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William D. Ford Federal Direct Loan Program rule (2014)

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The William D. Ford Federal Direct Loan Program (2014) rule is a significant rule issued by the U.S. Department of Education that implemented final regulations incorporating changes from the Moving Ahead for Progress in the 21st Century Act (MAP-21) into the regulatory code governing the Direct Loan Program and modifying similar interim regulations established previously. Specifically, the rule incorporated the statutory interest rate and length restrictions for Subsidized Direct Loans established in MAP-21. The final rule took effect on March 18, 2014.[1]

HIGHLIGHTS
  • Name: William D. Ford Federal Direct Loan Program
  • Agency: Office of Postsecondary Education, Department of Education
  • Type of significant rule: Economically significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    • March 18, 2014: The final rule took effect.[1]
    • January 17, 2014: The Department of Education Published the final rule.[1]
    • July 1, 2013: The Department of Education closed the comment period.[1]
    • May 16, 2013: The Department of Education published an interim final rule, which took effect the same day and requested comments.[2]
    • July 6, 2012: President Barack Obama (D) signed the Moving Ahead for Progress in the 21st Century Act (MAP-21) into law, amending various provisions of the Higher Education Act related to the Direct Loan Program.[2]

    Background

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    The Higher Education Act (HEA) was enacted by President Lyndon B. Johnson (D) in 1965, establishing several financial aid programs for college students. The law was reauthorized, usually with amendments, every five years from 1965 through 2008 when the Higher Education Opportunity Act (HEOA) reauthorized the HEA through 2013. The HEOA incorporated several amendments that became effective in 2010, including a change that moved "all new subsidized and unsubsidized Stafford loans, PLUS loans, and Consolidation loans" under the Direct Loan Program.[3]

    President Barack Obama (D) signed the Moving Ahead for Progress in the 21st Century Act (MAP-21) into law on July 6, 2012, amending various provisions of the HEA related to the Direct Loan Program. The changes enacted with MAP-21 included:[1]

    • A prohibition on borrowers receiving Direct Subsidized Loans "for more than 150 percent of the published length of the educational program in which the borrower is enrolled." For example, a borrower could not receive six or more years of subsidized loans for a four-year bachelor's program under the MAP-21 amendments. After the 150% limit, under MAP-21, interest would start accruing on the subsidized loans, and borrowers would only be eligible for unsubsidized loans.[1]
    • A provision stating that the interest rate on a Direct Subsidized Loan originated between July 1, 2012, and July 1, 2013, would be 3.4%.

    The Department of Education released an interim final rule effective May 16, 2013, that incorporated the MAP-21 changes into the regulatory code governing the William D. Ford Federal Direct Loan Program and requested comments on the changes by July 1, 2013. The final regulations, which took effect March 18, 2014, addressed comments on the interim rule and made modifications to rounding procedures and eligibility and subsidized usage calculations.[1]

    The version of the regulations in 34 CFR 685 as of April 2023 can be read here.

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:

    “ The Secretary amends the William D. Ford Federal Direct Loan Program (Direct Loan Program) regulations to implement the changes to the Higher Education Act of 1965, as amended (HEA), resulting from the Moving Ahead for Progress in the 21st Century Act (MAP-21). These final regulations reflect the provisions of the HEA, as amended by MAP-21.[1][4] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register.

    Finalized the interim rule

    The final rule finalized the implementation of the interim final regulations that were effective May 16, 2013. The interim regulations:[1]

    “
    • Provided that a Direct Subsidized Loan first disbursed on or after July 1, 2012, and before July 1, 2013, has an interest rate of 3.4 percent.
    • Established new Direct Loan Program regulations that provide that a first-time borrower on or after July 1, 2013, is no longer eligible to receive additional Direct Subsidized Loans if the period during which the borrower has received such loans meets or exceeds 150 percent of the published length of the program in which the borrower is currently enrolled. These borrowers may still receive Direct Unsubsidized Loans for which they are otherwise eligible.
    • Established new Direct Loan Program regulations that provide that first-time borrowers who are ineligible for Direct Subsidized Loans as a result of these provisions and who enroll in a program for which the borrower would otherwise be eligible for a Direct Subsidized Loan become responsible for accruing interest on all previously received Direct Subsidized Loans during future periods, beginning on the date of the triggering enrollment, unless the student completes his or her prior program of study and has not lost eligibility for Direct Subsidized Loans as a result of these provisions.
    • Prorated periods of Direct Subsidized Loan receipt during part-time enrollment for purposes of the 150 percent limit on Direct Subsidized Loan eligibility.
    • Established special rules for applying the 150 percent limit on Direct Subsidized Loan eligibility for borrowers enrolled in preparatory coursework required for enrollment in an undergraduate program, preparatory coursework required for enrollment in a graduate or professional program or teacher certification coursework necessary for a State teaching credential for which the institution awards no academic credential. These special rules limit the borrower's responsibility for accruing interest in certain circumstances.
    • Modified existing entrance- and exit-counseling requirements to require institutions to provide borrowers with information regarding the 150 percent limit on Direct Subsidized Loans.[4]
    		 ”

    Modified interim regulations

    The final rule also modified the interim regulations in the following ways according to the final rule's entry in the Federal Register:[1]

    “
    • Modify the rule for rounding borrowers' subsidized usage periods to ensure that similarly situated borrowers have similar subsidized usage periods;
    • Modify the calculation of the subsidized usage period for borrowers who are enrolled on a part-time basis for a period of less than a full academic year, but who receive a Direct Subsidized Loan in the amount of the full annual loan limit;
    • Modify the calculation of the maximum eligibility period for two-year baccalaureate degree programs that require an associate degree or at least two years of postsecondary coursework as a prerequisite for admission; and
    • Modify the calculation of the maximum eligibility period for certain associate degree programs that have special admissions requirements.[4]
    		 ”

    Significant impact

    See also: Significant regulatory action

    The Office of Management and Budget (OMB) deemed this rule economically significant pursuant to Executive Order 12866. An agency rule can be deemed a significant rule if it has had or might have a large impact on the economy, environment, public health, or state or local governments. The term was defined by E.O. 12866, which was issued in 1993 by President Bill Clinton.[1]

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 Federal Register, "William D. Ford Federal Direct Loan Program," January 17, 2013
    2. ↑ 2.0 2.1 Federal Register, "William D. Ford Federal Direct Loan Program," May 16, 2013
    3. ↑ Federal Register, "William D. Ford Federal Direct Loan Program," October 23, 2014
    4. ↑ 4.0 4.1 4.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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