# Presentation: 303719

## <date/time>

## General Capstone Session

***And***
***Disbursement***

***General Capstone Session***

## The Student Aid Lifecycle

**Student Aid Awareness**
**Application Processing System**

**Student Eligibility**

**Disbursement and Cash**
**Management**

**Repayment of Title IV Loans **

- EFC

- COA

- Verification

- Packaging

- Overrides

## The Balancing Act

**The Balancing Act**

***Right Time***

***Right Money***

***Right People***

## Student Eligibility

**Eligibility**
**Determine Need**
**Cost of Attendance (COA)**
**Expected Family Contribution (EFC)**
**Verification**
**Resources and Estimated Financial Assistance (EFA)**
**Packaging/Awarding**
**Disbursement**
**Cash Management**

## Eligible Student

**Section 484 of the HEA comprises the student eligibility provisions.**

## Eligible Student

**To be eligible for Title IV aid a student must:**
**Have a high school diploma or**
**Have the equivalent, such as a GED certificate.**
**Pass an ability-to-benefit test approved by ED.**
**Complete a high school education in a home school treated as a home school or private school by State law.**
**Certify that the federal student aid will only be used for educational purposes.**
**Is not in default on a federal student loan or owes money on a federal student grant.**
**Not have a drug-related conviction that makes him or her ineligible.**

**K**

## Eligible Student

**Be a U.S. citizen or an eligible non-citizen.**
**Have a valid Social Security number.**
**Be registered with the Selective Service if required.**
**Be a regular student, i.e., one enrolled or accepted for enrollment in an eligible program to earn a certificate or degree.**
**Meet satisfactory academic progress standards set by the school.**
**Not be incarcerated.**
**Have financial need.**

## Eligible Student

**The Department uses data matches with other federal agencies (e.g. the Social Security Administration, INS, Selective Service) and internal edits on the application to check eligibility.**
**Schools are required to check comments and flags on the ISIRs from the Central Processing System. **
**Schools must clear up any conflicting information when it arises.**

## Determining Need

***Determining Need***

**Cost of Attendance (COA)**
*** ******less***** **
**Expected Family Contribution (EFC)**
***less***
** ****Resources/Estimated Financial Assistance (EFA)**
**         ***** Need = COA – EFC – Resources/EFA**
*** Generally the student’s aid package may not exceed his or her need.**

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## Cost of Attendance (COA)

**Determined by School**
**Components of the COA:**
**Tuition and fees normally assessed for a student carrying the same academic workload.**
**Books and supplies**
**Transportation**
**Miscellaneous and personal expenses**
**The documented cost of the purchase or rental of a personal computer.**

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## Cost of Attendance (COA)

**Room and board.**
**Cost for care of a student’s dependents.**
**Reasonable costs associated with study-abroad programs approved for credit by the home institution.**
**Disability expenses for disabled students.**
**Cost related to co-op education employment.**
**Fees required to receive student loans.**

## Expected Family Contribution (EFC)

**Congressionally mandated formulas**
**Uses the applicant’s (and parents’ if dependent) income, assets, and other information.**
**The CPS calculates the official EFC based upon data provided by the applicant on the FAFSA.**

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## Expected Family Contribution (EFC)

**Variations of the EFC formula**
**Full Data Formula**
**Simplified Needs Test**
**Automatic zero EFC if the applicant meets certain conditions**

## Verification Overview

**Title IV Programs Have Significant and Long- Standing Public and Political Support**
**More than $10 Billion in Pell Grant alone**
**More than $50 Billion Total Aid**
**To maintain this support we must ensure that money is spent properly – Right money to right students.**
**System of Self-Reported Data**
**Corrections and Updates Needed**

**K**

## Verification

**If CPS selects more than 30% of applications for verification, you only have to verify 30%.**
**The school may select additional applications for verification.**
**Required Items to verify:**
**Household Size**
**Number in College**
**AGI**
**U.S. Taxes Paid**
**Certain types of untaxed income and benefits**

## Verification

**Possible Documentation (copies are okay)**
**Verification worksheets**
**Tax returns**
**W-2 forms**
**Tax transcripts**
**Signed statements**** **

## Verification Overview

**Tools for Ensuring Accuracy**
**IRS Match**
**Verification**
**Selection Criteria Refined Using IRS Match Data and Statistical Model**
**Outreach and Training**
**Technical Assistance**
**Program Review Focus**

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## FAFSA – IRS Data Match

**Part of President’s Management Agenda**
**Current HEA Language Does Not Work**
**ED/Treasury/OMB Drafted Legislation to amend the Internal Revenue Code**
**Submitted to Congress in June**
**Draft Language Does Not Allow Release of IRS Data to Schools**
**Early Internal Discussions on Implementation**

## Professional Judgment

- Case by Case basis
- Document Unusual Circumstances
- Used For:
- COA Adjustments
- EFC Components
- Dependency Status
- Loan Certification/Origination

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## Resources/Estimated Financial Assistance

| Campus-based (Resources) | FFELP (Estimated Financial Assistance) |
| --- | --- |
| Pell Grants | Same |
| Direct Loans, FFEL and other | Same |
| Grants | Same |
| Tuition and Fee Waivers | Same |
| Scholarships | Same |
| Certain Fellowships and Assistantships | Same |
| Net earnings from need-based employment | Same |
| Veterans Benefits | Chapter 30 not counted for subsidized loans |
| Americorp Benefits | Americorp Benefits not counted for subsidized loans |

## Packaging

**Some decisions the school must make, for example:**
- Should priority be given to students who apply first?
- How will the school package for the neediest students?
- Should grants, loans, and work-study be awarded differently based on the year of the student?
- Order of awards
**Policy must be documented and made available to Students and prospective Students**

**K**

## Packaging

| Aid Type:  Federal Pell Grant |
| --- |
| Who Receives:
Undergraduates only (those who have not received a bachelor’s degree)
Exception for certain teacher education students |
| Amount for 2002-2003 Award Year:
From Payment Schedules (COA, EFC, Enrollment Status)
Minimum $400  Maximum $4,000 |

**K**

## Packaging

| Aid Type:  FSEOG |
| --- |
| Who Receives:
Undergraduates only (those who have not previously received a bachelor’s degree)
Those with lowest EFC must be awarded first |
| Amount for 2002-2003 Award Year:
School’s Packaging Policy
COA less EFC less Resources
Minimum $100  Maximum $4,000 |

## Packaging

| Aid Type:  Federal Perkins Loan |
| --- |
| Who Receives:
Undergraduates and Graduates
Those with “exceptional financial need” undefined |
| Amount for 2002-2003 Award Year:
School’s Packaging Policy
COA less EFC less Resources
Annual Limits $4,000 Undergraduate and $6,000 Graduate |

**K**

## Packaging

| Aid Type:  Federal Work Study |
| --- |
| Who Receives:
Undergraduates and Graduates |
| Amount for 2002-2003 Award Year:
School’s Packaging Policy
COA less EFC less Resources
Minimum Wage Rate |

**K**

## Packaging

| Aid Type:  FFEL and Direct Loan Subsidized Loans | Aid Type: FFEL and Direct Loan Unsubsidized Loans |
| --- | --- |
| Who Receives:
Undergraduates and Graduates | Who Receives:
Undergraduates and Graduates |
| Amount:
(COA-EFC-EFA)
Annual and aggregate loan limits depending upon grade level | Amount:
(COA-EFA)
Annual and aggregate loan limits depending upon grade level |

## Annual Loan Limits for Subsidized and Unsubsidized Stafford Loans

| Dependent Undergraduate Student |
| --- |
| 1st Year                  $2,625 |
| 2nd Year                 $3,500 |
| 3rd and beyond      $5,500 |

| Independent Undergraduate and PLUS denial Student |
| --- |
| 1st Year                  $6,625
Only $2,625 of this amount may be subsidized loans |
| 2nd Year                 $7,500
Only $3,500 of this amount may be in subsidized loans |
| 3rd and beyond    $10,500
Only $5,500 of this amount may be in subsidized loans. |

| Graduate Student |
| --- |
| Up to $18,500 Only $8,500 of this amount may be in subsidized loans
Note:  Increased amounts for certain health profession students. |

## Aggregate Loan Limits for Subsidized and Unsubsidized Stafford Loans

***Aggregate Loan Limits for Subsidized and Unsubsidized Stafford Loans***

| Dependent Undergraduate Student |
| --- |
| $23,000 as a dependent undergraduate student |

| Independent Undergraduate Student |
| --- |
| $46,000 as an independent undergraduate student.  Only $23,000 of this amount may be in subsidized loans. |

| Graduate Student |
| --- |
| $138,500 as graduate or professional student. Only $65,500 of this amount may be in subsidized Loans.

The graduate debt limit includes Stafford loans received for undergraduates study.

Note:  Increased amounts for certain health profession students. |

**Maximum total debt from Stafford Loans when you graduate**

## Packaging

| Aid Type:  PLUS Loans |
| --- |
| Who Receives:
Parents of eligible dependent students |
| Amount for 2002-2003 Award Year:
Up to the COA less EFA |

## Interest Sessions

| Session Number | Session Title |
| --- | --- |
| 6 | Unexplained Side of Resources:  Fellowships, Assistantships, 529 Plans, etc. |
| 7 | NSLDS Transfer Student Monitoring & Eligibility Changes |
| 8 | Resolving Student Eligibility Issues |
| 9 | CPS Edits, Verification Selection, and FSA’s Quality Analysis Tool:  Tools for Improving the Accuracy of Application Information |
| 10 | NSLDS Data Conflict Resolution and You |
| 12 | Which? Who? How? And So What?:  Using the Quality Analysis Tool to Answer Your Institutional Verification Questions |
| 52 | How EFCs Are Calculated (Two Part Session) |

## Cash Management and  Disbursement

- Purpose of this portion is to promote an understanding of:
- How Federal student aid dollars are financed
- Title IV cash management and disbursement rules
- Protections for Students/Borrowers
- Program Integrity

**K**

## 2002-2003 Title IV Expenditures(Estimated)

| Title IV Program | Dollars Disbursed | Students Aided (Duplicated) |
| --- | --- | --- |
| Pell Grant | $10,700,000,000 | 4,500,000 |
| Campus Based | $  3,500,000,000 | 1,200,000 |
| DL and FFEL | $64,200,000,000 | 6,200,000 |
| Total | $78,400,000,000 |  |

## Cash Management Rules(34 CFR, Subpart K)

- Student aid dollars are intended solely for the use of the student
- Cash management rules intended to:
- Promote sound cash management of the student aid programs
- Minimize cost to taxpayer for making funds available to students
- Minimize the cost to the student

## Business Process for Requesting Funds (668.162)

- FFELP: School certifies the loan and provides lender with disbursement information
- Pell/DL/Campus-Based: School obtains the money from the U.S. Treasury via ED’s Grants Administration and Payments System (GAPS)

## Methods for Requesting Funds from ED (668.162)

- Advance Payment Method
- Reimbursement Method
- Cash Monitoring Method
- Just In Time Payment Method

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## Requesting Funds (668.162)

- Advance Payment: School can request funds that it expects to disburse within 3 days of receipt.
- Reimbursement: After making disbursement, providing student specific documentation, and receiving ED’s approval, school requests funds.
- Cash Monitoring: School disburses and reports then requests funds.
- Just In Time (JIT): School reports disbursement seven days before funds needed then requests funds.
- FFELP: 3 day rule applies for EFT and Master Check.

**K**

## Maintaining and Accounting for Funds (668.163)

- Federally insured bank account required for all FSA program funds --
- Separate Account or Combined with Other Institutional Funds – ED May Require Separate Account
- Notify bank that account contains federal funds

## Interest Bearing Account (668.163)

- DL/Pell/Campus-Based must be in interest bearing account, low risk account, unless --
- Less than $3 million in annual Title IV drawdowns
- Less than $250 in interest earned
- JIT
- Interest >$250 per award year must be returned to Department by June 30

## Disbursement (668.164)

- Definition: When a school credits a student’s account or pays a student directly with:
- Funds received from Department
- FFELP funds received from lender
- Institutional funds when disbursed as Title IV aid

**K**

## Allowable Credits to Student Accounts (668.164)

- Current Charges for:
- Tuition and Fees
- Room and Board if contracted with school
- Other current educationally related expenses if student/parent (PLUS) authorizes in writing

**K**

## Allowable Credits to Student Accounts (668.164)

- Prior Year Charges if:
- Student has/will have credit balance in current year and student authorizes for:
- Up to $99 or
- Greater than $99 if taking funds will not impact student’s ability to pay current year costs

**K**

## Credit Balances (668.164)

- Amount of Title IV aid that exceeds institutional charges
- Must release ASAP but no later than 14 days after balance is created
- Can hold if student authorizes in writing

## Methods of Direct Payment (668.164)

- Releasing FFELP check to borrower
- Issuing a check requiring an endorsement by student/parent
- Initiating an authorized Electronic Funds Transfer (EFT) to student designated bank account
- Paying in cash with receipt signed by student
- School smart card ok but cannot charge the student a fee for making withdrawals

## Late Disbursements (668.164)

- Pell/FSEOG/Perkins: Student no longer enrolled for the payment period
- DL/FFELP: Student no longer enrolled at least 1⁄2 time.
- Must pay no later than 120 days after student became ineligible
- Later with ED’s Approval
- Changed **from**
-  	***“******ISIR Processed by School”***
-  		**to** ***“ISIR Processed.”***

## School Notifications(668.165)

- Award Notice - Type and amount of aid and when and how disbursed (Award Letter).
- Loan Notice - If loan funds credited to account.
- Includes:
- Date and amount of disbursement
- Right to cancel all or part of loan
- Procedures for cancellation
- Borrower given at least 14 days to respond
- Must be sent no earlier than 30 days before or no later than 30 days after action
- No need to receive return receipt

**K**

## Student Authorizations (668.165)

- Disbursing to the student’s bank account
- Using funds to pay for allowable charges other than tuition/fees and room and board
- Holding excess credit balances
- Applying funds to prior year charges
- Student can cancel notice
- Cannot be coerced

## Overview of Common Origination and Disbursement (COD)

- Redefines aid origination and disbursement processes for Pell Grants and Direct Loans, and provides optional common reporting opportunities for campus-based programs
- Integrates a common process with a system designed to support origination, ***disbursement******,*** and reporting
- Increases accountability and program integrity

## COD Cash Management Tools

- Customer Service assistance
- Primary representative for each School/Servicer
- Performs outreach activities including for funding issues (calls & warning messages)
- Reconciliation Team
- Provides Funds Management Support to Schools
- Has access to GAPS information

## COD Cash Management Tools

- Aging of Drawdowns
- Each drawdown is aged to see how long it takes to “substantiate” the draw
- Lets a school know at any point how much funds have not been substantiated
- Funds are available based on actual disbursement records
- Records are accepted 30 days out
- CFL is increased 7 days out

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## COD Cash Management Tools

- COD Web Pages
- Provide up to date information about funds drawn by school
- Allow for easy comparison of accepted student level disbursement records to funds
- Allow easy view of Current Funding Level
- Show GAPS activity
- Provide for self-assessment of cash management compliance

**K**

## Shows draw downs and any cash activity

**K**

## Shows by program:

- Total dollar amount for awards
- Total dollar amount for actual disbursements
- Total number of recipients for the selected school

## Interest Sessions

| Session Number | Session Title |
| --- | --- |
|  | General Session:  Federal Regulatory and Reauthorization Update |
| 17 | Return of Title IV Funds |
| 18 | Electronic Signatures |
| 19 | Cash Management Overview, A - Z |
| 23 | COD and Pell Grants:  Updates to Edits and Record Layouts for 2003-2004 |
| 24 | COD and Direct Loan:  Updates to Edits and Record Layouts for 2003-2004 |
| 26 | Common Origination and Disbursement (COD) – Using the New Web Site |
| 28 | Common Origination and Disbursement (COD) and Direct Loans – Balancing the Books |
| 29 | Common Origination and Disbursement (COD), Pell and Direct Loans – Funding for Schools |
| 44 | CommonLine and the Common Record |
| 51 | ELMNet |

## Slide 55