, winter, spring, and summer, three of which comprise an academic year. For example, the fall, winter, and spring quarters would comprise an academic year in a program using an SAY calendar. In a program using a BBAY calendar, an academic year could be any three consecutive terms, such as spring-summer-fall, or summer-fall-winter. Academic progress is measured in quarter credit hours, and full time is at least 12 quarter credits.

Semesters and quarters may contain as few as 14 and nine weeks, respectively. Therefore, a school that defines the academic year for a program as 24 semester hours or 36 quarter hours and 30 weeks of instructional time could have fall and spring semesters of 14 weeks each, resulting in 28 weeks of instruction, or fall, winter, and spring quarters of nine weeks each, resulting in 27 weeks of instructional time. However, because the academic year for a program that measures academic progress in credit hours must include a minimum of 30 weeks of instructional time, a school with such an academic calendar would be required to calculate Pell Grant awards using either Pell Grant Formula 2 or Pell Grant Formula 3 (see Volume 7). For Direct Loan purposes, two 14-week semesters or three 9-week quarters could not constitute an SAY or BBAY, since the number of weeks of instructional time in an SAY or BBAY must generally meet the minimum 30-week statutory requirement (see Volume 8). In order for its fall and spring semesters or fall, winter, and spring quarters to comprise an SAY or BBAY, the school would need to modify its calendar to ensure that there are at least 30 weeks of instruction in the fall and spring semesters or fall, winter, and spring quarters combined (for example, a 16-week fall semester and a 14-week spring semester). Standard terms need not be of equal length. For example, a school could offer a program using semesters with the academic year consisting of a 14-week fall semester and a 20-week spring semester, or a program using quarters with the academic year consisting of a 13-week fall quarter, a 9-week winter quarter, and an 11-week spring quarter. In addition, the number of weeks in a standard term may vary from year to year during the course of a program. For example, a school could offer a two-year program with the first academic year consisting of two 15-week semesters, and the second academic year consisting of two 20-week semesters. In a standard term academic calendar, a term may contain an occasional class or classes that are longer than the normal term or that begin or end beyond the normal start or end date of the term, as long as the class or classes do not overlap another term (see below). However, if classes routinely extend a week or more beyond the normal term start or end dates, the school must revise the official length of the term. Generally, if the combined length of a term and an extended class or classes is greater than the maximum number of weeks allowed for a standard term, the program must be considered a nonstandard term program for FSA program purposes. For example, if a 17-week semester contains a class that does not end until five weeks after the normal semester end date, the term must be considered nonstandard, because the combined length of the term and the extended class is 22 weeks, which exceeds the maximum 21 weeks permitted for a semester. There is an exception to this general rule for standard quarters that are 12 weeks in length. A 12-week quarter may still be considered a standard term if it contains a class or classes that begin not more than two weeks before the official beginning date of the term or that end not more than two weeks after the official ending date of the term (for a total period not to exceed two weeks). For example, a 12-week quarter containing a class that extends two weeks beyond the normal term ending date may still be considered a standard term, even though the combined length of the term and the extended class (14 weeks) exceeds the maximum 13 weeks allowed for a quarter. The limited exception for 12-week quarters preserves a flexibility that was allowed under the policy on standard term length that was in effect prior to the implementation of the changes described in the November 5, 2019 Electronic Announcement. Under prior policy a quarter could not exceed 12 weeks, but a quarter with a class or classes that extended beyond the normal term beginning or ending dates by not more than two weeks could still be considered a standard term. Note that the requirements described above do not apply to standard terms in a subscription-based academic calendar. As explained earlier, classes in a subscription-based program are not required to begin and end within a term. Standard terms (including standard terms in a subscription-based program) may not overlap within a program. In addition, if an extended class overlaps another term in a program that is not a subscription-based program, the program’s academic calendar must be treated as non-term.

Except for subscription-based programs, in a program using a standard term academic calendar you may combine two or more consecutive shorter nonstandard terms (often called modules) and treat them as a single standard term such as a semester or quarter. For example, you might offer a program in a series of modules, each of which is six weeks in length, with students earning six quarter credits in each module. Although a single 6-week module could not constitute a quarter (because it contains fewer than the minimum nine weeks required for a quarter), you could choose to treat two consecutive 6-week modules as a single 12-week quarter. There are no modules in subscription-based programs for Title IV purposes.

In certain limited cases for academic programs offered in standard terms, a short nonstandard term may be combined with a preceding or following standard term and considered to be a single standard term. These short nonstandard terms are often called “intersessions.” For example, a program might be offered in an academic calendar consisting of two 15-week semesters, fall and spring, with a 4-week intersession between the two semesters. To consider the program as being offered in standard terms, you must combine the intersession with either the fall semester or the spring semester and treat the combined intersession and semester as a single term. If you choose to take this approach, the same treatment must be applied for all FSA purposes to all students enrolled in the program. In addition, hours taken in the intersession must count toward a student’s enrollment status for the combined term, and costs for the intersession must be included in the cost of attendance. In some cases, an intersession may partially overlap one or more standard terms. If the intersession overlaps just one standard term, you may still consider the program to be offered in standard terms if you combine the overlapping intersession with the standard term and treat that combination as a single term, as described above. If you choose not to combine an intersession with a standard term as described above and instead treat the intersession as a standalone term, or if an intersession partially overlaps more than one standard term, the program must be treated as a non-term program for Direct Loans, and a Formula 3 program for Pell Grants and Teacher Education Assistance for College and Higher Education (TEACH) Grants. Regardless of whether you treat an intersession as a standalone term or combine it with a standard term, you may not have a policy of prohibiting otherwise eligible students from receiving FSA program funds to cover costs associated with enrollment in the intersession. Intersessions are not permitted in subscription-based programs.

Periods of clinical work such as medical and education program work which is conducted outside the classroom may not be included in a standard term, unless all of the following apply:

If the clinical work meets all of the above criteria, terms which include such clinical work are not required to be considered nonstandard, nor are such programs required to be considered non-term, even if the clinical work overlaps another term. This flexibility is limited to required clinical periods associated with standard term programs in medicine (including, but not limited to, allopathic, osteopathic, nursing, veterinary, dentistry, pharmacy, and physical therapy), and student teaching required to obtain a state teaching certificate.

Generally, nonstandard terms are terms that are not semesters, trimesters, or quarters. For example, a 5-week term or a 23-week term would be considered a nonstandard term because no standard term can be fewer than nine weeks or greater than 21 weeks in length. Like standard terms, nonstandard terms may be equal in length or may be of different lengths. If a program is offered in a mixture of standard terms and nonstandard terms, the program is considered to be offered in nonstandard terms. Even if a school calls its terms semesters, trimesters, or quarters, they are considered to be nonstandard terms if they do not comply with the policy on standard term length, as described earlier. For instance, a 22-week semester or an 8-week quarter must be treated as a nonstandard term, because a semester cannot contain more than 21 weeks and a quarter must include a minimum of nine weeks. Semesters, trimesters, or quarters are also considered to be nonstandard terms if academic progress is not measured in the manner normally associated with the type of term. For example, if a program is offered in 15-week semesters but measures academic progress in quarter credit hours, the semesters would be considered nonstandard terms.

A program that measures progress in clock hours is always treated as a non-term program. Except for subscription-based programs, a program that measures progress in credit-hours is considered to be using a non-term calendar if it has:

The payment period is applicable to all FSA programs except the Federal Work-Study (FWS) Program. For example, FSA program disbursements (except FWS payments) must be made on a payment period basis, as discussed in detail later in this chapter. Another example is that a student’s satisfactory academic progress (SAP) evaluation must correspond with the end of a payment period. The definition of a payment period depends on the kind of academic calendar your school uses and the FSA program for which you are disbursing funds. For reference, the payment period definitions described in detail below are summarized in Table 1 at the end of this section.

For credit-hour programs with standard terms or with nonstandard terms that are substantially equal in length, the payment period is the term. Nonstandard terms are considered to be substantially equal in length if no term in a program is more than two weeks of instructional time longer than any other term in the program.

Nonstandard terms are considered to be not substantially equal in length if any nonstandard term in a program is more than two weeks of instructional time longer than another term in the same program. For the Pell Grant, TEACH Grant, and Federal Supplemental Educational Opportunity Grant (FSEOG) programs, the payment period for a credit-hour program with nonstandard terms that are not substantially equal in length is the term. For the Direct Loan Program, if a program has nonstandard terms that are not substantially equal in length, the payment period is the same as described below for clock-hour and non-term programs.

For all clock-hour programs and for credit-hour programs that do not have academic terms, payment periods are defined based on a student’s successful completion of clock or credit hours and weeks of instructional time, as described below. As noted earlier, these same payment period requirements also apply when disbursing Direct Loans to students enrolled in programs with nonstandard terms that are not substantially equal in length. A student successfully completes clock or credit hours if the school considers the student to have passed the coursework associated with those hours.

Although some schools offer clock-hour programs that are divided into terms for institutional purposes, for Title IV purposes all clock-hour programs are considered to be non-term programs. Therefore, the payment periods for clock-hour programs that a school divides into terms are determined in the same way as described above under “Payment periods for clock-hour and non-term programs.” Because a student enrolled in such a program must successfully complete all the clock hours in the payment period before the next payment period begins, the payment period starting dates may not coincide with the starting dates of the terms in the program.

In a clock-hour program, you are allowed to count a limited number of excused absences when deciding whether the student has completed the hours in a payment period. An excused absence may only be counted if the student is excused from hours that were actually scheduled, were missed, and do not have to be made up for the student to receive the degree or certificate for the program. For instance, a student in a program that has 450-clock-hour payment periods might miss 20 clock hours and only have attended 430 clock hours at the point where other students who did not miss any clock hours had received 450 clock hours of instruction. If your school has an excused absences policy, the 20 missed clock hours are considered excused, and this student could be paid the next disbursement. To be counted for FSA purposes, excused absences must be permitted in your school’s written policies, and the number of excused absences that may be counted when determining whether a student completed the hours in a payment period may not exceed the lesser of—

Except for FWS wages, FSA disbursements are made on a payment period basis as described below. Except when making late disbursements or retroactive payments for completed payment periods (as discussed in Volume 4, Chapter 2), you must disburse the Title IV funds during the payment period to which they apply.

As noted earlier in the chapter, for the Pell Grant, TEACH Grant, and FSEOG programs the payment period is the academic term for a student enrolled in a credit-hour program that uses any type of academic term (standard or nonstandard). For the Direct Loan Program, the payment period is the academic term only if the program uses standard terms or uses nonstandard terms that are substantially equal in length. If the program uses nonstandard terms that are not substantially equal in length, a school must use the non-term-based rules for Direct Loan disbursement timing, as discussed in the next section below. Except as noted above for the Direct Loan Program, there is no requirement for a student who is enrolled in a credit-hour term program that is not a subscription-based program to successfully complete a certain amount of coursework in a payment period before they can receive a disbursement of Title IV funds in the next payment period. For instance, a student could receive a Pell Grant or Direct Loan disbursement in the spring term after failing several courses in the fall term, provided that the student is still making satisfactory progress under the school’s policy.

A student who is enrolled in a credit-hour program without terms or in a clock-hour program must successfully complete both the credit or clock hours and the weeks of instructional time in a payment period before receiving a disbursement of Pell Grant, FSEOG, TEACH Grant or Direct Loan funds for the next payment period. For the Direct Loan Program only, this same requirement applies to students who are enrolled in programs with nonstandard terms that are not substantially equal in length.

The Pell Grant or TEACH Grant amount that a student is eligible to receive for a payment period in a clock-hour or non-term credit-hour program is based on the number of hours and weeks in the scheduled payment periods for the program that are established at the beginning of the program based on the program length (as described earlier in this chapter). These scheduled payment periods do not change, regardless of a student’s rate of progression through a clock-hour or non-term credit-hour program. This means that if a student completes additional weeks of instructional time or hours while completing the other measure of a payment period, the actual number of weeks or hours that the student completes before a disbursement can be made for the next payment period may differ from the number of weeks or hours in the scheduled payment period used to determine the student’s grant amount for the payment period. Although a student’s completion of additional weeks or hours in a payment period has no effect on the scheduled payment periods for purposes of determining Pell Grant and TEACH Grant payment amounts, an undergraduate student who accelerates in a clock-hour or non-term credit-hour program may have reduced Direct Loan eligibility in the final academic year of a program. Specifically, if a student enrolled in a program that is greater than one academic year in length completes additional clock or credit hours prior to the final academic year of the program, this may result in a final period of study that contains fewer clock or credit hours than the number of hours in the program’s defined academic year. In this circumstance, the Direct Loan annual loan limit for an undergraduate student must be prorated (reduced). The principles described above are illustrated by the examples in Appendix A at the end of this chapter. For guidance on calculating Pell Grant and TEACH Grant awards for clock-hour and non-term credit-hour programs, see Volume 7. For information on Direct Loan annual loan limit proration and annual loan limit progression in clock-hour and non-term credit-hour programs, see Volume 8. If your school is unable to determine when a student has successfully completed half of the credit or clock hours in a program, academic year, or remainder of a program, the student is considered to have begun the second payment period of the program, academic year, or remainder of a program at the later of the date (identified by your school) that the student has successfully completed:

For the first two subscription periods (terms) that a student attends in a subscription-based program, there is no requirement for the student to have completed a certain amount of coursework before receiving a disbursement of Title IV funds (the same as in any other term-based program using credit hours). However, to receive a disbursement of Title IV aid for each subsequent subscription period in the program, the student must have completed a cumulative number of credit hours equal to the total of the number of hours for which the student was enrolled in all previously attended subscription periods in the program, excluding the number of hours for which the student was enrolled in the most recently attended subscription period. For more detailed guidance on the disbursement rules for subscription-based programs, including examples, refer to Appendix B at the end of this chapter.

FSA regulations generally permit schools to pay FSA funds at such times and in such installments within each payment period as will best meet students’ needs. This gives schools the ability to apportion the payment if doing so will be in the best interest of the student. For example, if a payment period is particularly long, a school might choose to pay in multiple installments to the extent program requirements permit to ensure that a student will have funds to pay rent later in the payment period. If a school chooses to schedule multiple Direct Loan disbursements within a single payment period, the disbursements must be substantially equal. Note also that if the loan period for a Direct Loan is a single payment period, the loan must be disbursed in at least two installments unless the school qualifies for an exception to the multiple disbursement requirement. See Volume 8 for more information. Schools that use payment periods as the basis for their Return of Title IV Funds calculations should note that making multiple disbursements within a payment period does not create a new or additional payment period. See Volume 5 of the FSA Handbook for information on how withdrawal calculations handle multiple disbursements.

When a student is enrolled in a term-based program in which the terms are divided into two or more modules, but the student won’t attend the first module, the date when classes begin for making disbursements is the starting date of the first module that the student will actually attend. For example, the earliest the school can pay a student who is scheduled to begin attendance in the second of three 5-week modules that make up a semester is 10 days before the first day of the second module (or 30 days after the second module begins, if the student is a first-time, first-year borrower and the school does not meet the requirements for an exemption from the delayed disbursement requirement for such students, as described in Volume 4).

Progression through payment periods for disbursements (student cannot receive next disbursement until successful completion of BOTH hours and weeks in scheduled payment periods)

Progression through payment periods for disbursements (student cannot receive next disbursement until successful completion of BOTH hours and weeks in scheduled payment periods)

The scheduled payment periods are 12 semester hours and 15 weeks of instructional time, but the student in this example takes 18 weeks to complete the first 12 hours. Therefore, the second disbursements of the first Pell Grant award and the Direct Loan for the first academic year of the program cannot be made until the 19th week of instruction. This is because the next grant or loan disbursement cannot begin until the student successfully completes BOTH the credit or clock-hours and the weeks of instruction in the previous scheduled payment period. It takes the student another 18 weeks to complete the second 12 hours in the program, meaning that the first disbursements of the second Pell Grant award and the Direct Loan for the second academic year of the program cannot be made until the 37th week of instruction (corresponds to when the student officially enters the 3rd scheduled payment period). Based on the scheduled payment periods a student cannot enter the 4th payment period until the student has completed at least 45 weeks and 36 semester hours (12 semester hours and 15 weeks within each payment period). After the student has successfully completed 36 weeks of instruction and 24 semester hours, there are 24 weeks and 24 hours remaining in the program. The second disbursements of the second Pell Grant award and the Direct Loan for the second academic year of the program cannot be made until the student officially enters the 4th scheduled payment period, which occurs after the student has cumulatively completed 36 semester hours and 48 weeks. Remember that the Pell Grant amount the student is eligible to receive in each of the four payment periods is always based on the scheduled payment periods of 12 semester hours and 15 weeks of instructional time. Although the academic year for the program is defined as 24 semester hours and 30 weeks of instructional time, students are expected to complete the first 24 hours over 36 weeks of instructional time. To ensure that the loan period for the student’s first Direct Loan covers both measures of the defined academic year, the school must originate a loan for a loan period covering 36 weeks of instructional time. The Direct Loan for the second academic year of the program will be originated for a loan period covering 24 weeks of instructional time. Although this is fewer weeks than the number of weeks in the program’s defined academic year, the number of semester hours remaining in the program (24) equals the number of hours in the academic year. Therefore, proration of the Direct Loan annual loan limit is not required.

Progression through payment periods for disbursements (student cannot receive next disbursement until successful completion of BOTH hours and weeks in scheduled payment periods)

The scheduled payment periods are 12 semester hours and 15 weeks of instructional time. The second disbursements of the first Pell Grant award and the Direct Loan for the first academic year of the program are made after the student has successfully completed BOTH the hours and weeks components of the first scheduled payment period. In this example, the student has earned 15 hours after completing the 15-weeks in the first scheduled payment period. The student then earns another 15 hours after completing the 15 weeks in the second scheduled payment period. After the student has successfully completed 30 weeks of instruction and 30 semester hours, there are 30 weeks and 18 hours remaining in the program. The first disbursements of the second Pell Grant award and the Direct Loan for the second academic year of the program cannot be made until the 31st week of instruction (corresponds to when the student officially enters the 3rd scheduled payment period). The second disbursements of the second Pell Grant award and the Direct Loan for the second academic year of the program cannot be made until the student officially enters the 4th scheduled payment period, which occurs after the student has cumulatively completed 39 semester hours and 45 weeks. Based on the scheduled payment periods a student cannot enter the 4th payment period until the student has completed at least 45 weeks and 36 semester hours (12 semester hours and 15 weeks within each payment period) As in Example 9, remember that the Pell Grant amount the student is eligible to receive in each of the four payment periods is always based on the scheduled payment periods of 12 semester hours and 15 weeks of instructional time. The student’s Direct Loan for the first academic year of the program will be originated for a loan period covering 30 weeks of instructional time, since a student will complete the hours in the defined academic year within that period. The student’s Direct Loan for the second academic year of the program will also be originated for a loan period covering 30 weeks of instructional time. However, because the number of semester hours remaining in the program (18) is less than the number of hours in the program’s defined academic year (24), the student is in a remaining period of study shorter than an academic year. Therefore, the Direct Loan annual loan limit for the second year of the program (the maximum Direct Loan amount the student may receive for the 3rd and 4th payment periods) must be prorated.

As we explained under “Disbursement timing in subscription-based programs” earlier in this chapter, there is no requirement for a student to have completed a specified amount of coursework before receiving a disbursement of Title IV funds for the first two subscription periods (terms) in a subscription-based program. However, to receive a disbursement for the third subscription period and for each subsequent subscription period in the program, a student must have completed a cumulative number of credit hours equal to the total number of hours for which the student was enrolled in all previously attended subscription periods in the program, excluding the number of hours for which the student was enrolled in the most recently attended subscription period. The cumulative number of hours that a student must have completed to receive a disbursement for the third subscription period and for each subsequent subscription period is based on the student's enrollment status for the program. Each subscription period that a student attends is associated with a number of credit hours based on the student's enrollment status. For example, if the program is a full-time program and the school's full-time standard is 12 semester or quarter hours, each subscription period will be associated with 12 hours. As a student progresses through a subscription-based program, the number of hours associated with each term are added to the cumulative total needed for the student to receive a disbursement. For the first two terms in a subscription-based program, a school can make a disbursement of FSA funds up to 10 days before the beginning of the subscription period. Beginning with the third subscription period, early disbursement 10 days before the beginning of the term is allowed only if at that point the student has completed the required number of credit hours to receive a disbursement for the term. Otherwise, the school cannot make a disbursement until the student has met the coursework completion requirement. Note that a student who has not begun attendance in any new coursework during a particular subscription period is ineligible to receive Title IV program funds for that period, even if the student would otherwise qualify to receive a disbursement based on coursework completion requirements. This means, for example, that although there is no coursework completion requirement for a student to receive a disbursement for the second term of a subscription-based program, the student would not be eligible for the disbursement if they simply continue attendance in coursework that they began during the first subscription period without having begun attendance in any new coursework during the second subscription period. If a disbursement is made to a student who did not begin attendance in any new coursework during a subscription period, the requirements described under "When a Student Fails to Begin Attendance" in Volume 4, Chapter 3 of the FSA Handbook would apply. Once the cumulative number of credit hours from earlier subscription periods that is required to receive a disbursement for a later subscription period equals or exceeds the total number of credit hours required to complete the program, a student is no longer eligible to receive FSA funds for the program. The principles described above are illustrated in the examples that follow.

As shown above, there is no coursework completion requirement for the student to receive a Title IV disbursement for the first and second subscription periods in the program.

To receive a disbursement for subscription period 3, the student must have completed a cumulative number of credit hours equal to the total number of credit hours for which the student was enrolled in all previously attended terms, excluding the number of hours for which the student was enrolled in the most recently attended term. Thus, the student cannot receive a disbursement for subscription period 3 until they have completed a total of 12 credit hours, the number of hours enrolled in subscription period 1. The 12 hours for which the student was enrolled in the most recently attended term (subscription period 2) are not counted.

To receive a disbursement for subscription period 4, the student must have completed 24 credit hours, the cumulative number of hours enrolled in subscription periods 1 and 2.

If the student has not completed the 48 hours in the program by the end of subscription period 4, they could receive FSA funds for one additional term, as shown below.

To receive a disbursement for subscription period 5, the student must have completed 36 credit hours, the cumulative number of hours enrolled in subscription periods 1, 2, and 3. The student is not eligible to receive any additional FSA funds after subscription period 5, because the cumulative number of hours required to receive a disbursement for the next subscription period would be 48, which is the total number of hours in the program.

As in Example 11, there is no coursework completion requirement for the student to receive a Title IV disbursement for the first and second subscription periods in the program.

The student changes to the half-time version of the program in the second academic year. However, because the course completion requirements to receive a disbursement for a subscription period are cumulative across multiple versions of the same program (full-time, half-time, etc.), the counting of the hours required for disbursement does not start over when a student changes to a different version of a program.

As in Example 11, the student must have completed a cumulative total of 12 credit hours (the number of hours enrolled in subscription period 1) to receive a disbursement for subscription period 3, and a cumulative total of 24 hours (the total number of hours enrolled in subscription periods 1 and 2) to receive a disbursement for subscription period 4. The student's change to the half-time version of the program in the second academic year does not affect the cumulative number of hours required to receive disbursements for subscription periods 3 and 4, because that number is based on the number of hours enrolled in subscription periods 1 and 2, when the student was enrolled in the full-time version of the program.

To receive a disbursement for subscription period 5, the student must have completed 30 credit hours, the cumulative number of hours enrolled in subscription periods 1, 2, and 3. (Note that as a result of the student's change to the half-time version of the program in subscription period 3, this is 6 fewer hours than the number of hours required to receive a disbursement for subscription period 5 in Example 11.) The student must have completed a cumulative total of 36 hours to receive a disbursement for subscription period 6.

If the student has not completed the 48 hours in the program by the end of subscription period 6, they would be eligible to receive aid for one additional subscription period, as shown below.

To receive a disbursement for subscription period 7, the student must have completed 42 credit hours, the cumulative number of hours enrolled in subscription periods 1, 2, 3, 4, and 5. The student is not eligible to receive any additional FSA funds after subscription period 7, because the cumulative number of hours required to receive a disbursement for the next subscription period would be 48, which is the total number of hours in the program.

For the first two subscription periods of the program, there is no coursework completion requirement for the student to receive a disbursement of FSA funds. Disbursements are made at the beginning of each subscription period.

To receive a disbursement for the third subscription period and for each subsequent subscription period in the program, the student must have completed a cumulative number of credit hours equal to the total number of hours for which the student was enrolled in all previously attended subscription periods in the program, excluding the number of hours for which the student was enrolled in the most recently attended subscription period. As shown above, for each of the three subscription periods in the second academic year of the program the student meets the course completion requirement to receive disbursements at the beginning of the term. For example, the student had completed a total of 21 credit hours by the end of subscription period #2, which exceeds the minimum 12 hours required to receive disbursements for subscription period #3.

In the third academic year of the program, the student meets the course completion requirement to receive disbursements at the beginning of subscription period #6. However, the disbursements for subscription period #7 must be delayed until the student has completed an additional three credit hours. This is because the student must have completed a cumulative total of at least 60 credit hours to receive disbursements for subscription period #7, but at the end of subscription period #6 the student had earned only 57 hours.

At the end of subscription period #7, the student has earned a cumulative total of 69 credit hours. Because 72 hours are required for the student to receive a disbursement in subscription period #8, the disbursements for that subscription period must be delayed until the student has complete an additional three hours. The student has earned a cumulative total of 84 hours at the end of subscription period #8, which is the number of hours required to receive a disbursement for subscription period #9. Therefore, the disbursements for the final subscription period in the program can be made at the beginning of the term.

In Example 14, the student meets the course completion requirements to receive disbursements at the beginning of each subscription period. For Direct Loan purposes, the school originates a single-term loan for subscription period #5 (i.e., the loan period beginning and ending dates correspond to the beginning and ending dates of the subscription period). Because the school does not meet the cohort default rate standard that would allow for a single-term Direct Loan to be disbursed in one installment, the student's Direct Loans for subscription period #5 must be disbursed in two substantially equal installments, with the second disbursement made at the calendar midpoint of the loan period. (Note also that because this subscription period is a remaining period of study that is shorter than an academic year, the Direct Loan annual loan limit must be prorated based on the six hours remaining in the program at the end of subscription period #4. See Volume 8 for information on Direct Loan annual loan limit proration). Because the student is enrolled in the full-time version of the program, the number of credit hours associated with subscription period #5 is 12. However, the student attends only six hours (the remaining number of hours in the program for Title IV purposes). The student's Pell Grant award for subscription period #5 is determined from the half-time schedule, and the student's enrollment status for that term is reported to the NSLDS as half-time. Note that even if the student has not completed the remaining six hours in the program by the end of subscription period #5, there is no aid eligibility after that term, because the cumulative number of hours that would be required to receive a disbursement for the next term is 48, which is the total number of hours in the program.

In Example 15, the student meets the coursework completion requirements to receive disbursements at the beginning of the first three subscription periods. However, at the end of subscription period #3 the student has completed a cumulative total of 21 hours, and 24 hours are required to receive a disbursement for subscription period #4. The school makes the disbursements for subscription period #4 after the student has completed an additional three hours. As in Example 14, the school originates a single-term loan for subscription period #5, which is a remaining period of study that is shorter than an academic year. The Direct Loan annual loan limit must be prorated based on the 21 hours remaining in the program as of the end of subscription period #4. The student must have completed a cumulative total of 36 hours to receive a disbursement for subscription period #5. During subscription period #5 the student completes only an additional six hours, resulting in a cumulative total of 33 hours completed. Therefore, the school makes the disbursements for subscription period #5 as late disbursements after the student has completed an additional three hours. Because the loan period is equal to a single payment period and more than half of the payment period has elapsed, the school may disburse the student's Direct Loan for subscription period #5 in a single late disbursement. After the student has earned the additional three hours required to receive late disbursements for subscription period #5 (resulting in a cumulative total of 36 hours completed), there are 12 hours remaining in the program. Note that there is no aid eligibility for the remaining 12 hours, because the cumulative number of hours that would be required to receive a disbursement for the next term is 48, which is the total number of hours in the program.