ED Clarifies How Current Students Can Access Uncapped Loans

Financial aid experts say the Education Department is reworking the way it determines whether existing students are eligible for uncapped loans, but a department spokesperson says the change is “not anything new.”

During a webinar last week, staffers at the Office of Federal Student Aid provided clarity about how they are calculating “expected time to credential”—or a formula that is key to determining how long certain students can remain eligible for the Grad and Parent PLUS programs under new loan limits. Instead of basing these calculations on the length of time a student is enrolled—as many financial aid experts previously understood to be the case—ED now appears to be basing them on the number of credit hours completed.

Loan experts say this is the first time they’ve heard about this change and that it’s significant because it could dramatically affect whether students who were enrolled prior to the new policy taking effect can still finance the remainder of their studies. 

Congress ended Grad PLUS and put new limits on Parent PLUS last year. Those changes took effect July 1, and existing students were grandfathered in since many began their studies depending on those loans to cover college costs. Under the final regulations, they were only going to have access to the uncapped loans for up to three years or whenever they hit their program’s standard full-time length, whichever comes first. (For example, many master’s programs are expected to take two years to complete.)

Now, that formula for eligibility appears to be based on credit hours—not time. 

Ellen Keast, an Education Department spokesperson, said the formula for calculating a student’s expected time to credential is not new and should not come as a surprise.

“The latest webinar and the specific question had been discussed earlier along with similar questions and answers over the past few months in the Virtual Office Hours that we have been doing with schools on implementation,” she wrote in an email to Inside Higher Ed.

The department did not, however, provide further specifics about when the updated definitions were discussed or written down. Meanwhile, financial aid administrators and loan experts noted that the department’s final rule on the new loan limits states that expected time to completion and therefore remaining eligibility for PLUS loans is based on time. They also cited an FAQ document released in May that suggests the same. 

The change would apply to undergraduate and graduate students, and some experts say it could help address previous concerns that existed under the time-based model for calculating eligibility. By focusing on credit hours, they say, it would better protect part-time students from losing access to the loans before they can complete their program. 

But it also raises new questions and concerns for financial aid administrators. Based on the webinar slides, it’s unclear how the change will affect students who have been taking more credits a year than the minimum required for their degree but still haven’t completed certain critical classes and whether they’ll now be cut off from PLUS loans before finishing their degree. 

The timing of a shift like this is also not ideal, said Sarah Austin, a policy analyst at the National Association of Student Financial Aid Administrators. NASFAA has previously taken issue with how the Trump administration is rolling out changes to the new loan limit policies.

“It’s really about the timing of this—the fact that we’re getting a change of guidance in August when school has already started on many campuses,” Austin said. “We’re now thinking what are all the scenarios where this changes what schools have been packaging [financial aid offers based] on.”