The Repeal of SULA

The FAFSA Simplification Act, which will be phased in over the next few years, has several major changes that will affect students and financial aid offices in the immediate future. One of those changes includes repeal of the 150% Direct Subsidized Loan Limit, or SULA.

The FAFSA Simplification Act is part of the Consolidated Appropriations Act of 2021 and was passed on Dec. 27, 2020, to simplify requirements when schools and students process and apply for student aid.

SULA will continue to apply to Direct Subsidized Loans with a first disbursement before July 1, 2021. But after June 27, 2021, COD will no longer include loans that have a first disbursement on or after July 1, 2021, in SULA calculations.

With this COD implementation, the Department of Education will also recalculate subsidized usage amounts that previously included loans with a first disbursement date on or after July 1, 2021.

SARs/ISIRs will continue to display messages on 150% limits for those borrowers subject to the limit – those with loans first disbursed on or after July 1, 2013, and before July 1, 2021. However, for applicants with the SULA indicator set to “Y” for loans with a first disbursement on or after July 1, 2021, the indicator will be changed to “N.”

Additionally, ED will remove the “loss of subsidy” status from Direct Subsidized Loans that have lost the interest subsidy benefit from the 2013-2014 award year and forward.

Because of these changes, schools should expect to see an increase in post-screening ISIRs.

The Department of Education will also work with loan servicers to retroactively apply subsidy benefits for any borrower who lost those benefits because of SULA.

ED will also update SULA language-related changes on, including removal of the “Loss of Subsidy” icon from the loan level display in loan counseling. In the ASLA link to SULA, ED will make a minor edit to the link language.

Please note that program level enrollment reporting to COD and NSLDS will not change. Colleges and universities must continue to report the required data.

For colleges that provide their own loan counseling materials, those materials should be updated to remove all information about SULA and loss of subsidy. Other college-produced materials, such as letters, web content, or internal procedures, should also be evaluated and updated. Global’s system is designed to assist schools with SULA requirements, and we are in the process of updating our materials for our clients.

As a reminder, SULA will still apply to loans with a first disbursement before July 1.

The Department of Education plans to post more information on changes in the next few months.

To access this announcement and more information on operational changes, click here. This announcement also includes resources for keeping up with the latest information on SULA topics and questions about updates to CPS or EDExpress, COD and NSLDS.