ED Changes Method for Calculating Expected Time to Credential
The Department of Education changed its interpretation of how institutions should calculate students’ "expected time to credential" (ETTC) for the purposes of determining whether they qualify for the interim exception under the One Big Beautiful Bill Act (OB3). Instead of the previous time-based method, institutions have been instructed to calculate ETTC using credit hours.
As of this writing, the Department has not published guidance or confirmed the change in interpretation beyond what was published in Inside Higher Ed.
The interim exception in OB3 allows students who enrolled in a program of study as of June 30, 2026, and received a Direct Loan for that program, to continue accessing federal loans under the pre-OB3 loan limits for the lesser of three years or their ETTC.
Prior to this change, the statutory text and implementing regulation under § 685.102 defined the ETTC calculation as:
Expected time to credential: From July 1, 2026, the expected time for a student to complete a program that is equal to or the lesser of—
Three academic years, as defined in 34 CFR 668.3; or
The period determined by calculating the difference between—
The program length for the program of study in which the individual is enrolled; and
The period of such program of study that such individual has completed as of the date of the determination under paragraph (ii) of this definition.
Further, "program length" is defined as: The minimum amount of time in weeks, months, or years that is specified in the catalog, marketing materials, or other official publications of an institution for a full-time student to complete the requirements for a specific program of study.
The Frequently Asked Questions document that the Department put out echoed this definition under question ETC-Q1:
ETC-Q1: If a student is enrolled in a four-year program but is attending part-time, are they eligible for the interim exception if they enter a fifth year? If a student is enrolled in a program of study at an institution as of June 30, 2026, and has received a Direct Loan for that program prior to July 1, 2026, they are eligible for the interim exception during their expected time to credential. This student’s expected time to credential is the lesser of three academic years and the difference between the published program length for the program of study in which the individual is enrolled (four years) and the period of such program of study that such individual has completed prior to July 1, 2026 (four years), resulting in zero eligibility left (§ 685.102(b)). Therefore, this student has no remaining eligibility for the interim exception and is subject to the new loan limits under §§ 685.200, 685.201, and 685.203.
The functional outcome of this change is that transfer credit is now pulled into the calculation. This is a positive change for part-time students because their credit hour progress is slower than their calendar hour progress, so relying on credit hours would provide these students with more remaining eligibility under the limited exception.
However, students who transfer with large amounts of credit or take more credits than the minimum required for full-time enrollment are disadvantaged because they will appear to be further along in their program than they would under a time-based calculation.
For financial aid offices, this change could result in a significant amount of repackaging, especially for institutions with large numbers of transfer students or students with aggressive course loads.
NAICU is pushing the Department to provide more details about its interpretation, whether it will apply proactively or retroactively to July 1, 2026, and whether it will hold institutions harmless for disbursements already made using the prior guidance.
For more information, please contact:
Justin Monk