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Since You Asked: Questions & Answers

July 13, 2014
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FAME Frequently Asked Questions & Answers _Q3 2014

Q1:  In DCL, GEN-14-07, we noticed the requirement to respond to Enrollment Reports has been reduced from 30 days to 15 days.  I would just like to confirm that this is correct and also ask if the 10-day requirement to respond to error files has changed.

A1:  The requirement to respond to rosters has changed from 30 days to 15 days.  The 10-day window to respond to error files has not changed, and is still 10 days.

Q2:  When a 2014-2015 Subsidized Loan origination is submitted to COD, will the loan reject if the new calculated percentage results in exceeding the 150% limit?  For example, a student has 25% remaining eligibility and a new loan being originated calculates to be 30% of the published program.  Will the loan get accepted or rejected at the time of origination?

A2:  We can’t speak to the hypothetical you posed, because the remaining eligibility, maximum eligibility period, and subsidized usage periods are all in units of years, not percentages.  That being said, if a loan would take the student over the 150% limit, i.e., create a remaining eligibility period that is negative, COD will reject it.

Q3:  What is an adjustment date when referring to reporting to COD within 15 calendar days?  If a student withdraws, does the school have to notify COD within 15 calendar days of the date of determination (DOD) or 15 days after they make a refund?

A3:  The most current guidance we have received from ED indicates that the date the school became aware of the need to make an adjustment would be the date the R2T4 calculation was performed.  Based upon this, ED has stated that is when the 15 day count begins.  However, having said that, with all of the time sensitivity to the new reporting time frame of 15 days and the impact that adjustments have on so many things now, e.g., the DL SUP calculations, Pell 6 year limits, etc., it does behoove schools to have a solid method in place for determining the DOD as quickly as possible so the R2T4 can be performed as expeditiously as possible.

Q4:  A student completed a non-degree medical assistant program approximately 15 years ago, but never worked in the field nor did she receive professional certification.  Now, she wants to gain certification and work as a medical assistant.  The certifying entity says it has been too long since she took courses and so she cannot be certified based upon out-of-date knowledge.  So, she wants to take the program again and needs Title IV assistance in order to do so.  The program is a term-based program.   Can the student be paid to retake each course (and include the course in determining the enrollment status) one more time for the program, and do so for all courses in the entire program?

A4:  You are treating this as an entirely new program and not accepting any of the credits previously obtained toward matriculation in that new program.  The rules pertaining to retaking coursework are found under the definition of a full-time student which is a program-specific definition.  This is a new program and the course repeat rules are pertinent only to courses repeated once the student has started in this new program.  The student would be treated like any other student in a new program for satisfactory academic progress purposes, with one repeat allowed for any previously passed course.

Q5:  If a school is applying for initial Title IV eligibility the first time and does not meet the 1.5 financial ratio on the most current year’s financials, will they be required to have a letter of credit (LOC) and, if so, is it 50% or 10%, and of what figure?

A5:  ED’s current statement on this is that they require the initial eligibility school to provide a 50% LOC in order to be considered financially responsible when its most recent financial statements have a failing composite score, i.e., a score of less than 1.5.  The 50% is calculated based on the school’s estimate of the total number of students that will receive Title IV aid in the first year of participation.  ED then multiplies the total number of students by the total possible amount of loans and grants per student, and then multiplies the total aid amount by 50%.

Q6:  We are a standard term school that has two six-week modules within the term.  The Federal Student Aid Handbook says that term-based schools normally are not eligible to have leaves of absences (LOAs).  Can we opt to allow a student to take a full term off but consider them still enrolled?  Can we put the student on LOA for one term?  We would require the student to give confirmation that they are going to enroll in the next regularly scheduled term.  We understand that confirmation of intent to return is used in R2T4 calculations for students in standard terms with modules.  That is, if a student provides written confirmation of intent to return in the same term the R2T4 is not calculated unless the student does not actually return within the term.  But, this scenario is not a situation of a student sitting out a module within the term, but rather it is the student taking a full term off for whatever the reason.

A6:  It is correct that term-based schools do not normally have a LOA policy that meets ED’s requirements.  For Title IV purposes, an LOA is meant to address situations in which a student begins attendance in a term or payment period but then must temporarily cease attendance in that term/payment period due to some extenuating circumstance.  One of the conditions of an approved LOA is that students must be able to return to the program at the point in which they left.  This is why term-based institutions do not generally have an approved LOA policy.  That said, a student who completes a term and then fails to return the next term may not be reported as being on a LOA to NSLDS for enrollment reporting purposes because the student did not leave in the middle of a term or payment period.  A student who completes a term but fails to return for the next term should be reported with a “W” on the enrollment reporting roster.  A school may, of course, consider this student to still be “enrolled” for admissions purposes (e.g., the student will not have to reapply for admission to begin the subsequent term), but you will be required to report the student as no longer enrolled (withdrawn) to NSLDS in the term of absence and not attending.  If the student does then return the subsequent term following a term of not being registered and taking classes, you can then update NSLDS to show that the student is again enrolled.  The accurate reporting of enrollment status (or, withdrawal) impacts on when a student begins to receive repayment information and when his or her grace period begins.  If a student were to have been reported as enrolled (even as if on a LOA), but did not actually return the next term, the student could potentially go into technical default on his or her loans before the school subsequently corrected its reporting.

Q7:  A private agency wants to award scholarships, but only after the students have graduated.  So we will not know who will receive the scholarship or how much will be received during the period of enrollment.  The agency is working on criteria for the scholarships but we are not aware of what they are yet and still they will not award and pay until after the student completes.  Are we, as the school, under any obligation to count this scholarship as other aid in determining Title IV aid eligibility?  We will get a check from the private agency for the scholarship recipients to pay off any balance the students may have.

A7:  This is an unusual scenario.  And, it sounds more like a tuition reimbursement program in which a student pays for the course and then is reimbursed after successfully completing it.  But, in those kinds of cases the funds typically go directly to the student.  As far as including the scholarship in estimated financial assistance, it should not be included because the period of enrollment for which charges were assessed would have ended.  The 2013-2014 Federal Student Aid Handbook is clear that if aid comes in during the award period, it must be considered toward determination of a student’s eligibility for Federal Student Aid programs.  (See page 3-141.)  Also, in regard to Direct Loans, it gives guidance that there are no adjustments necessary to the Direct Loans when a school becomes aware of any additional aid after all of the Direct Loan disbursements are fully made.

Q8:  In calculating a R2T4, we understand that you can count as aid that “could have been disbursed” (CHBD) any loan funds disbursed after the student ceased attendance but prior to the date of determination (DOD) in a return to Title IV funds calculation (R2T4).  We also understand that you can also use as CHBD any loan funds that were not yet disbursed but for which the student was eligible based on the loan having been originated prior to the student no longer being enrolled and the master promissory note having been signed prior to the R2T4 calculation.  What about loans disbursed after the DOD?  Would it be treated the same as funds disbursed prior to the DOD?

A8:  A disbursement after the DOD would have already been considered as aid that CHBD since it did not meet the criteria for a “disbursed” loan.  If it is coming in as a disbursement after the DOD, it would have had to have also met the requirements for a late disbursement or post withdrawal disbursement (PWD).

Q9:  What is the requirement on the number of references an institution must obtain from a borrower?  For a dependent, is it the parents plus one additional reference?  Or, is it the parents plus one sibling and one non-relative?

A9:  The regulations do not specify a certain number of references.  However, the Federal Direct Loan (DL) master promissory note (MPN) does request two references.  The MPN instructs that the first references should be a parent or legal guardian.  In regard to exit counseling information, the regulations at 34 CFR 685.304(b)(4)(xiv) state that schools are to:

“require the student borrower to provide current information concerning…references, …as well as the student borrower’s expected permanent address, the address of the student borrower’s next of kin, and the name and address of the student borrower’s expected employer (if known).”

Thus, we see that only the “next of kin” and “expected employer” are required as reference-type information for exit counseling purposes.  However, it does specify that the borrower should provide current information for “references”, which is taken to mean current information on references provided previously on the MPN, etc.

For Federal Perkins Loans, ED states that schools should, prior to disbursement, attempt to collect the name, address, and telephone numbers of the borrower’s parents and spouse, the spouse’s employer, and the names and addresses of two or three of the student’s personal acquaintances.  But, ED does further specify that receiving this additional contact information is not a condition for receiving a subsequent disbursement.  The reference or contact information required for Federal Perkins Loans at exit counseling is shown to be the same as that required for the DL program requirements.

Q10:  Our school wants to change our additional location from being a separate location of our main OPEID to being a separate “main campus”.  To do so, does that necessitate the campus going without Title IV aid for two years?  (This is not a situation of re-designating the additional location to be the main campus, but rather establishing it as a separate main campus.)

A10:  When an additional location of a proprietary school wants to go freestanding, yes, they must go without Title IV for two years in order to meet the 2-year rule as a main school.  Though very unlikely, if the location has been designated by ED as an “official” BRANCH, any time spent as a BRANCH can also be applied towards the

 

 

THE INFORMATION PROVIDED TO YOU IS FAME’S OPINION BASED ON OUR INTERPRETATION OF THE ISSUES AND EVENTS PROVIDED AND OUR INTERPRETATION OF THE TITLE IV REGULATIONS AS THEY MAY APPLY.  FAME SHALL NOT BE LIABLE FOR ANY ERRORS CONTAINED HEREIN OR FOR ANY DAMAGES WHATSOEVER ARISING OUT OF OR RELATED TO THE USE OF THIS INFORMATION.

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