NASFAA National Conference

1
NASFAA National Conference

• Seattle, Washington -- July 5 - 8, 2006
• Washington State Convention
• Trade Center

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Return of Title IV Funds Updated for Changes
from the Higher Education Reconciliation Act of
2005, P. L. 109-171

• Brian Kerrigan
• Dan Klock

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Todays Agenda

• DCL issues
• Regulation changes from HERA
• R2T4 calculation with HERA changes
• Training on R2T4
• Compliance self-monitoring
• Questions answers

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Presentation Objectives

• Bring you up to date on R2T4 changes
• Notify you of training opportunities
• Demonstrate changes in calculation
• Understand that R2T4 non-compliance is a top
  finding

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Dear Colleague Letter GEN-04-03

• Title IV credit balance
• Aid that could have been disbursed
• Verification not completed before withdrawal
• No passing grades
• Withdrawal credit hr, non-term program
• Date of determination of withdrawal for
  institution required to take attendance

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Title IV Credit Balances

• Hold Title IV credit balance until R2T4
  calculation is completed
• Credit balance is Aid Disbursed
• Determine if credit balance changes because of
  refund policy or R2T4
• Use credit balance to repay Title IV grant
  overpayment on behalf of student
• Release credit balance within 14 days

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Aid That Could Have Been Disbursed

• All aid for period, if conditions for late
  disbursement met before student withdraws
  (668.164(g)(2))
• However, if limitations apply, aid may not be
  paid to student (668.164(g)(4))

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Conditions for a Late Disbursement

• All student aid (including Pell) - ED processed
  SAR/ISIR with official (not necessarily valid)
  EFC (not needed for PLUS)
• FFEL/Direct Loan - loan certified or originated
• Perkins/FSEOG award made

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Limitations on Making a Late Disbursement

• No second or subsequent disbursement of FFEL/DL,
  unless student completes period
• No FFEL/DL unless student completes 30-day delay
  period
• No Pell Grant without valid SAR/ISIR by deadlines
  in 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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Verification

• Must complete R2T4 within 45 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 -- new R2T4 calculation
  using additional eligible aid

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No Passing Grades

• Institution must have 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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Withdrawal from a Credit Hour Non-term Program

• Percentage earned is equal to calendar days
  completed divided by calendar days in period
• Project calendar days in period if student is in
  self-paced program

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Date of Determination that Student Withdrew
School 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 institutions absence policy

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HERA Regulation Changes
15
Remember !

• The Department has not yet issued regulations to
  implement the provisions of the Higher Education
  Reconciliation Act of 2005. Program
  participants, including institutions, lenders,
  and guarantee agencies, should implement the
  provisions of the Act in accordance with
  subregulatory guidance provided by the Department
  in Dear Colleague Letters and other materials
  until the regulations are published and
  effective. In general, the regulations will be
  effective 30 days after they are published in the
  Federal Register.

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Programs Specified for R2T4

• Perkins
• Direct Loan
• FFEL
• Pell Grant
• Academic Competitiveness Grant
• National SMART Grant
• FSEOG

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Postwithdrawal Disbursement

• Credit grant for tuition and fees room and
  board (without authorization) and for other
  charges (with authorization)
• Credit loan for tuition and fees room and board
  (without authorization) and for other charges
  (with authorization)
• But only after student / parent confirms that
  (s)he wants loan funds in response to written
  notification

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Written Notification

• Within 30 days of date of determination of
  withdrawal
• Identifies type and amount of loan funds to be
  credited, and type and amount of grant and loan
  funds available as direct disbursement
• Asks if student / parent wants loan funds
  credited
• Asks if student / parent wants grant or loan
  funds as direct disbursement

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Written Notification

• Explains that student / parent can accept some or
  all of aid
• Explains that if student / parent declines credit
  of loan, (s)he may not receive direct
  disbursement of loan unless institution agrees
• Explains obligation to repay loan
• Explains 14 day (or later) response time

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Written Notification

• Deadline to accept PWD either directly or as
  credit to account must be same
• PWD must be disbursed in manner specified by
  student / parent within 120 days of date of
  determination of withdrawal

21
Written Notification

• If response from student / parent is late,
  institution may make, or not make PWD
• If institution declines to make PWD, it must
  inform student / parent
• If there is no response from the student /
  parent, no loan may be credited to account and no
  grant or loan may be disbursed directly

22
Clock Hour Changes

• Scheduled clock hours always used
• Scheduled clock hours as of withdrawal divided by
  clock hours in period
• If greater than 60, student earns 100
• Scheduled clock hours must be -
• - established prior to beginning of classes
  (or modified before withdrawal date)
• - consistent with published materials
• - consistent with accrediting agency / state

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Aid Student Returns

• Grant overpayment protection
• 50 of amounts disbursed (and that could have
  been disbursed)
• 50.00 or less per program (but, not remaining
  balances of 50.00 or less)
• Waiver of grant overpayments for students
  residing in, employed in, or attending
  institutions located in declared disaster areas

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Return of Funds Order

• Loan Programs
• Pell Grant Program
• Academic Competitiveness Grants Program
• National SMART Grants Program
• FSEOG Program

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R2T4 Worksheets/Software
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Step 1 Students Title IV Aid

• All information collected about Title IV aid
  either disbursed or could have been disbursed
• Broken down by Grants and Loans
• This is straight-forward, although the data is
  collected as noted on the next slide

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Step 1 Students Title IV Aid

• Box E. Total Title IV aid disbursed for the PP or
  POE
• Used to determine the amount of PWD or returned
• Box F. Total Title IV grant aid disbursed could
  have been disbursed for the PP or POE
• Used to determine the TIV grants amount that is
  protected under HERA
• Box G. Total of all aid disbursed or could have
  been disbursed
• Used to determine the amount of TIV aid earned

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Step 2 Percentage of TIV Aid Earned

• Credit-hour program - same as pre-HERA
• If is gt 60 100 TIV earned
• Clock-hour program
• This becomes a one-step calculation
• Hours scheduled to complete
• Total hours in period (PP or POE)
• If is gt 60 100 TIV earned

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Step 3 Amount of TIV aid Earned by the Student

• Remains earned (Box H) X Total of TIV aid
  disbursed or could have been disbursed (Box G)

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Step 4 Total Title IV Aid to be Disbursed or
Returned

• PWD or Amount to be Returned
• Remains same as before
• Amt earned gt Amt disbd PWD
• Amt earned lt Amt disbd Amt to be Returned
• Amt earned Amt disbd No action required

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Step 5 Amount of Unearned Title IV Aid Due from
the School

• Unearned amount of Title IV aid due from the
  school is calculated the same as before
• Lesser of
• Total amount of unearned aid, or
• Institutional charges X of unearned aid

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Step 6 Return of Funds by the School

• Return order of TIV aid has changed
• Loans
• Unsubsidized FFEL/DL
• Subsidized FFEL/DL
• Perkins
• FFEL/DL PLUS (Graduate student)
• FFEL/DL PLUS (Parent)

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Step 6 Return of Funds by the School

• Grants
• Pell Grant
• Academic Competitiveness Grant
• National SMART Grant
• FSEOG

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Step 7 Initial Amount of Unearned TIV Aid Due
from the Student

• Total amount unearned TIV aid
• - Amount school has to repay
• Amount student has responsibility to
  repay

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Step 8 Repayment of the Students Loans

• Student repays what he has earned plus what he
  has not earned that the school does not repay
• Total TIV net loans disbursed
• - Amount of TIV loans school repaid
• Remaining balance of TIV loans
• If the amount of unearned less the amount the
  school repaid (Step 7) is greater than the
  remaining balance of TIV loans outstanding go
  to Step 9

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Step 9 Grant Funds to be Returned

• Initial amount of unearned aid that the
  student has responsibility for (Step 7)
• - Amount to be repaid by student on loans
• Initial amount of TIV grants for student to
  repay
• NEW Amount of TIV grant protection
• Total of TIV grants disbursed or could have
  been disbursed X 50 the protected amount

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Step 9 Grant Funds to be Returned

• Initial amount of TIV grants for student to
  repay
• - the protected amount of TIV grants
• Amount of TIV grants to be returned by the
  student

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Step 10 Return of Grant Funds by the Student

• Pell Grant
• Academic Competitiveness Grant
• National Smart Grant
• FSEOG
• Note that the student is not responsible for
  returning funds to any program to which the
  student owes 50.00 or less

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Student A

• Pell Grant - 2025
• Student attended 10
• Earned and unearned
• 10 X 2,025 202.50 amount earned
• Amount to be returned
• 2,025 - 202.50 1,822.50
• Amount school returns
• 1,000 X 90 900
• The lesser of 1,822.50 or 900

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Student A

• Initial amount student owes
• 1,822.50 less 900 922.50
• Amount of TIV grant protection
• 2,025 X 50 1,012.50
• Amount of TIV grant funds for student to repay
• 922.50 less 1,012.50 0
• (Negative set to zero)

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Student B

• Pell Grant - 500, SMART - 2,000, FSEOG - 1,000
  
• Student attended 10
• Earned and unearned
• 10 X 3,500 350 amount earned
• Amount to be returned
• 3,500 - 350 3,150
• Amount school returns
• 1,000 X 90 900
• The lesser of 3,150 or 900

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Student B

• Initial amount student owes
• 3,150 less 900 2,250
• Amount of TIV grant protection
• 3,500 X 50 1,750
• Amount of TIV grant funds for student to repay
• 2,250 less 1,750 500
• Since Pell fully repaid, goes to SMART

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De minimis Amount

• Q Is the 50.00 de minimis amount applicable to
  the total amount of grant funds owed or is it
  program by program?
• A The 50.00 de minimis amount is applicable on
  a program by program basis. Therefore, if after
  the amount that the school must return, the
  student owes 50 or less to each program - Pell,
  ACG, National SMART, and FSEOG, the student would
  not owe a Title IV grant overpayment to any of
  these funds

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De minimis Amount

• Q Is the 50.00 de minimis amount also
  applicable to overpayments of FSEOG and Federal
  Perkins loans?
• A No. Under the provisions of 34 CFR 673.5(f),
  an overpayment made by the institution to a
  student (that is not a remaining balance) of less
  than 25 is not referred to the Secretary for
  repayment it is considered a de minimis amount.
  When the HERA increased the amount of a de
  minimis amount of a Return of Title IV Funds
  grant overpayment to 50 or less, it did not
  alter Part 673 on overawards of Perkins and FSEOG.

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Postwithdrawal Disbursements

• Q Are the new notification requirements limited
  to when a portion of the PWD is from a TIV loan
  program?
• A No. If the PWD includes any TIV grant funds
  that will be directly disbursed to the student,
  they too must meet the notification requirements.

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Postwithdrawal Disbursements

• Q What are the notification requirements?
• A 1. The notification must be written
• 2. Must request confirmation to credit loan
  funds to the students account (also need 668.164
  authorization for certain charges for both grants
  and loans)
• 3. Must identify the types and amounts of the
  loan that will be credited to the account and
  the types and amounts of loans and grants that
  will be directly disbursed to the
  student/borrower

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Postwithdrawal Disbursements

• 4. Must explain that the student/borrower can
  decline or reduce any amount of those funds
• 5. Must establish a deadline for the
  student/borrower to provide confirmation to the
  school
• 6. Explains that if the confirmation of
  crediting loan funds to the students account is
  not provided, rather that all the loan funds
  should be directly disbursed to the
  student/borrower, that the student/borrower may
  not receive any loan funds as a direct
  disbursement, unless the school concurs

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Postwithdrawal Disbursements

• 7. Must explain the obligation to repay
• 8. The deadline established by the school must
  be the same for both the confirmation of a direct
  disbursement and a confirmation to credit loan
  funds to the students account
• 9. If confirmed, the PWD must be made within
  120 days of the date of determination by the
  school that the student withdrew

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Postwithdrawal Disbursements

• 10. If the student/borrower provides confirmation
  after the deadline, the school may elect not to
  provide the PWD, but if the school chooses not to
  provide the PWD, it must contact the
  student/borrower
• 11. If the student/borrower does not respond, no
  portion of the loan may be credited to the
  students account, nor may any amount to be
  directly disbursed be released

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Clock Hour Programs Scheduled Hours

• Q Under HERA, the scheduled hours must be those
  established prior to the students beginning
  class date. Can you provide an example of how the
  school can establish the scheduled hours?
• A Yes. When the student enrolls, generally,
  the number of clock hours would be established as
  a part of the students enrollment agreement.

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Clock Hour Programs Scheduled Hours

• Q Can the established scheduled hours ever be
  changed once the student has begun classes?
• A Yes. Except the change cannot be related to
  or as a result of the students withdrawal.

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50 Grant Protection

• Q The statute states that the grant overpayment
  amount is the amount that exceeds 50 of the
  total Title IV grants received by the student.
  Does that include grant amount that could have
  been received by the student or does it mean only
  the disbursed amounts?
• A Yes. Amounts received generally means the
  amount of Title IV grants disbursed and those
  that could have been disbursed for the period for
  which the calculation is performed.

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Disaster Waiver

• Q Under what conditions is the students portion
  of a Title IV grant overpayment forgiven due to a
  disaster?
• A Under Public Laws 109-66 and 109-67 a
  student's Title IV grant overpayment otherwise
  due under the Return of Title IV Aid requirements
  is waived if the student withdrew because of a
  disaster under the following conditions

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Disaster Waiver

• The student was residing in, employed in, or
  attending an institution that is located in an
  area in which the President has declared that a
  major disaster exists
• The student withdrew because of the impact of the
  disaster on the student or the institution and
• The student's withdrawal occurred within the
  award year during which the designation as a
  major disaster occurred or during the next
  succeeding award year.

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Disaster Waiver

• For purposes of this waiver, a "major disaster"
  must have been declared by the President in
  accordance with the Robert T. Stafford Disaster
  Relief and Emergency Assistance Act (42 U.S.C.
  5170).

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Order of Return

• Q If the amount of Return reduces the Pell
  Grant to zero and the student has received or is
  eligible to receive the ACG or SMART Grant, will
  the student remain eligible for the new grant or
  must the student repay the new grant because s/he
  is no longer eligible once the Pell is fully
  repaid?
• A The student was a recipient of the Pell Grant
  at the time the ACG/SMART grant was disbursed and
  otherwise eligible therefore, the full repayment
  of the Pell as a result of R2T4 does not make the
  student ineligible for the new grant.

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LEAP/SLEAP/GEAR-UP SSS Grants

• Q When a student withdraws on or after July 1,
  2006, and the student has one or more of these
  grants, what happens in the R2T4 calculation?
• A The amount of the grants listed above would
  not be included in the Return calculation with
  withdrawal dates on or after July 1, 2006.

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HERA Revised R2T4 Software

• Q If the new software is not implemented until
  after July 1, 2006, what should schools do to
  remain in compliance with 34 CFR 668.22?
• A First, the period for the school to complete
  the calculation and return the funds is increased
  from 30 days to 45 days, effective July 1, 2006.
  Second, while the estimated software availability
  date is early August of 2006, the paper
  worksheets should be available prior to the
  software.

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ACG/SMART Grants

• Q If a student withdraws and was awarded a
  second year ACG or SMART grant, but the school
  did not have the students GPA, may the grant
  amount be included in the R2T4 calculation as
  aid that could have been disbursed?
• A No. The school has to have the GPA before
  either grant can be included as aid that could
  have been disbursed. Note that the school has up
  to 45 days from the date of determination to
  perform the R2T4 calculation.

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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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Thank You ! Brian.Kerrigan_at_ed.gov(202) 219
-7058Dan.Klock_at_ed.gov(202) 377- 4026