# Presentation: 075174

## <date/time>

##     Federal Student Aid

**    ****Policy Update**
**Sally Stroup ****	****-  ****	****Assistant Secretary**
**	****	****	****Postsecondary Education**
**Jeff Andrade ****	****-  ****	****Deputy Assistant Secretary**
**	****	****	****Postsecondary Education**
**Dan Madzelan ****	****-  ****	****Program, Planning, and Innovation**
**	****	****	****Postsecondary Education**
**Jeff Baker ****	****-  Program Development**
**	****	****	****Federal Student Aid**

## Negotiated Rulemaking

**and**
**Final Rules**

## Two Teams - Loan Issues and Program Issues

Meetings - January 14, March 4 and April 22

Results -

Notice of Proposed Rulemaking (NPRM)
Team I Published on August 6
Team II Published on August 8
60 Day Comment Period
About 100 Comments Received
Final Published on November 1 (One Package)
Effective July 1, 2003
All Provisions Subject to Early Implementation

**Two Teams - Loan Issues and Program Issues**
**Meetings - January 14, March 4 and April 22**
**Results -**
**Notice of Proposed Rulemaking (NPRM)**
**Team I Published on August 6**
**Team II Published on August 8**
**60 Day Comment Period**
**About 100 Comments Received**
**Final Published on November 1 (One Package)**
**Effective July 1, 2003**
**All Provisions Subject to Early Implementation**

***Negotiated Rulemaking***** **

## Loan Issues

**Loan Issues**

## Negotiated RulemakingLoan Issues 

_**School Related Issues**_
**All Loan Programs –**
**Loan Counseling:**
**School Can Use Third Party**
**Must Reference NSLDS**
**Loan Repayment Examples**
**FFEL and Direct Loan –**
** ****Loan Limits for Stand-Alone Programs**

## School Related Issues

Perkins –

Assessing Late Charges Optional

Write-Offs
Up to $25
Up to $50 After Normal Billing

Coordinating Monthly Payments

_**School Related Issues**_
**Perkins –**
**Assessing Late Charges Optional**
**Write-Offs**
**Up to $25**
**Up to $50 After Normal Billing**
**Coordinating Monthly Payments**

***Negotiated Rulemaking****** Loan Issues***

## School Related Issues

Perkins –

Litigation
Threshold from $200 to $500
Review Every Two Years

Reporting to Credit Bureaus

Providing Copies of Notes to Borrowers

_**School Related Issues**_
**Perkins –**
**Litigation**
**Threshold from $200 to $500**
**Review Every Two Years**
**Reporting to Credit Bureaus**
**Providing Copies of Notes to Borrowers**

***Negotiated Rulemaking****** Loan Issues***

## Negotiated Rulemaking Loan Issues 

_**Borrower Issues**_
**All Loan Programs –**
** ****Rehabilitation of Defaulted Loans**
** ****Not if Judgment**
** ****Regaining Title IV Eligibility**
**FFEL and Direct Loans –**
**Unemployment Deferments**
**Economic Hardship Deferments**

## Negotiated Rulemaking Loan Issues 

_**Borrower Issues**_
**FFEL and Direct Loan –**
** ****Forbearances**
**Agreement Over Phone**
**Emergencies**
**Consolidation Loan Discharges**
** ****No Loss of Benefits**
**Establishing First Repayment Date**

## Program Issues

**Program Issues**

## Negotiated Rulemaking Program Issues

**Definition of Academic Year**
**Elimination of “12 - Hour Rule”** **for Non-Term and Non-Standard Term**
**All Programs – One-Day Rule**
**Revised Definition of Payment Period for Non-Term Programs**
**Must Complete Both –**
**Half Number of Weeks**
**Half Credit Hours**

## Incentive Compensation Prohibition
Set of “Safe Harbors”
  Internet Activities
  Salary Adjustments
  Contracts with Other Entities
  Token Gifts
   Profit Sharing and Bonuses
   Etc.

**Incentive Compensation Prohibition**
**Set of “Safe Harbors”**
**  ****Internet Activities**
**  ****Salary Adjustments**
**  ****Contracts with Other Entities**
**  ****Token Gifts**
**   ****Profit Sharing and Bonuses**
**   ****Etc.**

***Negotiated Rulemaking****** Program Issues***

## De Minimus Overpayment Amount
$25 - All Programs
Does Not Apply If –
Remaining Balance
Result of Campus Based $300 Tolerance
Electronic Notification Return 	Receipt Eliminated

**De Minimus Overpayment Amount**
**$25 - All Programs**
**Does Not Apply If –**
**Remaining Balance**
**Result of Campus Based $300 Tolerance**
**Electronic Notification Return ****	****Receipt Eliminated**

***Negotiated Rulemaking****** Program Issues***

## Negotiated Rulemaking Program Issues

**Return of Title IV Aid**
**Required to Take Attendance**
**Determined by Outside Entity**
**Leave of Absence**
**Total of 180 Days Within 12- Month Period**

## Late Disbursements --
Must Make Late Disbursement if
Student Withdrew or Completed 
Payment Period
Timeframe from 90 to 120 Days, or
 Later if Approved by Secretary
ISIR Must Have Been Processed by
Secretary

**Late Disbursements --**
**Must Make Late Disbursement if**
**Student Withdrew or Completed **
**Payment Period**
**Timeframe from 90 to 120 Days, or**
** ****Later if Approved by Secretary**
**ISIR Must Have Been Processed by**
**Secretary**

***Negotiated Rulemaking****** Program Issues***

## Remove 1 Year Expiration for ATB Tests

GEAR UP - Greater Packaging 	Flexibility

FWS at For Profit Schools
Expanded Definition of “Student
Services”

**Remove 1 Year Expiration for ATB Tests**
**GEAR UP - ****Greater Packaging ****	****Flexibility**
**FWS at For Profit Schools**
**Expanded Definition of “Student**
**Services”**

***Negotiated Rulemaking****** Program Issues***

## Timely Payment of Refunds --
Funds Returned Within 30 Days

Checks to FFEL Lenders Must Be 	Received by Lender Within 45 Days

Letter of Credit If Not Timely
Request for Special Consideration

**Timely Payment of Refunds --**
**Funds Returned Within 30 Days**
**Checks to FFEL Lenders Must Be ****	****Received by Lender Within 45 Days**
**Letter of Credit If Not Timely**
**Request for Special Consideration**

***Negotiated Rulemaking****** Program Issues***

## Policy Guidance

## Home Schooled Students

**HEA - Student Eligibility:  Students who have completed a secondary home school program are eligible for Title IV student aid.**
**HEA - Institutional Eligibility:  Schools can only admit, as regular students, persons who are beyond the age of compulsory attendance or who have a high school diploma (or equivalent).  **
**Catch-22:  A younger home schooled student is eligible to receive aid, but the school could lose its eligibility for all students.  Non-aided recipients can also affect eligibility. **

## Home Schooled Students

**Modified Interpretation:**** **
**	****Consider student to **_**not**_** be subject to the “age of compulsory attendance” provision if State where institution is located would not consider student to be in violation of truancy laws.**
**	****Does not impact institution’s admissions policy.**

## Expiration of Loan Disbursement Relief

**Specific Provisions:**
**Schools with cohort default rates of less than 10% for the three most recent years, may-**
**Ignore “30-day delayed disbursement” for first time, first year students**
**Make single disbursement for one-term loans (or less than 4 months)**
**Issue:**** **
**Loan disbursement relief for low default rate schools expired on September 30, 2002.**

## Expiration of Loan Disbursement Relief

**What Happens Now --**
**Loans certified (FFELP) or originated (Direct Loan) on or after October 1, 2002 must be disbursed under the regular rules that require multiple disbursements and delayed delivery of loan proceeds.**
**Any loan that had been certified or originated prior to October 1, 2002 may be disbursed under the requirements of the exceptions.**** **

## Perkins Prom Notes

**2002-03 Electronic Prom Note**
**Electronic Template Posted to IFAP**
**Master Note Promissory Note**
**Draft in Early Stages of Clearance**
**Phase-In Implement in Spring of 2003 for 2003-2004 Award Year**

## PLUS Master Prom Note

**Both FFEL and Direct Loans**
**Forms in OMB Clearance**
**Phase-In for 2003-04**
**Note:  All schools will be eligible for multi-year functionality of both student and PLUS MPNs**

## Fellowships and Assistantships

**Question:**
**What is the correct treatment for awards such as fellowships and assistantships?  Should they be used as resources and estimated financial assistance (EFA) in the current year,**
**OR**
**Reported on the student’s next year’s FAFSA for calculation of the next EFC?**

## Fellowships and Assistantships

**Two Tests:**
**1.  Is Award Employment?  **
**	****If Not Employment:  Must Use as ****	****	****	****Resource/EFA, without regard to need**
**	****If Employment: Go to Test 2**
** **
**2.  Is Award Need-Based?**
**	**
**	****If Award is Need-Based: Must use as ****	****Resource/EFA **
**	****If Award is Not Need-Based:  Not used as ****	****resource/EFA  Most likely reported on next ****	****FAFSA**

## Fellowships and Assistantships

**Is the Award Employment?  **
**	****Determined by institution based upon non-financial aid requirements.  Does the institution consider the payment to be employment based upon state and federal rules,  e.g.**
**  ****withholding**
**  ****W-2s **
**  ****social security **
**  ****unemployment **
**  ****worker’s compensation requirements.**

## Use of Electronics

**Question:**
**Do the regulations allow schools (and others) to conduct Title IV business electronically?**
**Answer:**
**Unless a regulatory requirement specifically states that a notification, certification, authorization, or signature must be in a paper format, such communications and transactions may be accomplished electronically.**

## Use of Electronics

**Question:**
**Will the regulations be modified to allow schools (and others) to conduct Title IV business electronically?**
**Answer:**** **
**No. Since, in almost all instances, the current language of the regulations does not specifically require either a printed “pen and ink” communication or a “wet” signature, there is no need to modify the regulations.**

## Use of Electronics

**More Discussion:**** **
**Must ensure that such processes are in compliance with all laws including E-Sign:**
**Consent**
**Disclosure**
**Testing**
***Consult with school’s legal counsel.***

## Use of Electronics

**More Discussion:**** **
**We expect to issue guidance for the use of electronics in the administration of the Title IV programs.  It will address issues related to: **
**  ****The use of “shared secrets” such as PINs**
**  ****The sending of electronic notices**
**  ****Obtaining electronic authorizations**
**  ****Use of electronics in the verification process**
**See Session # 18**

## Reauthorization

## Reauthorization

**	**
_**Discussion Topics**_
**Need Analysis**
** **
**Pell Grants**
**Campus-Based Programs**
**General Provisions**** **

## <date/time>