Proposed Regulatory Language

**Committee II -- Program Issues**

**Quick Fix:** No.

**Origin:** Fed Up #35

**Issue:** Late Disbursements

**Regulatory Cite:** §668.164(g)

**Summary of Change:** This section has been restructured to read more
easily. The substantive changes from current regulations to this section
would:

(1) Eliminate the requirement that, for Pell Grant purposes, the school
    must have received a 'valid' SAR or ISIR before the student withdrew
    \[668.164(g)(1)\].

(2) Change the requirement that in order to make a late disbursement the
    school must have received a SAR or ISIR with an official EFC while
    the student was still eligible, to that the Secretary must have
    processed a SAR or ISIR with an official EFC while the student was
    still eligible \[§668.164(g)(2)(i)\].

(3) Exclude a late disbursement of a PLUS loan from the above SAR/ISIR
    processing requirement \[§668.164(g)(2)(i)\].

(4) Clarify the current requirement that an institution must make any
    required post-withdrawal disbursement to a student who has withdrawn
    and is subject to the provisions of §668.22 \[§668.164(g)(3)(i)\].

(5) Provide that an institution must offer a late disbursement to a
    student who had completed a payment or loan period
    \[§668.164(g)(3)(ii)\].

(6) Provide an additional 30 days (total of 120 days) for the
    institution to make a late disbursement \[§668.164(g)(4)(i)\].

(7) Add PLUS loans to the prohibition of making a second or subsequent
    late disbursement of a FFEL or Direct Loan unless the student
    completed the period for which the loan was intended
    \[§668.164(g)(4)(ii)\].

(8) Provide that a school may make a late disbursement to a first-year,
    first-time borrower if the school is exempt from the delayed
    disbursement requirements \[§668.164(g)(4)(iii)\].

**Updated Information**

**Since 3/6-8 Meetings:**

(1) This section has been redrafted to read more easily.

(2) Makes clear that a SAR or ISIR is not required for a late
    disbursement of a PLUS loan.

(3) Changes the requirement that in order to make a late disbursement
    the school must have received a SAR or ISIR with an official EFC
    while the student was still eligible, to that the Secretary must
    have processed a SAR or ISIR with an official EFC while the student
    was still eligible.

(4) For a late disbursement to a student who completed a payment or
    enrollment period, clarifies that the school may credit the
    student's account to pay for allowable costs but must offer any
    remaining funds to the student.

(5) Provides that a late disbursement must be made within 120 days
    instead of 90 days.

(6) Provides that a school may make a late disbursement to a first-year,
    first-time borrower if the school is exempt from the 30-day delayed
    disbursement requirements.

**Tentative Agreement:** No

**Change**:

1\. The authority citation for part 668 continues to read as follows:

AUTHORITY: 20 U.S.C. 1094

2\. Section 668.164(g) is amended to read as follows:

\(g\) [Late disbursements]{.underline}. (1) [Ineligible
student]{.underline}. For purposes of this paragraph, an otherwise
eligible student becomes ineligible to receive title IV, HEA program
funds on the date that\--

\(i\) For a loan under the FFEL and Direct Loan programs, the student is
no longer enrolled at the institution as at least a half-time student
for the loan period; or

\(ii\) For an award under the Federal Pell Grant, FSEOG, and Federal
Perkins Loan programs, the student is no longer enrolled at the
institution for the award year.

\(2\) [Conditions for a late disbursement]{.underline}. Except as
limited under paragraph (g)(4) of this section, a student who becomes
ineligible (or the student's parent) may receive a late disbursement if
before the date the student became ineligible---

\(i\) Except in the case of a PLUS loan, the Secretary processed a SAR
or ISIR with an official expected family contribution; and

(ii)(A) For a loan under the FFEL or Direct Loan programs, the
institution certified or originated the loan; or

\(B\) For an award under the Federal Perkins Loan or FSEOG programs, the
institution made that award to the student.

\(3\) [Making a late disbursement]{.underline}. Provided that the
conditions described in paragraph (g)(2) of this section are satisfied-

\(i\) If the student withdrew from the institution during a payment
period or period of enrollment, the institution must make any
post-withdrawal disbursement required under §668.22(a)(3) in accordance
with the provisions of §668.22(a)(4);

\(ii\) If the student successfully completed the payment period or
period of enrollment, the institution must provide the student (or
parent) the opportunity to receive the amount of Title IV HEA funds that
the student (or parent) was eligible to receive while the student was
enrolled at the institution. For a late disbursement in this
circumstance, the institution may credit the student's account to pay
for current and allowable charges as described in paragraph (d) of this
section, but

must offer any remaining amount to the student or parent; or

\(iii\) If the student did not withdraw but ceased to be enrolled as at
least a half-time student, the institution may make the late
disbursement of a loan under the FFEL or Direct Loan programs to pay for
educational costs that the institution determines the student incurred
for the period in which the student was eligible.

\(4\) [Limitations]{.underline}. (i) An institution may not make a late
disbursement later than 120 days after the date of the institution's
determination that the student withdrew, as provided under §668.22, or,
for a student who did not withdraw, 120 days after the date the student
otherwise became ineligible;

\(ii\) An institution may not make a second or subsequent late
disbursement of a loan under the FFEL or Direct Loan program unless the
student successfully completed the period of enrollment for which the
loan was intended; and

\(iii\) An institution may not make a late disbursement of a loan under
the FFEL or Direct Loan program if the student was a first-year,
first-time borrower unless the student completed the first 30 days of
his or her program of study. This limitation does not apply if the
institution is exempt from the 30-day delayed disbursement requirements
under §682.604(c)(5)(i)--(iii) or §685.303(b)(4)(i)(A)--(C).