Student’s with Direct Subsidized loans are losing their interest subsidies when schools fail to report the information required under SULA correctly to NSLDS.

Ever since SULA was implemented, it has become extremely important that schools accurately report a borrower’s Direct Loan information to COD and enrollment information to NSLDS to ensure that Subsidized Usage and interest subsidy status can be calculated correctly for borrowers. If accurate information is not reported including necessary corrections when information changes, a borrower may incorrectly lose the interest subsidy on his or her Direct Subsidized Loans.

Schools aren’t doing a great job of making all of the adjustments required under SULA. Schools using third party servicers aren’t exempt either. ED has expressed that those outsourcing functions like disbursement processing and reporting to NSLDS still must be aware 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.

Institutions using Third Party Servicers are severally liable for any errors they make related to processing.

This is a big enough deal that ED cautioned schools reminding them that systemic errors, when found, can result in sanctions against an institution including possible administrative action like fines, limitation, suspension, and termination proceedings. Institutions using Third Party Servicers are severally liable for any errors they make related to processing.

Institutions with questions pertaining to this blog post or other matters of compliance with Accreditation, Federal Student Aid standards are welcome to contact our offices for additional assistance.

Peter Terebesi is the President and founder of Higher Ed Executives. You can find Peter on Twitter (@FSAPete), and reach him through the Higher Ed Executives website. You may also email

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