Session C-34 Changes to the General Provisions Brian Kerrigan U.S. Department of Education

Session C-34

Changes to the General Provisions

Brian KerriganU.S. Department of Education

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Negotiated Rulemaking

• Federal Register notice - Aug. 18, 2006• Regional hearings

Berkeley, CA - Sep. 19, 2006Chicago, IL - Oct. 5, 2006Orlando, FL - Nov. 2, 2006Washington, DC - Nov. 9, 2006

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Negotiating Committees

• General Provisions• Loans• Academic Competitiveness & National

SMART Grants• Accreditation

(Negotiations from December – June)

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General Provisions Package

• Consensus• NPRM - Fed. Reg. Aug. 8, 07 (Part II)

Reflected the proposed regulatory language agreed to by the committee

22 public comments received by the end of the comment period (Sept. 7, 2007)

• Final rules – Fed. Reg. Nov. 1, 07 (Part III)• Effective date

July 1, 2008 Early implementation

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Definitions

• Professional Degree• Graduate or Professional Student• Undergraduate Student• Full-time Student• Three quarter-time Student• Half-time Student

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Professional Degree

• Above bachelor’s degree• Generally requires professional licensure• List of examples, including J.D., D.V.M.,

D.D.S., Pharm. D.

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Graduate/Professional Student

• Grad/Prof students cannot receive undergraduate level aid and graduate level aid at same time

• You can change a student’s status from “undergraduate” to “graduate or professional” once a student has completed at least 3 years at the undergraduate level

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Undergraduate Student

• For Perkins, FFEL, and DL programs, any student who takes courses at or below the baccalaureate level is an undergraduate student

• For Pell, ACG, SMART, and FSEOG, a student is only an undergraduate student if she is pursuing her first bachelor’s degree or below

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Undergraduate Student• For Pell, a student who has a bachelor’s

degree and is studying to earn a state-required teaching certification could be an undergraduate student

• For the first three years of a dual degree program, students are undergraduates

• For the first four years of a program lasting longer than five years that leads to a bachelor’s degree, students are undergraduates

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Full-time Student

• Moved the calculation from Pell Grant regulations (for Formula 3) to the General Provisions

• Also clarified the definition of a full-time student for correspondence programs

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Half-time/Three-quarter-time Student

• The existing definitions in the Pell Grant Program regulations were moved to the General Provisions regulations

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Other “Definitions”

• Independent study• Substantially equal in length• Successfully completes

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Independent Study

• Only applies to Direct Assessment Programs

• Course of study with predefined objectives determined by student & professor

• Requires regular and substantive interaction

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When A Recipient Does Not Begin Classes

• Consolidated the Return to Title IV requirements into the General Provisions

• You must return Title IV funds within 30 days of discovering that a student has failed to attend class

• You cannot disburse funds to any student you know will not be starting classes (e.g., a student who has been expelled)

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When A Recipient Does Not Begin Classes

• You are not required to return funds that are disbursed directly to a student in a study abroad program or one who is attending a foreign institution

• You must issue a final demand notice to these students

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Payment Period

• Credit hour programs with standard terms or terms that are substantially equal

• Credit hour programs with terms that are not substantially equal

• Credit hour programs w/o terms, or clock-hour programs

• The cohort default rate exemption• Excused absences• Re-entry w/i 180 days• Re-entry after 180 days, or transfer

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Payment Period

• For credit-hour programs with standard terms or terms that are substantially equal, it’s the term

• For credit-hour programs with terms that are not substantially equal—For grants and Perkins, it’s the termFor FFEL and DL, it’s ½ the credit hours

and ½ the weeks• For credit-hour programs w/o terms, or

clock-hour programs, it’s ½ the (credit or clock) hours and ½ the weeks

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Payment Period

• When the cohort default rate is less than 10%, and the loan period is equal to or less than a single standard term or equal to or less than 4 months, it’s the loan period

• Excused absences count if—There is a written policyThey do not exceed the lesser of

Accrediting agency policy, State agency policy, or 10%

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Payment Period• Re-entry w/i 180 days, stay in the same payment period

• Re-entry after 180 days, or transfer –Start a new payment period, orRemain in the same payment period,

Continuous enrollment, Substantially similar coursework, Substantially equal payment periods, Little or no changes in charges, and Credits are accepted in new program

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Minimum Period For A Loan

• Credit hour programs with standard terms or terms that are substantially equal with no term less than 9 weeks

• Clock hour programs, or credit-hour programs w/o standard terms and w/o terms that are substantially equal with no term less than 9 weeks

• Transfer students• Completing one program and immediately

starting another

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Minimum Period For A Loan• For credit-hour programs with standard terms or

terms that are substantially equal with no term less than 9 weeks, it’s the term

• For clock-hour programs, or credit-hour programs w/o standard terms and w/o terms that are substantially equal with no term less than 9 weeks, it’s the lesser of—The length of the program (or the remaining

portion of the program), orThe academic year

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Minimum Period For A Loan

• For transfer students, it’s the remaining portion of the program or academic year (The student can get the remaining balance of the annual loan)

• For completing one program and immediately starting another, it’s the remainder of the academic year (The student can get the remaining balance of the annual loan limit at the loan level of the new program)

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Academic Year Progression

• Credit-hour programs with standard terms or terms that are substantially equal with no term less than 9 weeks

• Credit-hour programs with non-standard terms that are not substantially equal or each term is not at least 9 weeks, or credit-hour programs w/o terms

• Clock-hour programs

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• For credit-hour programs with standard terms or terms that are substantially equal with no term less than 9 weeks, the student progresses when the academic year calendar period elapses

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• For credit-hour programs with non-standard terms that are not substantially equal or each term is not at least 9 weeks, or credit-hour programs w/o terms, the student progresses at the later of—Completion of the weeks, orCompletion of the coursework

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• For clock-hour programs, the student progresses at the later ofCompletion of the weeks, orCompletion of the clock hours

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R2T4 Changes

• Confirmation not needed for post-withdrawal disbursement of grant funds

• Post-withdrawal disbursement of grant funds ASAP but no later than 45 days after the institution determines the student withdrew

• Post-withdrawal disbursement of loan funds ASAP but no later than 180 days after the institution determines the student withdrew

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R2T4 Changes• For credit-hour programs with non-standard

terms that are not substantially equal in length — if the payment period is used for calculation and the student gets: 1) grants and/or a Perkins (where the payment period is the term), and 2) an FFEL or DL (where the payment period is ½ the hours and ½ the weeks) — Use the payment period that ends later, andAttribute funds to the payment period that

ends later

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Use of PP That Ends LaterAcademic Year is 24 credit hours & 30 weeksTerms: 1 = 10 wks, 2 = 6 wks, 3 = 14 wks.

FFEL (DL) PP1 FFEL (DL) PP2 15 weeks 15 weeks

WD at day 50

10 weeks 6 weeks 14 weeks Grant PP1 Grant PP2 Grant PP3 (Perkins) (Perkins) (Perkins)

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Use of PP That Ends Later

• The withdrawal was at day 50 (which is in both the FFEL/DL PP1 and the Grant/Perkins PP1)

• Assume student got an FFEL and a PellFFEL/DL PP1 = 15 weeks*Grant/Perkins PP1 = 10 weeks

• Determine the payment period that ends later* and use it

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Attribution of Aid From PP

PP 1 = 10/30 X $4,310 = $1,437PP 2 = 6/30 X $4,310 = $ 862*PP 3 = 14/30 X $4,310 = $2,011

• Attribute the portion of Pell from the Pell PP 2 to be included as aid that could have been disbursed (as if Pell was disbursed for the FFEL PP 1)

(Attribution for 5 wks of Pell from PP 2 is: 5/6 X $862* = $718)

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Total Title IV Aid Used In Calculation

• Total Title IV Aid disbursed or could have been disbursed for R2T4 calculation:FFEL PP 1 = $1,750Pell PP 1 = $1,437

Portion from Pell PP 2 = $ 718Total $3,905

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Requirements For Use of Formula 1 (Pell)

• Credit-hour programs• 12 hours (or more) for full-time per term• At least 30 weeks in —

2 semesters or trimesters (fall through spring) or 3 quarters (fall, winter, spring) with no overlapping terms, or

Any 2 semesters or trimesters or 3 quarters that have periodic starts (e.g., monthly) where students are not in overlapping terms

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Pell Grant Formula 4 Calculation

• Credit-hour programs w/o terms, and clock-hour programsScheduled Pell x the lesser of —

Hours in the payment periodHours in the academic year

ORWeeks in the payment periodWeeks in the academic year

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Pell Grant Formula 5 Calculation

• Correspondence programs w/o termsHalf-time amt x the lesser of —



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Requirements For Use of Formula 1 (ACG/SMART)

• Credit hour programs• 12 hours (or more) for full-time per term• At least 30 weeks in —

2 semesters or trimesters (fall through spring) or 3 quarters (fall, winter, spring) with no overlapping terms, or

Any 2 semesters or trimesters or 3 quarters that have periodic starts (e.g., monthly) where students are not in overlapping terms

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ACG/SMART Formula 4 Calculation

• Credit-hour programs w/o terms, and clock-hour programsScheduled grant amt x the lesser of —



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Cash Management

• Issuing a check• Electronic disbursements• Minor prior-year charges• Late disbursements• Returning unclaimed funds• Loan cancellation notice and confirmation

of a loan• Excess cash

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Issuing a Check

• Issued on date mailed or date the student is notified

• Student has 21 days to pick up check• After 21 days you must mail the check,

initiate an EFT, or return the funds

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Electronic Disbursements

• You may have a policy requiring students to have a bank account

• However, if a student does not have or want an account, you must disburse funds in another way

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● If you open an account or actively assist the student in opening the account, you –Must get the student’s written consentMust inform the student of the terms and

conditionsMay not make any claims against the

funds in the accountMust ensure that the student does not

incur any cost in opening the account or in receiving a debit or stored-value card

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Must ensure that the student has convenient access to a branch office or ATM where the student will not incur any cost for cash withdrawals

May not limit the use of the card to certain vendors

May not market or portray the card as a credit card

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Minor Prior-year Charges

• Amount increases from less than $100 to not more than $200

• But, the old regulatory language addressing the concept of paying for more than this amount “if the payment of those charges does not, and will not, prevent the student from paying his or her current educational costs” has been eliminated

• No need to get student’s permission for tuition and fee or room and board charges

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• Title IV aid is intended to be used for the period for which it is awarded

• Only $200 of current “year” aid may be used for prior “year” charges

• If a student has an FFEL or Direct Loan in his or her aid package, the year is the loan period.

• If a student does not have an FFEL or Direct Loan in his or her aid package, the year is the award year.

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• Charging for a program up front usually creates prior-year charges

• Charging by the payment period eliminates most prior-year charges

• A contract listing the total cost for a program does not mean that the institution has to charge the student the entire cost up front

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Late Disbursements

• Late disbursement period is extended from 120 to 180 days

• There are no late disbursements after 180 days

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Returning Unclaimed Funds

• Title IV funds never escheat to the state• An un-cashed check must be returned no later

than 240 days after it is issued• If a check is returned or an EFT is rejected, you

can make additional attempts to re-disburseAttempts must be made no later than 45 days

after the check is returned (or the EFT is rejected)

If no additional attempts are made, you must return the funds within the 45 days

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Loan Notice (With Confirmation)

• If you obtain affirmative confirmation, old loan notice and cancellation procedures apply, i.e., — You must notify the student no earlier

than 30 days before and no later than 30 days after crediting the account

The student has until the later of the first day of the payment period or 14 days after notification to cancel the loan

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Loan Notice (W/o Confirmation)

• If you do not obtain affirmative confirmation, new loan notice and cancellation procedures apply, i.e., —You must notify the student no earlier

than 30 days before and no later than 7 days after crediting the account

The student has 30 days after notification to cancel the loan

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Affirmative Confirmation

• Affirmative confirmation is a process where you obtain written confirmation of the types and amounts of Title IV loans the student wants for an award year

• It must be obtained before loan funds are disbursed

• It includes signed award letters and Web-based processes for accepting awards

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Excess Cash

• Title IV funds (except Perkins funds) that are not disbursed w/i three business days of receipt (includes previously disbursed funds that are re-deposited or transferred into your federal account as a result of an award recovery, adjustment, or cancellation)

• Only the 1% tolerance option is retained• Finding may trigger cash monitoring or

reimbursement

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Contact Information

I appreciate your feedback and comments. I can be reached at:

• Phone: (202) 219-7058 • Email: [email protected]• Fax: (202) 502-7874

Documents

Session C-34 Changes to the General Provisions Brian Kerrigan U.S. Department of Education