R2T4 COMPLIANCE ISSUES

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• R2T4 COMPLIANCE ISSUES
• Dan Klock
• Policy Liaison and Implementation
• Federal Student Aid
• U.S. Department of Education
• Winter 2008

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Todays Agenda

• R2T4 - Compliance Issues
• Collection of withdrawal information
• R2T4 Calculation
• Notification
• DCL issues
• Compliance self-monitoring
• Q A

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Presentation Objectives

• Understand that R2T4 non-compliance remains a top
  finding
• Todays session will equip you to prevent R2T4
  findings from occurring on your campus

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R2T4 Compliance Issues

• Return to Title IV Funds is a
• Top-10 compliance issue for institutions FSA
• FAAs are risk managers
• Maximize compliance Minimize risk
• Clear policies and procedures
• Quality Control how do you measure up?

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R2T4 - Compliance Issues

• Top Compliance Concerns
• Incorrect Refund Calculation
• Return of Title IV Funds Not Made
• Withdrawal Incomplete/Incorrect
• /Untimely
• Refunds Made Late to Title IV Funds
  Account
• Students Not Notified of Refund to Lender
• Notification and Confirmation of PWD

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R2T4 Compliance Issues

• R2T4 on the Web
• How many people use our Free R2T4 OTW software?
• How many people are using someone elses
• software?
• How many are doing hand calculations?

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R2T4 Compliance Issues

• Policies and Procedures
• Standards of Administrative Capabilities
• 34 CFR 668.16(b)(3) communicates all info
  received by ANY institutional office that bears
  on a students eligibility for Title IV aid to
  the person designated to be responsible for
  administering Title IV, HEA programs

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R2T4 Compliance Issues

• Policies and Procedures
• Coordination among all campus administrators
• Integration between Campus Refund policy and R2T4
  policy
• Clear information to students
• Regular processing
• Report generation and problem resolution

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Collection of Withdrawal Info.

• Institutions required to take attendance
• Outside entity has a requirement that the
  institution take attendance - Nov. 1,2002 change
  (67 FR 67073)

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Collection of Withdrawal Info. - Date of
Determination

• Not Required to Take Attendance
• - When the student
  begins the official withdrawal process at
  the school
• The date the institution becomes aware that the
  student has ceased attendance

• Required to Take Attendance
• When the student begins the official withdrawal
  process at the school
• When student exceeds the institutions policy on
  unexcused absences, not more than two weeks after
  the withdrawal date

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Collection of Withdrawal Info. Withdrawal Date

• Required to Take Attendance
• The last recorded date of attendance from the
  institutions attendance records

• Not Required to Take Attendance
• Begins the formal withdrawal process
• Date student provided intent to withdraw
• Midpoint unofficial withdrawal
• The date a LOA began for a student who does not
  return from an LOA
• Illness, accident, grievous personal loss, events
  beyond the students control
• Academically-related activity

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R2T4 Calculation

• For a standard term based program, use
• payment period.
• For a non-term based or non-standard term
  program, use
• payment period or period of enrollment.
• For a non-term or non-standard term based
  program, an institution must consistently use
  either a PP or POE for all students (in a
  category) in a particular program.

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R2T4 Calculation

• Since HERA, the Percentage Earned is a one-step
  process
• clock hours scheduled to complete equals gt
  60
  clock hours in
  the period
• student has earned 100 of title IV Funds

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R2T4 Calculation

• Percentage Earned is equal to
• calendar days completed
• calendar days in the period
• Note Exclude institutionally scheduled breaks of
  5 or more consecutive days
• When a student has completed MORE than 60, 100
  of Title IV funds are earned

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R2T4 Calculation

• Aid That Could Have Been Disbursed
• Old Policy -- Aid that could have been disbursed
  before withdrawal. Did not include
• - Second loan disbursement, or
• - Loan within first 30 days.
• New Policy -- All aid for period, if conditions
  for late disbursement were met before the student
  withdrew. (668.164(g)(2))
• However, if limitations apply, that aid may not
  be paid to the student. (668.164(g)(4))

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R2T4 Calculation

• After you calc the amount the student earned - 3
  possibilities
• A. The amount disbursed the amount earned
• Eureka! No further action necessary!
• B. The amount disbursed gt the amount earned
• The unearned portion must be returned to the
  programs
• C. The amount disbursed lt the amount earned
• Post-withdrawal disbursement

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R2T4 Calculation

• B. The amount disbursed gt the amount earned
• Calculate the unearned portion from the school
• Institution returns the lesser of
• 1.) amount disbursed
• 2.) institutional charges x percentage not earned
• Calculate the unearned portion that the student
  owes Total unearned amt. less amt. school paid

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R2T4 Calculation

• B. The amount disbursed gt the amount earned
• Amount of unearned the student owes
• Less Title IV Loans repay in accordance with
  the loan repayment provisions
• Title IV Grants the initial amount of the grant
  (disbd or could have been disbd) is multiplied
  by 50, this is the amount of TIV grant funds
  that are protected. The amount of TIV grant funds
  above this amount is the amount that the student
  has responsibility to repay

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Notification

• C. The amount disbursed lt the amount earned
• Post-withdrawal disbursement (PWD)
• Credit the students account for direct costs
  with grant funds only
• Notification and confirmation must notify the
  student/borrower of all loan amounts for any
  PWD/Late disbursement and any grant amounts that
  will be directly disbursed (NOTE Nov 1, 07 Final
  Regs)
• Must wait for confirmation from the
  student/borrower
• Title IV grant funds
• If Title IV loan funds are credited, must notify
  borrower of right to cancel or reduce loan
• If PWD exceeds costs credited institution must
  offer PWD w/in 30 days of the date of
  determination

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Notification

• Post-withdrawal disbursement (PWD)
• 14-day Rule
• Institutional flexibility beyond 14-day Rule
• 180 days to complete the PWD (NO APPEAL)

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Notification

• Grant Overpayment Notification
• 45-day period of extended eligibility
• Notify student w/in 30 days of Date of
  Determination that s/he must take Positive Action
• Fully repay the overpayment
• Make arrangements with school to repay
• Make arrangements with ED to repay
• Institutional monitoring

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PWD Notifications/Authorizations
Prior Rule HERA Rule Crediting PWD to
Account Crediting PWD to Account Grant-Credit
direct cost, w/auth Grant Credit direct cost,
indirect costs w/auth indirect
costs Loan-Notify student/parent Loan-Notify and
receive confirmation Direct
Disbursement Direct Disbursement Grant-Receive
confirmation Grant- OK Loan-Receive
confirmation Loan- Notify receive
confirmation
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Written Notifications - HERA

• Must ask if student/parent wants
• loan credited to the account, and
• grant or loan funds as direct disbursement (Nov
  1, 2007 Final removes requirement for TIV grant
  notification for direct disbursement)
• Must include reminder of obligation to repay loan
  funds
• Notification ASAP but no later than 30 days after
  the Date of Determination

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Written Notifications - HERA

• Student/parent can accept some or all of the aid
• Student/parent has 14 days to respond
• School can give longer time, provided the
  timeframe applies both to loan funds to be
  credited to account or directly disbursed
• If response from student/parent is late, school
  has the option of making the PWD

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Written Notifications - HERA

• PWD 180-day rule - Nov 1, 07 Final Regs,
  otherwise 120-day rule
• If student/parent declines loan funds to be
  credited to account, school must comply
• Student may not receive direct disbursement of
  loan funds that the institution wishes to credit
  to account unless school agrees

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Written Notifications - HERA

• If no response to the notification is received
• loan cannot be credited to account
• grant or loan cannot be directly disbursed (Note
  Nov 1, 07 Final Regs)
• School must document results of notification and
  final PWD determination

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Notifications Final Regs

• Direct disbursement of a Title IV Grant written
  notification not needed.
• Must disburse ASAP, no later than 45 days after
  Date of Determination
• Loans written notification ASAP but no later
  than 30 days after Date of Determination

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Compliance Self-Monitoring

• R2T4 is one of the most common audit findings
• Use our free software
• Ease of use
• Use reports to manage the process and assure
  compliance

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Compliance Self- Monitoring
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Compliance Self-Monitoring

• How do I access R2T4OTW?
• Its Easy!
• SIGNUP!
• Signup via SAIG Enrollment website
• https//www.fsawebenroll.ed.gov/PMEnroll
• Note The R2T4 Web Application when available
  will be accessed via FAA Access
• https//fafsa.ed.gov/faa/faa.htm

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Compliance Self-Monitoring

• CUSTOMER SERVICE
• Software Support
• CPS/WAN Technical Support
• CPSSAIG_at_ed.gov
• [phone]
• Policy
• ED's Customer Support center
• fsa.customer.support_at_ed.gov
• [phone]

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General Provisions Final Regs

• Final Reg
• Eliminate 34 CFR 668.4(d), thus clock hour and
  nonterm credit hour programs may not have more
  than 2 payment periods
• Credit hour programs with terms that are NOT
  substantially equal for R2T4, school must use the
  payment period during which the student withdrew
  that ends later (see graphic on next slide).

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R2T4 Payment periods for nonstandard, credit
hour programs with terms substantially not equal

• Academic Year 24 credit hours 30 weeks of
  instruction Terms are 10, 6 and 14 wks in length
  
• Payment Periods (PP) Loan Terms 1 2 15 wks
  each Pell - Term 1 10 wks, Term 2 6 wks, Term
  3 14 wks.
• Loan PP1 Loan PP2
• WD at day 50 Expected to
  complete 12 hours
• 15 wks of instructional time
• Expected to complete Expected to complete
• 8 hrs and 10 wks 13 hrs and
  16 wks of instruction
• Pell PP1 Pell PP2 Pell PP3

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R2T4 Payment periods for nonstandard, credit
hour programs with terms substantially not equal

• PROPOSED
• A. As of the students withdrawal date, determine
  which payment periods ends later
• Loan PP 1 15 wks, or
• Pell PP 1 10 wks,
• B. Pell Payment Periods and the corresponding
  amount based on a Scheduled Award of 4,310
• PP 1 10/30 4,310 1,437
• PP 2 6/30 4,310 862
• PP 3 14/30 4,310 2,011
• Total 4,310

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R2T4 Payment periods for nonstandard, credit
hour programs with terms substantially not equal

• PROPOSED
• C. As of the students withdrawal date and
  before the R2T4 calculation, you must attribute
  the portion of Pell PP 2 to be included as Aid
  That Could Have Been Disbursed
• Loan PP 1 15 wks
• Pell PP 1 10 wks
• Attribution for 5 wks of Pell PP 2
• 5/6 862 718
• D. Total Title IV Aid disbursed or Could Have
  Been Disbursed for the R2T4 calculation
• Loan PP 1 1,750
• Pell PP 1 1,437
• Attrib portion of Pell PP 2 718
• Total 3,905

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General Provisions Final Reg

• Late disbursements from 120 days to 180 days,
  but no appeal
• Crediting a students account for minor prior
  year charges from 100 to 200

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Escheated funds - prohibited

• Schools prohibited from allowing Title IV funds
  to escheat (paid to a third party)
• Credit balances and post-withdrawal disbursements
• School must ensure that Title IV funds are used
  only for educational purposes intended
• Funds cannot escheat to a third party (state or
  institutional coffers)
• Must have a process to identify non-negotiated
  checks and return the funds to the Title IV
  programs before the checks are stale and escheat
  to an unintended third party
• When paid by check, funds must be returned within
  240 days after check issued. (See 34 CFR
  668.164(h))

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Dear Colleague Letter (DCL)GEN-04-03

• Title IV Credit Balances
• Aid That Could Have Been Disbursed
• Verification not completed before withdrawal
• No Passing Grades
• Non-Term Programs
• Date of Determination that Student Withdrew
• Treatment of LEAP Funds

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DCL Issues - Title IV Credit Balances

• Hold all Title IV Credit Balances until R2T4
  calculation is completed.
• Credit Balance is Aid Disbursed.
• Determine if Credit Balance changes because of a
  Refund Policy or R2T4.
• Use Credit Balance to repay TIV Grant Overpayment
  on behalf of student.
• Release Credit Balance within 14 days.

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DCL Issues -Aid That Could Have Been Disbursed

• Old Policy -- Aid that could have been disbursed
  before withdrawal. Did not include
• - Second loan disbursement, or
• - Loan within first 30 days.
• New Policy -- All aid for period, if conditions
  for late disbursement were met before the student
  withdrew. (668.164(g)(2))
• However, if limitations apply, that aid may not
  be paid to the student. (668.164(g)(4))

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DCL Issues Conditions for a Late Disbursement

• All Student Aid (including Pell) - ED processed
  SAR/ISIR with official (not necessarily a valid)
  EFC. (Not needed for PLUS.)
• FFEL/Direct Loan - Institution certified or
  originated the loan.
• Perkins/FSEOG - Institution made the award

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DCL Issues Limitations on Making a Late
Disbursement

• No second or subsequent disbursements of FFEL/DL,
  unless student completes the period.
• No FFEL/DL unless student completes the 30-day
  delay period.
• No Pell Grant without a valid SAR/ISIR by the
  deadlines in the Federal Register.
• No 2nd pp Pell if 1st pp not completed.
• No 2nd pp FFEL/DL if 1st pp not completed

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DCL Importance of Aid That Could Have Been
Disbursed

• If total aid (Aid That Could Have Been Disbursed
  plus Aid Disbursed) is greater, the amount
  earned will be greater.
• Results in a smaller amount to be returned, or in
  a post-withdrawal disbursement.
• Remember - Aid must correspond to the period for
  which you are doing the Return Calculation. (pp
  or period of enrollment)

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DCL Issues -Verification

• Must complete R2T4 within 30 days.
• If Verification not completed
• Return Interim Disbursements of aid subject to
  verification.
• Include Unsubsidized and PLUS loans in R2T4.
• If Verification completed later, but within
  Verification timelines
• School must perform new R2T4 calculation using
  additional eligible aid.

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DCL Issues No Passing Grades

• School must have a process for determining if
  student completed.
• No passing grade, institution must document
  completion of period.
• Grading Policy that differentiates between
  Failing, Completed and Failing, Did Not
  Complete.

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DCL Issues - Non-Term, Credit Hour Programs

• Percentage Earned is equal to calendar days
  completed divided by calendar days in the period.
• Project calendar days in period if student is in
  a Self-Paced Program.

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DCL Issues - Date of Determination that Student
Withdrew for Schools Required to Take Attendance

• Usually no later than two weeks after last date
  of attendance.
• Based on Attendance Records.
• Date of Official Notification if prior to that.
• After end of schools Absence Policy.

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DCL Issues Treatment of FWS LEAP Funds

• Law excludes FWS and (under HERA) LEAP and SLEAP
  are also excluded.

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QUESTIONS ?
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Thank YouDan Klockdan.klock_at_ed.gov(202) 377-
4026
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Appendix

• Reminders that you can read on your own

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Appendix

• The Law Regulations
• Section 484B of the HEA
• Enacted October 7, 1998, as part of the Higher
  Education Amendments of 1998
• NPRM published August 6, 1999
• Final Reg published November 1, 1999
• Effective Date of Reg - July 1, 2000
• Dear Colleague Letter GEN-00-24
• NPRM published August 8, 2002
• Final Reg published November 1, 2002
• Dear Colleague Letter GEN-04-03
• Dear Colleague Letter GEN-05-16
• HERA Operational Implementation June 30, 2006
• NPRM published August 8, 2007
• Final Regulations published November 1, 2007

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Appendix

• Old approach (refunds and repayments)
• Dictated use of specific refund policies.
• Determined amount of institutional charges that a
  school had earned and not earned.
• New approach (Return to Title IV Funds)
• Determines amount of title IV aid a student has
  earned, the unearned portion is returned
• Paycheck theory if you arent there for the
  entire period you owe some of the money back

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Appendix Leave of Absence

• The previous limit to only one LOA in 12 months
  was eliminated in the November 1, 2002 final
  regulations. HERA codifies 1 or more LOAs w/in
  180 days. Sec 8022
• Total leave days cannot exceed 180 in any
  12-month period.
• The institution must have a formal policy that
  the student and institution follow.

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Appendix Academically Related Activity

• An institution not required to take attendance
  MAY ALWAYS use the last date of an
  academically-related activity as the withdrawal
  date.
• The school, not the student, must DOCUMENT
• That the activity is academically-related, and
• The students attendance at the activity.

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Appendix Academically Related Activity

• Examples of academically-related activities are
• Examinations or quizzes,
• Tutorials,
• Computer-assisted instruction,
• Completing an academic assignment, paper or
  project,
• Attending a school assigned study group.