SULA – Interest Subsidy – New Q & A Part 4

Understanding the requirements for calculating awards under SULA can be as brain-racking as the calculations themselves. Fortunately, ED provides fairly regular updates to its 150% Direct Subsidized Loan Limit Frequently Asked Questions. In March, ED provided guidance on a several topics which I’ve summarized for you below.

You can read these and other 150% Direct Subsidized Loan Limit – Frequently Asked Questions on the Departments FAQ Page Here: http://bit.ly/2mZ95gW

Interest Subsidy 

INT-Q6: If a student loses interest subsidy, but subsequently regains eligibility for Direct Subsidized Loans by enrolling in a longer program, will the student regain interest subsidy?  

INT-A6: Not on the loans that had lost interest subsidy. Once a loan loses interest subsidy, it does so permanently. However, if otherwise eligible, the student may receive additional Direct Subsidized Loans. 

For example, consider a student who was enrolled in a 4-year bachelor’s degree program and had a subsidized usage period of 3 years, withdraws from the 4-year program, and then enrolls in a 1-year undergraduate certificate program. The student is not only ineligible for Direct Subsidized Loans in the 1-year program, but also loses interest subsidy on all of the outstanding Direct Subsidized Loans taken for attendance in the 4-year program. If this student later re-enrolls in the same or another 4-year program, the student may borrow subsidized loans for up to 3 more years.  However, the loans from the first 3 years of study in the 4-year program do not regain interest subsidy. Any additional loans borrowed upon re-enrollment in the 4-year program will have interest subsidy unless the student’s enrollment again triggers the loss of interest subsidy.  

INT-Q7: Is there a way for a school to determine when a student lost interest subsidy on a Direct Subsidized Loan?  

INT-A7: Yes. On the National Student Loan Data System’s Professional Access site, schools may view the date that the student’s loans lost subsidy by navigating to the enrollment tab and then selecting the subsidized usage button. 

 

SULA –  Loss of Eligibilty- New Q & A Part 3

SULA DIRECT SUBSIDIZED LOAN LIMIT FREQUENTLY ASKED QUESTIONS UPDATE

Understanding the requirements for calculating awards under SULA can be as brain-racking as the calculations themselves. Fortunately, ED provides fairly regular updates to its 150% Direct Subsidized Loan Limit Frequently Asked Questions. In March, ED provided guidance on a several topics which I’ve summarized for you below.

Loss of Eligibility 

ELIG-Q2: The Common Origination and Disbursement (COD) System rejected a Direct Subsidized Loan record because it would have caused the student’s remaining eligibility period to be less than zero (edit 206). However, the student’s current remaining eligibility period is greater than zero. Can the loan be reconfigured so that the COD System will accept the record? 

ELIG-A2: Maybe. If the school can either properly make the loan for a shorter period of time or, in some circumstances, if the school can reduce the amount of the loan, COD may accept it. Please see 150% Electronic Announcement #20 for more information.  

ELIG-Q3: The Common Origination and Disbursement (COD) System rejected a Direct Subsidized Loan record because it would have caused a student’s remaining eligibility period to be less than zero (edit 206). However, the student’s current remaining eligibility period is greater than zero. Should the school simply prorate the loan amount by the student’s remaining eligibility period?  

ELIG-A3: No. Generally, the 150% limit calculates a student’s eligibility based on the period of time for which a student is receiving a Direct Subsidized Loan, not the amount of that loan. While the amount of the loan will matter in some circumstances, simply prorating the loan amount by the amount of the student’s remaining eligibility period is improper. Please see 150% Electronic Announcement #20 for more information.    

ELIG-Q4: A student transferred from one school to another school. The new school finds that the other school misreported loan information that is affecting the student’s eligibility for Direct Subsidized Loans at the new school. What should the new school do?  

ELIG-A4: The new school should contact the former school to request that the loan information be corrected. If the former school is unresponsive or closed, the new school should submit a Subsidized Usage Inquiry on the Common Origination and Disbursement (COD) System’s website. 

 

SULA –  Remaining Eligibility Period – New Q & A Part 2

SULA DIRECT SUBSIDIZED LOAN LIMIT FREQUENTLY ASKED QUESTIONS UPDATE

Understanding the requirements for calculating awards under SULA can be as brain-racking as the calculations themselves. Fortunately, ED provides fairly regular updates to its 150% Direct Subsidized Loan Limit Frequently Asked Questions. In March, ED provided guidance on a several topics which I’ve summarized for you below.

Remaining Eligibility Period

REP-Q5: A school has a policy of automatically awarding only Direct Unsubsidized Loans to a student who has as remaining eligibility period of less than 0.5 years. Is this acceptable?

 REP-A5: No. A student with a remaining eligibility period of 0.5 years or less may be able to receive a Direct Subsidized Loan and must be considered for the loan.

 At standard-term-based schools, a single-term loan would often have a Subsidized Usage Period of less than 0.5 years. Moreover, factors such as enrollment status also play a role in calculating Subsidized Usage Periods. Please see 150% Electronic Announcement  #20 for more information and the subsidized usage calculator on the Common Origination and Disbursement (COD) System’s website, which can assist schools which are attempting to ascertain whether COD would accept a loan record based on the 150% limit.

SULA –  Subsidized Usage Period – New Q & A Part 1

SULA DIRECT SUBSIDIZED LOAN LIMIT FREQUENTLY ASKED QUESTIONS UPDATE

Understanding the requirements for calculating awards under SULA can be as brain-racking as the calculations themselves. Fortunately, ED provides fairly regular updates to its 150% Direct Subsidized Loan Limit Frequently Asked Questions. In March, ED provided guidance on a several topics which I’ve summarized for you below.

 Subsidized Usage Period

SUP-Q16: A school cancelled all disbursements of a Direct Subsidized Loan by reducing the disbursement amounts to zero. However, the Common Origination and Disbursement (COD) System is still calculating a subsidized usage period. Why?

SUP-A16: To completely eliminate a subsidized usage period on a Direct Subsidized Loan, schools must fully inactivate the loan by reducing the award amount to zero, not just the disbursement amount to zero.

 

SULA CHANGES ON COD INCREASE NSLDS POSTSCREENING

In the last few weeks schools have seen an increased volume of Subsidized Usage changes on postscreened ISIRS resulting from recent changes to COD for 150% Direct Subsidized Loan Limit determinations. In the end of October, FSA recalculated Subsidized Usage for existing subsidized loans. The recalculation and new COD calculations trigger NSLDS Postscreening and in turn, system generated ISIR and SAR data whenever there is a change in the student’s SULA Eligibility results. Many schools have already reviewed borrower eligibility using the System generated SULA Calculation response files that were sent to schools during the last week of October, however those who haven’t should pay close attention to any system generated  ISIRs they receive in the coming weeks because they may impact student eligibility for Direct Subsidized Loans due to the changes. Be on the lookout for ISIRS with NSLDS Post Screening Reason Code 27 and ISIR SAR Comment 004 and double check your SULA determinations. http://bit.ly/2gDOpUQ

COD launched system changes for 150% SULA

Zero Disbursement Exception – Effective October 30, 2016, COD System that will modify how we calculate the Subsidized Usage Period (SUP).

Currently, the payment period of a Direct Loan award is excluded from the Subsidized Usage Period calculation if the disbursement amount for that payment period is

$0 and the disbursement date is outside the Financial Award Begin and End (loan period) dates. Beginning October 30, 2016, a payment period of a Direct Loan award will be excluded from the Subsidized Usage Period calculation if the disbursement amount for that payment period is $0 and the Payment Period Start Date (PPSD) is outside the loan period dates. As a result, a school will be able to change the Financial Award Begin and/or End (loan period) dates as long as the disbursement amount is $0. A school will no longer have to change the disbursement date to adjust loan period dates.

Loan Limit Exception – Currently, the Subsidized Usage Period of a Direct Loan award is calculated as 1 year when the award amount is equal to the annual loan limit for that grade level and the loan period is less than the academic year regardless of the actual length of the loan period and academic year. Beginning October 30, 2016, the COD System will also consider a student’s highest grade level when a student progresses to a higher grade level during the academic year when applying the loan limit exception. The Subsidized Usage Period for a Direct Loan award will be calculated as 1 year, regardless of the actual length of the loan period and academic year, when all of the following conditions are true:

  • The award amount is equal to the annual loan limit (for that grade level)
  • The loan period is less than the academic year
  • The borrower does not have another active Direct Subsidized Loan within the same academic year at a higher grade level

Changes to COD Edits

COD Reject Edit 046 – Incorrect Academic Year Dates

Schools have been reporting Direct Loan Academic Year Start and End Dates that are less than the required minimum number of weeks. Schools should be reporting academic year start and end dates that reflect their defined academic year for annual loan limit purposes. In general, an academic year for a credit-hour or direct assessment program must include at least 30 weeks of instructional time. An academic year for a clock-hour program must include at least 26 weeks of instructional time. Beginning October 30, 2016, COD Reject Edit 046 will be returned when the Direct Loan Academic Year Start and End Dates do not equal at least 26 weeks for origination and maintenance records. The new edit will apply to the 2016-2017 Award Year and forward.

COD Reject Edit 205 – Payment Period Start Date is outside the Award Begin and End dates

Currently, COD Reject Edit 205 is returned when the Payment Period Start Date for a disbursement is not contained within the Financial Award Begin and End Dates (Loan Period) of a Direct Loan award. However, the edit is not returned when the disbursement amount has been reduced to $0, the Payment Period Start Date is outside the loan period, and the disbursement date remains inside the loan period. Beginning October 30, 2016, COD Edit 205 will not be returned when a disbursement has been reduced to $0 and the Payment Period Start Date is outside the loan period, regardless of whether the disbursement date falls inside or outside of the loan period.

COD Reject Edit 206 & 207 – The Remaining Subsidized Eligibility Period is less than zero for this award

The Remaining Subsidized Eligibility Period is less than zero for this award after this disbursement was approved from the Action Queue Currently, Edits 206 and 207 are returned to schools when a Direct Loan award or maintenance record is submitted and the calculated Remaining Subsidized Eligibility Period is less than zero. Edits 206 or 207 are also returned when a maintenance record is submitted and the Remaining Subsidized Eligibility Period increases but the period remains less than zero. Beginning October 30, 2016, Edits 206 and 207 will no longer be returned when a maintenance record is submitted and the Remaining Subsidized Eligibility Period is increased or remains the same but the period is still less than zero.

New COD Edits

Correcting Edit 219 – Award Amount was greater than the sum of the Disbursement Amount(s)

In order for the COD System to correctly calculate the Subsidized Usage Period for a Direct Loan award, a school must ensure both the loan amount and disbursement amounts reflect the total amount disbursed to the student. Many schools have been reducing the disbursement(s) of a loan without also updating the loan amount. Beginning October 30, 2016, a new Correcting Edit 219 will be added for Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and TEACH Grants for the 2016–2017 Award Year and forward. When a school submits a maintenance record to reduce the disbursement(s) on a Direct Loan or TEACH Grant award, the COD System will correct the award amount to equal the new sum of the actual and anticipated disbursements.

Warning Edit 220 – The disbursement has an amount of $0 and a payment period start date within the loan period

When a student does not receive a disbursement for a payment period, schools have been reducing disbursement amounts to $0 without also making the appropriate adjustments to the loan period. As a result, the Subsidized Usage Period is not calculated correctly. Beginning October 30, 2016, a new Warning Edit 220 will be added for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans for the 2014-2015 Award Year and forward. Warning Edit 220 will be returned at the disbursement level when a disbursement amount is reduced to $0 and the loan period remains the same, leaving the Payment Period Start Date within the loan period. Warning Edit 220 will be returned at the award level when a disbursement is equal to $0 and the Financial Award Begin and/or Award End (loan period) dates changed but the Payment Period Start Date remains within the loan period. The warning edit reminds schools to verify that the reported Financial Award Begin and/or End dates reflect the correct period of enrollment for the loan.

http://bit.ly/2dVB9gH

What info are schools require to report to COD under SULA?

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.

 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.

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 have been adjusted to include only those payment periods (terms) for which the borrower received and retained an actual disbursement.
  • Academic year dates and reflect the defined length of a program’s academic year, and the dates were adjusted, when or if appropriate.
  • The same Weeks-Programs-Academic-Year was reported to both the COD System and NSLDS, and the academic year dates reflect at least the number of weeks reported.
  • The same program length measurement for the same program was reported to both the COD System and NSLDS.

As a reminder, 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.

In addition, award-level tags must be accurate as of the date that the last disbursement was made on the loan. For example, if a student was enrolled in a 1-year certificate program (credential level “1”) when the first disbursement was made, but is in a 2-year associate degree program (credential level “2”) when the second disbursement is made, the school must update the appropriate award-level tags when reporting that the second disbursement has been made.

SCHOOL REPORTING FAILURES CAN CAUSE STUDENTS TO LOSE LOAN SUBSIDIES

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 info@ed-executives.com.

As stated in our disclaimers, blog posts by Higher Ed Executives, shared on Twitter, LinkedIn, or elsewhere, should not be considered legal advice. Please consult a qualified advisor.

Common 150% SULA Questions and Answers

In March, Federal Student Aid implemented a Direct Loan Subsidized Usage Inquiry Page on the Common Origination and Disbursement (COD) Web site. It gives users the ability to send cases of incorrect Subsidized Usage Period calculations or incorrect applications of loss of subsidy to the Department of Education (the Department) for review and support. Most of the inquiries COD has received, have been the result of school’s simply not understanding the 150% limit or misreported data that schools should be correcting themselves.

http://1.usa.gov/20Qt4r7