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Ask a Fed: Perkins, Prior-Prior, Training, and More

February 19, 2016

Federal Training Officer David Bartnicki recently shared these updates. bartnicki

Perkins

ED recently posted GEN-16-05 describing the new Perkins requirements under the extension of the Federal Perkins Loan Program by the Federal Perkins Loan Program Extension Act of 2015, which became effective December 18, 2015.

The Extension Act eliminated the Perkins Loan grandfathering provisions that the Department provided guidance on in DCL GEN-15-03 and established new eligibility requirements for undergraduate and graduate students to receive Perkins Loans.

Under the new rules, a school can make Perkins loans to undergraduate students through September 30, 2017. When awarding Perkins loans the school has to make a distinction between those who have an outstanding Perkins loan from the school (current Perkins borrower) and those who do not (new Perkins borrower).  For those with outstanding Perkins Loans from the school, the school has to award all Subsidized Direct Loans before awarding Perkins. For those without outstanding Perkins Loans from the school, the school has to award all Subsidized and Unsubsidized Direct Loans before awarding Perkins. Please note – an undergraduate student who was awarded a Direct Subsidized Loan and/or a Direct Unsubsidized Loan can decline one or both of the loans (or request a lesser amount). However, the student’s full Direct Loan eligibility amounts must be included in the calculation of the undergraduate student’s Perkins Loan amount, regardless of whether they actually borrow that full amount.

In addition, if an eligible undergraduate student borrower receives a disbursement of a Perkins Loan after June 30, 2017, and before October 1, 2017 for the 2017-2018 award year the student may receive any subsequent disbursements of that Perkins Loan.

Under the new rules, a school can make Perkins loans to graduate students through September 30, 2016. In order to receive Perkins funds, a graduate student had to have received a Perkins Loan before October 1, 2015, received their most recent Perkins Loan from the current school and be completing the academic program for which they received their most recent Perkins Loan. We consider a graduate student to be continuing or completing the academic program for which the student received his or her most recent Perkins Loan only if the first four digits of the program’s Classification of Instructional Program (CIP) code are identical to the first four digits of the CIP code for the academic program for which the student received his or her most recent Perkins Loan.

In addition, if an eligible graduate student borrower receives a disbursement of a Perkins Loan after June 30, 2016, and before October 1, 2016, for the 2016-2017 award year, the student may receive any subsequent disbursements of that Perkins Loan.

Finally, under the Extension Act, a school must provide some additional disclosures to each Perkins Loan borrower before it makes a first disbursement of a Perkins Loan:

  • A notice and explanation regarding the end to future availability of Perkins Loan Program loans;
  • A notice and explanation that repayment and forgiveness benefits available to Direct Loan borrowers are not available to Perkins Loan borrowers;
  • A notice and explanation regarding the borrower’s option to consolidate a Perkins Loan into a Direct Consolidation Loan, including any benefit of consolidation;
  • For current undergraduate borrowers, a notice and explanation providing a comparison of the interest rates of Perkins Loans and Direct Loans, and informing the borrower that the borrower has reached the maximum annual borrowing limit for Direct Subsidized Stafford Loans for which the borrower is eligible; and
  • For new undergraduate borrowers, a notice and explanation providing a comparison of the interest rates of Perkins Loans and Direct Loans, and informing the borrower that the borrower has reached the maximum annual borrowing limit for Direct Subsidized and Unsubsidized Stafford Loans for which the borrower is eligible.

For more information and contact information, please review the Dear Colleague Letter – GEN-16-05.

FSA Student Loan Ombudsman Office

As most of you know, schools are required to provide, through various consumer information requirements, the FSA Ombudsman Office contact information and availability to student loan borrowers. Effective February 28, 2016, please use the following information to contact the FSA Student Loan Ombudsman Group.

Via online assistance: http//studentaid.gov/repay-loans/disputes/prepare

Via telephone: 877.557.2575
Via fax: 606.396.4821
Via mail: FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633

Prior-Prior Year

ED recently posted GEN-16-03 about the use of Professional Judgment (PJ) when prior-prior year income is used to complete the Free Application for Federal Student Aid (FAFSA). The DCL reminds schools of their statutory ability to use PJ to assist families when warranted and that the Department is aware there may be an increase in the use of PJ due to using prior-prior year income. Due to the expected increase in the use of PJs, ED will adjust appropriately any risk-based models used to evaluate the use of PJ and potential school concerns.

Though ED encourages the use of PJ where appropriate, we remind schools that PJ is on a case-by-case basis and must be properly documented. Also, don’t forget when submitting professional judgment changes to a student’s information to the Department’s Central Processing System (CPS), you must set the Professional Judgment Flag to 1 (EFC Adjustment Processed) to indicate that the submission was the result of a professional judgment determination.

For a more in-depth discussion about Professional Judgments and for additional resources, please review the Dear Colleague Letter GEN-16-03.

In addition, ED posted an electronic announcement on February 18, 2016 discussing steps we are taking to implement the new prior-prior year and early FAFSA submission process.  Though we have not reached a final decision around the potential issues with conflicting information, we strongly urge families to use the DRT in both 16/17 and 17/18 in order to reduce the likelihood of conflicting financial information.

We have also developed an “Early FAFSA” mailbox as a way for the community to contribute thoughts, ideas, and concerns that they believe we should consider as we move forward on the implementation of the 2017-2018 Early FAFSA. The email address of the “Early FAFSA” mailbox is EarlyFAFSAFeedback@ed.gov. I encourage all schools to submit their ideas and concerns about the early FAFSA submission process and prior-prior year to ensure that we do not overlook any serious issues. We do not know it all, and we rely on your experiences and insights to help us properly implement these new changes.

FY 2013 3-Year Draft Cohort Default Rates

For those of you involved with your schools’ cohort default rates, please note that ED is scheduled to release your Draft cohort default rates for FY2013 on Monday, February 29, 2016. Reviewing draft rates timely is crucial for being able to make certain types of data challenges, which can impact your final CDRs.

Program Eligibility

Under 34 CFR 668.14(b)(26) we state the following –

“(26) If an educational program offered by the institution is required to prepare a student for gainful employment in a recognized occupation, the institution must—

  • (i) Demonstrate a reasonable relationship between the length of the program and entry-level requirements for the recognized occupation for which the program prepares the student. The Secretary considers the relationship to be reasonable if the number of clock hours provided in the program does not exceed by more than 50 percent the minimum number of clock hours required for training in the recognized occupation for which the program prepares the student, as established by the State in which the institution is located, if the State has established such a requirement, or as established by any Federal agency;”

Policy has recently provided clarification that any Gainful Employment program where the State has a minimum number of hours required for training, the school’s GE programs (no matter how offered) cannot exceed the State’s minimum requirements by more than 50 percent. This is true whether the program is a clock hour or credit hour program. So, if the State has a clock hour minimum requirement for a certain program of study, but the school offers the program in credit hours, the school will have to demonstrate how the number of in–class clock hours under our credit hour definition in 34 CFR 600.2 or in our clock-to-credit hour conversion, if the program is subject to the conversion, does not exceed the State minimum by more than 50 percent.

In addition, if the State provides a minimum training requirement in credit hours, an institution’s credit hour GE program may not exceed the State minimum by more than 50% of the credit hours required by the State.

This is a very important concept to understand and implement since it can impact the eligibility of an entire program for Title IV purposes.

UEH

When reviewing subsequent UEH flags for the same student (from one year to the next), you can rely upon past documentation received to support academic credit earned at prior schools. However, new documentation would have to be obtained from any school during an award year being reviewed where a student received a Pell Grant or Direct Loan if that school had not been reviewed for academic credit during a particular award year under review. This might happen if a new school was added in between UEH reviews.

Pell Grant ACA Payments

Please note that we will be changing how schools receive Pell Grant ACA payments starting with the first Pell Grant ACA payment for the 2015-2016 Award Year scheduled for February 29, 2016. This change does not impact how Pell Grant ACA payments are calculated; it only changes how we deliver those payments to schools.

Instead of depositing the ACA funds directly into a school’s bank account, schools will now have their Pell Grant ACA payment posted in G5 as an Available Balance in the school’s ACA G5 Award Number, beginning with P063Q. Once posted, a school will sign in to G5 and process a drawdown transaction in G5 to receive the funds. We will send an Electronic Statement of Account (ESOA) (Message Class PGASyyOP) that reflects the Pell Grant ACA payment amount to the reporting school’s Student Aid Internet Gateway (SAIG) mailbox. Additionally, a Pell Grant ACA payment amount and other ACA-related information will be displayed on the COD Web site’s School Funding Information screen.

This is a significant change in how schools will receive their Pell ACA payments so please ensure your business office and other staff members involved with the Title IV G5 drawndown process are aware of these changes. For more information, please see the January 27, 2016 electronic announcement. Any questions about the process change for Pell Grant ACA payments can be directed to our COD School Relations Center at 800.474.7268 or CODSupport@ed.gov.

Federal Pell Grant

If you were not aware, the new 2016-2017 Pell Grant Payment and Disbursement Schedules were released in GEN-16-01. The maximum Pell Grant for 16/17 is $5,815. The highest eligible EFC for Pell Grant funds is 5234. Please note that the PDF charts initially contained errors but were later updated on January 29, 2016.

Training

I am pleased to announce a new training endeavor by FSAs’ training officers called – Regional Drive-In Workshop Series. I and other training officers will be conducting a series of five instructor-led, in-person training workshops, to be offered in April-September 2016 in each of Federal Student Aid’s regional offices as well as in Washington, DC. These interactive one-day sessions will provide information on five hot topics, including the consumer disclosure requirements, Return of Title IV Funds (R2T4) calculations for clock-hours, for credit hours, and for modules, as well as changes to the verification requirements. We will present one specific workshop topic in the morning, to be followed by a federal update in the afternoon.  The one-day workshops will begin at 9:30 p.m. and conclude by 3:00 p.m.

To register for one or more training workshops, log in to http://fsatraining.info with your username and password. After logging in, point your cursor to “Webinars and Workshops” on the main menu bar and select the “Regional Drive-In Workshop Series” option. Select the regional workshop city location of your choice, and follow the instructions to complete your registration. You must complete a separate registration for each workshop that you wish to attend.  If you do not have a username and password for Federal Student Aid E-Training, select “Create new account” from the home page and follow the instructions to create a username and password.

Below are the Atlanta Regional Office Workshops:

Workshop Date
Consumer Information 4/21/2016
R2T4 Clock Hour Basics 5/12/2016
R2T4 Credit Hour Basics 6/30/2016
R2T4 Term-Based Credit Hour with Modules 8/11/2016
Verification 9/1/2016

But don’t forget you may be closer to the Kansas City or Washington D.C. location. For a complete listing of locations and dates, along with registration information, please see ANN-16-03.

Finally, if you missed our Webinar on the new Cash Management regulations or want to share the information with your business office, you can view the session, including the presentation slides and transcript, through the following link: https://ifap.ed.gov/ifap/ifapMedia.jsp#CashManagementRegulations020916.

For additional information on viewing the recorded webinar, please see ANN-16-04.

Have a great rest of the week and hope to see many of you at your upcoming state conferences.

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