Background for the Schedule of Reductions (SOR)

The 2025 One Big Beautiful Bill Act (OBBBA or OB3) introduces the Schedule of Reductions (SOR) on student loans for Less Than Full-Time (LTFT) enrollment.

SOR for LTFT Enrollment for an Academic Year

The Schedule of Reductions (SOR) requires the amount of any Direct Loan a student may borrow (Direct Subsidized, Direct Unsubsidized, and Grad Plus Loans) for the award year to be reduced in direct proportion to the degree to which that student is not enrolled on a full-time basis, as of the date the institution determined the student’s eligibility for the award, rounded to the nearest whole percentage point.

Institutions must reduce a student’s loan amounts in direct proportion to the amount the student is not enrolled full-time (except for non-term programs) through Equal Disbursements or Proportional Disbursements.

Anthology Student version 26.1.1 provides only the Equal Disbursements calculation. Functionality for the Proportional Disbursements calculation will be added in a future version.

No reduction is required if the student drops credits after disbursement in the current term, but a school can choose to apply a refund in the term the over-award occurred instead of waiting until the next term.

Subsequent term disbursement would also be evaluated and reduced, if necessary, based on the total number of credit hours for the academic year.

Anthology Student will use the loan’s Gross Amount to calculate the SOR. If the loan amount was wrong when the SOR calculation was invoked, the user can update the loan’s gross amount (without saving) and click the “Recalculate” button to apply the SOR calculation against that max loan amount. (A new field called “Max Loan Amount” is coming in Anthology Student 26.2.0 that will allow the institution to lock down the value that is always used when calculating the SOR.)

All other eligibility criteria must be checked before disbursement.

• Borrowers enrolled less than half-time are not eligible for loans.

• Existing R2T4 rules apply.

• For single-term loans (e.g., a transfer student enrolling for one term), the existing per-term formula at 34 CFR 685.203(m)(1)(i) applies.

• A borrower may not receive more than the SOR annual loan limit for the loan period, regardless of how disbursements are distributed across terms. If rounding results in exceeding the SOR loan amount, then Anthology Student will adjust the last disbursement so as not to exceed the SOR annual limit.

Glossary of Terms for the SOR Calculation

Full-Time term credits:	Institutions define the credits needed to be full-time for a term under Configuration > Academic Records > Program > Program Version in the "Full Time Minimum" field.
Full Academic Year Credits:	Institutions define the full-time academic year credits under Configuration > Financial Aid > Program Version in the "Full Academic Year Credits" field.
Initial maximum annual loan limit:	Annual loan limit for the borrower based on loan type, grade level, and dependency status. This should be the amount the loan originated for, but if the student or school chooses to award an amount less than the maximum limit, then it would not be that value.
SOR percentage:	Total enrolled credits divided by the total full-time credits. Round to the nearest whole percentage point. Total enrolled credits are pulled from the courses registered, and any future term that is not registered will be assumed as full-time minimum credits. If the result is 100% or higher, no reduction applies and disburse per standard rules.
SOR annual loan limit:	Initial maximum annual loan limit multiplied by the SOR percentage. This becomes the new annual loan limit. Round to the nearest whole dollar.
Revised SOR annual loan limit:	Recalculated SOR annual loan limit based on change in enrollment status.
Total amount disbursed to the borrower:	Sum of all disbursements already made to the borrower for this loan period. If a refund has been posted and accepted by COD, then that amount will reduce the amount disbursed to the borrower.
Remaining loan eligibility:	Revised SOR loan limit minus the total amount disbursed to the borrower; the remainder is available to be distributed across future terms.
Equal disbursements:	Divide the annual loan limit (initial, SOR, or revised SOR) by the number of terms in the loan period; each term receives an equal share. Round to the nearest whole dollar. Ensure that the sum of distributions equals the annual amount, exactly.

SOR Steps in the Calculation

Step 1:	Determine the amount of the academic year loan limit the term represents. This would be the max loan amount the student is eligible for, regardless of whether the student requested a lower amount for that loan.
Step 2:	Determine that the student meets all eligibility requirements for disbursement, in accordance with 34 CFR 668.164(b)(3).
Step 3:	Calculate disbursement based on enrollment and reduce DL amount accordingly. A borrower may not receive more than the SOR annual loan limit (total credits enrolled by total full-time credits multiplied by the max loan amount) for the loan period, regardless of how disbursements are distributed across terms. If rounding results in exceeding the SOR loan amount, the institution decides which disbursement to adjust.

Example

Step 1:	1st year that the student is independent.
Step 2:	The student has no prior Aggregate loan that limits their eligibility and has full eligibility for Need-Based Aid, with a max loan amount of DLSU = $3,500. If a student is in an academic year that awards 3 disbursements and each term is 12 credits of full-time. The Sub loan would get 3 gross disbursements of $1,167 / $1,166 / $1,167. Then in term 1, the student is registered for 8 credits, and we assume full-time for the remaining 2 terms. The loan SOR annual percentage is (8+12+12) / 36 = .88888889 which is rounded up to 89%. The sub-annual SOR% is 3500 by 89% = $3,115.
Step 3:	The Sub loan would get 3 gross disbursements of $1,038 / $1,038 / $1,039. Even though the equal disbursement amount is $1,038.33, we use standard rounding on each disbursement, and the last disbursement is rounded to not exceed the SOR annual limit of $3,115.

Maximum Loan Eligibility and LTFT SOR Steps for Disbursements

Maximum Eligible = the lesser of:

Component	Formula
Subsidized	lesser of (statutory grade-level sub limit) OR (COA - SAI - OFA)
Unsubsidized	remaining eligibility up to the combination base loan limit

The LTFT reductions are always calculated against the maximum eligible base amounts - even if the student requested a lower loan amount.

Annual Statutory Limits (Undergraduate - unchanged under OB3):

Annual Statutory Limits (Undergraduate - unchanged under OB3):

Grade Level	Sub Limit	Unsub Limit (Dependent)	Unsub Limit (Independent)
1st Year (0/1)	$3,500	$5,500 combined	$9,500 combined
2nd Year (2)	$4,500	$6,500 combined	$10,500 combined
3rd Year+ (3-5)	$5,500	$7,500 combined	$12,500 combined

The 6-Step LTFT Schedule of Reductions

This is the Department of Education (ED) formula. Follow all six steps for every disbursement where a student is less than full-time.

Step 1:	Determine max loan eligibility	(grade level + dependency status + COA - SAI - OFA) Lock this number in. Do not change it.
Step 2:	Calculate the annual enrollment percentage	(total credits enrolled for the academic year/credits considered FT for the year) x 100 = Annual Loan Limit Percentage
Step 3:	Calculate what portion of the academic year the current term represents	For a 2-term year: each term = 50% For a 3-term year: each term = ~33.33%
Step 4:	Calculate the term's enrollment intensity percentage	(credits enrolled for THIS TERM/credits considered FT for THIS TERM) x 100 = Term Enrollment Intensity
Step 5:	Calculate the term disbursement	(Max Annual Eligibility x Term Portion) x Term Enrollment Intensity = Term LTFT Disbursement Amount
Step 6:	For subsequent terms:	Restart Steps 1-3 for that term. Subtract what has already been disbursed from the LTFT annual limit. The remainder (up to the term limit) is the next disbursement.

Important: The enrollment intensity reported in the COD <EnrollmentIntensity> tag (a whole number 0-100, capped at 100%) is a reporting field only. COD does NOT use it to validate or calculate loan amounts. The math is done by the school/vendor at the time of disbursement.

Resolving the Core Confusion: "Which Amount Drives the First Disbursement?"

The Question: If a student takes 12 credits out of a 24-credit full-time academic year, is the first disbursement 50% of the prorated annual loan, or 50% of the full max eligible?

The Answer: The first disbursement is NOT calculated by prorating the annual loan amount first. The Steps above always apply the LTFT reduction per term, against the full max eligible.

The confusion arises from two different but correct statements that look like contradictions:

• "The first disbursement is 50% of the max eligible ($3,500)" - TRUE in the sense that for a standard 2-term year, 50% of the annual limit is the TERM BASE before applying the enrollment intensity reduction.

• "The loan is prorated" - ALSO TRUE, but the proration happens at the TERM level (Step 4-5), not at the annual level first.

The step-by-step makes this concrete. See Scenario A below.

Substantially Equal Disbursements - When the Rule Applies and When It Is Waived

Situation	Rule
Student is full-time for all terms	Substantially equal disbursements required
Student triggers the LTFT schedule of reductions	Substantially equal disbursements waived - uneven disbursements are legally required by the math
School wants uneven disbursements without the LTFT trigger	Not allowed - the school cannot discretionarily choose uneven splits

The waiver is strictly driven by the math of the LTFT calculation. If the schedule of reductions is not required, the equal disbursement requirement stands. This is not at the school's discretion.

Short Remaining Period of Study (Statutory Proration) vs. LTFT - Stacking Rules

When an undergraduate student is in a remaining period of study shorter than a full academic year (e.g., a graduating senior taking only a fall term), statutory proration must be applied BEFORE the LTFT math.

Order:

1. Apply statutory proration first (cut the annual base limit proportionally to the remaining program length)

2. Then apply the LTFT schedule of reductions to the already-prorated base

This is a double reduction - it is not the lesser of the two. Both apply.

Packaging and Intent to Enroll - What the System Must Handle

Rule: Schools may package and originate a loan based on expected enrollment (intent to enroll) before the student is actually registered. The LTFT reduction is applied at the time of disbursement, NOT at origination.

Implications for the system:

Trigger	Required Action
First disbursement	Evaluate actual enrolled credits. Apply the LTFT reduction if below FT. The origination amount does NOT change - only the disbursement is reduced.
Second disbursement	MUST re-evaluate. Restart the 6-step calculation using actual credits from ALL terms in the academic year to date (including any drops from the first term).
Every subsequent disbursement	Same as above. Recalculate every time.
Student drops after disbursement	No retroactive requirement for that term. Account for the over-award in the next term's disbursement.
Student is below half-time for a term	$0 disbursement for that term. Those credits still count toward the annual enrollment percentage for subsequent terms.

Packaging philosophy is a school-level decision. ED guidance is explicit: the school determines whether to package assuming the student will be full-time for all terms, or to assume the same credits as the first term for all subsequent terms, or another method. Whatever philosophy is chosen must be applied consistently. The system must evaluate at each disbursement regardless of how it was packaged.