Institutions are now facing uncertainty regarding how to calculate a student’s Expected Time to Credential (ETTC) for purposes of the interim exception to the federal student loan limits that became effective July 1, 2026.
Earlier Department guidance described ETTC using a time-based methodology. The final regulations define program length in terms of weeks, months, or years, and the Department’s May 20, 2026 Frequently Asked Questions – Loan Limits generally reflected that approach, with exceptions for transfer students. However, during the August 12, 2026 webinar, the Department described a credit-based methodology that uses earned credits to determine the portion of the program completed. In the subsequent week’s office hours on August 20, 2026, the Department acknowledged questions arising from these differing interpretations but did not provide written guidance reconciling the two approaches.
As a result, institutions have been left to navigate two methodologies that may produce different outcomes for the same student. While the Department indicated that additional written guidance would be forthcoming, institutions continue to await an updated FAQ or other formal publication that clearly addresses the apparent conflict between the time-based and credit-based approaches.
NASFAA Weighs In
On September 16, 2026, NASFAA published Expected Time to Credential Q&A, which includes a detailed analysis of the conflicting guidance and considerations institutions may wish to evaluate while awaiting additional clarification from the Department.
One area of the analysis that may be particularly relevant to institutions involves whether differing ETTC methodologies can be applied to individual students on a case-by-case basis. NASFAA cites communications from the Federal Student Aid Ombudsman’s Office in which institutions were directed to reevaluate certain students using a credit-based methodology when the student’s circumstances were brought to the Department’s attention. According to NASFAA, those communications suggested that institutions do not necessarily need to recalculate all students but should consider reevaluating students whose circumstances are specifically raised.
NASFAA notes that this position may create tension with the Department’s longstanding expectation that similarly situated students be treated consistently. If some students are reevaluated under one methodology while others remain under a different methodology, institutions may need to consider the potential implications for consistency, equitable treatment, and documentation of institutional decision-making.
Because institutions may be weighing competing considerations, we would recommend reviewing NASFAA’s analysis in its entirety and consult regulatory counsel before determining an institutional approach. Considerations that institutions may wish to evaluate with legal counsel include reliance on prior Department guidance, consistency and equitable treatment issues, potential impacts on students who have already been packaged or received disbursements, and the risks associated with changing methodologies or applying revised determinations retroactively. Institutions may also wish to discuss implementation and documentation considerations with their auditors as they evaluate available approaches.
Documentation Matters
Given the conflicting guidance, institutions should maintain a clear audit trail supporting their ETTC methodology. Documentation is not simply a recordkeeping exercise. It may become important in demonstrating how decisions were reached and what guidance was relied upon.
If an institution decides to implement or transition to a different methodology, documentation may include:
- The institution’s written ETTC policy and procedures:
- The methodology selected (time-based or credit-based);
- The rationale supporting that decision;
- The effective date of implementation.
- Copies of the Department guidance relied upon:
- Relevant webinar transcripts, presentation materials, FAQs, or other written guidance.
Evidence that the methodology was applied to students:
- Relevant webinar transcripts, presentation materials, FAQs, or other written guidance.
- Evidence that the methodology was applied to students:
- The original ETTC calculation and resulting determination;
- Any revised ETTC calculation and resulting determination;
- Documentation explaining why a recalculation was performed;
- Identification of the student population affected by the change.
- Internal communications or approvals supporting the institution’s decision-making process.
For institutions that elect to change methodologies, we highly encourage the institution to retain both the original and revised calculations, along with documentation demonstrating why the change was made and how affected students were identified. Such documentation will help establish a reasonable and supportable basis for institutional decisions should questions arise later regarding ETTC determinations made during this period of uncertainty.
McClintock Comment and Audit Perspective
Financial aid administrators are no strangers to regulatory change. New statutes, regulations, Dear Colleague Letters, and FAQs are a routine part of administering Title IV programs. What makes the current ETTC situation different is that institutions are responding not only to new guidance, but to differing interpretations issued during the implementation of an already effective regulation.
The ETTC discussion highlights the challenges that can arise when implementation evolves through sub-regulatory guidance rather than changes to the final regulation itself. Institutions may find themselves balancing several considerations, including reliance on prior guidance, consistent treatment of students, administrative feasibility, and the potential impact on aid eligibility determinations.
From an audit perspective, our focus is whether an institution applied a reasonable interpretation based on the information available at the time, established appropriate controls, followed its documented policies and procedures, and applied its methodology consistently to similarly situated students. At the same time, we acknowledge that institutions may wish to consider the Department’s indication that student-specific reevaluations may be appropriate in certain circumstances where doing so benefits the student.
Until additional written guidance is issued, institutions should carefully document the guidance relied upon, the rationale for their decisions, and the methodology applied. As institutions evaluate available options, we encourage consultation with regulatory counsel and a careful assessment of the risks and benefits associated with each approach.
Our team has spent the past several months providing OB3 workshops and training sessions. If your institution would like assistance evaluating its ETTC methodology, documentation practices, or broader OB3 compliance, we invite you to learn more about our services.
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Kimberly Cravotta, FAAC®, is a leader within the Compliance Department at McClintock & Associates and has extensive experience in Title IV compliance and financial aid administration. She provides guidance to institutions on regulatory requirements, compliance considerations, and operational best practices.
