Repeal of the William D. Ford Federal Direct Loan Program Subsidized Usage Limit Restriction rule (2021)

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The Repeal of the William D. Ford Federal Direct Loan Program Subsidized Usage Limit Restriction rule is a significant rule issued by the U.S. Department of Education effective June 14, 2021, that removed and amended department regulations to align with the stated goals of the Consolidated Appropriations Act of 2021. The rule removed subsidized usage loan limit restrictions for student loan borrowers receiving Federal Direct Stafford Subsidized Loans distributed on or after July 1, 2021.[1]

HIGHLIGHTS
  • Name: Repeal of the William D. Ford Federal Direct Loan Program Subsidized Usage Limit Restriction
  • Agency: Office of Postsecondary Education, Department of Education
  • Type of significant rule: Economically significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    • August 13, 2021: The final rule took effect.[1]
    • June 14, 2021: The Department of Education published a final rule.[1]
    • December 27, 2020: President Donald Trump (R) signed the Consolidated Appropriations Act of 2021 into law.[2]

    Background

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    President Donald Trump (R) signed the Consolidated Appropriations Act of 2021 into law on December 27, 2020, which directed the Secretary of Education to repeal certain sections of the Higher Education Act of 1965 by July 1, 2023.[2][1]

    The Department of Education issued a final rule in the Federal Register on June 14, 2021, to further the stated goals of the Consolidated Appropriations Act. The department was permitted to waive the notice and comment procedure under the Administrative Procedure Act "because this final regulatory action removes regulations for which the statutory authority has been repealed. This regulatory action adopts no new regulations and does not establish or affect substantive policy," according to the rule.[1]

    Summary of the rule

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

    “ The Secretary removes and amends regulations to conform with changes made by the Consolidated Appropriations Act, 2021. Specifically, the Secretary removes the subsidized usage loan limit restriction (SULA) for any borrower who receives a Federal Direct Stafford Subsidized Loan first disbursed on or after July 1, 2021, regardless of the award year associated with the loan. In addition, all subsidy benefits 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 2013-2014 award year. The Secretary also removes regulations related to the subsidized usage loan limit restriction and makes other technical changes.[1][3] ”

    Summary of provisions

    The following is a summary of the provisions from the final rule's entry in the Federal Register:[1]

    “ In these final regulations we remove 34 CFR 685.200(a)(2)(i)(A) and (B) and (f) and 685.304(a)(6)(xvi) and (b)(4)(xii) to reflect the repeal of section 455(q) of the HEA. In addition, we amend § 685.200(a)(2)(i) introductory text and redesignate § 685.304(b)(4)(xiii) and (xiv).

    Borrower Eligibility (§ 685.200)

    We remove a reference to eligibility requirements for first-time borrowers from § 685.200(a)(2)(i)(A) and (B). Provisions specifying the limitations on a borrower's eligibility for Direct Subsidized Loans and the borrower's responsibility for accruing interest in § 685.200(f) are removed.

    Entrance Counseling (§ 685.304(a)(6)(xvi))

    We remove the requirement that entrance counseling include information on the limitation on eligibility of Federal Direct Stafford Subsidized Loans based on the borrower's subsidized usage period.

    Exit Counseling (§ 685.304(b)(4)(xii))

    We remove the requirement that exit counseling include the following information on the limitation on eligibility for Federal Direct Subsidized Loans based on the borrower's subsidized period:

    (a) How the borrower's maximum eligibility period, remaining eligibility period, and subsidized usage period are determined;
    (b) The sum of the borrower's subsidized usage periods at the time of the exit counseling;
    (c) The consequences of continued borrowing or enrollment;
    (d) The impact of the borrower becoming responsible for accruing interest on total student debt;
    (e) That the Secretary will inform the student borrower of whether he or she is responsible for accruing interest on his or her Direct Subsidized Loans; and
    (f) That the borrower can access the National Student Loan Data System (NSLDS) to determine whether he or she is responsible for accruing interest on any Direct Subsidized Loans.[3]
    		 ”

    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. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Federal Register, "Repeal of the William D. Ford Federal Direct Loan Program Subsidized Usage Limit Restriction," June 14, 2021
    2. ↑ 2.0 2.1 Congress.gov, "H.R.133 - Consolidated Appropriations Act, 2021," accessed July 6, 2023
    3. ↑ 3.0 3.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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