Direct Lending Borrowing to
150% of the Program Length
NYSFAAA 45
Long Island, NY
October 16, 2013
George Chin, Senior Federal Policy Consultant, AASCU
MAP-21 – (Moving Ahead for
st
Progress in the 21 Century Act)
• Extended the 3.4% interest rate for
undergraduate subsidized loans for one year
• Established a 150% length of program limit for
receiving subsidized loans for new borrowers
on or after July 1, 2013.
Statutory Language
(q) ELIGIBILITY FOR , AND INTEREST CHARGES ON,
FEDERAL DIRECT STAFFORD LOANS FOR NEW
BORROWERS ON OR AFTER JULY 1, 2013 –
(1) In General – Notwithstanding subsection (a) or any other
provisions of this title, any borrower who was a new borrower
on or after July 1, 2013, shall not be eligible for a Federal
Direct Stafford Loan if the period of time for which the
borrower has received Federal Direct Stafford Loans, in the
aggregate, exceeds the period of enrollment described in
paragraph (3). Such borrower may still receive any Federal
Direct Unsubsidized Stafford Loan for which such borrower is
otherwise eligible.
Statutory Language
(2) Accrual of Interest on Federal Direct Stafford Loans –
Notwithstanding subsection (f)(1)(A) or any other provision of
this title and beginning on the date upon which a borrower
who is enrolled in a program of education or training
(including a course of study or program described in
paragraph(3)(B) or (4)(B) of section 484(b) ) for which
borrowers are otherwise eligible to receive Federal Direct
Stafford Loans , becomes ineligible for such loan as a result of
paragraph (1), interest shall accrue. Such interest shall be paid
or capitalized in the same manner as interest on a Federal
Direct Unsubsidized Stafford Loan is paid or capitalized under
section 428H(e)(2).
Statutory Language
(3) Period of Enrollment(A) In General – The aggregate period of enrollment
referred to in paragraph (1) shall not exceed the lesser of –
(i) a period equal to 150 percent of the published
length of the educational program in which the student is
enrolled; or
(ii) in the case of a borrower who was previously
enrolled in one or more other educational programs that
began on or after July 1, 2013 and subject to paragraph
(B), a period of time equal to the difference between -
Statutory Language
(I) 150 percent of the published length of
the longest educational program in which the
borrower was, or is, enrolled; and
(II) any periods of enrollment in which the
borrower received a Federal Direct Stafford Loan.
Statutory Language
(B) Regulations – The Secretary shall specify in regulation –
(i) how the aggregate period described in
subparagraph (A) shall be calculated with respect to a
borrower who was or is enrolled in less than a full-time
basis; and
(ii) how such aggregate period shall be calculated to
include a course of study or program described in paragraph
(3)(B) or 4(B) of section 484(b), respectively.
Statutory Language
(b) Inapplicability of Title IV Negotiated Rulemaking
Requirement and Master Calendar Exception – Sections
482(c) and 492 of the Higher Education Act of 1965 (20 U.S.C.
1089(c), 1098a) shall not apply to the amendment made by
subsection (a) or to any regulation promulgated under such
amendment.
Regulation
Interim Final Rule issued on May 16, 2013
Comments invited by July 1, 2013
Regulation - Definitions
New (First Time) Borrower
Maximum Eligibility Period
Subsidized Usage Period
Remaining Eligibility Period
New (First Time) Borrower
An individual who has no outstanding balance
of principal or interest on a Federal Direct
Loan Program or FFEL Program loan on July 1,
2013, or on the date the borrower obtains a
Federal Direct Program loan after July 1, 2013
Maximum Eligibility Period
• Statutorily called the aggregate period of
enrollment.
• Generally 150% of the published length of the
educational program in which the student is
enrolled.
Subsidized Usage Period
• Generally equal to the number of days in the
loan period divided by the number of days in
the academic year, rounded down to the
nearest quarter.
• Exceptions – receipt of a full annual loan limit
in a period less than an academic year = 1 year
If the amount received is less than the full
annual limit and the student is enrolled HT,
multiply by .5 and 3/4T, multiply by .75.
Remaining Eligibility Period
• Generally the difference between the
Maximum Eligibility Period and the sum of the
subsidized usage periods
• When the Remaining Eligibility Period is zero,
the borrower loses eligibility for subsidized
loans but can continue to receive unsubsidized
loans
Remaining Eligibility Period
• If the borrower continues to enroll after the
remaining eligibility period is zero, then
interest accrues on the prior subsidized loans
• If the remaining eligibility period is less than a
minimum loan period for the program type, a
subsidized loan may not be disbursed.
Preparatory Coursework
• Limited to one twelve month period
• Counted in the sum of subsidized usage
• Maximum eligibility period is equal to the
maximum period for the undergraduate
program for which the coursework is required
• Maximum eligibility period for preparatory
work for a graduate or professional program is
equal to the maximum period for the most
recent undergraduate program for which the
student received a subsidized loan.
Teacher Certification
• Maximum Eligibility Period is 150% of the
length of the certification program
• Only loans received for the teacher
certification program are included in the
subsidized usage period
New Data
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CIP Code
Credential Level
Program Length
Enrollment Status
Preparatory Work for UG Program
Preparatory Work for Grad/Prof Program
Teacher Certification Program