Blog

Since You Asked: Questions & Answers

January 20, 2016
|

Periodically we are asked questions regarding an interpretation of the laws, regulations, or policies related to the administration of the Title IV Federal Student Aid (FSA) Programs.  In this series we provide questions, and the related answers, generated by our interaction with clients and the U.S. Department of Education (ED). 

Q1:  We are a school that teaches in quarters.  The program has three 10-week terms in the program with new students starting each term.  Can we also have a version of the program that has a 5-week term, two 10-week terms, and a 5-week term on every other “start?”

A1:  The latest guidance from ED indicates that schools have the ability to create different versions of a program with different calendars (even if both are in the day).  But, the school really needs to treat these programs as two separate programs (e.g., in regard to coding, cohorts, no crossing over between programs, consumer information, and if a student switches programs they must be dropped and re-enrolled, etc.).  Every student within a particular program would follow the same academic calendar; otherwise, you would have one program taught in different term settings which would cause the entire program to become nonstandard, non-SE9W (not substantially equal nine-week, or longer, terms).

(JD 012102015)

Q2:  The scenario is one in which a student has dropped a program as of 11/5/2015.  Subsidized and Unsubsidized Direct Loans, as well as Parent PLUS Loans were originated at COD on 09/30/2015.  But, these loans were not disbursed prior to October 1 when the new origination fees took effect.  There were MPNs on file for both the student and parent loans.  The PLUS Loans had an incorrect origination fee and were inactivated and reactivated on 11/11/2015 with the correct, new origination fees.

In the above scenario, would the PLUS loan be considered in the R2T4 process because the loan was originated or created, and the promissory note received, while the student was still enrolled?  Or, would the loan not be able to be counted as could have been disbursed because the loan, although originally created and originated while still enrolled, it was not actually disbursed prior to October 1, and therefore it had to be deactivated and then reactivated to get the correct post-October 1 origination fee assigned?  Does the fact that it was originally created while the student was enrolled make a difference in such a scenario, or is it simply based upon the latest action after the deactivation and reactivation due to the change in the origination fee being after the drop date?  The 2015-2016 Federal Student Aid Handbook only states that schools should count a Direct Loan as aid that could have been disbursed if the institution originated the loan prior to the withdrawal date and they have a promissory note.  In this student’s case, the loan had been originated, but it had to be deactivated and then reactivated to correct the origination fee percentage/amount, which happened after the withdrawal.  Does that make a difference in such a scenario as this?

A2:  You are fine since it was technically originated prior to the student leaving.  You were simply updating or correcting the original loan.  ED’s latest guidance is that it would still meet the disbursement criteria for inclusion as aid that could have been disbursed in the R2T4 calculations.

(DB 11122015)

Q3:  We have a program that is a non-standard term program with substantially equal nine-week terms (SE9W).  A student changes programs in the middle, or end, of a term.  There is no gap in attendance.  The student will be treated as a transfer student per school policy.  The student will be reported with a new program, a new CIP code, and a new loan record.  Does an R2T4 have to be completed because the student is changing programs?

A3:  First, anytime a student completes a term and then withdraws, there is no requirement to calculate an R2T4, assuming you use terms as your payment periods for R2T4 purposes.  The student that completed the term would just start the next term in the new program.  (There may be other issues that become necessary to deal with, such as overlapping award years, etc., similar to situations with transfer students).

In this particular scenario, if both programs use the same academic calendar—SE9W terms and the terms are the same for all programs—then, even if they switch programs during a term (for example, if the student was enrolled in modular courses, completes one module and then starts the next module in a new program), the R2T4 would not apply either since the student is technically still enrolled in the same term and has not completely withdrawn.  Current guidance is that if the student remains in a program with the same academic calendars as the prior program of enrollment there is not an issue.  It would be different if the student changed from a non-term to a term-based program, etc.

(JD 01142016)

Q4:  Is the prohibition against releasing the proceeds of a Direct Loan to a student on an approved leave of absence (LOA) still in effect?  The regulatory citation of 34 CFR 682.604(c)(4) given on page 5-10 of the 2015-2016 Federal Student Aid Handbook no longer appears in the Code of Federal Regulations.

A4:  The regulatory citation specified was eliminated from the CFR in the November 1, 2013, final regulations that were published in part as a result of the elimination of the former Federal Family Education Loan Program (FFELP).  However, ED’s guidance has not changed in regard to making disbursements while a student is on an approved LOA.  A school may not credit a student’s account for, or release the proceeds of, a Direct Loan disbursement while the student is on an LOA.  This has been ED’s policy since the guidance was first published in the 2004-2005 FSA Handbook.  ED has affirmed that this policy remains its official guidance regarding the prohibition of DL disbursements to students on approved LOAs.

(JD 01142016)

Q5:  We are a non-profit, historically traditional university that now offers programs in various term lengths (e.g., a traditional 16-week semester program, and an evening program for adults, or an online program, that is in nonstandard terms of 20 weeks).  Can we allow a student enrolled in the standard term to also take courses at the same time in the nonstandard term (e.g., online, or evening program)?  Or, would that then classify the student as being in a non-term environment, and have to be processed accordingly?

A5:  Typically, you do not want students crossing programs because then the lines get blurred as to what program they are in.  To remain standard term, whatever courses the student takes in the standard term program must start and end within the standard term dates (or, fall outside the standard term by no more than the overall 2-week allowance).  If the standard term student took a course that went 20 weeks, they would cause the entire standard term program to become nonstandard for all students.

(DB 09292015)

Q6:  In a similar environment as the preceding question, if a student started in a 20-week nonstandard term (perhaps taking an evening course and/or online courses), could that student then also enroll in a course in the traditional day program (16-week term)?  Or, does the student have to be only in one program or the other since they are varying lengths to avoid being classified a non-term program? 

A6:  The best approach is to keep the programs completely separate.  However, if the nonstandard term student took a course that fit within the nonstandard term, but happened to be the same length of the standard term, it should ultimately be OK since it basically would become a module within the nonstandard term.

(DB 09292015)

Q7:  In regard to maximum timeframe for satisfactory academic progress (SAP), is there a specific reference regarding whether the weeks have to be rounded down when the maximum time frame in weeks (or months) ends up to be a decimal?  For example, in a program that has a published length of 63 weeks, is it acceptable to leave the 150% figure at 94.5 weeks?  Or, for a part-time program that is stated to be 78.75 weeks, can we leave the 150% at 118.13 weeks?  Or, do we need to round down?  That is, are standard rounding conventions used in rounding up or down based upon whether the result is .49 or lower, or .50 or higher?

A7:  ED’s most recent guidance indicates that once you start a week, you are in that week and can count that partial week as a whole week.  Under 34 CFR 668.3, a week of instruction is any 7-day period with at least one day of instruction, examination, etc.  So, a school may in fact round, but they round up.  That is because if, for example, you had a 50.4 week maximum timeframe, ED is saying that the maximum time frame is going to take 50 weeks plus a few days into the 51st week.  Therefore, based on the regulatory definition of a week, ED states that the school can simply say there are 51 weeks in the maximum timeframe.

As far as whether the maximum timeframe must be in weeks vs. months, ED has not provided specific guidance.  Thus far, ED indicates only having seen examples being in weeks.  However, the most recent direction from ED indicates that there is not anything that prohibits months being used in setting the maximum timeframe.  But, when evaluating SAP, it is a lot easier reviewing weeks because a school must check at the end of a payment period which is defined in part in regulation by the number of weeks.  When you start looking at months, the time frame aspect becomes more generic and less specific.  If a program was 12 months in length, ED would say the maximum time frame is 18 months.  However, the school would still have to check at the end of a payment period measured in weeks and then determine if they are progressing at a minimum of a 67% pace in months.  So, it may be possible to evaluate maximum time frame based upon the length in months, but ED’s indication is that it will not be as clear and precise.

(DB 09292015)

Q8:  We have a dependent student whose parents refuse to support the student and refuse to complete the FAFSA, etc.  What is the amount and type of loan that we may offer the student?

A8:  Upon obtaining the appropriate documentation, you may offer the dependent student whose parent refuses to complete the FAFSA and support the student, the base dependent undergraduate Unsubsidized Direct Loan limit depending upon the grade level, plus the additional $2000 Unsubsidized DL.  This is spelled out in the 2015-2016 Federal Student Aid Handbook on page AVG-123.  Further discussion that the FSA Handbook text was developed from is drawn from Dear Colleague Letter (DCL) DCL-08-12, pages 79-80.  It is important to keep in mind that this guidance is separate and distinct from the guidance ED provides in cases where a parent PLUS Loan applicant is not approved for credit based upon an adverse credit history, etc. (See page 3-92 of the FSA Handbook).

(DB 01042016)

Q9:  Does a school use a net price calculator (NPC) for every program they have that has full-time, first-time students, or just one NPC?

A9:  The requirement for the NPC is only for the school’s largest program in most instances for most of our clients.  Additional information regarding this requirement is found in the questions and answers on the IPEDS Frequently Asked Questions (FAQs) site pertaining to the NPC.  For example, this excerpt is helpful:

Q: Can I create and post more than one Net Price Calculator for my institution (e.g. for students other than full-time, first-time or for additional programs other than the largest)?

A: Once your institution has met the HEA requirement by posting a net price calculator applicable to full-time, first-time degree/certificate seeking students, you may create and post as many additional calculators to the institution’s Web site as desired. These additional calculators are optional, and as such, are not required in order to be in compliance with the HEA.

For more FAQs related to the NPC, see http://nces.ed.gov/ipeds/resource/net_price_calculator.asp#NPCRequirement.

The NPC “Quick Start Guide” is also helpful with instructions.  It is at http://nces.ed.gov/ipeds/netpricecalculator/download/QuickStart_IE.pdf

The NPC “Quick Start Guide” provides this guidance, on page 7, related to what information is applicable:

Program reporters are asked to specify the largest program the institution offered to full-time, first- time undergraduate students and the average number of months it took a full-time student to complete the program. This should be reported for the data year indicated in Step 1, Question 1. This is the program that will appear on the output screen for the calculator and is the program upon which all calculations will be based.

Since most of our schools are “program” reporters vs. academic year reporters, in most cases this is going to be applicable.  If a school includes on their Web site more than one NPC, they should specify which one meets the statutory/regulatory requirement since schools are required to post the NPC for comparison purposes with other schools.

Schools are reminded that they are to have their NPC data updated on their Web sites annually, usually by January 31 of each year using the NPC template ED provided through NCES.  ED’s latest statement on the IPEDS Web site is that they still anticipate providing the Department’s NPC template to be used to update your school’s NPC with 2014-2015 data in January 2016.  Schools should be tuned to ED’s and IPEDS postings via IFAP, etc., to be aware of the availability of the template as soon as it is released.

(JD 01062016)

Q10:  We read the regulations and saw that effective July 1, 2016, schools that charge for an entire program upfront must determine if a credit balance exists by payment period.  In reading the comments about the books and fees, the “Discussion” in the Federal Register says “Under 668.164(c)(5), an institution is required to prorate charges for books only if those charges are included as part of tuition and fees under 668.164(c)(2), and the institution charges the student upfront for an amount of tuition and fees that exceed the amount associated with the payment period.”  My question is this: if the school charges books, supplies, and kits, etc., separately upfront for the entire program, do we have to prorate the amount for books, supplies, kits, and so forth?

A10:  No.  You only have to prorate the charges for books, supplies, and kits, etc., if they are included as part of tuition and fees and the school charges tuition and fees upfront for a period longer than the payment period, as you noted in the Federal Register discussion.

(JD 01082016)

 _______________________________

The material in this “Since You Asked” is presented for informational and educational purposes only and should not be considered to be giving legal advice.

Leave a Reply

Your email address will not be published. Required fields are marked *