# Presentation: 107519

##                Return of Title IV Funds              (With Changes from HERA) Higher Education Reconciliation Act of 2005 	               (P. L. 109-171)

-  Brian Kerrigan
- Dan Klock

**Session 11**

## Today’s Agenda

- DCL issues
- Regulation changes from HERA
- R2T4 calculation with HERA changes
- Compliance self-monitoring
- Questions & answers

## Presentation Objectives

- Bring you up to date on R2T4 changes
- Demonstrate changes in calculation
- Understand that R2T4 non-compliance is a top finding
- Answer questions

##         Dear Colleague Letter               (GEN-04-03) 

## 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

## Title IV Credit Balances

- Hold credit balance - do R2T4 first
- Credit balance is “Aid Disbursed”
- See if credit balance changes because of R2T4
- Repay grant overpayment on behalf of student
- Release credit balance within 14 days

## Aid That Could Have Been Disbursed

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

## Conditions for a Late Disbursement(need to be before student withdraws)

- For all aid (except PLUS) – process date for official EFC on SAR / ISIR
- For FFEL / Direct Loan – loan certified or originated
- For Perkins / FSEOG – award made

## Limitations on Making Late Disbursement 

- No second or subsequent disbursement of FFEL / DL, unless student completes period
- No FFEL / DL unless student completes 30-day delay period

## Limitations on Making Late Disbursement

- 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

## Verification

- Must complete R2T4 within 45 days
- If verification not completed
- Return interim disbursements of aid
- Only unsubsidized and PLUS loans in R2T4
- If verification completed later – new R2T4 calculation using additional eligible aid

## No Passing Grades

- Institution must have process for determining if student completed period
- Institution must document completion of period

## Withdrawal from 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 a self-paced program

## Date of Determination that Student WithdrewFor School Required to Take Attendance 

- 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 institution’s absence policy

##            HERA 

**    ****Regulation Changes****  ****     **

## Programs Specified for R2T4

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

## Post-withdrawal Disbursement - HERA

- Credit grant for tuition and fees & room and board (without authorization) and for other charges (with authorization)

## Post-withdrawal Disbursement - HERA

- Credit loan for tuition and fees & room and board (without authorization) and for other charges (with authorization)
- Written notification to the student / parent and their confirmation must be received before the loan funds may be credited to the account or directly disbursed

## Written Notification (within 30 days of date of determination of withdrawal)

- Identifies _loan_ to be credited & _grant_ and _loan_ available as direct disbursement
- Asks if student / parent wants
- _loan_ credited &
- _grant_ or _loan_ as direct disbursement

## Written Notification (explains)

- Student / parent can accept some / all of aid
- If student / parent declines credit of loan, she may not receive direct disbursement unless institution agrees
- Obligation to repay loan
- 14 day (or later) response time

## 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

## 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 to notification, no loan may be credited to account & no grant or loan may be disbursed directly

## 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%

## Clock Hour Changes

- Scheduled clock hours must be:
- established prior to beginning of classes (or modified before withdrawal date)
- consistent with:
- published materials
- accrediting agency / state

## Grant Overpayment Protection (to amounts student is required to return)

- 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 overpayments for students residing in, employed in, or attending institutions in declared disaster areas

## Return of Funds Order

- Loan Programs
- Pell Grant Program
- Academic Competitiveness Grant Program
- National SMART Grant Program
- FSEOG Program

##     R2T4 Worksheets/Software

## Step 1:

**Step 1:**

## Step 1: Student’s 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

## Step 1: Student’s Title IV Aid

- Box E. Total Title IV aid disbursed for the PP or POE
- Used to determine the amount of PWD or returned

## Step 1: Student’s Title IV Aid

- 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

## Step 1: Student’s Title IV Aid

- Box G. Total of all aid disbursed or could have been disbursed
- Used to determine the amount of TIV aid earned

## Step 2: Credit hour

**Step 2: Credit hour**

## Step 2: Clock hour

**Step 2: Clock hour**

## Step 2: Percentage of TIV Aid Earned

- Credit-hour program - same as pre-HERA
- If % is > 60% = 100% TIV earned

## Step 2: Percentage of TIV Aid Earned

- Clock-hour program
- This becomes a one-step calculation
- Hours scheduled to complete
- Total hours in period (PP or POE)
-   If % is > 60% = 100 % TIV earned

## Step 3:

**Step 3:**

## 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)

## Step 4:

**Step 4:**

## Step 4: Total Title IV Aid to be Disbursed or Returned

- PWD or Amount to be Returned
- Remains same as before:
- Amt earned > Amt disb’d = PWD
- Amt earned < Amt disb’d = Amt to be Returned

## Step 5:

**Step 5:**

## 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

## Step 6:

**Step 6:**

## 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)

## Step 6: Return of Funds by the School

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

## Step 7:

**Step 7:**

## 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

## Step 8:

**Step 8:**

## Step 8: Repayment of the Student’s 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

## Step 8: Repayment of the Student’s 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

## Step 9:

**Step 9:**

## 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

## Step 9: Grant Funds to be Returned

**NEW:** Amount of TIV grant protection:
- 	Total of  TIV grants disbursed or could have been disbursed X 50% = the protected amount

## 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

## Step 10:

**Step 10:**

## 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

## Student A

- Pell Grant - $2025
- Student attended 10%

## Student A

- 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 (Inst charges) X 90% (Unearned %) =  $900 *
- 	[The lesser of  $1,822.50 or $900]

## 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)

## Student B

- Pell Grant - $500, SMART - $2,000, FSEOG - $1,000
- Student attended 10%

## Student B

- 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, so $500 Pell and $400 SMART repaid by inst.)]

## 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]

## 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

## 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.

## Post-withdrawal 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.

## Post-withdrawal Disbursements

- 	**Q:** What are the notification requirements?
- 	**A:** 1. The notification must be written
- 	2. Must request confirmation to credit loan funds to the student’s account (also need 34 CFR 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

## Post-withdrawal 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 student’s 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

## Post-withdrawal 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 student’s account
- 	9.  If confirmed, the PWD must be made within 120 days of the date of determination by the school that the student withdrew

## Post-withdrawal 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 student’s account, nor may any amount to be directly disbursed be released

## Clock Hour Programs Scheduled Hours

- 	**Q:** Under HERA, the scheduled hours must be those established prior to the student’s 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 student’s enrollment agreement.

## 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 student’s withdrawal.

## 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.

## Disaster Waiver 

**    ****Q:** Under what conditions is the student’s 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:

## 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.

## 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).

## 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.

## 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.

## 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 student’s 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.

## 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

## Compliance Self-Monitoring

## Slide 81

## Slide 82

## Compliance Self-Monitoring

- How do I access R2T4OTW?
- It’s Easy!
- 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**

## Compliance Self-Monitoring

- CUSTOMER SERVICE
- Software Support
- CPS/WAN Technical Support
- CPSSAIG@ed.gov
- (800) 330-5947

## Compliance Self-Monitoring

- CUSTOMER SERVICE
- Policy
- ED's Customer Support center
-  fsa.customer.support@ed.gov
-  (800) 433-7327

##                  Thank You !          Brian.Kerrigan@ed.gov              		(202) 219 -7058            Dan.Klock@ed.gov              			(202) 377- 4026