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(EDESuite) Subject: Guidance for EDExpress 2012-2013 Direct Loan Users to Exclude Subsidized Loan Eligibility for Graduate and Professional Students and Update Interest Rebate Calculation

Posted Date:March 29, 2012

Author: William Leith, Service Director, Program Management, Federal Student Aid

Subject: Guidance for EDExpress 2012-2013 Direct Loan Users to Exclude Subsidized Loan Eligibility for Graduate and Professional Students and Update Interest Rebate Calculation

As a result of the Budget Control Act (BCA) of 2011, two major changes impacting William D. Ford Federal Direct Loan (Direct Loan) processing are being implemented in 2012. First, Direct Subsidized Loans can no longer be awarded to graduate and professional students (college grade level 6 and 7) if the loan period begins on or after July 1, 2012. Second, the up-front interest rebate for all Direct Loan awards has been eliminated if the earliest disbursement date is on or after July 1, 2012.

While no changes are planned for EDExpress 2012-2013, Release 2.0 or subsequent releases to address either of these legislative mandates, we provide recommendations in this announcement on procedures schools can implement prior to originating loans to account for both issues. We also provide guidance on how to modify the rebate percentage on loan records at a variety of processing statuses.

Note: As explained in a February 28, 2012 Electronic Announcement, the Common Origination and Disbursement (COD) System will be updated in April and July 2012 to incorporate functionality addressing both legislative changes. Schools should hold Direct Loan awards with a first disbursement on or after July 1, 2012 until April 2012. Please monitor the Information for Financial Aid Professionals (IFAP) Web site for forthcoming Electronic Announcements related to the COD System releases.

Discontinuation of Subsidized Loan Eligibility for Graduate/Professional Students

When using EDExpress 2012-2013 Release 2.0, you should ensure you do not originate or export subsidized loans for graduate or professional students if the loan period starts on or after July 1, 2012. Later in 2012, the COD System will begin rejecting impacted records when they are received for processing.

If you create subsidized loan records by importing ISIR or Packaging data into the Direct Loan module, we recommend you apply selection criteria to your import that excludes students with a college grade level of 6 or 7 if the loan period begins on or after July 1, 2012. Disbursement profile codes are required for both import types, and each code includes the applicable loan period date range, so you should adjust your import criteria for college grade level accordingly depending on which disbursement profile you select on the import dialog box.

The Direct Loan module includes a predefined college grade level query you can use for this purpose, which will prompt you to enter a college grade level value to limit the import. Alternatively, you can create a custom query for a college grade level range (under Tools, Query, Direct Loan), such as college grade level = 0-5 or college grade level < 6, and then select the query as needed prior to importing data to create subsidized loan records.

If you create loan records manually or through external import from another system, we recommend you check the loan period start date and college grade level prior to entering or importing any subsidized loan records to ensure the student is eligible.

For more guidance on how you can modify Packaging setup to address this legislative change, see the January 11, 2012 Electronic Announcement posted to the IFAP Web site.

Interest Rebate Calculation Change

The Budget Control Act (BCA) of 2011 also stipulated that all Direct Loans (including subsidized, unsubsidized, PLUS, and Grad PLUS loan types) must be calculated with a 0% interest rebate percentage if the earliest disbursement occurs on or after July 1, 2012.

We recommend you define a process in your office to ensure you verify that the appropriate interest rebate percentage values are established in EDExpress 2012-2013 setup before you create loan records in the software. You can change the percentage settings as often as needed.

Before originating loan records with an earliest disbursement date on or after July 1, 2012, you must update the Sub/Unsub Interest Rebate Percentage and PLUS Interest Rebate Percentage fields manually in EDExpress Direct Loan setup (Tools, Setup, COD, School, Direct Loan) from the default values of 0.500 and 1.500, respectively, to 0.000.

Conversely, before you originate loans in EDExpress 2012-2013 with an earliest disbursement date prior to July 1, 2012, you must ensure that you change the Sub/Unsub Interest Rebate Percentage and PLUS Interest Rebate Percentage values in setup back to 0.500 and 1.500, respectively.

Note: If you import Prior Year User-Defined Queries, Setup, and File Formats from EDExpress 2011-2012 into EDExpress 2012-2013 with the COD School (Direct Loan School) checkbox selected, be aware that the default value for the Sub/Unsub Interest Rebate Percentage and PLUS Interest Rebate Percentage fields reverts to the 2011-2012 default values of 0.500 and 1.500.

Modifying the Rebate Percentage on Anticipated and Actual Direct Loan Disbursements

During the course of the 2012-2013 Award Year, you may need to adjust the rebate percentage on anticipated or actual disbursement records after creating and originating the loan. Note the following guidance for these situations:

  • You can correct loan records at the individual record level that have been rejected because the rebate percentage is incorrect. When the origination status is E (Origination reject received from COD), the Rebate field on the Origination tab is enabled. If there are any rejected actual disbursements (disbursement status E), delete them from the disbursement grid. Change the rebate field to the correct amount, reduce the Loan Amount Approved to zero and click Save. Select Yes at the prompt to reset the loan status to Ready to Send. Then re-enter the correct Loan Amount Approved and click Save once again. Select Yes at the prompt to recalculate the anticipated disbursements. The rebate is recalculated at the correct percentage, and the origination is ready to be exported.

  • If you have loan records with origination status A (Accepted by COD) that have an earliest anticipated disbursement date and rebate percentage that need to be changed with no accepted actual disbursements, you can change the rebate percentage to the correct percentage depending on the date of the first disbursement. You must first reduce the already accepted loan record’s Loan Amount Approved to zero, submit the change to the COD System, and import an accepted response. Once the reduction is accepted, open the record and click the Origination (Direct Loan) tab. With the Loan Amount Approved at zero, the Rebate Percentage field is enabled. Change the rebate percentage to the correct amount, re-enter the Loan Amount Approved and click Save. When the prompt to Recalculate Anticipated Disbursements appears, click Yes. Change the first anticipated disbursement date to correspond to the rebate percentage value used (for example, provide a date on or after July 1, 2012 if you are using 0%) and click Save. This creates an origination change record that will be exported in your next COD Common Record (CRAA13OP) export file.

  • If you have loan records with origination status A that have an incorrect rebate percentage and an accepted first actual disbursement, we recommend that you reduce the accepted actual disbursement to zero and send the adjustment to the COD System. After that adjustment is accepted, reduce the Loan Amount Approved to zero, mark the loan as inactive, then export and transmit the change to the COD System. After that change is accepted, create and originate an entirely new loan with the correct rebate percentage.

If the loan period has already ended, you cannot inactivate the existing loan record and then originate a new loan to correct the rebate percentage. Contact CPS/SAIG Technical Support for assistance to correctly change the rebate percentage in this situation.

Contact Information

If you have any questions regarding this message, contact CPS/SAIG Technical Support at 800/330-5947 (TDD/TTY 800/511-5806) or by e-mail at CPSSAIG@ed.gov.

You can also post questions regarding EDExpress on FSATECH. FSATECH is an electronic mailing list for technical questions about Federal Student Aid systems, software, and mainframe products. For more information on subscribing to FSATECH, go to http://www.ed.gov/offices/OSFAP/services/fsatechsubscribe.html.

Last Modified: 03/28/2012