By Hugh T. Ferguson, NASFAA Staff Reporter
Related Topics in the Ref Desk: Direct Loans
The Department of Education (ED) in a Federal Register notice and Electronic Announcement said it will early implement the repeal of the limitation on lifetime subsidized loan eligibility, known as Subsidized Usage Limit Applies (SULA), which currently bars students from receiving subsidized Direct Loans for more than 150% of the published length of their program. Congress, through the Consolidated Appropriations Act, 2021, required ED to implement the repeal by July 1, 2023.
Moving forward, the repeal will apply to any borrower who receives a Direct Loan first disbursed on or after July 1, 2021, regardless of the award year associated with the loan. In addition, all lost subsidy benefits, if applicable, will be reinstated retroactively to the date on which the loss of subsidy was applied for all Federal Direct Stafford Subsidized Loans with an outstanding balance on July 1, 2021, and for all award years since the 2013-14 award year, which was when the SULA requirement was first implemented.
The guidance also removes references to the lifetime subsidized loan limit in entrance and exit loan requirements, so schools should update any in-house loan counseling materials. Notably, there are no changes to program level enrollment reporting requirements.
The Electronic Announcement reviews many of the immediate operational impacts that schools need to be aware of, and ED will be issuing more guidance in the next couple of months.
Separately, ED notified NASFAA that its online loan counseling has been updated to remove references to SULA and they are working to update all pdf documents on ED web pages.
The SULA requirement went into effect in 2013 as a way to pay for a one-year extension of a lower interest rate for undergraduate students, prior to the move to the variable-fixed interest rate structure. NASFAA has advocated heavily to eliminate this onerous cost-saving requirement that has burdened institutions and negatively impacted students.
Publication Date: 6/14/2021
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