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Federal Register / Vol. 86, No. 112 / Monday, June 14, 2021 / Rules and Regulations
of the subsidized usage limit. The Department estimates that the SULA
Repeal Phases 1 and 2 will cost $454,025. Phase 1 consists of modifying existing triggers in the reporting of origination and disbursement data to the Common Origination and Disbursement COD system and the reporting of enrollment data to the National Student Loan Data System NSLDS with an estimated cost of $279,025. Phase 2
involves evaluating and implementing the impacts of SULA repeal to the Office of Partner Participation and Oversight PPO/FSA Partner Connect, DCC/
Digital Platform StudentAid.gov, myStudentAid app, Customer Care Platform, Marketing and Communications Platform as well as other interfaces and reports that include SULA data and is expected to cost approximately $175,000.
Net Budget Impact The total net budget impact of the regulations is $1,888 million in outlays over 10 years. We estimate that these regulations will have a net Federal budget impact for Federal student loan cohorts between 20212030 of $635
million as well as an effect on past cohorts of $180.1 million for the restoration of interest benefits. We also estimate a potential shift from unsubsidized loans to subsidized loans after July 1, 2021, with a two percent shift costing approximately $1,073
million in additional outlays for the Federal student loan cohorts between 20212030. A cohort reflects all loans originated in a given fiscal year.
Consistent with the requirements of the
Credit Reform Act of 1990, budget cost estimates for the student loan programs reflect the estimated net present value of all future non-administrative Federal costs associated with a cohort of loans.
The Net Budget Impact is compared to a modified version of the 2020
Presidents Budget baseline PB2021
that adjusts for the Coronavirus Aid, Relief, and Economic Security CARES
Act and extension of coronavirusrelated student loan provisions and other recent regulations.
The net budget impact of the increased transfers associated with the removal of the subsidized loan usage limitation come from the restoration of subsidized loan interest benefits to existing borrowers and additional subsidized loan volume, as future borrowers are no longer subject to the limitation. The loss of subsidized loan benefits was previously modeled by applying interest to subsidized loans assumed to be affected by the limitation.
Reversing this added interest for existing cohorts is estimated to cost $180 million and $635 million for cohorts from 2021 to 2030.
The potential increase in subsidized loan volume, either from those who did not borrow because of the limit or who took out unsubsidized loans instead, is challenging to predict. While borrowers with $1.6 billion in disbursements were affected by the limit, it is likely that others managed their subsidized loan usage, with the help of their institutions, to not trigger the loss of subsidized benefits. Future borrowers will not face the same constraint, so some borrowers who would not be
identified as being affected by the subsidized loan usage limit will also take additional subsidized loans. The peak year for disbursements affected by the subsidized usage limitation was 2016, with approximately $356.5
million in subsidized loans. This represents around 2 percent of the $22.95 billion in subsidized loans disbursed in AY 20152016. Table 2
demonstrates the cost of shifting loan volume from unsubsidized to subsidized with the 2 percent shift within the range evaluated.

TABLE 2COST OF SHIFTING FROM
UNSUBSIDIZED
TO
SUBSIDIZED
LOANS FOR COHORTS 20212030
Millions Estimated cost
Volume shift 1 percent
2 percent
5 percent

$852
1,073
1,739

Accounting Statement As required by OMB Circular A4
available at www.whitehouse.gov/sites/
default/files/omb/assets/omb/circulars/
a004/a-4.pdf, in the following table we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of these final regulations.
This table provides our best estimate of the changes in annual monetized transfers as a result of this rule.
Expenditures are classified as transfers from the Federal Government to affected student loan borrowers.

TABLE 3ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES
In millions Benefits Category 7%
Reduction in paperwork burden on students and institutions from elimination of subsidized usage limit information in entrance and exit counseling requirements

3%
4.8

Category
Costs 7%

Costs to modify Government systems for administering student loans to implement repeal of SULA

3%
$.06

Category
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Increased transfers of subsidized loans to eligible students
Restoration of subsidized loan benefits to affected borrowers

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consideration to borrowers with outstanding balances on unsubsidized loans because of SULA, the Department
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$.05

Transfers 7%

Alternatives Considered While the statute could have been implemented prospectively without
4.8

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3%
$96.2
$85.4

$98.7
$82.7

interprets this repeal by Congress to reverse the impact of SULA, which was instituted initially as a cost-saving
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