Final Regulations Revise Definition of Payment Period

Federal regulations published Nov. 1 include revised and refined definitions of the term “payment period.” Schools may implement these revisions immediately and must implement them no later than July 1, 2008.

Because schools have the opportunity to move forward with adjustments to their payment-period calculation, USA Funds^® provides the following summary of the term “payment period” as it applies to certifying Federal Family Education Loan Program Stafford and PLUS loans. The definition of “payment period” for other types of Title-IV aid may differ in some instances.

The payment period is the term in either of the following instances:

• If the school uses credit hours and standard terms (semesters, trimesters or quarters).
• If the school uses credit hours and nonstandard terms that are substantially equal in length.

Payment periods for schools that use credit hours and nonstandard terms that are not substantially equal in length are as follows:

• If the program is one academic year or less in length:
  • The first payment period is the period during which the student completes half of the credit hours and half of the weeks of instructional time in the program.
  • The second payment period is the period during which the student successfully completes the program.
• If the program is more than one academic year in length:
  • For the first and any subsequent full academic year
    • The first payment period is the period during which the student completes half of the credit hours and half of the weeks of instructional time in the academic year.
    • The second payment period is the period during which the student successfully completes the academic year.
  • If the remainder of the program is more than half an academic year but less than a full academic year:
    • The first payment period is the period during which the student completes half of the credit hours and half of the weeks of instructional time in the remainder of the program.
    • The second payment period is the period during which the student successfully completes the program.
  • If the remainder of a program is half an academic year or less, the payment period is the remainder of the program.

Payment periods for schools that use credit or clock hours and no terms and offer programs that are one academic year or less are as follows:

• The first payment period is the period during which the student completes half of the credit or clock hours and half of the weeks of instructional time in the program.
• The second payment period is the period during which the student successfully completes the program.

Payment periods for schools that use credit or clock hours and no terms and offer programs that are more than academic year:

• For the first and any subsequent full academic year:
  • The first payment period is the period during which the student completes half of the credit or clock hours and half of the weeks of instructional time in the academic year. 
  • The second payment period is the period during which the student successfully completes the academic year.
• If the remainder of a program is more than half of an academic year but not a full academic year in length:
  • The first payment period is the period during which the student completes half of the credit or clock hours and half of the weeks of instructional time in the remainder of the program. 
  • The second payment period is the period during which the student successfully completes the program.
• If the remainder of a program is half an academic year or less, the payment period is the remainder of the program.

Note that if the school cannot document the student’s successful completion of the required credit or clock hours in the student’s program, academic year, or remainder of a program, the school may document that the student successfully completed half of the required coursework or half of the number of weeks of instructional time in the program, academic year, or remainder of the program.

For more information regarding the change in the payment-period definition, please contact USA Funds’ policy advisers.