As we explained in Electronic Announcement General-24-72, batch institutional corrections functionality through the Electronic Data Exchange (EDE) will not be available until the first half of August. As such, some schools that treat the summer term as a “header” to their fall-spring academic year have expressed concerns about their ability to originate Direct Loans based on 2024-25 FAFSA data for a summer-only loan period if they are unable to process corrections before the end of the summer loan period. This Electronic Announcement outlines the basic requirements for originating Direct Loans and explains options for awarding summer term loans if schools are unable to submit corrections and obtain a valid Institutional Student Information Record (ISIR) before the end of the loan period.
Loan Origination Requirements
Origination is the process of creating a Direct Loan award in the school’s system. It is not the submission of a loan record to the Department’s Common Origination and Disbursement (COD) system or the acceptance of a loan record by the COD system. The date of loan origination is the date that a school creates the electronic loan origination record in its system. Therefore, it is important for schools to accurately record when a loan is originated.
A Direct Loan must be originated before the student borrower ceases to be enrolled on at least a half-time basis for the loan period. This requirement is particularly important if a school wants to originate a single-term loan for summer 2024 but cannot disburse the loan funds until all FAFSA corrections have been processed and a valid ISIR has been received. If this does not occur until after the summer loan period has ended, the school could then make a late disbursement, but one of the requirements for making a late disbursement is that the loan must have been originated before the student ceased to be enrolled at least half-time for the loan period.
It is also important to remember that a valid ISIR from the Department is not required to originate a Direct Loan. If required FAFSA corrections are unable to be made and a valid ISIR will not be received until after the loan period has ended, a school may still originate (but not disburse) a Direct Loan based on the best student eligibility information it has at the time of origination. Of course, corrections or updates to the origination record may be required if the valid ISIR information differs from the estimated information used at the time of the loan origination.
School Options
Schools that are concerned about not being able to complete FAFSA corrections and obtain a valid ISIR before the end of a summer “header” term loan period may consider one of the following options:
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For those students attending the summer header term who also plan on attending in the fall, the school could originate a summer-fall loan (or a summer-fall-spring loan) instead of a summer-only loan once it obtains the valid ISIR after batch corrections functionality becomes available. Once the loan has been originated, the school could then make a retroactive disbursement for the summer payment period based on the valid ISIR.
If it is not possible to originate a summer-fall or summer-fall-spring loan, or if for any other reason a school wants to originate a summer-only loan, we remind schools that the student’s full Student Aid Index (SAI) must be used in all cases when packaging aid, regardless of the length of the period of enrollment. As explained in Volume 3, Chapter 3 of the FSA Handbook, there are no alternate SAIs for periods of enrollment other than nine months comparable to the alternate Expected Family Contributions (EFCs) for periods other than nine months that were used prior to the 2024-25 award year. This means, for example, that if a summer-only loan is originated, a student’s eligibility for Direct Subsidized Loans and other need-based aid must be determined by subtracting the full SAI from the summer-only cost of attendance (COA). Subtracting the full SAI from the reduced COA for a shorter period of enrollment may result in reduced eligibility for need-based aid.
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As briefly mentioned earlier in this announcement, a school can originate a summer-only Direct Loan within its system prior to the end of the loan period using an estimate of the student’s loan eligibility based on its own system’s calculation of the effects of corrections. Once the FAFSA corrections have been processed and a valid ISIR received, the school would be able to make a late disbursement of the loan funds in accordance with the normal late disbursement rules. Of course, the school must first make any necessary corrections to the originally estimated loan amount if that amount changes based on the information contained in the valid ISIR.
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Schools may now make individual FAFSA corrections through the FAFSA Partner Portal (FPP). Although it would not be practical to make a large number of FAFSA corrections using this option, schools should be aware that it is available to address an individual student’s pressing or unique circumstances.
Regardless of the option used to award Direct Loans to a student for a summer 2024 loan period, we remind schools that no loan disbursements can be made until the school receives a valid ISIR and that a student must still meet all general and program-specific eligibility requirements.
Contact Information
Any questions about this announcement should be sent through the Contact Customer Support form link in Federal Student Aid’s Help Center. When submitting a question, please enter your name, email address, IHE, topic, and question. When selecting a topic, please select “Policy Guidance.”