Are We Required To Adjust Direct Loan Period End Dates If We Extend Or Shorten Our Terms Due To Coronavirus?

KA-34714 Helpfulness Rating 1,071 page views

This AskRegs Knowledgebase Q&A was updated on August 30, 2020 to inform schools that the August 21, 2020 Electronic Announcement extends the U.S. Department of Education's (ED's) previous guidance about not changing loan period dates when a school shortens or extends a term/payment period within the loan period.

According to the COVID-19 FAQs attached to ED's March 5, 2020 Electronic Announcement"Institutions that choose to extend terms that begin on or before June 1, 2020 as a result of the COVID-19 outbreak are not required to change loan period end dates if the loan period was scheduled to end on the term end date."

According to guidance NASFAA received from ED, the same is true if the school chooses to shorten the loan period by shortening the term or academic year (late start or early end). The school is not required to change the loan period begin or end dates in the Common Origination and Disbursement (COD) System for these loans. This flexibility also applies to any changes that occurred after March 5, 2020 to the length of a loan period, regardless of when the loan was or will be originated. In other words, the above rules apply to both existing loans and newly originated loans. For example, if the school is originating a new loan during the term/payment period after March 5, 2020, the school is not required to extend the loan period in COD (unless COD edits block the origination).

NASFAA has confirmed with ED that the August 21st announcement now extends this flexibility to loan periods that include a term/payment period that includes December 31, 2020 or a term/payment period that includes the date on which the qualifying emergency is declared to be over, whichever is later.

Note: Even given these flexibilities, we have been told by schools that COD edits might not allow you to originate a Direct Loan after the end of the loan period associated with the loan. In these cases, you will need to extend the loan period in order to pass the COD edits. We are not aware of any plans to suspend COD edits.

AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.