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Session 46

Session 46. What’s New in Direct Loans: Grad PLUS and other HERA-Related Changes Lisa DiCarlo. What’s New for Direct Loans?. The Higher Education Reconciliation Act (HERA) of 2005 COD System 6.0 Release, April 13, 2007. The HERA of 2005. Changes affecting Direct Loans

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Session 46

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  1. Session 46 What’s New in Direct Loans: Grad PLUS and other HERA-Related Changes Lisa DiCarlo

  2. What’s New for Direct Loans? • The Higher Education Reconciliation Act (HERA) of 2005 • COD System 6.0 Release, April 13, 2007

  3. The HERA of 2005 • Changes affecting Direct Loans • Effective February 8, 2006 • Reinstatement of low cohort default rate exemption • Effective July 1, 2006 • New False Certification Discharge due to Identity Theft • Graduate/Professional Students may borrow PLUS (Grad PLUS) • Effective July 1, 2007 • New Stafford (Sub/Unsub) Loan Limits for loans disbursed on or after July 1, 2007 • New Sub/Unsub origination fees – reduced over time.

  4. The HERA of 2005 • Low cohort default rate exemption: February 8, 2006 • COD System has implemented many changes as a result of the HERA • Updated e-MPN site: July 2006 • Student borrowers can complete a PLUS MPN • Reflects HERA changes to Sub/Unsub and PLUS

  5. The HERA of 2005 • Updated correspondence: July 2006 • Revised Plain Language Disclosure Statements for DL Sub/Unsub and PLUS. • New MPN Addenda for DL Sub/Unsub and PLUS • Updated correspondence to reflect HERA changes, including new PLUS borrower type. • Credit Check • MPN Packages

  6. The HERA of 2005 • Full Grad PLUS Functionality: August 12, 2006 • Process Grad PLUS via existing PLUS Common Record • Both student and borrower block must be completed and contain identical information • COD System will implement additional changes with the COD 6.0 Release on April 13, 2007

  7. COD 6.0 System Changes • April 13, 2007 • MPN Expiration Date changes • Discharge due to Identity Theft • Loan Limit changes • Origination Fee changes

  8. MPN Expiration Date Tags • Will send MPN Expiration Date in: • MPN response (message class CRPN##OP, where ## = award year) • Award Response Block • New tag is <MPNExpirationDate> • Change applies to all award years

  9. MPN Expiration Date Tags (continued) • MPN Response will be sent to: • School listed on MPN • All schools w/ active award linked to MPN

  10. MPN Expiration Date Tags (continued) • MPN Response will be sent when: • MPN is received and doesn’t link • MPN is received and links to one or more loans • MPN expiration date changes due to acceptance of actual disbursement

  11. MPN Expiration Date Tags (continued) • MPN Response won’t be sent when: • Loan is inactive • School has confirmed closeout for year • FSA has confirmed school closed out for year • Year is closed and school isn’t on extended processing for that year

  12. Discharge for Identity Theft • COD will accept new false certification discharge type for identity theft • MPN Discharge Report will include new reason identifier of “I” • Discharged loan won’t count against loan limit

  13. Discharge for Identity Theft (continued) • What does it mean for processing? • MPN linked to discharged loan won’t link to additional loans • Disbursements and adjustments for discharged loan may reject • Person w/ stolen identity may receive other loans

  14. Discharge for Identity Theft (continued) Example: • Discharge date: 8/1/2007

  15. Annual Loan Limit Changes • Certain loan limits will increase for loans disbursed on or after 7/1/2007 • COD System will accept loan origination records beginning 4/13/2007; however, higher limits apply only to loans disbursed on or after 7/1/2007 • Aggregate loan limits are unchanged • Applies to 2006-2007 and forward

  16. Annual Loan Limits-July 1, 2007 (continued) HERA Changes to Loan Limits Apply to loans disbursed on or after 7/1/2007

  17. Annual Loan Limits-July 1, 2007 (continued) COD Loan Limit Edits (Edit 39) Apply to loans disbursed on or after 7/1/2007

  18. Origination Fee Changes • HERA reduces Direct Loan origination fees over next 4 years • COD implements fee changes 4/13/2007 • Subsidized and unsubsidized loans only

  19. Origination Fee Changes (continued) Example 1: • Origination submitted w/ two actual disbursements • Loan amt = $3000, Origination Fee = 3.0%

  20. Origination Fee Changes (continued) Example 2: • Origination submitted w/ one actual • Loan amt = $3000, Origination Fee = 2.5%

  21. Origination Fee Changes (continued) Example 3: • Origination submitted with no actual disbursements • Loan amt = $3000, Origination Fee = 2.5%

  22. Origination Fee Changes (continued) Example 4: • Origination submitted with no actual disbursements • Loan amt = $3000, Origination Fee = 3%

  23. Origination Fee Changes (continued) Example 4: (continued) • Disbursement 2 becomes the first actual disbursement • Loan amt = $3000, Origination Fee = 3%

  24. Origination Fee Changes (continued) • What if this happens to me? • Inactivate loan • Change Date and Fee % • Reactivate loan and submit recalculated disbursements

  25. Contact Information We appreciate your feedback and comments. We can be reached at: Direct Loan Operations dlops@ed.gov

  26. Other Direct Loan Sessions Session 40 Hands On Tour of DL Tools Session 41 Best Practices in Using DL LSDA Session 42 DL Funding & Cash Management A-Z Session 43 Best Practices for Processing DL at Your School Session 44 Direct Loans A – Z Session 45 Direct Loans: How to Get Started and Get Going Session 47 Direct Loan Reconciliation and Closeout Session 48 Direct Loan Reports & Reference Materials-Tools of the Trade Session 49 How Direct Loan Servicing is Improving the Financial Aid Experience for You and Your Students

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