Foreign Schools: Awarding Loans

1. Session 51 Foreign Schools: Awarding Loans Nautochia Webb | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

2. STRUCTURING YOUR OFFICE • Direct Loan Team • Key Personnel Involved • Campus-Wide Coordination • Office Roles and Responsibilities • Systems and Electronics • Awarding and Disbursing • Reviewing and Reporting • Oversight and Corrective Plans

3. STRUCTURING YOUR OFFICE • Systems and Electronics • Maintenance of Systems • COD • G5 • NSLDS • SAIG/FSA Downloads • Electronic Updates • Staffing, Purchasing, Technology updates • Department Software and Programs • FAA Access to CPS Online • EDExpress • DL Tool • R2T4 on the Web

4. STRUCTURING YOUR OFFICE • Awarding and Disbursing • Perform awarding functions • Review ISIRS • Award loans, originate, and counsel students • Review SAP • Calculate R2T4, overawards, and adjustments • Maintain student records/forms • Perform disbursing functions • Debit/Credit student accounts • G5 access • Drawdown or return funds • Maintain required forms • Maintain student ledgers

5. STRUCTURING YOUR OFFICE • Reviewing and Reporting • Consumer Information • Campus Security • Enrollment Reporting • Form Letters • Policies and Procedures Manual • Processing, Packaging, Special Circumstances, etc.

6. STRUCTURING YOUR OFFICE • Oversight and Corrective Plans • Internal Reviews • Default Prevention and Management • Reporting Deadlines • Staffing

7. STUDENT ELIGIBILITY • Enrollment Status- • at least half-time at time of disbursement • General student eligibility requirements- • Citizenship, SAP, Valid ISIR, etc. • Parent and Grad PLUS borrowers- must pass credit check

8. TYPES OF DIRECT LOANS • Subsidized and Unsubsidized • A Combination, All Subsidized, or All Unsubsidized • Parent PLUS • Grad PLUS

9. TYPES OF DIRECT LOANS • Loan Limits for Subsidized/Unsubsidized Loans • Dependent Undergraduates (excluding dependent students whose parents can’t get PLUS)Subsidized Total Subsidized & Unsubsidized • First Year......................................... $ 3,500 $ 5,500 • Second Year.................................... $ 4,500 $ 6,500 • Third Year and Beyond.................... $ 5,500 $ 7,500 • Independent Undergraduates & Dependent Students whose parents can’t get PLUSSubsidized Total Subsidized & Unsubsidized • First Year…..................................... $ 3,500 $ 9,500 • Second Year.................................... $ 4,500 $10,500 • Third Year and Beyond.................... $ 5,500 $12,500 • Graduate & Professional Students…$ 0* $20,500 (all years)

10. TYPES OF DIRECT LOANS • Aggregate Limits for Subsidized/Unsubsidized Loans Subsidized Total Subsidized & Unsubsidized • Dependent Undergraduates (excluding those whose parents can’t borrow PLUS) $ 23,000 $ 31,000 • Independent Undergrads & Dependent Students whose parents can’t get PLUS $ 23,000 $ 57,500 • Graduate & Professional Students$ 65,500* $ 138,500** *Effective for loan periods beginning on or after July 1, 2012, graduate and professional students are no longer eligible for Direct Subsidized Loans. **Aggregate loan limits for graduate and professional students include loans received for undergraduate study. The $65,500 subsidized aggregate loan limit shown here for graduate and professional students includes subsidized loans received for loan periods beginning before July 1, 2012, and prior subsidized loans received for undergraduate study.

11. DETERMINING LOAN PERIODS • Loan Period = Period of Enrollment • Maximum loan period- • Generally the academic year; sometimes the length of program • Minimum loan period- • Standard term or SE9W program - one academic term • Other programs - lesser of the academic year, students program or • Remaining portion of the program or an academic year • Loan period may cross award years • Loans must be disbursed equally by payment period

12. ANNUAL LOAN LIMITS • Undergraduate students ineligible for Subsidized loans may receive up to the total Subsidized/Unsubsidized annual loan limit in Unsubsidized loans • Subsidized loan annual loan limits are the same for both dependent and independent undergraduates • The student’s maximum annual loan limit increases as the student progresses to higher grade levels

13. PRORATING ANNUAL LOAN LIMITS • Undergraduate Student • Programs longer than an academic year: final period of study that is less than an academic year: Hours/Credits Enrolled X Annual Loan Limit Hours/Credits in AY • Program that is less than an academic year program that is shorter than an academic year, use the lesser of: Hours/Credits Enrolled X Annual Loan Limit Hours/Credits in AY or Weeks in Program X Annual Loan Limit Weeks in AY *Calculate Subsidized and Unsubsidized separately

14. MONITORING LOAN LIMITS • Scheduled Academic Year (SAY) • Term-based, credit-hour programs • Fixed period of time • Corresponds to academic year calendar • Borrower-Based Academic Year (BBAY) • Moves with student’s attendance and progression in program • Must be used for clock-hour and non-term programs • May be used by term-based credit-hour programs

15. SINGLE TERM LOAN PERIODS • If loan period consist of one semester- • the first half of the loan will be disbursed at the beginning of the semester and the second half will be disbursed at the calendar midpoint of the semester • If more than half of semester has passed before disbursement- • single disbursement of the loan may be made

16. MULTIPLE TERM LOAN PERIOD • If a loan period consists of more than one term- • each term is a payment period and a disbursement is made at the beginning of each payment period • If disbursing loan in non-term, credit- or clock-hour programs- • Whether the loan period is an academic year or a period less than an academic year, the loan must be disbursed in at least two substantially equal amounts • The first disbursement is generally made at the beginning of the loan period. The second disbursement may not be made until: • the student successfully completes half of the coursework; AND  • half of the weeks of instructional time of the loan period

17. LOAN FLEXIBILITY • Professional Judgment • for awarding Unsubsidized loans to dependent students without parent data • Student may receive maximum dependent loan eligibility • School may refuse to originate the loan for an individual borrower • School may originate a loan for an amount less than the borrower’s maximum eligibility

18. SUBSIDIZED LOAN ELIGIBILITY • Subsidized loans are need-based • COA – EFC – EFA = Subsidized Eligibility • COA is determined for the number of weeks/months • EFC used is the primary EFC on ISIR for months in loan period • Eligibility is determined BEFORE Unsubsidized loan eligibility

19. UNSUBSIDIZED LOAN ELIGIBILITY • Unsubsidized loans are NOT need-based • COA – EFA = Unsubsidized • Eligibility is determined AFTER Subsidized loan eligibility

20. PLUS Eligibility • Parents of dependent students or graduate/professional student with no adverse credit • COA – EFA = Maximum PLUS • PLUS may replace EFC • No Annual/Aggregate limit • Parent borrower is not required to file FAFSA • PLUS are not subsidized • Eligibility is determined AFTER Subsidized and Unsubsidized loan eligibility

21. COST OF ATTENDANCE • COA = estimate of student’s educational expenses • Includes direct institutional cost and indirect education-related costs • Components of COA • Tuition and fees • Books and supplies • Transportation and personal expenses • Allowance for room and board • Dependent care cost • Study abroad expenses • Cost associated with a disability • Cooperative-education-related expenses • Loan fees

22. MASTER PROMISSORY NOTE (MPN) • School must use ED’s MPN • Borrower must sign prior to loan disbursement • No dollar amount printed on the MPN • Only one MPN needed for Subsidized/Unsubsidized loans for same Award Year • A student or parent must complete a Direct Loan MPN for each academic year that he or she receives a Direct Loan for attendance at your school • PLUS MPN includes credit check information • MPN may be paper or electronic

23. ESTABLISHING BANK ACCOUNT • Institution must maintain loan funds in an interest-bearing or investment account • Unless institution drew down less than $3 million in the prior AY and expects to draw $3 million in the next AY • First $250 in interest may be retained by the institution • Must complete addendum if using foreign bank account

24. REQUESTING FUNDS • Students must be reported through COD • No earlier than 7 days prior to disbursement, but no later than14 days after disbursement • Funds must be requested through G5 • Identified by program and fiscal year • School must request immediate need • Disbursed to eligible students within 3 business days

25. DIRECT LOAN AWARD NUMBER • P268K15xxxx • P CFDA principle office designator • 268 CFDA numeric suffix for Direct Loan • K Alphabetic subprogram identifier • 15 First 2 digits of funding fiscal year (2014-15) • xxxx 4 digit unique school identifier assigned by COD CFDA - Catalog of Federal Domestic Assistance principal office designator

26. DISBURSING FUNDS • Check student eligibility • general • program-specific • period of eligibility • Determine payment periods • term-based • non-term credit-hour • clock-hour programs

27. DISBURSING FUNDS • When school credits disbursement to student’s account or pays student/parent directly with- • Funds received from ED • Institutional funds used in advance of receiving ED funds • Disbursement information (amount and date) on account must match student’s COD disbursement record • Required notices/authorization must be given/obtained prior to student disbursements. Borrower notification must also be given after disbursements

28. 150% Subsidized Loan Limit • Law limits subsidized loan borrowing • Borrower may receive subsidized loans for 150% of the length of the borrower’s current educational program • Aggregate subsidized loan limit still applies • Law includes potential loss of subsidy for each borrower, after 150% point is reached • If eligibility is lost, borrower still eligible for Direct Unsubsidized Loans

29. 150% Subsidized Loan Limit • Varies by program • Multiply published length of program by 1.5 • Measured in academic years or portions • ED will calculate using school-reported information

30. RETURNING FUNDS • R2T4 • Adjustments • Recoveries • Excess Cash

31. REPORTING FUNDS • Timeframes • Required Notices • Required Authorizations

32. QUESTIONS?