Transcript Slide 1

AASFAA Conference
Top 10 Categories of
Misunderstandings in Administering
Federal Student Aid
October 2007
Auburn, Alabama
Introductions
Gary Garoffolo
Associate Vice President for Interim Staffing
Top 10 Categories of
Misunderstandings in Administering
Federal Student Aid
That’s stating it nicely—
misunderstandings vs.
compliance violations
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Most Common Audit Findings
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Repeated failure to take corrective action
Late refund to Title IV account
Incorrect return of Title IV funds calculation
Entrance/Exit counseling deficiencies
Auditors opinion cited in Audit
Deficiencies in student credit balance
Student Confirmation Report issues
Pell over/under payment
Source: SASFAA 07 conference presentation by Greg Martin,
U.S. Department of Education
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Most Common
Program Review Findings
• Late refund to Title IV account
• Incorrect Return to Title IV fund calculation
• Return to Title IV fund calculation not
documented/performed
• Verification violations
• Not meeting campus crime reporting
requirements
• Student credit balance deficiencies
• Inconsistent information in student file
• Not verifying enrollment before disbursement
Source: SASFAA 07 conference presentation by Greg Martin,
U.S. Department of Education
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10 Categories of Misunderstandings
• Return of Title IV Funds –
Determination of Withdrawal
• Return of Title IV Funds –
Timely Return of Funds
• Exit Loan Counseling
• Satisfactory Academic Progress
• Notifications and Authorizations
• Prompt Disbursement and FSA Credit Balance
• Academic Program Eligibility
• Academic Year and Payment Period
• School Eligibility –
Administrative Capability
• Consumer Information
• And one additional: Written Policies and
Procedures
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Withdrawal and Return of Title IV Funds (RTIV)
– Determination of Withdrawal
• Determination of withdrawal
– Must track “official” withdrawals during
drop/add period. That is, if student began
attending and then drops all courses,
RTIV must be performed, even if all
institutional charges are cancelled.
– Must perform a RTIV calculation after the
60% date in the payment period to
determine if the student has earned a
post-withdrawal disbursement.
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Withdrawal and Return of Title IV Funds (RTIV)
– Determination of Withdrawal
– Must identify and perform RTIV for federal aid
recipients that withdraw from all courses
during the term. The withdrawal date and the
date of determination of withdrawal are the
same for an “official” withdrawal.
• Must record as the withdrawal date (for federal aid
purposes) the student began an “official”
withdrawal; instead, schools are recording the
“official” withdrawal when a school’s required
paperwork is received.
• School must perform RTIV calculation within 30
days of date of determination; and if needed, notify
the student of a grant overpayment or postwithdrawal disbursement.
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Withdrawal and Return of Title IV Funds (RTIV)
– Determination of Withdrawal
– Must identify and perform RTIV for federal
aid recipients that receive all non-passing
grades at the end of the payment period,
and therefore, must be treated as
“unofficial” withdrawals.
• School must determine “unofficial” withdrawals
no later than 30 days after the end of the
payment period*
• School must perform RTIV calculation within 30
days of date of determination; and if needed,
notify the student of a grant overpayment or
post-withdrawal disbursement
* Assumes school is not required to take attendance and is calculating
RTIV on a payment period basis.
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Withdrawal and Return of Title IV Funds (RTIV)
– Timely Return of Funds
• Timely return of unearned funds.
– School must return unearned funds no later
than 45 days after the date of
determination.
Note: The RTIV calculation should be performed
within 30 days of date of determination, because a
student must be notified within 30 days of date of
determination if there is a grant overpayment or
post-withdrawal disbursement.
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Withdrawal, Return of Title IV Funds, and
Exit Loan Counseling
• Exit loan counseling
– School must notify a student of exit loan counseling
requirements, if the student withdraws, whether
“officially” or “unofficially”, and borrowed a federal
loan.
– School must report the change in enrollment status
within 30 days of the withdrawal date. However, if
the school is scheduled to complete enrollment
reporting to NSLDS within 60 days, the data may be
reported on that file.
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Exit Loan Counseling
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If the student borrower drops out without notifying the school, it must confirm
that the student has completed online counseling, or mail exit counseling
material to the borrower at his or her last known address. The material must be
mailed within 30 days of determining that a borrower has withdrawn or failed to
participate in an exit counseling session.
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If the school mails the exit materials, it is not required to use certified mail with
a return receipt requested, but it must document in the student’s file that the
materials were sent. If the student fails to provide the updated contact
information, the school is not required to take any further action.
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The personal and contact information collected at the time of exit counseling
must be provided to the guaranty agency or Direct Loan Servicing Center
within 60 days. Updated information includes: the borrower’s name; address;
references; future permanent address; Social Security Number; the identity
and address of the borrower’s expected employer, the address of the
borrower’s next of kin, and the borrower’s driver’s license number and state of
issuance.
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Satisfactory Academic Progress (SAP)
• Must have written SAP standards (i.e., GPA,
Completion Rate, Maximum Time Frame) for
all types of programs offered, e.g., less than 1year, 1-year, 2-year, 4-year, graduate, and
other programs
• Each SAP policy must:
– be as stringent as the institution’s academic
standing policy
– at a minimum, require a “C” average or its equivalent
or have an academic standing consistent with the
requirement for graduation from the program at the
end of the second academic year (Having a
standard consistent with graduation requirements
accommodates a school using an escalating GPA.)
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Satisfactory Academic Progress (SAP)
– require a minimum amount of work be completed at the
end of each increment, (where an increment is no longer
than half the program or an academic year, whichever is
less), that is sufficient to ensure the student will
complete the program within the maximum time frame.
(At some point, this must convert to at least 66.67% of
attempted credits for undergraduate students.)
– Set a maximum time frame, which must be no more than
150% of the academic program for undergraduates. If at
any point it is clear that a student cannot mathematically
finish the program within the maximum time frame, the
student becomes ineligible for aid. The student may
appeal.
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Satisfactory Academic Progress (SAP)
- Include written statement of the treatment of:
• Repeat coursework
• Incomplete course grades
• Withdrawals, which must be included in maximum time
frame and completion rate
• Transfer credits, which must be included in maximum
time frame
• Non-credit remedial coursework
• ESL coursework
• Dropped courses during the add/drop period, if they
are to be excluded in attempted credits
• Prior coursework that the school ignores because it
has given “academic amnesty”
• Change in major or academic program
• Pursuit of additional degrees
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Notifications and Authorizations
• School must issue a Notification of Disbursement and
Opportunity to Cancel or Reduce a Loan.
– This notification must be sent no earlier than 30 days before
and no later than 30 days after crediting a student’s account.
– A student has 14 days to notify a school if she wants the loan
cancelled (or reduced).
Note: Proposed rulemaking would add a condition to the
timeframes based on type of confirmation (active or passive).
- If a school obtains a active (affirmative) confirmation of a
student’s acceptance of a loan, the timeframe for notification
is unchanged.
- If not, a school must notify a student no earlier than 30 days
before and no later than 7 days after crediting a student’s
account, and the student would have 30 days to cancel all or
a portion of the loan.
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Notifications and Authorizations
• School must obtain a written authorization before it may:
– Disburse federal student aid funds (including FWS
earnings) by EFT to a back account designated by the
student.
– Use federal student aid funds (including FWS earnings) to
pay for allowable charges other than tuition, fees and
room and board if the student contracts with the school.
– Hold a federal student aid credit balance
(An FSA credit
balance occurs whenever your school credits FSA program funds to a
student’s account and the total amount of those FSA funds exceeds the
student’s allowable charges.)
– Apply federal student aid funds toward minor year
charges.
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Prompt Disbursement and
FSA Credit Balance
• School is required to make a disbursement by
crediting a student’s account (or releasing funds
directly to student) no more than three (3)
business days after receiving the funds.
This is different from the timeframe for paying a
federal credit balance.
• An FSA credit balance must be paid no later than
14 days after the balance occurred on the
student account, assuming it occurred after the
first day of classes.
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Program Eligibility
Aid should not be awarded/disbursed to students enrolled in:
– Undergraduate “programs” that do not lead to a degree or
certificate. These open admission “programs” are:
• often coded AAS
• set up as a convenience to track applicants that declared an
interest in a program that requires another stage of admission
with more rigorous admission criteria and limited enrollment,
e.g., Pre-Nursing, Pre-Dental, Pre-Radiology, PrePhotography.
– Undergraduate certificate or licensure preparation programs
that have not been submitted to the U.S. Department of
Education for approval before disbursing any federal aid,
even if each course in the program is acceptable for full
credit toward a 2-year or more degree program at the
school.
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Academic Year and Payment Periods
Academic Programs may be administered on a Standard Term
basis, but not in compliance with requirements for:
– Treatment of an intersession with start and end dates
between the standard Fall and Spring semester or Fall and
Winter quarter. It must be combined with Fall or Spring, and
aid awarded for credits attempted. It cannot be ignored.
– Treatment of summer sessions. They must be combined,
and aid awarded for credits attempted. The school cannot
choose to award aid for one session and not another; and, if
it does not combine summer sessions, the whole program
must be treated as nonstandard.
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Academic Year and Payment Periods
– Treatment of compressed (e.g., “accelerated”, “short”, “mini”,
“modules”) coursework with start and end dates that are part of a
standing “mini term” or “session” operating within a standard term
(i.e., semester, trimester, or quarter).
• A school must track a student’s start and end date within a term to
ensure the student is enrolled for the full span of a term.
• If the student is enrolled for only a part of the term, the school must:
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Adjust the Cost of Attendance
Adjust the EFC
Compute the financial need based on the adjusted COA and EFC
Establish the loan period for the compressed period of enrollment
Monitor when an initial disbursement may be released based on the start
date of the first course the student begins attending
– Monitor the end date of last course that the student begins to determine
within 30 days whether there was an “unofficial” withdrawal
– Adjust the payment period calendar when computing Return of Title IV
Funds to properly compute the percentage of earned aid.
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School Eligibility –
Administrative Capability
Under Administrative Capability
• Biennial report on drug prevention to comply with DrugFree Schools and Communities Act is required,
although not submitted to the U.S. Department of
Education, unless requested.
• Annual distribution of institution’s drug abuse prevention
activities and description of unlawful behavior to comply
with Drug-Free Workplace Act of 1988 is required, not
solely at the time of employment.
• School must register with NSLDS to participate in
Transfer Student Monitoring Process and collect
financial aid history before disbursing aid to transfer
students.
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Consumer Information
Under Consumer Information
• Each year a school must provide to enrolled students a
notice (disclosure statement) containing a list of the
consumer information it is required to disseminate, and the
procedures for obtaining the consumer information. The
notice must be made through a one-on-one distribution.
• Under Student Right-To-Know Act, the school must publish
its graduation (or completion) rates by July 1 of each year.
• Under Campus Security/Clery Act requires timely reporting
of campus crime statistics and annual distribution of
campus crime report and statistics directly to students and
employees by October 1 of each year.
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Written Policies and Procedures
• Policies and Procedures Manual is not required.
However, there are many program-related requirements
for written policies and procedures, e.g., verification, Ccode resolution, Pell Grant recalculation, treatment of
summer session for standard term loan processing,
handling of borrower-based academic year for student
loan, awarding of campus-based aid to less than halftime students.
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Identifying Compliance Issues
• Training, e.g., national, regional, state associational
meetings; ED and state workshops, Webinars, ED’s
Coach
• Internal assessment, e.g., Internal Auditor, NASFAA
Self-Evaluation Guide or ED’s Self-Assessment Tool
• Peer reviews
• Contract with third-party to review financial aid
operation, e.g., Financial Aid Services, NASFAA’s
Standard of Excellence
• Annual independent audits
• State agency audit, e.g., audit by guaranty agency or
state grant agency
• Program review
• Office of the Inspector General (OIG) review
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The presenter is not a representative of the U.S. Department of Education.
The presentation and remarks are solely those of the presenter.
Thank you for your time.
Gary Garoffolo
Associate Vice President for Interim Staffing
Telephone:
(405) 747-0424
EmailAddress: [email protected]
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