FAME Frequently Asked Questions & Answers _Q2 2014
Q1: If a school has a policy that requires a student to buy the first textbook on their own, can the school charge a student a 20% surcharge if the student does not buy the first book on their own? That is, the school wants to bill a surcharge if it has to purchase the book for the student and then charge the student’s account ledger and use Title IV Federal Student Aid to pay for it (if the student receives Title IV assistance).
A1: No. That would unfairly be charging an extra fee essentially for Title IV recipients. Under the Program Participation Agreement regulations in 34 CFR 668.14, a school may not charge additional fees to a student to get Title IV aid or because they are getting aid. In addition, for Federal Pell Grant recipients for whom ten days before the beginning of the payment period the school could have disbursed FSA funds to the student and for whom disbursement of those funds would have created an FSA credit balance, the school must provide the books or a way to obtain or purchase the books and supplies within 7 days of the start of the payment period. With that said, however, a school may pass on direct costs it may incur with obtaining a book.
Q2: A student’s Federal Direct Loan was originated and a promissory note was signed, but before the disbursement arrived a second ISIR comes in that indicates the student has a loan that is in default. The second ISIR is dated February 2013. The loan period ended November 2013. The default is resolved January 2014. Is the student eligible for that expired loan period under the late disbursement rules? The student is still in school.
A2: No. The student never regained eligibility during the loan period.
Q3: How do we determine the length of the program that is considered “published” (the term that is used frequently in ED’s 150% Direct Subsidized Loan Limit FAQs) for purposes of measuring the 150% limit? Historically we have only referenced our programs’ length by indicating the “number of credits” in the programs in the catalog, although we did have to report “program lengths” to our accrediting body in months. However, in some of our marketing materials (letters, brochures, etc.) we refer to the shortest possible time frame in which a student may complete the program, e.g., students “can finish their programs in as little as ‘X’ months”. We are concerned that making these statements (the only statements referencing “time” to complete) might be construed as the “published length” of the program, even though it may not be the “normal” completion time, but rather the shortest possible time. Will ED consider the shortest possible time we mention in marketing materials (as referenced above) as the “normal” published length for monitoring the 150% limit rather than the program lengths reported to the accrediting body?
A3: The program length to use is the one as reported to your accrediting body (although not currently “published” in the catalog or admissions materials, etc., based upon this length, but rather based upon the number of credits). To use the program length reported to the accrediting body necessitates that you also ensure that the length you reported fits the program, e.g., an associate’s degree would typically be considered a 2-year length, a baccalaureate program is generally four years, etc. ED’s most recent guidance states that they do not intend for a school to list the quickest possible time in which a student may complete a program, but rather, the normal or regular time it takes a student to complete the program. A school should evaluate the normal time it takes its full-time students to complete their programs. Schools may include in their materials contextual information that may indicate that although students normally take “X” years/months to complete the program, motivated students have been known to complete the program in as little as “Y” years/months. It is important that schools very clearly list the normal published length of programs in weeks, months, or years (as appropriate) in their catalog, along with credits, etc. ED’s 150% Direct Loan Subsidized Limit Q&As MEP #7 and #10 also provide guidance in this topic.
Q4: How long after ED/NCES released the updated Net Price Calculator (NPC) template for 2012-2013 data on January 27, 2014, were schools supposed to have their information updated on their Web site?
A4: ED did not post a specific time frame within which the NPC template had to be updated. The NPC FAQ Web site indicates simply that schools must update their calculators on an annual basis when new data become available. However, informal written guidance from ED states that updating the NPC template within 30 days of the release of the template is reasonable to expect. Therefore, all schools should by now have updated their NPC calculator with the 2012-2013 data contained in the template released on January 27, 2014.
Q5: A student’s Title IV aid has paid his full tuition and also created an excess credit balance on his account. We released the excess balance to the student by check. The student withdrew approximately 40 days after the start of the academic year. After calculating the institutional refund policy, the student still owes a balance for tuition charges as a result of the refund policy.
If the student does not cash the excess credit balance check we mailed to the student, can we simply void/stop payment on the check and apply the funds to the amount still owed for educational charges (tuition/fees, etc.) after the results of the institutional refund policy and the R2T4 calculations are done? Or, would that be considered escheating? Or, rather, would it be considered as more of a “correction” to the charges and funds released to the student instead of escheating since it is still for the same period for which the student was originally enrolled and charged?
If in fact we may cancel the check without it being considered escheating, would we have to re-offer the funds to the student as a post-withdrawal disbursement (PWD)? Or, would the fact that the funds had already been disbursed and credited to the student make it unnecessary to re-offer them to the student again as a PWD?
A5: Since the funds were disbursed, this would fall under the escheating rules. This is not the same as when a credit balance has not been delivered and the student withdraws. If it is close to 240 days since the excess balance funds were released by check to the student and the student does not claim the funds, the regulations say the funds must be returned to the Title IV programs. Of course, if the school can find the student within the 240-day time frame, hopefully the student can use some of the credit balance funds to cover the outstanding costs.
Q6: We put up all of our Gainful Employment disclosure information templates on our Web site on time. But, our Web sites will be changing soon and the links to our individual program sections of the Web sites will change. Once that happens, when students click on the link from the template, it will no longer be valid. When this situation occurs, how does a school go about creating a new template without looking like they were not in compliance on January 31? It is our understanding that the templates are date stamped. We have not been able to figure out a way to edit the content of the template (i.e., change the link/address for where the data is stored) without having to recreate the whole thing again. Are there any solutions for situations like this? Or, if we simply do screen prints or something to show that we had the data disclosed by January 31, even though we will have to recreate the data (re-run the GEDT data) when the new sites are up, will that cover us from a compliance standpoint?
A6: ED’s most recent guidance would indicate that keeping a summary of the changes and the situation, along with the screen prints, are a good idea. ED would most likely just want proof that the school was in compliance by the required time frame. A school would have to contact the GEDT template help desk to find out how it might be able to save or link the old data. The contact information is, by phone, at (855) 359-3697, or by e-mail to email@example.com. Beyond this, ED indicates that if a school has further urgent concern about this scenario from a compliance perspective, the school should contact their regional ED office for additional guidance.
Q7: Can a school change its academic year definition at the beginning of an award year for all students? For example, the 2012-2013 academic year (AY) definition was 1040 clock hours. In 2013-2014 the school changed all students to a 900 clock-hour definition (and adjusted the payment periods based upon the hours paid in 2012-2013). Or, does the school have to start a new definition with a specific cohort start?
A7: Our latest guidance from ED is that their recommendation is to start a new AY definition with a new cohort of students with a specific effective date. Then for a while, the school would run two versions of the program with two different AY definitions until the previous groups all graduate or drop out. Going back and changing the definition can be problematic, e.g., how far back do you go; how do you ensure all students in the same program are treated the same (graduates, withdrawals, currently enrolled, etc.)? And, there may be other issues with adjustments, returns or additional cash draws, etc.
If you say you are going back to January 1, 2014, for instance, but several students have graduated and/or withdrawn you really wouldn’t be able to adjust their programs, loan originations, loan periods, etc. and yet they would have to have the same AY definition as all other students in the same program during the same time period?
ED suggests that a school considering a change in its AY definition should run the details by their ED regional office for a compliance perspective.
Q8: Does ED prohibit a school from implementing a tuition increase during a change of ownership?
A8: The latest information received from ED indicates that there is no such prohibition on tuition increases. However, if current students have a contract to pay one rate, the school must be careful how the change is implemented. For example, it may be that the school would implement the new rate effective for all new students or students who continue after a certain point, etc. All consumer information must also be clear in matters related to tuition charges. Schools are well-advised to contact their ED School Participation Division representative if they have further concerns.
Q9: Will the Central Processing System (CPS) allow a correction to be made to an ISIR if there was a correction already submitted and the school is awaiting receipt of the resultant new ISIR?
A9: No, the CPS will only allow for one correction record (ISIR transaction) at a time. Once the first correction is processed, then another can be submitted. Multiple changes or corrections may be made on the same correction record, but once the record is submitted no further corrections may be made until the reprocessed ISIR is received.
Q10: Our school wants to change our additional location from being a separate location of our main OPEID to being a separate “main campus”. To do so, does that necessitate the campus going without Title IV aid for two years? (This is not a situation of re-designating the additional location to be the main campus, but rather establishing it as a separate main campus.)
A10: When an additional location of a proprietary school wants to go freestanding, yes, they must go without Title IV for two years in order to meet the 2-year rule as a main school. Though very unlikely, if the location has been designated by ED as an “official” BRANCH, any time spent as a BRANCH can also be applied towards the location’s meeting the 2-year rule.