150% DIRECT SUBSIDIZED LOAN LIMIT – IMPORTANCE OF ACCURATE DIRECT LOAN AND ENROLLMENT REPORTING TO PREVENT LOSS OF INTEREST SUBSIDY

This past July, schools were notified that the National Student Loan Data System (NSLDS) began notifying the federal loan servicers of borrowers who have lost eligibility for the interest subsidy on their existing Direct Subsidized Loans. It is important that schools accurately report a borrower’s Direct Loan (Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans) information to the COD System and enrollment information to NSLDS to ensure that Subsidized Usage and interest subsidy status can be calculated correctly.

If accurate information is not reported (or corrections are not made when information changes), a borrower may incorrectly lose the interest subsidy on his or her Direct Subsidized Loans. In addition, schools may be subject to sanctions, including possible administrative action pursuant to 34 CFR 668, Subpart G – Fine, Limitation, Suspension, and Termination Proceedings. It is important to remember that  a school must be aware of its Direct Loan reporting even if its loan processing or enrollment reporting is handled by a third party servicer. It is the school’s responsibility to ensure that reporting is being completed timely and correctly.

Reporting Direct Loan information to COD

If no additional Direct Loan disbursements will be paid to a borrower (current or former student), a school must ensure the following is reported to the COD System:

  • All pending Direct Loan disbursements were reduced to zero.
  • All loan amounts equal the total amounts disbursed.
  • The borrower’s correct enrollment status (at the time of each actual disbursement) was reported.
  • Loan period dates (<FinancialAwardBeginDate> and <FinancialAwardEndDate>) have been adjusted to include only those payment periods (terms) for which the borrower received and retained an actual disbursement.
  • Academic year dates (<AcademicYearBeginDate> and <AcademicYearEndDate>) reflect the defined length of a program’s academic year, and the dates were adjusted, when or if appropriate.

Schools must generally update reported loan periods and academic years, as with any other adjustment to an origination record, within 15 days of the date that the school became aware of the need to make an adjustment. For non-term or clock-hour programs, the school would not become aware of the need to make an adjustment until the student has finished with the loan period or academic year or withdrawn.

Enrollment Reporting to NSLDS

A school must ensure the following is reported to NSLDS:

  • The Published Program Length is reported in the correct format.
  • The Program Begin Date is reported as the date in which the student actually began enrollment in the program (generally, for term-based programs, this will be the first day in the term in which the student commenced attendance).
  • The student’s correct program-level enrollment status is reported
  • If a change or correction is needed to the reported value of either the Published Program Length, Published Program Length Measurement (W-M-Y), or Weeks in Title IV Academic Year, the program is re-reported and the prior program with the incorrect length is inactivated by reporting with a program-level enrollment status of “X” (Never Attended).
  • If the program-level enrollment status effective date of the Graduation (“G”) status is later than the loan period end date of the student’s last SULA-eligible loan, a Withdrawal (“W”) status with an effective date no later than the last loan period end date should be reported.

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