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(Loans) Subject: 150% Direct Subsidized Loan Limit: Electronic Announcement #3 - Prorating Subsidized Usage Periods Based on Enrollment Status for the 2013-2014 Year

Posted Date:August 30, 2013

Author: Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid

Subject: 150% Direct Subsidized Loan Limit: Electronic Announcement #3 - Prorating Subsidized Usage Periods Based on Enrollment Status for the 2013-2014 Year

On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Public Law 112-141) was enacted. MAP-21 added a new provision to the Direct Loan statutory requirements (see HEA section 455(q)) that limits a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150% of the length of the borrower’s educational program. On May 16, 2013, we published interim final regulations in the Federal Register implementing the 150% Direct Subsidized Loan limit (See 78 FR 28953).

The interim final regulations include provisions that require the proration of a borrower’s Subsidized Usage Period if the borrower is enrolled less than full time. To properly calculate a Subsidized Usage Period we must know whether the borrower was enrolled on a full-time, three-quarter-time, or half-time basis when the loan was received.

As noted in 150% Direct Subsidized Loan Limit: Electronic Announcements #1 and 2, we will be making changes to the Common Origination and Disbursement (COD) System, the National Student Loan Data System (NSLDS), and the Central Processing System (CPS) to implement the 150% subsidized loan limit .1 These changes will be made in phases. One of those phases will include the addition of a tag to the COD schema for the borrower’s “enrollment status” and the addition of another tag for the “payment period begin dates” of the loan. COD will use these tags to prorate a borrower’s Subsidized Usage Period when the reported enrollment for the payment period is less than full time. Among the changes planned to NSLDS enrollment reporting will be the addition of a new three-quarter-time enrollment status, in addition to the current NSLDS full-time, half-time, less-than-half-time, and other enrollment statuses.

Because the COD and NSLDS enrollment status reporting changes will not be implemented until next spring, we have developed an alternative method for COD to obtain enrollment statuses for loans made for the 2013-2014 year. The alternative method will not require any special ad-hoc reporting by schools, instead it will use enrollment status information that schools currently report to NSLDS. Because NSLDS does not currently have a reporting status for three-quarter time enrollment, all Subsidized Usage Periods for 2013-2014 Direct Subsidized Loans will be prorated on the basis of “half-time” enrollment if, for any portion of the loan’s loan period, the enrollment status reported to NSLDS is “at least half-time but less than full-time” (NSLDS Enrollment Status Value of ‘H’), even if the borrower is or was actually enrolled on a three-quarter-time basis.

The first COD calculation of Subsidized Usage Periods will occur in March 2014 using borrowers’ enrollment statuses reported to NSLDS by schools for the 2013-2014 year. Of course, COD will only prorate a 2013-2014 Subsidized Usage Period if the school has reported an “at least half-time but less than full-time” enrollment status. While COD will recalculate Subsidized Usage Periods to account for enrollment information reported by schools after the initial calculation, delayed or incorrect enrollment reporting to NSLDS will result in some Subsidized Usage Periods being temporarily incorrect.

We thank all schools for assisting us during this period of transition.

1 Note: While this electronic announcement notes upcoming changes to reporting for COD and NSLDS, there are additional reporting changes that are required to implement the 150% limit. For information on those changes, please see the section of the preamble to the interim final regulations related to “Additional Reporting Requirements and Modifications to Departmental Systems” (78 FR 28953, 28971-72) and 150% Direct Subsidized Loan Limit: Electronic Announcement #2. We will publish other communications that comprehensively detail the changes to the COD System and NSLDS in the near future.

Last Modified: 08/29/2013