Schedule of reductions for Direct Loan borrowers enrolled less than full time

Beginning with the 2026-27 award year, One Big Beautiful Bill provisions require institutions to reduce applicable Direct Loan eligibility when a borrower is enrolled less than full time for the academic year or other applicable loan period. This requirement is commonly referred to by the Department of Education (ED) as Schedule of Reductions (SOR).

SOR is an annual or period-of-enrollment loan-limit calculation. It does not replace existing Direct Loan eligibility rules. Instead, the institution first determines the borrower's Direct Loan eligibility using the normal loan-limit, grade-level, dependency, aggregate, need, cost of attendance, loan limit exception, and other applicable rules.  If the student qualifies for end-of-program proration, SOR will not be applied.  Otherwise, the SOR percentage is then applied to the resulting loan eligibility when the borrower is less than full time.

  • Loans impacted: Subsidized, Unsubsidized, Grad PLUS, and UNSUB Medical (not Parent PLUS) for term based programs.
  • Individual Proration: Subsidized and Unsubsidized loans are prorated individually, using the Schedule of Reductions (SOR) percentage / enrollment intensity per term.
  • Measured at point of disbursement: Adjustments to enrollment intensity do not apply to disbursed disbursements.  
  • Exceptions: The interim exception provision does not apply.
  • Adjusted Enrollment: Initial package of loans is based on the student's intent to enroll, but at each subsequent disbursement, you must review actual enrollment for the prior term and recalculate eligibility if there were any dropped credits.
  • Optional vs. Required Summer Required: Summer credits are always included in the SOR numerator when the student is enrolled in summer, however, summer credits are included in the SOR denominator only when summer is required. 

With this update, Oracle Student Financial Aid supports Schedule of Reductions processing for the following areas.

Supported loans and scope

  • Evaluates SOR for term-based Subsidized, Unsubsidized, Grad PLUS, and UNSUB Medical loans beginning with the 2026-27 award year.
  • Excludes Parent PLUS loans and non-term program types from the automated SOR calculation.

SOR calculation

  • Applies SOR separately by applicable Direct Loan fund using the borrower’s starting eligibility for that loan after existing Direct Loan eligibility rules have been applied.
  • Calculates the SOR percentage using the student’s included enrolled credits divided by the applicable full-time credits for the academic year or shorter loan period.
  • Rounds the SOR percentage to the nearest whole percentage point before applying it to the starting Direct Loan eligibility.
  • Calculates the SOR annual loan limit first for standard annual or multi-term loans, then allocates the reduced amount across payment periods eligible to receive a Direct Loan disbursement.
  • Rounds final dollar amounts to the nearest whole dollar and reconciles payment-period amounts so they do not exceed the SOR-adjusted limit.
  • Uses the single-term calculation path only when the loan period is a true single-term or shorter loan period.

Payment period and disbursement handling

  • Uses available projected or actual enrollment information when determining SOR eligibility, including updated enrollment information before future disbursements.
  • Prevents a Direct Loan disbursement to a less-than-half-time payment period while allowing that period’s credits to count in the annual SOR numerator when the configured rules support annual treatment.
  • Preserves posted Direct Loan disbursements when enrollment changes.
  • Recalculates the SOR annual loan limit after enrollment changes and determines remaining eligibility by subtracting posted Direct Loan disbursements from the revised SOR annual loan limit.
  • Applies only positive remaining eligibility to future payment periods.
  • Does not reduce posted disbursements through SOR when posted disbursements already meet or exceed the revised SOR limit.
  • Does not increase an already-posted disbursement retroactively if enrollment later increases; the updated enrollment is considered when recalculating remaining eligibility for future undisbursed payment periods.

Summer handling

  • Supports required-summer treatment when summer is part of the academic year or when required-summer configuration or document override identifies the summer requirement.
  • Uses AYD as the denominator when required summer is included in the SAFI academic year structure and AYD already includes the full-time credits for the standard terms and required summer.
  • Uses delivered SOR configuration or the Required Summer Override document when required summer is sent separately in the SAFI SummerTerm element to determine whether summer is required and, when needed, the summer full-time credit value.
  • Allows optional summer to increase the SOR numerator when it is part of the loan period being evaluated, but does not expand the AYD denominator for optional summer.

Configuration approach

  • Schedule of Reductions logic is configurable for the applicable Direct Loan fund and award year within the Award_Override_Criteria and OB3_Criteria Groovy logic in FAS_FUND_CONFIG.csv.
    • See the attached SFA 26.4.2 Configuration Updates (New Config) and SFA 26.4.2 Configuration Scripting API on Cloud Customer Connect for full details about the new bindings provided.
  • Oracle provides baseline configuration with the core calculation behavior delivered, and institutions can review and adjust customer-maintained configuration areas, such as included course statuses, numerator and denominator rules, term inclusion rules, and required-summer configuration.
    • Review the related Feature Configuration Guide attached to this release notes post on Cloud Customer Connect to understand the delivered configuration changes and determine whether refinements are needed for your implementation.
  • Existing Awarding_Override_Criteria logic may also continue to influence upstream term eligibility, exclusions, or hard-set award amounts before OB3_Criteria applies the SOR calculation.

Business benefit: This update helps institutions comply with ED's Direct Loan Schedule of Reductions requirements by automating less-than-full-time loan-limit reductions while preserving existing Direct Loan eligibility rules and reducing manual recalculation risk.

Here's the demo of these capabilities:

Steps to enable and configure

Use the Opt In UI to enable this feature. For instructions, refer to the Optional Uptake of New Features section of this document.

Offering: Student Financial Aid

Confirm applicability and data readiness:

  • Confirm that the funds and award years you plan to configure are in scope for SOR processing. SOR processing evaluates supported term-based Subsidized, Unsubsidized, Grad PLUS, and UNSUB Medical loan scenarios beginning with the 2026-27 award year. Parent PLUS loans and non-term program types are outside this automated SOR calculation.
  • Confirm that SAFI provides the data needed for the SOR numerator and denominator, including AYD credits, academic-year or loan-period terms, enrolled or projected credits, course status, and term/payment-period information.
  • Confirm how summer is represented in SAFI for each affected program:
    • If summer is part of the regular required academic year, AYD should include the required summer full-time credits.
    • If required summer is sent separately in SummerTerm, confirm that the summer term is sent early enough for SFP to package it and determine whether configuration or document override should identify the required summer full-time value.
    • If summer is optional, confirm that optional summer is not being used to expand the AYD denominator.

Update configuration scripts:

  • Review baseline configuration for Schedule of reductions for less than full time enrollment when it is posted on Cloud Customer Connect, and update your configuration. 
  • To get started, ensure that "Configuration Administration" Permission is enabled and download your existing configuration from Oracle Student Financial Aid within Administration > Configuration Administration > Download.
    • This configuration will include the pre-populated system data and include the new column, which you can then update as needed.
      • Update FAS_FUND_CONFIG.csv tor each applicable Direct Loan fund and award year to reference the delivered OB3_Criteria and Award_Override_Criteria SOR logic.
        • Review the customer-maintained SOR configuration block near the top of the delivered script and adjust only the institution-owned areas that apply to your school, such as:
          • included course statuses;
          • term or payment-period inclusion rules;
          • annual and single-term denominator rules;
          • required-summer program or program-year rules;
          • summer full-time credit values when they differ from the derived value.
      • Review Awarding_Override_Criteria within FAS_FUND_CONFIG.csv for related upstream behavior, such as term eligibility, excluded terms, or hard-set award amounts, when your institution already uses those controls.
      • Configure the Required Summer Override document only when student-specific required-summer exceptions are needed.
        • When used, configure the related DOCUMENTS.csv and DOCMETADATA.csv entries so the document can identify program code, whether summer is required, and optional summer full-time credits.
    • Upload the updated zipped configuration through Administration > Configuration Administration.

Validate and repackage:

  • Validate SOR in non-production before loading configuration to production, using representative students for the programs, terms, summer patterns, enrollment-change patterns, and loan types your institution supports.
  • Confirm that the updated configuration produces award outcomes that align with your institution's SOR policy decisions and existing Direct Loan review process.
  • After successful testing, load the configuration to production and repackage impacted students.
  • Divide your bulk production repackaging operation into manageable groups, taking into consideration processing windows, communication needs, and the availability of supporting resources. This approach will ensure you are well-equipped to assist students whose inquiries arise as a result of the repackaging process.

Tips and considerations

  • Existing Direct Loan rules still apply: SOR is applied after normal Direct Loan eligibility rules, including annual and aggregate limits, subsidized need, cost of attendance, proration, loan limit exception, grade level, overlapping loan, and other applicable constraints.
  • Configuration review is required: Review the delivered SOR configuration before enabling SOR in an environment. Institutions may need to adjust customer-maintained configuration for course statuses, term inclusion, summer treatment, or local award override behavior.
  • Core calculation behavior is delivered logic: The annual-first SOR cap calculation, rounding approach, less-than-half-time disbursement restriction, proportional payment allocation, and preservation of posted disbursements should be treated as delivered regulatory logic unless Oracle provides implementation guidance to change them.
  • Less-than-half-time terms need special review: A less-than-half-time payment period does not receive a Direct Loan disbursement, but the period's credits may still count in the annual SOR numerator when the configured rules support annual treatment.
  • Single-term logic is only for true single-term or short-period loans: A loan is not automatically a single-term SOR case just because only one future disbursement remains after a posted disbursement.
  • Grad PLUS has different starting eligibility by loan-period type: Annual or multi-term Grad PLUS uses the applicable unpackaged amount before SOR, while true single-term Grad PLUS follows the single-term calculation path.
  • Required summer depends on data visibility: SFP can calculate and package required summer only when the summer term or payment period is available in SAFI early enough for packaging. If required summer is not visible until later, the institution or integration must address that timing before SFP can package it up front.
  • AYD and summer must stay consistent: AYD should represent the full-time units for the academic year structure being sent. Do not expand AYD for optional summer. For required summer sent separately in SummerTerm, use SOR required-summer configuration or document override to identify the required summer full-time credits.
  • Optional summer can affect the numerator without changing the denominator: Optional summer credits may increase the SOR numerator when they are part of the evaluated loan period, but optional summer should not expand the AYD denominator.
  • Posted disbursements are preserved: If enrollment changes after disbursement, SFP recalculates remaining eligibility for future anticipated disbursements. It does not retroactively reduce posted disbursements through this SOR process.
  • Rounding and cap reconciliation matter: SFP rounds the SOR percentage before applying it to Direct Loan eligibility and reconciles final payment amounts to the SOR-adjusted cap.
  • Validate before bulk repackaging: SOR can change Direct Loan amounts when students are less than full time, have summer enrollment, or have enrollment changes after disbursement. Validate representative populations in non-production before loading configuration to production and repackaging students.
  • COD Reporting: Calculated enrollment intensity and adjusted award values are available as source data for applicable Direct Loan disbursement reporting to COD.

Key resources

Access requirements

No new access requirements.