Eric Hardy and Patrick Kennedy | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals 150% - A Life Cycle.

Eric Hardy and Patrick Kennedy | Dec. 2014

U.S. Department of Education

2014 FSA Training Conference for Financial Aid Professionals

150% - A Life Cycle View

Session #27

Agenda

• Recap and Overview• COD Processing -- the system of record for SULA usage• NSLDS Processing – the system of record for Loss of

Subsidy • CPS Processing• Questions and Answers

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On July 6, 2012 President Obama signed into Public Law 112-141, the elimination of the subsidy on Direct Subsidized Stafford Loans when a “first-time borrower” enrollment exceeds 150% of the published program length (150% Direct Subsidized Loan Limit Electronic Announcement #1)

150% Subsidy Loan Limit

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• Identify “first-time borrower” starting July 1, 2013 (Phase 1)

• Identify when a borrower reaches the 150% threshold and take appropriate actions (Phase 2)

• Continuously monitor “first-time borrower” enrollment to evaluate future enrollment impacts to students’ 150% limitations (Phase 2)

150% Subsidy Loan Limit

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The 150% Subsidy Limit – Overview

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SULA: Subsidized Usage Limit Applies First-time borrower: Any borrower who had no balance on a

DL/FFEL student loan on 7/1/2013 or afterwards at the time they obtain a loan

Maximum Eligibility Period (MEP): Set at 150% of the published length of the program the borrower is enrolled in

Subsidized Usage Period (SUP): Measured in years, the amount of subsidized usage of the loan [# days in loan period/# of days in academic year]

Remaining Eligibility Period (REP): Borrower’s remaining eligibility for subsidized loans:

MEP - ∑SUPs = REP

With Release 13.0 the Common Origination and Disbursement System (COD) began to determine a borrower’s remaining subsidized eligibility by calculating a subsidized usage period for each Direct Subsidized Loan originated for first-time borrowers .

COD also prevents the origination of Direct Subsidized Loans for borrowers who have reached their maximum subsidized eligibility limits for the program for which the loan is intended.

The 150% Subsidy Limit - Overview

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Identifying “New Borrowers”

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Each time a new applicable award, or maintenance to an existing award that changes the disbursement release indicator (DRI) to true or changes the Earliest Disbursement Date (EDD) to be on or after July 1st 2013 is submitted, the COD System will evaluate the borrower to determine if the SULA Flag should be set to ‘Yes’.

When evaluating the SULA flag for a borrower, the COD System will check the customer record on both the COD System and/or from the NSLDS Borrower Outstanding Balance (BOB) file when applicable.

Identifying “New Borrowers”

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The COD System sets the SULA flag at the borrower level. The SULA Date is populated on the COD View Person Information page.

Calculating Usage & Remaining Eligibility

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The COD System uses the calculated values for

the Maximum Subsidized Eligibility Period, Loan Period Length,

Academic Year Length, payment period Length,

and Enrollment Status

---- to calculate a borrowers Subsidized usage and remaining eligibility.

Maximum Subsidized Eligibility Period

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MSEP ~ The Maximum Subsidized Eligibility Period is the maximum period of time in which a student may receive a subsidized loan based on the published program length reported for the loan.

It is equal to 150% of the calculated published program length in academic years.

𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑆𝑢𝑏𝑠𝑖𝑑𝑖𝑧𝑒𝑑 𝐸𝑙𝑖𝑔𝑖𝑏𝑖𝑙𝑖𝑡𝑦 𝑃𝑒𝑟𝑖𝑜𝑑= 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑑 𝑃𝑢𝑏𝑙𝑖𝑠ℎ𝑒𝑑 𝑃𝑟𝑜𝑔𝑟𝑎𝑚 𝐿𝑒𝑛𝑔𝑡ℎ 𝑌𝑒𝑎𝑟𝑠 × 1.5

Academic Year Length

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The Academic Year Length for Direct Subsidized Loans is the number of days between and including the Academic Year Begin Date and Academic Year End Date submitted.

𝐴𝑐𝑎𝑑𝑒𝑚𝑖𝑐 𝑌𝑒𝑎𝑟 𝐿𝑒𝑛𝑔𝑡ℎ = ሺ𝐴𝑐𝑎𝑑𝑒𝑚𝑖𝑐 𝑌𝑒𝑎𝑟 𝐸𝑛𝑑 𝐷𝑎𝑡𝑒+ 1ሻ− 𝐴𝑐𝑎𝑑𝑒𝑚𝑖𝑐 𝑌𝑒𝑎𝑟 𝐵𝑒𝑔𝑖𝑛 𝐷𝑎𝑡𝑒

Note: The reason for the ‘+1’ in the formula is to include the begin and end dates in the time period.

Loan Period Length

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The Loan Period Length is the period of time between and including the Financial Award Begin and End dates.

The Subsidized Usage Period for a DL Subsidized loan is a ratio between the Loan Period Length and the Academic Year Length, prorated by Enrollment Status.

𝐿𝑜𝑎𝑛 𝑃𝑒𝑟𝑖𝑜𝑑 𝐿𝑒𝑛𝑔𝑡ℎ = (𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐴𝑤𝑎𝑟𝑑 𝐸𝑛𝑑 𝐷𝑎𝑡𝑒+ 1) − 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐴𝑤𝑎𝑟𝑑 𝐵𝑒𝑔𝑖𝑛 𝐷𝑎𝑡𝑒

Changes to the Loan Period Length will cause a change to the Subsidized Usage Period.

Loan Period Length

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Example: A student has 3 DL Subsidized loans each with different and overlapping loan periods. The Loan Period Length will be calculated as follows:

payment period Length

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The payment period Length is a length of time that each disbursement is intended to provide financial aid for a student. Each student’s Direct Subsidized Loan is divided into payment periods.

•payment period Length is at the disbursement level, with one for each disbursement•payment period Length is calculated when enrollment status varies across disbursements for a DL Subsidized award

When a student’s enrollment is consistent across an award’s payment periods COD is able to calculate subsidized eligibility at the DL Subsidized award level using Loan Period Length.

payment period Subsidized Usage Period

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For DL Subsidized awards that have enrolment statuses that vary across disbursements, it is necessary to calculate the payment period Subsidized Usage Period for each disbursement in order to calculate the Subsidized Usage Period for the entire DL Subsidized award.

The COD System calculates the ratio between the payment period Length and the Academic Year Length, and then prorates the resulting value by the student’s Enrollment Status for the relevant disbursement.

Anticipated and Actual SUP

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A Subsidized Usage Period will be calculated for each DL Subsidized award with SULA flag set to ‘Yes.’ A Subsidized Usage Period is the calculated subsidized usage of an individual DL Subsidized award.

Each Subsidized Usage Period is classified as an Actual or Anticipated Subsidized Usage Period depending on whether the DL Subsidized award has at least one actual disbursement.

Actual Subsidized Usage Period

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The COD System will calculate an Actual Subsidized Usage Period for a DL Subsidized award when at least one disbursement for the award is submitted or stored with DRI= ‘True.’

The following formula is used when Enrollment Statuses are consistent across all disbursements:

𝐴𝑐𝑡𝑢𝑎𝑙 𝑆𝑢𝑏𝑠𝑖𝑑𝑖𝑧𝑒𝑑𝑈𝑠𝑎𝑔𝑒𝑃𝑒𝑟𝑖𝑜𝑑= 𝐸𝑛𝑟𝑜𝑙𝑙𝑚𝑒𝑛𝑡𝑆𝑡𝑎𝑡𝑢𝑠 × 𝐿𝑜𝑎𝑛𝑃𝑒𝑟𝑖𝑜𝑑𝐿𝑒𝑛𝑔𝑡ℎ𝐴𝑐𝑎𝑑𝑒𝑚𝑖𝑐𝑌𝑒𝑎𝑟𝐿𝑒𝑛𝑔𝑡ℎ

When the enrolment statuses vary across the award’s disbursements, the Actual Subsidized Usage Period is the sum of payment period Subsidized Usage Periods.

Anticipated Subsidized Usage Period

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The COD System will calculate the Anticipated Subsidized Usage Period for a DL Subsidized award when all of the disbursements are submitted or stored with a DRI=‘False.’

The following formula will be used when the Enrollment Statuses are consistent across all disbursements:

𝐴𝑛𝑡𝑖𝑐𝑖𝑝𝑎𝑡𝑒𝑑 𝑆𝑢𝑏𝑠𝑖𝑑𝑖𝑧𝑒𝑑𝑈𝑠𝑎𝑔𝑒𝑃𝑒𝑟𝑖𝑜𝑑= 𝐸𝑛𝑟𝑜𝑙𝑙𝑚𝑒𝑛𝑡𝑆𝑡𝑎𝑡𝑢𝑠 × 𝐿𝑜𝑎𝑛𝑃𝑒𝑟𝑖𝑜𝑑𝐿𝑒𝑛𝑔𝑡ℎ𝐴𝑐𝑎𝑑𝑒𝑚𝑖𝑐𝑌𝑒𝑎𝑟𝐿𝑒𝑛𝑔𝑡ℎ

When the enrolment statuses vary across the award’s disbursements, the Anticipated Subsidized Usage Period is the sum of payment period Subsidized Usage Periods.

SUP Loan Limit Exception

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~ exception to the rules for the Subsidized Usage Period calculation. When the following three conditions are met, a different Subsidized Usage Period calculation will be used:•A Borrower receives a DL Subsidized award with an award amount equal to the annual subsidized limit for his/her grade level•A Loan Period Length on a DL Subsidized award is less than the Academic Year Length•A Loan Period on a DL Subsidized award does not overlap with the Loan Period on any other active DL Subsidized award for that borrower

Student Level Code Annual Subsidized Limit0 $3,5001 $3,5002 $4,5003 $5,5004 $5,5005 $5,500

Sum Actual SUP

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A Sum Actual Subsidized Usage Period will be calculated, stored, and returned at the student level when borrower has SULA flag set to ‘Yes’. The Sum Actual Subsidized Usage Period will include all Actual Subsidized Usage Periods for the borrower.

Note: No Anticipated Subsidized Usage Periods will be included.

Sum Anticipated and Actual SUP

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The Sum Anticipated Subsidized Usage Period will include all Actual Subsidized Usage Periods for the borrower and the one Anticipated Subsidized Usage Period for that award ~~ to show what the Actual Subsidized Usage Period would be if that Anticipated award was changed to be an Actual.

Note: Anticipated Subsidized Usage Periods for other awards will not be included in the calculation.

Remaining Anticipated and Actual SEP

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RSEP ~ Remaining Anticipated and Remaining Actual Subsidized Usage Periods will be calculated, or recalculated.

The Remaining Subsidized Usage Period is stored at the award level because it is the remaining subsidized eligibility that the particular award is for.

SULA Calculations - Displays

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SULA Calculations - Displays

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Remaining Anticipated and Actual SEP

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If an incoming DL Subsidized award origination causes the Anticipated or Actual Remaining Subsidized Usage Period on the award being processed to be less than zero, the award will be rejected with Edit 206 ~~ The Remaining Subsidized Eligibility Period is less than zero for this award.

System Generated Response

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The COD System creates and send a SULA system generated response for person, award, or disbursement level SULA calculation changes on Direct Subsidized Loan awards.

The new award year specific system generated response are sent to the SAIG mailbox of the reporting school of a borrower where SULA-related calculations have been changed.

The SULA system generated response (Document type SU) is sent using message class, CRSUAYOP (AY=award year).

System Reporting

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COD sends Direct Loan data to NSLDS on a daily basis to be used by NSLDS for SULA calculation purposes.

The daily records includes student, award, and disbursement information for Subsidized, Unsubsidized, and Direct PLUS Loans for activity that was accepted or triggered during the prior processing day.

NSLDS – Display SULA Flag

• Display of Subsidized Usage Limit Applies (SULA) Flag

• Indicates whether the borrower is subject to the 150% Direct Subsidized Loan Limit provision

• Sent to NSLDS by Federal Loan Servicers after the SULA Flag is received from the COD

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Subsidized Usage Web Page

• A link to the Subsidized Usage Page has been added under the Enrollment Summary page

• The Subsidized Usage Page displays information about a student’s: • Maximum Eligibility Period

• Subsidized Usage Period• Sum SUP

• Loan-Level SUP

• Program-level Enrollment

• Remaining Eligibility Period

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Subsidized Usage Web Page

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NSLDS – Maximum Eligibility Period

• The Maximum Eligibility Period is 150% of the published length of borrower’s current educational program.• Calculated by COD based on disbursement records• Multiply published length of program by 1.5• NSLDS will calculate using Enrollment Reporting information• Schools will be required to report individual student’s program-level

enrollment data to NSLDS

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NSLDS – Maximum Eligibility Period

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NSLDS - Subsidized Usage Period

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• Subsidized Usage Period (SUP) – Calculated by COD and sent to NSLDS• COD calculates the Subsidized Usage Period (SUP) for each loan and

sends to NSLDS• NSLDS displays the SUP on the NSLDS websites• NSLDS includes the SUP in TSM, FAH, and select NSLDS Reports

NSLDS – REPRemaining Eligibility Period

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• Remaining Eligibility Period (REP) – Difference between MEP and SUP, calculated by NSLDS

• NSLDS determines if Loss of Interest Subsidy should occur on a borrower’s loan based on the borrower’s Remaining Eligibility Period (REP) and the borrower’s program-level enrollment statusRemaining

Eligibility Period (REP)

NSLDS – Loss of Subsidy

NSLDS determines if Loss of Interest Subsidy should occur on a borrower’s loan based on the borrower’s Remaining Eligibility Period (REP) and program-level enrollment status.

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NSLDS – Loss of SubsidyExample #1 – No Loss of Subsidy

OCT2014

JAN2015

APR2015

JUL2015

OCT2015

JAN2016

APR2016

JUL2016

OCT2016

JAN2017

APR2017

JUL2017

Program A Full Time 10/01/14 – 12/31/15

Published Program Length = 2 YearsMax = 3

Loan #210/01/15 – 06/30/16

SUP = 1

Loan #110/01/14 – 04/30/15

SUP = 1

Loan #310/01/16 – 06/30/17

SUP = 1

Program B Full Time 10/01/15 – 06/30/17

Published Program Length = 2 YearsMax = 3

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NSLDS – Loss of SubsidyExample #1 – No Loss of Subsidy

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Borrower’s Condition at the End of the Loan Period

Is the REP <= 0? Yes

Is the Loan Period Begin Date earlier than a graduation?

No

Is there new qualifying enrollment? No

This borrower does not lose subsidy on their loans as there is no qualifying enrollment.

NSLDS – Loss of SubsidyExample #2 - New Enrollment After Loan Period

OCT2014

JAN2015

APR2015

JUL2015

OCT2015

JAN2016

APR2016

JUL2016

OCT2016

JAN2017

APR2017

JUL2017

Program A Full Time 10/01/14 – 12/31/15

Published Program Length = 2 YearsMax = 3

Loan #210/01/15 – 06/30/16

SUP = 1

Loan #110/01/14 – 04/30/15

SUP = 1

Loan #310/01/16 – 06/30/17

SUP = 1

Program B Full Time 10/01/15 – 03/31/17

Published Program Length = 2 YearsMax = 3

Program CFull Time 07/15/17 – 12/31/17

Published Program Length = 2 YearsMax = 3

LoS 07/15/17

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NSLDS – Loss of SubsidyExample #2 – New Enrollment after Loan Period

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Borrower’s Condition at the End of the Loan Period

Is the REP <= 0? Yes

Is the Loan Period Begin Date earlier than a graduation?

No

Is there new qualifying enrollment? Yes

This borrower loses subsidy on their loans effective on the first day of qualifying enrollment.

NSLDS – Loss of SubsidyExample #3 - Subsidy Protected by Graduation

OCT2014

JAN2015

APR2015

JUL2015

OCT2015

JAN2016

APR2016

JUL2016

OCT2016

JAN2017

APR2017

JUL2017

Program A Full Time 10/01/14 – 12/31/15

Published Program Length = 2 YearsMax = 3

Loan #210/01/15 – 06/30/16

SUP = 1

Loan #110/01/14 – 04/30/15

SUP = 1

Program B Full Time 10/01/15 – 07/31/17

Published Program Length = 2 YearsMax = 3

Loan #310/01/16 – 06/30/17

SUP = 1

GProgram C

Full Time 07/15/17 – 12/31/17Published Program Length = 2 Years

Max = 3

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NSLDS – Loss of SubsidyExample #3 – Subsidy Protected by Graduation

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Borrower’s Condition at the End of the Loan Period

Is the REP <= 0? Yes

Is the Loan Period Begin Date earlier than a gradation?

Yes

Is there new qualifying enrollment on the day after the end of the loan period?

Yes

This borrower does not lose subsidy on any loan with a Loan Period Begin Date earlier than the Graduation Date.

NSLDS – Loss of Subsidy

• NSLDS distributes LOS data to the federal loan servicers daily

• Federal loan servicers apply the LOS and respond to NSLDS weekly• LOS data is displayed on NSLDS after the federal loan servicer responds• LOS data is sent to CPS and studentoans.gov

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• The NSLDS FAP now displays the new Loss of Subsidy warning icon for borrowers who have lost interest subsidy any:• D0 - Direct Stafford Subsidized (SULA Eligible) loans

• D9 - Direct Consolidation Subsidized (SULA Eligible) loans

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• A field has been added to Loan Summary for (D0) and (D9) loans to display the status of the interest subsidy:

NSLDS – Loss of Subsidy

• Identify “first-time borrower” starting July 1, 2013

• Identify when a borrower reaches the 150% threshold and take appropriate actions

• Continuously monitor “first-time borrower” enrollment to evaluate future enrollment impacts to students’ 150% limitations

CPS Impacts

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The following NSLDS fields were added to the ISIR record:

•A SAR Comment 267 will be triggered when SULA Flag is set to Y• There is a limit to the total amount of subsidized Federal student loans that you may

receive. Please refer to studentaid.gov under Types of Aid, Loans for more information

•Reason Code 25 will be added to the NSLDS Post-screening for a Subsidized Usage Limit Applies Flag status change

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CPS Impacts: First-Time Borrower

Added FIELD # Value

Subsidized Usage Limit Applies Flag (SULA)

444 Y/N

Subsidized Loan Eligibility Used field (SLEU)

445 999v999

NSLDS added two new Loan Types in order for servicers to track which loans should be adjusted when losing subsidy.

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CPS Impacts

NSLDS Loan Program Codes

Definition

D9 Direct Consolidated Stafford Subsidized Loan where all or an underlying portion of the consolation loan is eligible for loss of subsidy under the 150% Regulation

D0 Direct Stafford Subsidized Loan subject to the 150% regulation

New NSLDS Post screening Reason Codes:

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CPS Impacts: New for 2015-16

Post screening Reason Code

Definition

26 Created to monitor for a change in Confirmed Loan Subsidy Status

27 Created to monitor for decreases in the Subsidized Usage Period

QUESTIONS?

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