NASFAA Submits Comments On Interim Final Rule On 150 Percent Loan Subsidy Limitation

On May 16, the Department of Education published interim final rules limiting a student’s eligibility for subsidized Direct Loans to 150 percent of the length of the student’s program of study. The rules were triggered by an amendment to the Higher Education Act made by sec. 100301 of P.L. 112-141.

In response to the Department of Education’s (ED) call for comments on the interim final rule, NASFAA has submitted comments on eight different aspects of the new regulations.  The response expresses appreciation for ED’s assumption of responsibility for tracking eligibility and notifying students of their limits, but articulates concerns about the way the interim final rule interprets the law. Although ED seeks equitable treatment of students in similar circumstances, NASFAA’s response takes a different view of what constitutes equity in some cases, and points out inconsistencies in how this standard seems to be applied.

“We commend the Department for the candid discussion of issues in the preamble to the interim final rules and for the very helpful examples. Implementing this law equitably is a seriously challenging task. While we have some limited disagreements as to what constitutes equity, we appreciate the Department’s attempts at identifying and resolving those inequities,” President Justin Draeger said in the introduction to NASFAA’s comments.

NASFAA has previously covered these new regulations, and also produced a Q&A document to help clarify the impact of the rule.


Publication Date: 7/3/2013

Peter G | 8/20/2013 6:19:01 PM

I appreciate the analysis.
On the issue of 685.200(f)(4), taking it a step further, that rule is particularly problematic for programs that are of short duration since it's quite possible for a student to hit the 150% cap before actually using 100% of the time the program normally runs.
We have one program where we project some students will hit the 150% cap at the ~75% point in their program just depending on which cohort they enter with.
Losing the subsidy for the last 3 months of their program isn't nearly as consequential fiscally as losing the possibility of future subsidy if the loans are deferred again at a future point.

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