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Since You Asked: Questions & Answers

FAME Frequently Asked Questions & Answers 

Below you will find the frequently asked questions and answers featured in the Q4 2013 edition of FAME’s Inside Report.


Q1:  The 2013-2014 Federal Student Aid Handbook states (page 3-26) that “Schools with cohort default rates of less than 15 percent for each of the three most recent fiscal years for which data are available…” are eligible for the exceptions to some requirements.  It does not specify whether that is using the 3-year cohort default rate (CDR) or 2-year CDR, or a combination of both.  Which rate should be used?

A1:  The regulations state in 34 CFR 685.301(b)(6)(i)(A)(2)(ii) that in years when the school has a 2-year and 3-year CDR calculated where the rate is 15% or lower in each of three years, the institution is eligible for the benefits applicable to low-default rate schools.   The appropriate rate to use is for the 3 most recently completed CDR calculations.  For FY 2011 a school must use the 2-year CDR because there is not a 3-year CDR.  However, in years where you have a 2-year and a 3-year CDR, you can use either year’s CDR.  If one rate is 15% or more and the other calculation is below 15%, the school can use the rate that is below 15% to qualify for the exceptions.  Of course, in September 2014 this will be a non-issue since all sanctions and benefits will be based on the 3-year CDRs.  The benefits available to schools with a CDR less than 15% in the 3 most recently calculated CDRS are granted an exception to the requirements for multiple disbursements in a one-term loan period (for term-based schools), or a loan period of 4 months or less in non term-based schools.  Additionally, the school with such CDRs less than 15% is also exempt from the 30-day disbursement delay for first year first-time borrowers.

Q2:  Is there anything that prohibits a school from allowing a student to take out a student loan if they have already paid their tuition in cash before the school was able to originate a loan for the student?

A2:   No.  Any appropriately enrolled and otherwise eligible student that has need per the Title IV calculations may take out a student loan.  Thus, if the calculation of cost of attendance (COA) minus the expected family contribution [(EFC) when determining eligibility for need based/subsidized aid], less other aid leaves a positive number, the student may borrow a student loan.  It is important to remember that a student’s COA includes costs other than direct institutional charges such as tuition and fees.  Schools may not limit a student’s borrowing to direct institutional charges if the student desires to borrow additional funds to cover other components of the COA (e.g., transportation, rent, food, personal expenses, etc.).

Q3:  In trying to clear an ISIR that was selected for verification, it is noticed that a parent filed an IRS Form 1040 as “head of household” with only one exemption (herself).  Is that possible?

A3:  It “may” be possible for this to be true.  An example is if the student is divorced and has a child living with her, but she cannot claim the child as an exemption for tax purposes due to the divorce decree that allows the other parent to claim the child as an exemption on his taxes (typically due to the other spouse paying child support and thus gets the benefit of claiming the exemption).  So, you may need to get clarification from the school or student (taxpayer).  Did she list her household size on the verification documents as having a child living with her?

See page 13, and pages 17-18, of the IRS Form 1040 instructions at  Those pages of the 1040 instructions list the various tax filing statuses and who can use what status, including in cases that involve children and divorced parents.  See, specifically, the instructions for Line 4 on page 13, and the third paragraph on page 18.  Also, IRS Publication 501 states on page 17:  “Applying this special rule to divorced or separated parents (or parents who live apart).  If a child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child.  However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit.”  (Note:  While financial aid administrators are not expected to be federal income tax filing experts, one can ascertain general guidance from tax publication information.  The preceding response is not intended to be tax or legal advice, but a general statement of our understanding of IRS Form 1040 instructions.)

Q4:  Do all schools now have to list all academic programs on their E-App?

A4:  Yes, all schools must now list all programs, including degree programs.  Section E of the E-App was recently updated to accommodate the listing of the degree programs when the degree level is checked on the first page of Section E.  There are specific places for the school to list Associate’s degree, baccalaureate degree, and master’s degree programs along with the specific program’s information.  Proprietary schools have to list ALL programs.  Public and non-profit institutions only have to list their degree programs if they have a provisional Program Participation Agreement (PPA) that contains the provision (provisional language) that specifically tells them that they must now report and list new degree programs.  Once a public or a non-profit institution comes off of provisional status they no longer have to list or specifically report new degree programs.

Q5:  I have a question about a Pell Grant Unusual Enrollment History (UEH) situation.  As an example, the scenario is one in which the ISIR of a student applying at our school (the “receiving school”) shows that the student has received Pell at five different schools/locations.  The five prior schools listed include 2 schools that have merged with 2 other schools on the list of schools the student attended.  Does the school need academic transcripts from all five schools, or just from the 3 schools that remain open?  And, if the schools are all the same OPEID, but with separate campus/branch locations, does the receiving school need to get 3 separate academic transcripts for each 8-digit OPEID, or only 1 since they are all under the same main 6-digit OPEID?

A5:  Our latest guidance from ED in the case of mergers is that the school remaining open as the active OPEID would be responsible to have the academic records of the school(s) that merged with it, and thus should be able to provide the academic information for the year in question for each campus in question (even though now merged).  Regarding the multiple OPEIDs for a school with multiple locations, each campus location should be able to provide the academic transcripts, but at a minimum, the “main” school location (the root 6-digit OPEID) should be able to obtain and provide the information from the branch locations.  So, in the above scenario, the receiving school will in fact need 5 separate academic transcripts even though some of the schools have merged and some are branch locations of the main OPEID.  (However, in this scenario, it may be possible that all five academic transcripts come from one source, e.g., the main school location or root 6-digit OPEID, depending upon its administrative operational set-up and procedures.)  The issue at hand is for the student to be able to show that they earned academic credit at each school where they received Pell during the 3 years in question for UEH purposes.  Though the schools have merged, when the student received Pell they were separate schools, so ED would expect to see documentation showing the student earned credit at each of the schools.  If the documentation all came from one school now (i.e., all documentation is all from the new parent school as a result of the merger), as long as all of the data was academically valid and accurate, it would be immaterial that it came from one entity now because of the merger process.

Q6:  When a school adds a new academic program and is submitting the program on the E-App, do they include only the classroom hours (i.e., exclude the allowable outside-of-class hours) on the E-App but yet show the credit hours associated with the total program hours which include the allowable outside-of-class hours?

A6:  For a clock hour program, the only hours on the E-App in Section E, #27 are the seat time hours, i.e., the hours that meet the definition of a clock hour in the regulations.

For a credit hour program subject to the clock-to-credit hour conversion formula, the school can include eligible outside-of-class hours in the number of clock hours, but also must add a statement in Section K, #69, listing the seat time hours and outside-of-class hours separately for each applicable program (including the name of the program) and explaining that it has combined the two in the clock hour question for the program in #27.  The outside-of-class hours are NOT clock hours, as these hours do not meet the definition of a clock hour.  But, due to the limitations of ED’s current software, ED asks schools to follow this process as a work-around.  The hope is that ED will eventually have an application form that allows the school to list the clock hours (seat time/supervised hours) separately from the outside-of-class hours.  When that happens, then the process described above should not be necessary.

Q7:  What is the rule about disbursing funds for students in a program that is on the ECAR already but for which the school has received its new letter from the accrediting agency with the credit hours that are applicable, including allowable outside-of-class work?  Do we have to submit that new information now, or can we wait until we otherwise must complete recertification or another E-App update?

A7:  If the number of credit hours approved for Title IV in the program will change as a result of the addition of outside-of-class hours, then the school does need to submit that information to ED.  If the number of credit hours increases and causes the program to go from being less than one year in length to greater than one year in length, or from one to two years, etc., then it should be submitted for approval prior to disbursing aid for the additional credit hours.

Q8:  Can you clarify for me if it is in fact correct that a school must be able to demonstrate that a student’s prior Associate’s degree is acceptable for full credit toward a bachelor’s degree at an institution in order to demonstrate the equivalency of a high school diploma and, thus, Title IV eligibility, if otherwise eligible?  What would be considered acceptable demonstration of “acceptance for full credit toward a bachelor’s degree at another institution”?  Does the student have to provide to his/her new admitting school an official academic evaluation from any bachelor’s degree granting institution that his/her Associate’s degree is acceptable for full credit toward a bachelor’s degree?

A8:  ED’s latest guidance states that if a student has received an Associate’s degree it is assumed to be acceptable towards a bachelor’s degree and is considered to be equivalent to having a high school diploma.  If the school questions the validity of the Associate’s degree they could research further.  In addition, however, there is nothing that prohibits a school from choosing to check and demonstrate specifically that the Associate’s degree is acceptable towards a bachelor’s degree.

Q9:  Is it true that a school can make a late disbursement/post-withdrawal disbursement (PWD) if the school received a valid ISIR with a valid EFC before the student left school, but they were selected for verification and therefore had to make corrections and, as a result, did not receive the new ISIR in time to be within late disbursement rules?

A9:  Yes.  But, they do have to be within the deadlines for verification and PWD/late disbursement.  See the 2013-2014 Federal Student Aid Handbook, pages 5-8 and 5-9.  “If a student provides all documents required for verification after withdrawing but before the verification submission deadline, and in time for the institution to meet the 30-day Return deadline, the institution performs the Return calculation including all Title IV aid for which the student has established eligibility as a result of verification and for which the conditions of a late disbursement had been met prior to the student’s loss of eligibility due to withdrawal. (See Volume 4 and 34 CFR 668.164(g)(2).)”  Note, however, that sometimes it may require a recalculation of the R2T4 due to the changes made in verification, depending upon the timing of everything, e.g., the verification is completed after the 30-day return deadline.  In such cases, “a school must make any post-withdrawal disbursement that results from the new Return calculation as soon as possible but no later than the applicable 180-day late disbursement deadline.”  See page 5-9.



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