What is a Borrower Based Academic Year and How Does BBAY Differ from SAY?
Huh? All of these letters. How is anyone supposed to understand student loan applications?
Obtaining and maintaining student loans can be confusing. Students will often hear references to BBAY and SAY or, Borrower Based Academic Year and Scheduled Academic Year when loans are discussed. Because student loans comprise part of a student’s future economic standing, understanding these terms plays a role in loan disbursements. In this post, we provide a clearer understanding of the difference between BBAY and SAY. To best understand, let us start with loans based on the Scheduled Academic Year (SAY).
What is a Scheduled Academic Year (SAY)?
The academic year calendar is published by each university or college, usually in the school catalogue or other materials. The calendar shows when classes begin for each standard academic year, traditionally in the fall.
A Scheduled Academic Year (SAY) is a fixed period that begins and ends at the same time each year; it is based on this school academic calendar and is used to measure annual loan limit progression. Annual student loan limits are based on a standard two-semester period marking one academic year. Because the school year runs as fall and spring semesters, student loans under SAY are provided for the fall and spring semester. The next loan period under SAY would begin the following fall.
However, students do not always want to attend school in tidy fall/spring schedules. Because of how loans are disbursed, this creates a lending problem. The solution is the Borrower Based Academic Year or BBAY.
What is a Borrower Based Academic Year (BBAY)?
The Borrower Based Academic Year (BBAY) is a standard that may be used to measure annual loan limit progression when a student does not attend school according to the traditional calendar. Rather than having to wait until the fall semester to qualify for loans, the borrower of a Title IV education loan becomes eligible for disbursement when the next semester begins, regardless of the traditional academic calendar.
Consider the following examples:
- John wants to start attending college in the spring. Because the SAY provides loans only for Fall/Spring semesters, he would have to wait several months to begin classes. If he chooses instead to use BBAY to account for his student loans, he can begin in the spring.
- Mary entered school in the fall, is nearing completion of spring classes, and wants to attend school in the summer. Because SAY funding ends with the spring semester and does not replenish until the following fall semester, she must apply instead to use the BBAY loan period.
- Tom only wants to attend an online school which offers classes in five-week increments. Because of the non-traditional approach, his loans will be based on the BBAY.
- Jerry wants to attend a vocational college. The next class starts in March. Using the BBAY, he can begin as soon as his loans are approved.
- Steve is planning to get his Master’s in Education. Grad school classes often do not follow the traditional calendar.
As these examples show, the Borrower Based Academic Year is very different from the Scheduled Academic Year. The BBAY is a tool which the Department of Education uses to account for loans provided. Under U.S. law, limits are placed on the amounts which may be loaned for student aid each year (based on two semesters). To satisfy this requirement while allowing students the flexibility needed to attend as they see fit, the BBAY was developed. Understandably, students using the SAY will require more time to graduate while those using BBAY will graduate sooner. Too, those using BBAY will accumulate student debt quicker, but ideally, they will be able to pay on it sooner as well.