The Frequently Asked Questions are broken down into the categories below. Please click a category to go right to that section, or scroll down through the entire list.
Academic Transcripts (back to top)
| Q. May a school withhold an academic transcript requested by a student who has defaulted on a FFEL Program loan? |
| A. A school may withhold an official academic transcript, but must provide an unofficial copy if refusing to do so would prevent the student from exercising the right, under the Family Education Rights and Privacy Act (FERPA), to inspect and review his or her educational records. Source: Federal Student Aid Handbook, Institutional Eligibility and Participation, p. 2-278 |
Award Year Cross-Over (back to top)
| Q. A student was considered a dependent student for the 2003-2004 award year and an independent student for the 2004-2005 award year. Can the school process a loan for the student as an independent student based on the 2004-2005 Institutional Student Information Record (ISIR) data if the loan period crosses over award years? |
| A. Yes. Schools may choose which year's ISIR data to use for certifying a loan when the loan period crosses award years. The school is not required to use the same year's ISIR data for every student, but should have a consistent policy for choosing which data to use. The only exception is for Federal Pell Grant awards. If six months or more of the Federal Pell Grant award period falls in one award year, the school must use the data from that award year's ISIR. |
Choice of Lender (back to top)
| Q. May a school restrict a borrower's choice of lender to only those on the school's preferred lender list, only those who participate in the school's electronic application processes, or only those whose application processing software is compatible with the school's software? |
| A. No. Federal law requires that the Master Promissory Note approved by the USDE provide a Federal Stafford or PLUS Loan borrower with the opportunity to indicate his or her choice of a lender. FFEL Program regulations that govern a guarantor's program agreement with the USDE require the MDHE to ensure that a borrower has the opportunity to indicate his or her preferred lender, if he or she has one, on the promissory note or other electronic documentation submitted for guarantee. As a convenience, many schools give their borrowers a list of lenders who have commonly have made student loans at that school. However, the borrower has the right to choose his or her preferred lender, even if that lender is not one that the school has previously used, or the lender is not on the school's preferred lender list. Source: 34 CFR 682.401(b)(5)(i) and Section 432(m)(1)(B)(ii) of the Higher Education Act (HEA) of 1965, as amended. |
Consortium/Contractual Agreements (back to top)
| Q. What is the difference between a consortium agreement and a contractual agreement between schools? |
| A. A consortium agreement exists between schools (both eligible to award federal financial aid to students), permitting a student to take unlimited courses at one school and have those courses count toward a degree or certificate that the "home" school awards. A contractual agreement is between schools (one that is eligible to award federal financial aid to its students and one that is not), permitting a student to take a limited number of courses at the ineligible school and have those courses count toward a degree or certificate awarded by the eligible "home" school. Source: Federal Student Aid Handbook, Volume 2-School Eligibility and Operations, Chapter 7. |
Consumer Information (back to top)
| Q. Federal regulations require schools to notify currently enrolled students about the availability of certain student consumer information. Must schools notify non-traditional students at a school's branch campuses and extension locations as well as traditional students enrolled at the main campus? |
| A. Yes. Federal regulations do not exempt non-traditional students at branch campuses or extension locations from the definition of a currently enrolled student. Source: 34 CFR 668.41(a). |
| Q. Schools must annually provide a campus security report [34 CFR 668.46(b)]. For the purpose of this report, does the definition of "campus" include branch campuses and extension locations that may be leased by the school? |
| A. Yes. Schools must meet the campus security report requirements individually for each separate campus. With regard to extension locations, schools must meet the campus security report requirements for other buildings that are included in the following definition of non-campus buildings and property: "any building or property (other than a branch campus) owned or controlled by the school, that is not within the same reasonable contiguous area, is used in direct support of or in relation to the school's educational purpose, and is frequently used by the students." Source: 34 CFR 668.46(a); Federal Student Aid Handbook, Volume 2-School Eligibility and Operations, p. 2-123. |
Cost of Attendance (back to top)
| Q. Are schools required to recalculate the cost of attendance used to certify a FFEL Program loan when a student's enrollment status changes from full time to at least half time, or when the student changes his or her choice of programs? |
| A. For FFEL (and Direct) Program Loans, the school is not required to recalculate the cost of attendance when a student's enrollment or program changes after the loan is certified, provided the student's enrollment does not drop below half time. (Different requirements may apply to other Title IV programs.) A school may choose to monitor a student's enrollment and adjust the cost of attendance and FFEL Program funds accordingly. A school that chooses this option should document this practice in its policies and apply the policy consistently. Source: Dear Colleague Letter (DCL) GEN-90-33, dated September 1990, Q/A #73. |
Counseling (back to top)
| Q. Can a student use the Personal Identification Number (PIN) that the USDE issues to electronically sign or correct a FAFSA, to access his or her federal student loan records in the NSLDS? |
| A. Yes. Source: Federal Student Aid Handbook, Application and Verification Guide, p. AVG-4. |
| Q. Do the MDHE Entrance and Exit counseling booklets provide the borrower with an explanation of the information contained in the NSLDS and contact information for the NSLDS? |
| Q. Does Mapping Your Future's online entrance counseling include sample ranges of indebtedness that a student may use to estimate a monthly repayment amount using Mapping Your Future's loan calculator? |
| A. Yes. In the same section as its repayment calculator, Mapping Your Future's Federal Stafford online entrance counseling program includes the following national average student loan indebtedness information as reflected in the National Student Financial Aid Administrator's 1999-2000 National Postsecondary Student Aid Study: Average cumulative federal loan amount borrowed in 1999-2000 by undergraduate students: - Four-Year Public Institutions: $16,708
- Four-Year Private Institutions: $20,151
- Two-Year Public Institutions: $7,914
- Two-Year Private Institutions: $10,146
- Private for-profit (proprietary): $24,400
Average cumulative federal loan amount borrowed in 1999-2000 by graduate students: - Master's Degree Public Institutions: $16,951
- Master's Degree Private Institutions: $24,406
- Doctoral Degree Public Institutions: $26,909
- Doctoral Degree Private Institutions: $42,889
- First Professional Degree Public Institutions: $49,845
- First Professional Degree Private Institutions: $65,294
Like the MDHE, Mapping Your Future recommends that schools provide students with average indebtedness information for Federal Stafford Loan borrowers at that particular school, or the average indebtedness for borrowers who have completed the student's program of study at the school. This information provides borrowers with a more realistic picture of what their actual, future indebtedness may be. |
| Q. Does the MDHE provide a video containing current FFEL Program information that schools can use as an entrance or exit counseling tool? |
| A. No. The MDHE has not produced or distributed an entrance or exit counseling video in several years. The MDHE strongly recommends that schools discontinue using any video the MDHE previously distributed because FFEL Program information, provided in the previous video, may no longer be valid due to significant, subsequent regulatory and other FFEL Program changes. |
| Q. Does the MDHE's Understanding Your Student Loan Entrance Counseling booklet include information about sample monthly repayment amounts based on a range of indebtedness that is compliant with a new regulatory requirement that was effective July 1, 2003? |
| A. Yes. On pages 21 and 22 of the MDHE's Entrance Counseling booklet, there are charts that include minimum monthly repayment amounts, interest charges, and minimum salary requirements for a range of indebtedness from $5,000 to $138,500 under a 10-year repayment plan, and for a range of indebtedness from $30,000 to $138,500 under a 25-year repayment plan. However, the MDHE strongly recommends that schools provide information for their students at the time of entrance counseling that includes the average indebtedness of Federal Stafford Loan borrowers at that particular school or borrowers who have completed the student's particular program of study at the school. |
| Q. FFEL Program regulations in 34 CFR 682.604(f)(1) and (g)(1) state that an individual with Title IV expertise must be "reasonably available" shortly after entrance or exit counseling sessions to answer the student's questions. How soon must a school make someone available to answer the student's questions in order to comply with the expectation that such a person be "reasonably available" shortly after the student completes an online counseling session? |
| A. The MDHE believes that it is reasonable to expect that a school make someone with Title IV expertise available to receive and acknowledge a student's questions during the next business day after a student completes an online counseling session. If the student's question requires research, the MDHE believes it is reasonable to expect that the student should receive an initial acknowledgement that his or her question was received and an answer to the question at a later date, after the responding party has an opportunity to thoroughly research the student's question. |
| Q. FFEL Program regulations in 34 CFR 682.604(f)(4) and (g)(4) state that a school must maintain documentation of its compliance with entrance and exit counseling requirements for each student borrower. Must this documentation be maintained in the student's financial aid file? |
| A. A school may place paper documentation in a student's financial aid file to demonstrate that it complied with entrance and exit counseling requirements for that student. However, a school may also choose other recording (e.g., electronic) or filing methods, provided that the method allows easy retrieval of documentation that substantiates compliance with counseling requirements in response to an auditor or program reviewer's inquiry about a specific student. |
| Q. FFEL Program regulations in 34 CFR 682.604(g)(1) require a school to ensure that exit counseling is provided through either interactive electronic means or by mailing written counseling materials to the student borrower at the borrower's last known address within 30 days after learning that the student borrower has withdrawn without notifying the institution or failed to complete a scheduled exit counseling session. Is an institution that mails exit counseling materials to such a student borrower required to send them via certified mail or other means that require a return receipt? For a student who withdraws without notice or fails to attend a scheduled exit counseling session, when does the 30-day time frame for providing exit counseling materials begin? |
| A. A school that chooses to mail exit counseling materials to a student that either withdraws without notice or fails to attend a scheduled exit counseling session is not required to send those materials via certified mail or return receipt requested. The 30-day time frame for providing exit counseling materials to a student who withdraws without notice or fails to attend a scheduled exit counseling session begins on the day that a) the financial aid office is notified by the admissions, business, or registrar's office that the student failed to register, withdrew without notice, or dropped to less than half time enrollment, or b) the financial aid office learns that the student missed his or her scheduled exit counseling session. |
| Q. FFEL Program regulations require schools to conduct entrance counseling with all first-time Federal Stafford Loan borrowers. May a school have a written policy that requires all of its Federal Stafford Loan borrowers to complete entrance counseling, regardless of whether the students are first-time borrowers? |
A. Yes. Some schools have adopted such policies as default prevention strategies. For example, a school may have a written policy requiring entrance counseling for all students who borrow a Federal Stafford Loan for the first time at that school, regardless of whether the student previously received a Stafford Loan from either the FFEL Program or Direct Loan Program, or a Federal SLS loan. Another example may be a school's written policy requiring Federal Stafford Loan borrowers to participate in entrance counseling at the beginning of each enrollment period for which a loan is certified. A school that has such a policy must ensure that the policy is- in writing,
- disseminated to students,
- clear in defining consequences for failure to complete the required entrance counseling, and
- specific about any exceptions to consequences for failure to complete the required entrance counseling.
Source: USDE private guidance. |
| Q. For students that withdraw from school without notification, does the school fulfill its exit counseling requirements by mailing the student a postcard referring him or her to an electronic counseling website such as Mapping Your Future? |
A. No. If a student borrower withdraws from school without notification, the school must ensure that one of the following is accomplished:- The school must obtain confirmation that the student has completed online loan counseling. A notice simply referring a student to a counseling website is not sufficient.
- The school must mail exit counseling material to the borrower at his or her last known address.
- In all cases when a school chooses to use online loan counseling, the school must take reasonable steps to ensure that the student participates in and completes the counseling. Regardless of the method employed to facilitate entrance or exit counseling, schools also must maintain records showing compliance for each student borrower.
Source: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-54; 34 CFR 682.604(g)(3) and (4). |
| Q. Regulations that were effective July 1, 2003, included a new exit counseling disclosure requirement - information about the availability of Title IV loan data in the National Student Loan Data System (NSLDS). What information about the NSLDS must schools provide in order to be compliant with the new rule? |
| A. In the preamble to the Federal Register dated November 1, 2002, the USDE states that borrowers must be informed so that they can access the NSLDS to review information about all of their Title IV loans. The USDE declined to be prescriptive, but suggested providing the NSLDS website address www.nslds.ed.gov and the USDE's toll-free telephone number [(800) 4-FED-AID]. |
| Q. What is the minimum record retention period for a school's documentation of compliance with entrance or exit counseling requirements for a particular student loan borrower? |
| A. The minimum retention period is the same as for other records related to a FFEL Program borrower's eligibility and participation - three years from the end of the award year in which the student last attended the school. Source: Federal Student Aid Handbook, Volume 2-School Eligibility and Operations, p. 2-164. |
Credit Balances (back to top)
| Q. A school applies a Federal Pell Grant payment to a student's account after a disbursement of Federal PLUS Loan funds. May the school pay the credit balance to the Federal PLUS Loan parent borrower, or must it be paid to the student? |
| A. If a credit balance remains after a Federal Pell Grant payment is credited to the student's account, the balance must be returned to the student unless the student provides written authorization for the school to hold the credit balance. If a school cannot locate a student to whom an FSA credit balance must be paid (i.e., the school has exhausted all possible avenues to find the student), the school must return the credit balance to the USDE, or in the case of a FFEL Program loan, to the loan's holder. In this case, the school will have to determine which FSA funds created the credit balance before it can return funds to the FSA programs. The USDE does not specify how a school must determine which funds create an FSA credit balance. However, when possible, the USDE encourages schools to return FSA funds to loan programs first to reduce the likelihood of default. Source: Federal Student Aid Handbook, Volume 3-Pell Grants, p. 3-75 & 3-76, and Volume 2-Institutional Eligibility and Participation, p. 2-98. |
| Q. If a student or parent borrower has not provided the school with written authorization to hold a credit balance, what is the maximum time frame for payment of a FSA credit balance to the student or parent borrower? |
| A. A school must pay a FSA credit balance to the student or parent borrower as soon as possible but no later than the time periods listed below: |
| Q. If Federal PLUS Loan funds create a FSA credit balance, may the funds be paid to the student instead of the parent borrower? |
| A. Generally, if Federal PLUS Loan funds create a FSA credit balance, that amount must be paid to the parent borrower. However, a school may obtain written authorization from the parent borrower to pay the credit balance over to the student. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-97; USDE private guidance. |
| Q. In what cases are schools permitted to hold an FSA credit balance for a student or parent borrower? |
| A. A school is permitted to hold an FSA credit balance only when it obtains voluntary, written authorization from the student or parent borrower. Source: 34 CFR 668.165(b)(1)(iii) and (b)(2)(i). |
| Q. What is a Federal Student Aid (FSA) credit balance? |
| A. An FSA credit balance occurs when the amount of Title IV funds that the school delivers to a student's account exceeds the school's allowable institutional charges. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-96. |
| Q. When a student or parent borrower has provided the school with written authorization to hold a FSA credit balance, is there a maximum time frame in which the school must pay any remaining funds to the borrower, despite the borrower's authorization? |
| A. Yes. The school must pay any remaining loan funds to the student or parent borrower by the end of the loan period. The school must pay any other remaining Title IV funds by the end of the last payment period in the award year for which they were awarded. Note: If a student or parent borrower cancels his or her authorization for the school to hold an FSA credit balance, the school must pay the remaining funds directly to the student or parent borrower as soon as possible but no later than 14 days after the school receives the cancellation notice. Source: 34 CFR 668.165(b)(4)(iii) and (b)(5)(iii). |
Death (back to top)
| Q. A school is informed that a student has died during a payment period. The school establishes a withdrawal date for the student and performs a return of Title IV funds calculation which shows that the student earned more Title IV aid than was disbursed. May the school make a post-withdrawal disbursement of available Title IV funds to the deceased student's account to pay outstanding institutional charges? |
| A. No. No post-withdrawal disbursement of Title IV funds may be made to the student's account at the school, or to the estate of a student who has died. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-141. |
| Q. On September 9, a school delivers the first disbursement of a Federal Stafford Loan and the first disbursement of a Federal PLUS Loan (both of which the school received by electronic funds transfer) to the student's account at the school. On September 17, the school learns that the parent Federal PLUS Loan borrower died on September 1. The student for whom the Federal PLUS Loan was made remains enrolled on at least a half time basis. May the school retain the Federal PLUS Loan disbursement that was delivered before it learned that the parent borrower died? |
| A. No, the school may not retain the Federal PLUS Loan disbursement. Note: In this scenario, the parent borrower died before the date that the school delivered Federal PLUS Loan funds to the student's account. The MDHE has received private guidance from the USDE stating that Title IV loan funds may neither be disbursed nor delivered after the borrower dies. All loan funds that were disbursed or delivered after the date of a borrower's death must be returned, even though the party that disbursed or delivered the funds did not learn of the borrower's death until after the disbursement or delivery occurred. The school must also cancel the second disbursement of the Federal PLUS Loan. At the same time the school returns the first Federal PLUS Loan disbursement to the lender, the MDHE strongly encourages the school to provide the lender with the reason for the return, and any information it has about the date and location of the parent borrower's death. |
| Q. On September 9, a school delivers the first disbursement of a Federal Stafford Loan and the first disbursement of a Federal PLUS Loan (both of which the school received by electronic funds transfer) to the student's account at the school. On September 17, the school learns that the parent Federal PLUS Loan borrower died on September 16. May the school retain the Federal PLUS Loan disbursement that was delivered before the parent borrower died? |
| A. Yes, the school may retain the first Federal PLUS Loan disbursement. Note: In this scenario, the parent borrower's died after the date that the school delivered Federal PLUS Loan funds to the student's account. The school must cancel any subsequent disbursement(s) of the Federal PLUS Loan. At the same time it cancels any subsequent disbursement(s), the school is strongly encouraged to provide the lender with the reason for the cancellation, and any information in its possession about the date and location of the parent borrower's death. The lender will use this information to obtain death documentation required for filing a claim for reimbursement from the MDHE. |
Dependency Status (back to top)
| Q. How is dependency status affected when a student has a child during the academic year? |
| A. A student with a dependent child is considered an independent student, provided the student provides at least half of the child's support. A student can include an unborn child as a dependent on the FAFSA if that child will be born before or during the award year and the student and/or the student's spouse will provide more than half of the child's support from the projected date of the child's date of birth to the end of the award year. A student must update his or her dependency status if it changes at any time during the award year (unless the change is due to a change in marital status). If the school has not yet certified a Federal Stafford Loan for the student, the school may submit the updated information to the Central Processing System for reprocessing and use the recalculated Expected Family Contribution (EFC) to certify the loan. If the school already has certified a Federal Stafford Loan, the school can use the updated status and recalculated EFC to request additional loan funds if the student qualifies. Source: Federal Student Aid Handbook, Application and Verification Guide, p. AVG-26, AVG-30, and AVG-99. |
| Q. When a student completed the FAFSA in May, the student was single. However, in June, the student married. The intended loan period is July through June of the following year. Is the student required to correct his or her marital status as reported on the FAFSA? |
| A. No. Updates are not permitted to dependency status as the result of a change in marital status. Source: Federal Student Aid Handbook, Application and Verification Guide, p. AVG-59; 34 CFR 668.55 (a)(3). |
Dual Enrollment (back to top)
| Q. A student is simultaneously enrolled at least half time in an eligible program at two Title IV eligible schools. The student requests a Federal Stafford Loan from both schools for the same period of enrollment. May both schools certify a Federal Stafford Loan for the student? |
| A. Yes, provided the total amount of Federal Stafford Loan funds certified by both schools for the period of enrollment does not exceed the student's maximum annual loan limit appropriate for his or her grade level at each school. However, please note the following important points: - The second school to certify a loan for the student must eliminate living costs from the cost of attendance, because those costs were already were accounted for in the loan certified by the first school.
- The second school to certify a loan for the student must also count the loan at the first school as estimated financial assistance.
If the school that certifies the second loan for the student does not find out about the first loan until after certification, the combined amount certified by both schools may exceed the applicable, annual maximum loan limit. In that case, the school that certified the second loan must adjust the student's loan amount to eliminate the excess. If the second school is unable to eliminate the overage, the school must report the excess amount to the loan's holder. The holder will demand payment from the student, who may pay the excess ineligible amount in full or establish arrangements satisfactory to the holder to repay that amount over a longer period. The student is ineligible to receive additional Title IV assistance until the school can determine that the student either paid the excess in full or made arrangements for payments that are satisfactory to the loan holder. But the school must not certify another loan that exceeds the applicable annual loan limit.Sources: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-18; Integrated Common Manual, subsection 6.11.D. |
Eligibility After Default (back to top)
| Q. Can a school deny a student's eligibility to borrow a Federal Stafford Loan based solely on the fact that his or her parent has defaulted on a Federal PLUS Loan? |
| A. No. A parent's ineligibility to borrow a Federal PLUS Loan does not affect the student's eligibility for a Federal Stafford Loan or any other type of Title IV federal student financial assistance. Source: Federal Student Aid Handbook, Volume 8, Chapter 2, p. 8-13. |
| Q. What must a Federal Student Aid applicant do in order to regain Title IV eligibility if he or she defaulted on a FFEL Program loan that was subsequently written off partially or in full? |
| A. The applicant must reaffirm the written off FFEL Program loan before he or she regains eligibility to receive additional Federal Student Aid. Reaffirmation is the borrower's legally binding acknowledgement of a loan that has been totally or partially written off and agreement to the reinstatement of his or her repayment obligation on the loan. The borrower must contact the holder of the loan that was written off in order to initiate the reaffirmation process. Before certifying additional Title IV aid for such an individual, the school should request that the applicant provide the school with documentation from the loan's holder that confirms the reaffirmation. Source: Federal Student Aid Handbook, Volume 1 - Student Eligibility, p. 1-49 and 1-51; Integrated Common Manual section 5.3. |
Enrollment Status (back to top)
| Q. When are schools required to recalculate the cost of attendance used to certify a FFEL Program loan when a student's enrollment status changes from full time to at least half time? |
| A. For FFEL Program (and Direct Program) loans, the school is not required to recalculate the cost of attendance when a student's enrollment changes after the loan is certified, provided the student's enrollment does not drop below half time. (Different requirements may apply to other Title IV programs.) A school may choose to monitor a student's enrollment, adjust the cost of attendance, and recalculate FFEL Program loan eligibility accordingly. A school that chooses this option should document this practice in its policies and apply the policy consistently. Source: Dear Colleague Letter GEN-90-33, dated September 1990, Q/A #73. |
Expected Family Contribution (back to top)
| Q. What are the acceptable methods for determining a student's Expected Family Contribution (EFC) when a school is calculating the student's Federal Stafford Loan eligibility for a summer enrollment period separately from the academic year? |
| A. (1) A school may always use the alternate, prorated EFC figure from the student's output document (e.g., the Institutional Student Information Record) that corresponds to the number of months in the summer enrollment period. (2) Through the National Association of Student Financial Aid Administrators, the USDE disseminated two acceptable, optional approaches that a school may use to avoid "double counting" the student's contribution when summer aid is packaged separately from the regular academic year. A school may opt to use either approach as a standard packaging policy for both dependent and independent students. Details on these options, including examples of their use, are in the EFC for summer enrollment periods information. |
Grade Level (back to top)
| Q. A dependent student is enrolled at grade level one for the fall and spring semesters at a school that considers summer a trailer and uses a scheduled academic year to determine annual loan limits for all of its students. For the fall and spring semesters, the student received a $2,000 Federal Stafford Loan. The student advances to grade level two at the end of the spring semester, enrolls for the summer term and requests another loan. What is the student's maximum Federal Stafford Loan eligibility for the summer term? |
| A. Because the school considers the summer semester a trailer and uses a scheduled academic year to determine annual loan limits for all of its students, the student is eligible for the difference between the loan amount already received and the grade level two annual loan limit ($3,500 - $2,000 = $1,500) for the summer term. At the beginning of the fall term, the student is eligible to receive another academic year loan of up to the maximum annual loan limit for grade level two ($3,500). |
Graduate Students (back to top)
| Q. A student is enrolled in a five-year program that allows the student to receive a master's degree upon program completion. For the first three years of the program, the school classifies the student as an undergraduate and the student is enrolled in undergraduate coursework. Beginning with the fourth year of the program, the school classifies the student as a graduate student and the student is enrolled in graduate level coursework. Beginning with the fourth year of the program, is the student eligible for a maximum annual loan limit at the graduate level? |
A. Yes. Beginning with the fourth year of this combined undergraduate/graduate program, the student gains eligibility for the graduate level maximum annual loan limit of $18,500, of which no more than $8,500 can be subsidized Federal Stafford Loan funds. This student must meet the following regulatory criteria for a graduate/professional student:- Enrollment in a program that is above the baccalaureate level or leads to a first professional degree.
- Completion of the equivalent of at least three academic years of full time study at an institution of higher education.
The student cannot receive undergraduate aid as an undergraduate student for the same period of enrollment. In the five-year, combined undergraduate/graduate program described above, the student must complete the first three years of the program before reaching graduate/professional status for purposes of determining his or her appropriate maximum annual loan limit. Source: Federal Student Aid Handbook, Volume 8, Direct Loan and FFEL Programs, p. 8-24 and 8-25. |
| Q. Can a student receive Federal Stafford Loan funds at the graduate annual loan limit levels if the student is simultaneously taking graduate and undergraduate coursework? |
A. In some cases, yes, a student may receive up to the graduate annual loan limit while simultaneously enrolled in graduate and undergraduate coursework, provided the student meets all of the following criteria:- At least half time enrollment in coursework (either graduate or undergraduate) that can be applied to graduate program requirements.
- Admission into the graduate program.
- Completion of the equivalent of at least 3 academic years of full time study at an institution of higher education.
Source: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-24 and 8-25 |
Home Schooling (back to top)
| Q. Does a student who receives a secondary education in a Missouri home school qualify for Title IV assistance if the student is under Missouri's compulsory school attendance age (16)? |
| A. Yes. Additionally, a school's admission of such students as regular students does not jeopardize the school's eligibility to participate in the Title IV programs. While the Higher Education Amendments of 1998 provided for the eligibility of a home schooled student to receive federal student financial assistance, Congress did not provide a parallel provision for home schooled students in the statutes that define institutional eligibility. Therefore, the USDE first announced in a private guidance letter issued to the Home School Legal Defense Association in April 2002 that it will consider a home schooled student to be beyond the age of compulsory attendance if the state where the school is located would not consider that student truant by virtue of the fact that the student completed a home schooling program. Missouri is such a state; students who attend home schooling programs in Missouri are exempt from Missouri's compulsory school attendance laws. Source: Federal Student Aid Handbook, Volume 1-Student Eligibility, p. 1-4 and Volume 2-School Eligibility and Operations, p. 2-6; private guidance letter from USDE to Home School Legal Defense Association dated April 19, 2002. |
| Q. Does a student who receives secondary education in a Missouri home school qualify for Title IV assistance? |
| A. Yes. Students who receive a secondary education in Missouri home school settings qualify for Title IV assistance by virtue of their exemption from Missouri's truancy laws. Missouri does not provide a credential for secondary home school completion, which is the alternative means of establishing Title IV eligibility. Source: 34 CFR 668.32(e)(4)(ii). |
| Q. May a home schooled student self-certify completion of a secondary education in a home school? |
| A. Yes. The USDE has clarified that a home schooled student may self-certify completion of a home schooled secondary education, just as a high school graduate may self-certify receipt of a diploma. Home schooled students need not obtain a state certification of home school completion unless the law of the state in which they completed their home schooling requires a state-approved certificate of home school completion. Because the current FAFSA does not provide a field for self-certification of home school completion, the USDE expects schools to accept self-certifications in application documents, in a letter, or in another appropriate document. Source: Preamble to the Federal Register dated July 16, 1999, p. 38505; Private guidance letter from the USDE to the Home School Legal Defense Association dated April 19, 2002 |
Information Sharing (back to top)
| Q. Must a school obtain a signed authorization for the release of information from a student (or if applicable student's parent,) before a school may report the student's enrollment information to a lender, guarantor, the National Student Clearinghouse, or the USDE? |
| A. No, a separate, signed authorization for the release of information is not required in order for a school to fulfill its responsibilities to provide student enrollment information to parties associated with the student's federal student loans. By signing the common Application and Promissory Note for Federal PLUS Loan, the Federal PLUS Loan Application and Master Promissory Note, or the Federal Stafford Loan Master Promissory Note, a student or parent borrower authorizes the release of information pertinent to his or her loans by and among the borrower's schools, lenders, guarantors, the USDE, and their agents. All schools participating in the Federal Student Aid loan programs must have some arrangement to report student enrollment data to the National Student Loan Data System through a roster file (formerly called the Student Status Confirmation Report). Schools may choose to facilitate this required reporting by selecting a servicer, such as the National Student Clearinghouse. Schools must also continue to respond to requests for student (and parent) borrower information, including enrollment status and enrollment history, from guaranty agencies, lenders, and loan servicers. Source: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-67; 34 CFR §682.610(c), 34 CFR §668.24(f)(4). |
Late Disbursement and Delivery (back to top)
| Q. A school receives a borrower's request for a Federal Stafford or PLUS Loan late in the period of enrollment for which the loan is intended. The school certifies the loan before the intended loan period end date, but transmits the certification to the MDHE for guarantee after the loan period end date. The student successfully completed the period of enrollment for which the loan is intended, thereby qualifying to receive the first and all subsequent disbursements of the loan as a late delivery. Will the Missouri Department of Higher Education Student Loan Program guarantee the loan? |
| A. Yes, provided the MDHE receives the certification within 120 days after the loan period end date, the school's loan certification will be automatically guaranteed. A school that has obtained express permission from the USDE to make a late disbursement of a FFEL Program loan more than 120 days after the loan period end date should notify the MDHE's senior associate for technology prior to submitting the loan certification so that the school's certification guarantees successfully. |
| Q. A student requested a Federal Stafford Loan and completed a FAFSA late in the enrollment period for which the loan is intended. The school certified a loan for the student based on an unofficial Expected Family Contribution (EFC) before the end of the enrollment period. However, the school did not receive a Student Aid Report (SAR) or Institutional Student Information Record (ISIR) with an official EFC until after the enrollment period end date. May the school deliver Federal Stafford Loan funds to this student as a late disbursement? |
| A. No. The school must receive a SAR or ISIR containing an official EFC calculated by the Central Processor before the date the student became ineligible - in this case, prior to the end of the enrollment period for which the loan is intended. Source: 34 CFR 668.164(g)(2)(i). |
| Q. A student requested a Federal Stafford Loan late in the first semester of a two-semester enrollment period. The school certified the loan on December 27, after the first semester's end date on December 19, based on the student's stated intention to return for the second semester. On January 15, two days after the second semester began, the financial aid office was notified that the student failed to begin attendance in the second semester. The student did successfully complete the first semester in the enrollment period for which the loan was certified. Is this student eligible to receive the Federal Stafford Loan's first disbursement? |
| A. No, even though the student successfully completed the first semester in the period of enrollment for which this loan was certified, the student is not eligible to receive a late delivery of the Federal Stafford Loan's first disbursement. A student qualifies to receive (or in the case of a Federal PLUS Loan, receive the benefit of) a late delivery of Federal Stafford or Federal PLUS Loan funds only if the school certifies the loan before the date the student became ineligible. Because this student failed to return for the second semester, the school must establish a withdrawal date that is the last day of the first semester. Because the school certified the loan after the student's withdrawal date, the student does not qualify to receive a late delivery of the first disbursement of his Federal Stafford Loan. Since the student did not complete the period of enrollment for which the loan is intended, the school must also cancel the loan's second disbursement. Source: 34 CFR 668.167(g)(2)(ii)(A); NSLDS Enrollment Reporting Guide, p. 117. |
Loan Limits (back to top)
| Q. Are Federal PLUS Loans subject to an annual borrowing limit? |
A. Federal PLUS Loans are not subject to an annual borrowing limit like Federal Stafford Loans. However, a school must not certify a PLUS Loan in an amount that exceeds the lesser of the following:- The student's cost of attendance, minus other financial assistance the school expects the student to receive.
- The parent borrower's requested amount.
Source: 34 CFR 682.204(h); 34 CFR 682.206(c)(2). |
| Q. Must annual loan limits be prorated for a Federal PLUS Loan or for a professional and graduate student who borrows a Federal Stafford Loan? |
| A. No. Prorated annual loan limits are required only for Federal Stafford Loans certified for undergraduate borrowers who are enrolled in a program of less than an academic year in length or enrolled in the final period of study that is less than an academic year. Source: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-26 through 8-29. |
| Q. What is the aggregate loan limit for a dependent undergraduate student whose parent has been denied a Federal PLUS Loan but who is eligible for an additional unsubsidized Federal Stafford Loan? |
| A. A dependent undergraduate student whose parent does not qualify for a Federal PLUS Loan is eligible for a combined subsidized and unsubsidized Federal Stafford Loan aggregate amount of $46,000. No more than $23,000 of this amount may be subsidized. Since the Institutional Student Information Record will include a comment indicating the student has exceeded the aggregate loan limit, the student's file must include documentation that he or she is eligible to borrow at the higher level and has, therefore, not exceeded the aggregate loan limit. Sources: DCL GEN-97-3; Integrated Common Manual subsection 6.11.B. |
Loan Periods (back to top)
| Q. A dependent, undergraduate student withdraws from a 900 clock hour program after completing 100 clock hours. The student did not request a FFEL Program loan for this initial period of enrollment. The student subsequently re-enrolled in the same program at the school and was given credit for the previously completed 100 clock hours. While the program begins on June 9, the student is allowed to start the program on July 14 because of the successful completion of the initial 100 clock hours of instruction. The program ends on the following January 27. What is the student's maximum Federal Stafford Loan eligibility, and for what calendar period should this loan be certified? |
A. Due to the student being enrolled in a final period of study that is less than the program's academic year (800 clock hours of a 900 clock hour program), and because the student was permitted to attend for only the remainder of the program that he or she needed to complete:- The school must prorate this student's maximum loan eligibility by dividing the number of clock hours in the academic year by the number of clock hours in the period of enrollment, and multiplying the result by the grade level one loan limit for a dependent student. Because the student is enrolled in the remainder of a program that is an academic year in length, there is no need to compare the number of weeks in the enrollment period with the number of weeks in the academic year.
The applicable prorated calculation is provided below. A school may choose to express the comparison of clock hours in the enrollment period to clock hours in the academic year as a fraction or as a decimal, but must be consistent in its selection. The example below uses the decimal method. 800 clock hours ÷ 900 clock hours = .888, which may be rounded to .89
.89 X $2,625 = $2,336.25, which may be rounded to $2,336 (the nearest whole dollar). - In addition, the school should use the calendar period in which the student will complete the remainder of the program as the loan period. In this case, the loan period is July 14 through January 27.
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| Q. A student is attending the second semester (January 15 to May 30) of an academic-year enrollment period that began on September 4, 2004, and ends May 30, 2005. The school did not certify Title IV student financial assistance at the beginning of this enrollment period because, at that time, the student was in default on a Federal Stafford Loan. However, the student's defaulted Federal Stafford Loan was paid in full by a Federal Consolidation Loan that was disbursed on March 1, 2005, thereby eliminating the student borrower's default status. Since this student no longer has a defaulted Federal Stafford Loan, she regains eligibility for Title IV assistance. What is the correct time period for which the school may certify the student's Federal Stafford Loan or Federal Pell Grant? Is it: - The entire period of enrollment (September 4, 2002 to May 30, 2003) in which the student regained Title IV eligibility?
- The payment period (semester of January 15, 2003 to May 30, 2003) in which the student regained Title IV eligibility?
- The period of time after the student regained eligibility (after March 1, 2003)?
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A. If a change in the student's status causes the student to regain eligibility for Title IV assistance, the student may receive aid for the following periods:- For Federal Pell Grants and campus-based funds, the payment period (semester of January 15 to May 30) in which the student regained eligibility.
- For FFEL Program loans, the period of enrollment (September 4, 2004 to May 30, 2005) in which the student regained eligibility.
The school must obtain and retain documentation in the student's file providing that the student's defaulted status has been resolved before certifying Title IV student financial assistance for the student. Also, please note that a school must not certify a Federal Stafford Loan after the end date of the period of enrollment for which the loan is intended. Source: Federal Student Aid Handbook, Volume 1-Student Eligibility, p. 1-51. |
| Q. An independent, undergraduate student is enrolled in a 900 clock hour, 36-week program that spans the calendar period of June 9 through January 27. Initially, the student did not request a FFEL Program loan. On October 15, after completing nearly half of the program, the student requested a Federal Stafford Loan. What is the student's maximum Federal Stafford Loan eligibility amount, and for what calendar period must this loan be certified? |
| A. Even though the student did not request a FFEL Program loan until he or she had completed nearly half of the program, this independent student's maximum eligibility is the grade level one, annual loan limit of $6,625, of which no more than $2,625 may be subsidized Federal Stafford Loan funds. In addition, the school must certify the student's Federal Stafford Loan for the period that coincides with the student's period of enrollment. In this case, the loan period is the length of the program, June 9 through January 27. |
| Q. An undergraduate student is enrolled in a semester-based, credit-hour program that uses a modular format. In this modular program, classes are held in two consecutive 8-week subdivisions of the 16-week standard semester. For the fall 2004 semester, the student enrolls in six credit hours (at least half time) in module No. 1 for the first eight weeks of the term, but does not enroll in module No. 2. After completing coursework during the fall 2004 term, the student will graduate. What is the correct Federal Stafford Loan period that should be used for this student - a loan period that corresponds to the beginning and ending dates of the first, 8-week module in the term, or a loan period that corresponds to the beginning and ending dates of the 16-week semester term? |
| A. This school must use a loan period that corresponds to the beginning and ending dates of the 16-week semester term, even though the student will actually attend only during the first eight-week module. Previously, the USDE disseminated guidance that indicated the module, rather than the term, was the minimum period for which a FFEL Program loan could be certified in a credit-hour program using standard terms and a modular format. However, the USDE subsequently provided the MDHE with written, corrected guidance that reflects current FFEL Program regulations in 34 CFR 682.603(f)(1)(i). These regulations state that the term, not a module within the term, is the minimum period for which a FFEL Program loan may be certified in a credit-hour program that uses standard terms. The USDE and the MDHE will hold harmless any school that previously certified FFEL Program loans for term-based, modular, credit-hour programs that corresponded to one or more modules within a term, but not the full term itself. However, a school must implement the corrected guidance, as reflected in current FFEL Program regulations, for all Federal Stafford and PLUS loans certified after the school becomes aware of this change. |
Military (back to top)
Q. A student and U.S. military reservist receives a Federal Stafford Loan for attendance in a semester-based program at one of Missouri's public universities when he is activated for military training. The borrower withdraws from school on February 24 to report for training; his first day of active military duty was February 28. His active duty period and military training program lasts 12 days.- Does this borrower qualify for Federal Stafford Loan repayment relief under the USDE's guidance outlined in DCL GEN-03-06?
- Does the student qualify for any special treatment under Missouri law (Section 41.948 RSMo.)?
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| A. No to both questions. Under federal regulations in 34 CFR 682.209(a)(6) and USDE guidance published in DCL GEN-03-06, a Title IV loan borrower is eligible for an extension of the grace period (or in-school deferment for repayment borrowers) only if the borrower's active military service lasts more than 30 days. This borrower's active military service lasted 12 days. Under Missouri law in Section 41.948.1 RSMo., a school is required to offer a student attending a public postsecondary institution who is called to active duty in the U.S. military either a full tuition refund or an incomplete grade for the semester's coursework, unless the student is activated to participate in a training activity. |
| Q. What enrollment status does the school report to the National Student Loan Data System (NSLDS) for a student who must leave school because he or she is ordered to active military duty or reassigned for more than 30 days? |
| A. The school should report the student's status as "withdrawn" (coded "W" on the school's NSLDS Enrollment Report, formerly the Student Status Confirmation Report). Source: NSLDS; DCL GEN-03-06. |
Overawards (back to top)
| Q. Is a return of Federal Stafford (or Direct) Loan funds required if the school learns of an overaward after all loan funds are delivered? |
| A. No, a school is not required to return Stafford loan funds that were delivered to the borrower before the overaward situation occurred. However, a school may choose to repay excess funds that were applied to the student's account. A borrower who receives a direct payment of loan funds is not required to repay the excess amount, unless the overaward was caused by the student's misreporting or withholding of information. Source: Federal Student Aid Handbook, Volume 1-Student Eligibility, p. 1-126. |
| Q. Is a school required to return an overaward of PLUS Loan funds? |
| A. No. Sources: Federal Student Aid Handbook, Volume 1-Student Eligibility, p. 1-126. |
| Q. Is there an overaward tolerance for Federal Stafford Loans? |
| A. Generally, no. However, if the student's financial aid package includes a Federal Stafford Loan and Federal Work-Study, there is a $300 overaward tolerance for the loan. The school is not required to adjust the student's Federal Stafford Loan unless the overaward exceeds $300.If an overaward exceeds $300, the school must make an adjustment for the entire amount. Schools must not subtract the $300 tolerance from a total overaward that exceeds $300 to determine the amount of loan funds that must be reduced. Source: Federal Student Aid Handbook, Volume 1-Student Eligibility, p. 1-126. |
| A. An overaward exists if the school becomes aware of additional financial assistance or an increase in the student's expected family contribution that could result in the student's aid package exceeding the cost of attendance. If the overaward occurs after the school certifies the loan but before the school receives any Federal Stafford Loan funds, the loan or any remaining disbursements must be adjusted to eliminate the overaward. If the school has delivered all of the loan disbursements before the overaward occurs, the school is not required to make an adjustment. |
PLUS Loans (back to top)
| Q. A dependent student's parents are divorced. One parent applied for a Federal PLUS Loan but was denied due to adverse credit. Must the student's other parent apply and also be denied a Federal PLUS Loan before the school can certify an additional unsubsidized Federal Stafford Loan for the student? |
| A. No. Only one parent must be denied a Federal PLUS Loan, due to adverse credit, for the student to be eligible to receive additional unsubsidized loan funds. Source: Integrated Common Manual subsection 6.15.D. |
| Q. Can a parent who is a U.S. citizen borrow a Federal PLUS Loan for a dependent undergraduate student who is not a U.S. citizen or eligible non-citizen? |
| A. No. If a parent wants to take out a Federal PLUS Loan for a dependent undergraduate student, both the parent and the student must be U.S. citizens or nationals, permanent residents, or eligible non-citizens. Source: Federal Student Aid Handbook, Volume 1-Student Eligibility, p. 1-19. |
| Q. Can each of two divorced parents take out a Federal PLUS Loan (one loan for mom and one loan for dad) for the same dependent student and for the same period of enrollment at the same school? |
| A. Yes, as long as the sum of both Federal PLUS Loans certified on behalf of that student does not exceed the cost of attendance minus other financial assistance the student receives for the period of enrollment. Source: Integrated Common Manual subsection 5.1.C |
| Q. In order for a student to receive the benefit of a Federal PLUS Loan, what are the minimum enrollment requirements for the student? |
| A. To be eligible for a Federal PLUS Loan, a parent borrower must be applying for the loan to pay the postsecondary educational costs for an eligible dependent undergraduate student who is enrolled, or accepted for enrollment, at least half time in an eligible program at an eligible school. Source: Common Manual subsection 5.1.C. |
| Q. Is a student required to complete a FAFSA if the only Title IV assistance requested is a PLUS Loan? |
| A. No. In addition, if the school expects to make a late delivery of Federal PLUS Loan funds (and a Federal PLUS Loan is the only type of Title IV aid requested), the student and parent borrower are no longer required to complete a FAFSA. Source: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-40; Federal Register dated August 8, 2002, p. 51728; and Federal Register dated November 1, 2002, p. 67073. |
| Q. Must a school determine a student's eligibility for a subsidized Federal Stafford Loan before determining a parent borrower's eligibility for a Federal PLUS Loan? |
| A. No. A school may certify and disburse Federal PLUS Loan funds without first determining the student's eligibility for either a Federal Pell Grant or Stafford Loan. Source: Federal Student Aid Handbook, Volume 8-Direct Loan and FFEL Programs, p. 8-13. |
| Q. The Federal PLUS Loan Application and Master Promissory Note does not include a place for the student to attest to his or her citizenship or default/overpayment status, and no longer requires the student's signature. But the school must still certify on the separate Federal PLUS Loan Information and School Certification form that the student is, (1) a U.S. citizen, permanent resident, or other eligible non-citizen and (2) based on records available and appropriate inquiry, the student has met the requirements of the Selective Service Act, is not incarcerated, and that neither the parent borrower nor the student is liable for an overpayment of any federal grant or loan made under the Act, is not in default, or if so, has made satisfactory payment arrangements with the holder(s) of any defaulted loan(s), does not have property subject to a judgment lien for a debt owed to the U.S. How should schools address the student eligibility issues mentioned in the school's certification? |
| A. Neither the USDE nor the MDHE prescribes a process by which the school confirms the student's eligibility in cases when a) the only type of Title IV aid requested is a Federal PLUS Loan and b) the school exercises its option not to require that the student complete a FAFSA. In such cases, the school should ensure that an internal process is in place to address the student's eligibility. That process may include, for example, a document the school develops that requires the student to provide information and sign to certify its validity. Or, a school may have a written policy requiring that all students complete the FAFSA. |
Repayment Options (back to top)
| Q. One of the repayment options that a FFEL Program borrower may choose is the income-sensitive repayment plan. This option enables a borrower to make lower payments based on his or her gross monthly income, provided that the payments at least cover the accruing interest on the loan. However, the borrower is still expected to repay the loan within the maximum time period allotted (e.g., ten years). What is the maximum time frame in which a borrower may make payments under the income-sensitive repayment option? |
| A. A FFEL Program lender must grant the borrower forbearance for a period of up to five years in cases where the effect of a decreased payment amount under the income-sensitive repayment schedule would result in the loan not being paid within the maximum repayment term. This forbearance period does not count toward the maximum repayment term. Since regulations authorize forbearance for no more than five years, the longest period that a borrower could make reduced payments under the income-sensitive repayment plan is five years when those reduced payments would result in the loan not being paid within the maximum repayment term. Source: 34 CFR 682.209(a)(7)(iv) and (vii)(D). |
| Q. Under the income-sensitive repayment plan, how often will a lender require a borrower to submit income information to the lender in order to continue making reduced payments? |
| A. Under the income-sensitive repayment plan, the lender must review the borrower's income annually. Source: 34 CFR 682.2098(a)(7)(vii)(A). |
Return of Title IV Funds (back to top)
| Q. Return of Title Four Funds Scenario Q & A Scenario 1: The school certifies a Federal Stafford Loan during the second of two payment periods in a period of enrollment. The school certifies the loan retroactive to the beginning of the period of enrollment that includes both payment periods, and the student successfully completes the first payment period. The student withdraws during the second payment period; but, as of the date the school determines the student withdrew, the school has not delivered the first or the second loan disbursement. The school is required (or has chosen) to calculate the return of Title IV funds on a payment period basis. In scenario 1 above, how is the first disbursement of the Federal Stafford Loan treated? |
| A. The initial disbursement of the loan is not included as aid that could have been disbursed for the purposes of the return of Title IV funds calculation since the student successfully completed the payment period for which the disbursement was intended. Instead, the school is required to offer the net amount of the first disbursement to the student as a late delivery, provided the student otherwise meets the conditions for a late disbursement. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-118 and 2-95; 34 CFR 668.164(g)(3)(ii). |
| Q. Scenario 2: A school certifies and processes a request for a Federal Stafford Loan guarantee through an electronic application processing system, but the student does not sign the Master Promissory Note, or the lender does not verify the existence of a valid Master Promissory Note before the student withdraws; therefore, the Federal Stafford Loan's first disbursement was not disbursed. In Scenario 2 above, may the school include the Federal Stafford Loan's first disbursement in aid that could have been disbursed to determine the amount of Title IV aid the student earned, and may the school make a post-withdrawal disbursement from these funds? |
| A. Yes, provided the student signs the promissory note, or as applicable, the lender confirms the existence of a valid Master Promissory Note, within a time frame that allows the school to comply with its requirements under the return of Title IV funds rules. A lender must not disburse funds until the student signs the Master Promissory Note (if required), or until the lender confirms the existence of a valid Master Promissory Note. |
| Q. Scenario 3: A school certifies Title IV aid for a student enrolled in a 900 clock hour, 32-week program that includes two payment periods of 450 clock hours each. Institutional charges totaling $8,000 are assessed to the student for the entire program at the time of initial enrollment: $7,000 in tuition and an additional $1,000 in allowable fees. The student withdraws during the first, 450 clock hour payment period after the school delivers a $2,000 Federal Pell Grant disbursement, and a $1,312 Federal Stafford Loan disbursement. This school elects to calculate a return of Title IV funds on a payment period basis for students who withdraw from this program. In Scenario 3 above, what is the correct amount of tuition charges that the school should record for this student in Step 5 of the return of Title IV funds calculation? |
| A. Schools that assess all tuition and fee charges "up front," but calculate the return of Title IV funds on a payment period basis and use the USDE's electronic calculation software or worksheets, should note that the formula for determining the correct tuition and fee amount in Step 5 of the calculation is not included in either the software or worksheet. When a school exercises its choice to calculate a return of Title IV funds for a non-term based educational program (i.e., a clock hour program or a non-term credit hour program) on a payment period basis, but charges for a longer period (in this scenario, for the entire program), the amount of institutional charges used in Step 5 of the return of Title IV funds calculation is the greater of the following: - The prorated amount of institutional charges for the longer period (in this scenario, the program).
- The amount of Title IV funds the school retained to pay institutional charges as of the date of the student's withdrawal.
In Scenario 3 above, the prorated amount of institutional charges for the payment period in which the student withdrew is $4,000: $7,000 tuition charges / 2 = $3,500
$1,000 fee charges / 2 = $500
$3,500 + $500 = $4,000 The amount of Title IV aid retained to pay institutional charges during the payment period in which the student withdrew is $3,312: $2,000 (Pell) + $1,312 (Stafford Loan) = $3,312 The greater of these is $4,000. This is the amount of total institutional charges for the payment period that is recorded in Box G of Step 5 in the return of Title IV funds calculation. |
| Q. A school has a policy of delaying the delivery of the first Federal Stafford Loan disbursement to all student borrowers. During the first payment period, and before the first Federal Stafford Loan disbursement is delivered, the school determines that the student withdrew. The student is not subject to regulatory delayed delivery requirements. Must the school include the net amount of the undelivered first disbursement in aid that could have been disbursed? |
| A. Yes. A school's delayed delivery policy has no effect on the student's ability to earn all or a portion of the undelivered first Federal Stafford Loan disbursement in this case. Source: USDE private guidance. |
| Q. A student borrower who is subject to the 30-day delayed delivery requirement for first-time, first-year Federal Stafford Loan borrowers (i.e., a student who is in the first year of an undergraduate program and never received a Direct or FFEL Program loan for attendance at the current school or any prior school) withdraws before completing the first 30 days of his undergraduate program. According to late disbursement rules, the school must not deliver the first Federal Stafford Loan disbursement after learning that the student withdrew because the student did not complete the first 30 days of the program. But when the school performs the return of Title IV funds calculation for this student, how is the first undelivered disbursement of the student's Federal Stafford Loan treated? |
| A. Even though this first-time, first-year student borrower was ineligible to receive the first Federal Stafford Loan disbursement because he withdrew before the thirty-first day of his undergraduate program, the school should include the first disbursement of this student's Federal Stafford Loan in "aid that could have been disbursed" for the purpose of determining the total amount of Title IV aid the student earned. If the return of Title IV funds calculation shows that the student earned more Title IV aid than he received, the school must not make a post-withdrawal disbursement from the first Federal Stafford Loan disbursement. The effect of including the net amount of the first Federal Stafford Loan disbursement in "aid that could have been disbursed" is illustrated below. EXAMPLE:
As of the date that the school determines this student withdrew, two disbursements of Title IV aid are undelivered: the first Federal Stafford Loan disbursement of $1,312, and the first Federal Pell Grant disbursement of $2,000. The school determines that the student completed 10 percent of the payment period as of the date of his withdrawal. If the school uses the first Federal Stafford Loan disbursement amount in aid that could have been disbursed, the total amount of Title IV aid the student earned is $331.00 ($1,312 + $2,000 x .10 = $331.20 rounded to the nearest dollar). According to this calculation methodology, the student is eligible to receive $331.00 of the undelivered Federal Pell Grant funds as a post-withdrawal disbursement. The school must not request any of the undelivered Federal Stafford Loan funds as part of the post-withdrawal disbursement. If the school does not use the first Federal Stafford Loan disbursement amount in aid that could have been disbursed, the total amount of Title IV aid the student earned is $200, based solely on the undelivered Federal Pell Grant disbursement ($2,000 x .10 = $200). According to this calculation methodology, the student is eligible to receive $200 of the undelivered Federal Pell Grant funds as a post-withdrawal disbursement. Please note that the interpretation discussed and illustrated above reflects a change in the USDE's prior guidance on the treatment of Federal Stafford Loan funds in such a case. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-116; Dear Colleague Letter GEN-04-03. |
| Q. A student who is a member of the U.S. military reserves is ordered to active duty (or a student on active military duty is reassigned for more than 30 days) and the student must withdraw from school. The school refunds 100 percent of institutional charges to the student. Do the return of Title IV funds requirements apply? |
| A. Yes. The return of Title IV funds requirements apply when a student withdraws, even if the school decides not to assess any charges to the student. Any otherwise eligible student who began attendance at an institution and received, or could have received, Title IV grant or loan funds prior to a withdrawal date has earned a portion of those Title IV funds. The adjustment or elimination of a student's institutional charges, changes to the student's enrollment status (e.g., if the school purges incomplete grades for the period of enrollment), or other administrative determinations the school makes after the withdrawal have no bearing on the applicability of the return of Title IV funds requirements. In Step 5 of the return of Title IV funds calculation, the school must use the amount of institutional charges that were originally assessed to the student. A school may not use the amount of unpaid charges on the student's account at the time of withdrawal, or the adjusted amount of institutional charges that results from the school's refund policy or from a "retroactive withdrawal" of the student. Source: Dear Colleague Letter GEN-00-24 Q&A #1 and #2 and DCL GEN 03-06. |
| Q. According to the return of Title IV funds calculation, a school determines that a deceased student earned more Title IV funds than were disbursed. May the school make a post-withdrawal disbursement in this case? |
| A. No. A post-withdrawal disbursement of Title IV funds may not be made to the account or estate of a student who has died. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-141. |
Q. As of the date the school determines the student withdrew, the school has not delivered a FFEL Program loan to the student. One of two situations exists:- The school has not received information needed to determine if the student is making satisfactory academic progress.
- The school determined the student failed to make satisfactory academic progress, and the student is pursuing an appeal of this determination.
In either situation, should the net amount of the first disbursement be included in aid that could have been disbursed? |
| A. If the school can determine and document that the student established eligibility for Title IV funds under the school's satisfactory academic progress policy within a time frame that allows the school to comply with its requirements under the return of Title IV rules, the net amount of an undelivered, first FFEL Program loan disbursement is included in aid that could have been disbursed and may be included in a post-withdrawal disbursement if necessary. |
| Q. Charles Gallagher Student Financial Assistance Program disbursements that the MDHE identifies as federally funded through the Leveraging Educational Assistance Program must be included in the return of Title IV funds calculation for a withdrawn student. Are there any circumstances in which a pending disbursement of a Gallagher award is included in aid that could have been disbursed? |
| A. No. There are no provisions for late disbursement of a Gallagher award to a withdrawn student. |
| Q. If a student withdraws after the 60 percent point in a payment period (or after the 60 percent point in the period of enrollment if the school calculates a return of Title IV funds on a period of enrollment basis), is the school required to perform a return of Title IV funds calculation? |
| A. Yes. A student who has completed more than 60 percent of the payment period (or, as applicable, period of enrollment) has earned 100 percent of disbursed aid and no return of funds to the Title IV programs will be required. However, the school must still complete a return calculation in order to determine whether the student is eligible for a post-withdrawal disbursement. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-107. |
| Q. If the borrower in Scenario 2 above never signs the promissory note, should the school cancel the loan? |
| A. If the student does not sign the promissory note in time to make it possible for the school to deliver post-withdrawal disbursement funds to the student's account (or, as applicable, deliver the funds directly to the borrower) within 120 days of the date the school determined that the student withdrew, the school must cancel the loan. |
| Q. In scenario 1 above, how is the second disbursement of the Federal Stafford Loan treated? |
| A. The school must include the net amount of the second Federal Stafford Loan disbursement in aid that could have been disbursed in the return of Title IV funds calculation for the purpose of determining the total amount of Title IV aid earned during the second payment period. However, if the school determines the student earned more Title IV aid than was disbursed, the school must not include any of the second disbursement in a post-withdrawal disbursement. |
| Q. Is a return of Title IV funds calculation required for a student who drops to less than half time enrollment status during a payment period but does not withdraw? |
| A. No, a return of Title IV funds calculation is not required for a student whose enrollment status drops to less than half time. The school must, however, report to National Student Loan Data System a less than half time date for the student that will begin the grace period and subsequent repayment period on any Federal Stafford Loan(s) received for attendance at the school. |
| Q. The first disbursement of a Federal Stafford Loan has not been delivered to a first-time borrower at the time the school determines the student withdrew. The student did not complete his or her required entrance counseling before withdrawing during the first payment period. For the purpose of determining the amount of Title IV aid that the student earned, should the net amount of the first Federal Stafford Loan disbursement be included in aid that could have been disbursed? |
| A. If the school determines and documents that the student completed entrance counseling requirements, the net amount of the undelivered, first Federal Stafford Loan disbursement may be included in aid that could have been disbursed, and may be delivered as a post-withdrawal disbursement. Source: USDE private guidance. |
| Q. Under previous prorata refund rules, a school could deduct an administrative fee from institutional charges. Under the current return of Title IV funds rules, can the school deduct an administrative fee from the institutional charge amount used to determine the amount of Title IV funds that a school is required to return to the Title IV programs? |
| A. No. The statutory language [previously in HEA Section 484B(c)(1)] authorizing the deduction of an administrative fee from institutional charges was deleted as the result of the HEA Amendments of 1998. |
| Q. When may the school round dollar amounts used in the return of Title IV funds to the nearest whole dollar? |
| A. In Steps 6 and 8 of the USDE's return of Title IV funds worksheet, final repayment amounts that the school and student are responsible for repaying may be rounded to the nearest dollar. In the case of a student's grant repayment, the final repayment amount is the result after applying the 50 percent reduction. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-111. |
| Q. When returning FFEL Program funds, should the school return up to the net disbursed amount or the gross disbursed amount (including the origination fee and, if applicable, the guarantee fee, deducted from each disbursement)? |
| A. The school should return no more than the net disbursement amount, i.e., the amount that was actually disbursed to the school from any Title IV program. The net disbursement amount for a FFEL Program loan does not include the 3 percent origination fee or, if applicable, the 1 percent guarantee fee. |
Tax Benefits for Higher Education (back to top)
| Q. Where do I find guidance on tax benefits for higher education? |
| A. Detailed guidance on the Hope Scholarship, Lifetime Learning tax credits, student loan interest deduction, and other tax benefits for higher education is available directly from the Internal Revenue Service. IRS Publication 970, Tax Benefits in Education, is updated annually. The publication includes a summary highlighting changes applicable to each new tax year. |
Verification (back to top)
| Q. During the verification process, may a school accept a tax return that does not include the taxpayer's signature? |
| A. Yes. A school may accept a student's or parent's tax return that is not signed by the taxpayer if the return includes the tax preparer's stamped, typed, signed, or printed name and Social Security Number, Employer Identification Number, or Preparer Tax Identification Number. Source: Federal Student Aid Handbook, Application and Verification Guide, p. AVG-86. |
| Q. Is verification required for a student whose FFEL Program eligibility is limited to an unsubsidized Federal Stafford Loan or a Federal PLUS Loan? |
| A. No. However, a student cannot avoid the verification requirements by choosing an unsubsidized Federal Stafford Loan when the school determines that the student has eligibility for a subsidized Federal Stafford Loan. Source: Federal Student Aid Handbook, Application and Verification Guide, p. AVG-77. |
Withdrawal Dates (back to top)
| Q. How can a school certify a student's official, verbal notification of intent to withdraw? |
| A. A school certifies a verbal notification by documenting the conversation with the student. The school can request, but cannot require, that the student provide the school with a written confirmation statement. Source: Federal Student Aid Handbook, Volume 2-Institutional Eligibility and Participation, p. 2-122. |
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