# Presentation: 809802

## Session C-34

**Changes to the General Provisions**
- Brian Kerrigan
- U.S. Department of Education

## Negotiated Rulemaking

- _Federal Register_ notice - Aug. 18, 2006
- Regional hearings
- Berkeley, CA             - Sep. 19, 2006
- Chicago, IL                - Oct. 5, 2006
- Orlando, FL                - Nov. 2, 2006
- Washington, DC         - Nov. 9, 2006

##   Negotiating Committees

- General Provisions
- Loans
- Academic Competitiveness & National SMART Grants
- Accreditation
- 	(Negotiations from December – June)

##   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

## Definitions

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

## Professional Degree

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

## 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

## 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

## 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

## 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

## Half-time/Three-quarter-time Student

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

## Other “Definitions”

- Independent study
- Substantially equal in length
- Successfully completes

## Independent Study

- Only applies to Direct Assessment Programs
- Course of study with predefined objectives determined by student & professor
- Requires regular and substantive interaction

## 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)

## 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

## 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

## 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 term_
- For FFEL and DL, _it’s 1⁄2 the credit hours and 1⁄2 the weeks_
- For credit-hour programs w/o terms, or clock-hour programs, _it’s 1⁄2 the (credit or clock) hours and 1⁄2 the weeks_

## 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 policy
- They do not exceed the lesser of
- Accrediting agency policy,
- State agency policy, or
- 10%

## 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, or_
- _Remain 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

## 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

## 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), or
- _The academic year_

## 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)

## 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

## Academic Year Progression

- 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_

## Academic Year Progression

- 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_, or
- _Completion of the coursework_

## Academic Year Progression

- For clock-hour programs, _the student progresses at the later of_
- _Completion of the weeks_, or
- _Completion of the clock hours_

## 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

## 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 1⁄2 the hours and 1⁄2 the weeks) —
- _Use the payment period that ends later, and_
- _Attribute funds to the payment period that ends later_

## Use of PP That Ends Later

- Academic Year is 24 credit hours & 30 weeks
- Terms: 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)

## 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 Pell
- FFEL/DL PP1             = 15 weeks*
- Grant/Perkins PP1     = 10 weeks
- Determine the payment period that ends later* and use it

## Attribution of Aid From PP 

- PP 1 = 10/30 X $4,310 =  $1,437
- PP 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)

## Total Title IV Aid Used In Calculation

- Total Title IV Aid disbursed or could have been disbursed for R2T4 calculation:
- 	FFEL PP 1 			    = $1,750
- 	Pell PP 1   			    = $1,437
-   Portion from Pell PP 2    _= $   718_
- 	Total                               $3,905

## 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

## Pell Grant Formula 4 Calculation

- Credit-hour programs w/o terms, and clock-hour programs
- Scheduled Pell x the lesser of —
-   _Hours in the payment period_
- 	Hours in the academic year
-  			    OR
- 	_Weeks in the payment period_
- 	Weeks in the academic year

## Pell Grant Formula 5 Calculation

- Correspondence programs w/o terms
- Half-time amt x the lesser of —
-   _Hours in the payment period_
- 	Hours in the academic year
-  			    OR
- 	_Weeks in the payment period_
- 	Weeks in the academic year

## 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

## ACG/SMART Formula 4 Calculation

- Credit-hour programs w/o terms, and clock-hour programs
- Scheduled grant amt x the lesser of —
-   _Hours in the payment period_
- 	Hours in the academic year
-  			    OR
- 	_Weeks in the payment period_
- 	Weeks in the academic year

## 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

## 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

**Notes:**
Intended to ensure that a school produces a check that a student may pick up at a specified location.  

Cases where schools held credit balances longer than 14 days waiting for students to make a disbursement selection.  

School is solely responsible for making timely credit balance payments – may not depend or rely on student.

## 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

**Notes:**
Promotes use of electronic funds transfers.
Policy or enforcement of policy may not delay the disbursement of title IV funds.

If school opens or establishes process for opening bank accounts, for the most part codified the guidance in GEN-05-16

## Electronic Disbursements

- ● If you open an account or actively assist
- 	the student in opening the account, you –
- Must get the student’s written consent
- Must inform the student of the terms and conditions
- May not make any claims against the funds in the account
- Must ensure that the student does not incur any cost in opening the account or in receiving a debit or stored-value card

**Notes:**
Bank account is a checking, savings account or account that underlies a stored-value card.  Account must be insured by the FDIC or National Credit Union Share Insurance Fund.

Claims against the account can only be made after getting the student’s permission or to correct an error.

No cost for the initial card issued.  

## Electronic Disbursements

- 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

**Notes:**
Convenient access means branch office or ATM on campus, on school-owned facilities, or immediately adjacent to campus.

## 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

## Minor Prior-year Charges

- 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.

## Minor Prior-year Charges

- 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

## Late Disbursements

- Late disbursement period is extended from 120 to 180 days
- There are no late disbursements after
- 	180 days

## 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-disburse
- Attempts 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

## 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

## 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

## 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

## 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

## Contact Information

_**Contact Information**_

- I appreciate your feedback and comments.  I can be reached at:
-  Phone: (202) 219-7058
-  Email:  brian.kerrigan@ed.gov
-  Fax:     (202) 502-7874