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Since You Asked: Questions & Answers December 20, 2018

Since You Asked: 

Questions & Answers

December 20, 2018

Periodically we are asked questions regarding an interpretation of the laws, regulations, or policies related to the administration of the Title IV Federal Student Aid (FSA) Programs.  In this series we provide questions, and the related answers, generated by our interaction with clients and the U.S. Department of Education (ED). 

Contents by Topic

Institutional Recertification Emergency Contact Info

Valid High School Diploma/Transcript

Citizenship and Third-Step Verification

Cost of Attendance

FAFSA Completion

Verification and Deadlines

Program Acceleration

Satisfactory Academic Progress and Excused Absences

Disbursements of Subsequent Loans

Record Retention

Natural Disasters


Institutional Recertification Emergency Contact Info

Q1:  ED is asking for emergency contact information to be placed in question 69 for recertification of our E-App.  In the past, we just used the owner’s cell phone number.

They now are asking for the President’s and Financial Aid Director’s information.

What information actually needs to be entered for the emergency contact information?


A1:  The most recent document ED distributed with instructions for submitting the Emergency Contact info on the E-App was back in 2009.  It was sent out as an attachment to EDs Electronic Announcement on August 31, 2009, which addressed “Emergency Preparedness.”

You will note that the instructions specify the following information be provided for the emergency contact individual:

  1. Identify the person, title and emergency contact information for each person including the:
  • Personal cell number;
  • Home telephone number; and
  • Personal email address

It is always good practice to complete the E-App as completely and thoroughly as possible to avoid potential delays in processing and approval/re-approval of institutional eligibility.  (FAME does offer institutional eligibility services to assist with completion, submission and tracking of your E-App.  For more information about this service, feel free to contact our sales team via the Client Solution Center.)


Valid High School Diploma/Transcript

Q2:  Our school at the present does not have a specific committee or person assigned to verify our diplomas/transcripts.  We generally receive them from another office who receives the majority of such documents.  With that being said, I’m assuming that this is something that we should now consider having a committee/person to verify the validity of these and also get some policies/procedures in place for it.  I just wanted to find out if we would ever get audited, would they impose fines if we were non-compliant in this area?


A2:  It is usually best practice to have a policy related to verifying the validity of a student’s high school diploma if required for admission (and/or if the student is selected for verification in verification Tracking Groups V4 or V5).  Such a policy would stipulate who has the responsibility for acknowledging the validity of a high school diploma or transcript.

While having a person or committee named to do this is not specifically a Title IV requirement, it all goes back to the concept of “administrative capability.”  The potential for findings comes from when/if an auditor or federal program reviewer were to view a student’s file and observe that the diploma did not appear to be valid (e.g., forged, or from a “diploma mill, etc.”).  If that student had been paid Title IV aid without truly having graduated from a legitimate high school or having another acceptable equivalency, any payments made to that student would be ineligible Title IV payments which the institution would have to return to ED.  While if the student intentionally committed fraud, you would want to notify the Inspector General, the institution may still incur some cost as a result.

And, if the matter was discovered in a program review, it is quite likely that a finding would have been written about the lack of administrative capability in ensuring the institution “admits only students who have a high school diploma or recognized equivalent.”  So, making sure processes are in place to prevent any errors in inadvertently admitting ineligible students is the best practice.  A fine resulting from a program review may result in the institution having to pay up to $27,500 per violation.  (See the 2017-2018 Federal Student Aid Handbook, Volume 2, page 2-212.)


Citizenship and Third-Step Verification

Q3:  Is it correct that we have to provide “written instructions” to students about the new “third step” verification process in affirming citizenship status?


A3:  Yes, it is a requirement of the “Student Rights” ED delineates related to documentation of immigration status.  On page 1-47, of Volume 1 of the 2018-2019 Federal Student Aid Handbook, it is stated that institutions must provide written instructions for every student required to undergo third step verification.  Per the FSA Handbook, the instructions must include:

  • An explanation of the documentation the student must submit as evi­dence of eligible noncitizen status;
  • Your school’s deadline for submitting documentation (which must be at least 30 days from the date your office receives the results of the pri­mary confirmation);
  • Notification that if the student misses the deadline, he may not receive FSA funds for the award period or period of enrollment; and
  • A statement that you won’t decide the student’s eligibility until he has a chance to submit immigration status documents.


Q4:  Is there a requirement for us to contact the Department of Homeland Security (DHS) if we do not receive a response within 20 business days of submitting an eligible noncitizen’s documentation for third step verification through the DHS-SAVE system as indicated in the 2018-2019 FSA Handbook, page 1-44?


A4:  ED has indicated that the wording in the FSA Handbook related to this topic will be updated to indicate that institutions do not need to call DHS if there has been no response within 20 days of documentation submission.  Additionally, if the institution has already made an appropriate determination of the student’s status within 15 business days, there is not a need to return to DHS-SAVE system to determine if there have been further updates.  However, institutions should always ensure that they follow the instructions delineated in the latest DHS-SAVE instructions.  ED’s latest update on these was with the December 6, 2018, Electronic Announcement, in which it announced the updated SAVE Instructions for School Users document (provided as a 40-page attachment to the Electronic Announcement).


Cost of Attendance

Q5:  We have a “change of status” fee that we assess a student when he or she changes his or her enrollment status or program, etc., at our institution.  Is that charge to be considered part of tuition and fees that does not need student permission in order to use Title IV aid to pay for it?  Or, is it a charge (fee) other than the standard “tuition and fees” for which the student must give authorization for us to credit Title IV aid toward it?


A5:  Since the mentioned change of status fee is not assessed to all students in a program, but only to those that change a course or enrollment status in a program, or who change programs, etc., it would be seen as one that is outside the normal “cost of attendance” (COA).  Therefore, it would not be included as part of the standard tuition and fees component.  However, if the student signs an authorization to have his/her Title IV aid cover other allowable charges, any excess Title IV aid could be used to cover those other educational expenses on his/her account.  (See the 2018-2019 FSA Handbook, Volume 3, page 3-34, and Volume 4, page 4-25.)


FAFSA Completion

Q6:  A prospective student came in to meet with us.  She did not file her 2016 taxes because the company she had worked for closed and did not provide her a 1099 or W-2.  She contacted the IRS in the hopes of obtaining a copy from them, but was told they never received anything either.  She does not have pay stubs from that time.  How do we prove income, whether she was required to file, etc. in order to complete the 2018-2019 FAFSA?


A6:  The technical answer for assisting her in getting the FAFSA “completed” is stated in the 2018-2019 FSA Handbook’s “Application and Verification Guide” volume (page AVG-14):  Per the AVG:

“In the rare instance that 2016 tax data is not available yet, best estimates can be used on the application. However, the student is asked to correct this information later when the tax return is filed.”

Similarly, the instructions for those “not” required to file a tax return (and, based upon what information you have shared, this is not the case for this student) state that:

“the student should still report any income earned from work in lines 39–40 (student and spouse) and lines 88–89 (parents).  The W-2 form and other records of work earnings should be used to determine these amounts. (See AVG-16.)

Lastly, the AVG directs that:

If a person did not retain a copy of her 2016 tax information and it cannot be located by the IRS or the relevant government agency, she must submit a signed statement indicating that she did not keep a copy of her tax information as well as documentation from the taxing authority indicating that that information cannot be located.  Also, you must accept for an IRS filer either a copy of Form W–2 for each source of employment income received for 2016 or, if she is self-employed, a signed statement certifying the amount of AGI and taxes paid.  For someone who filed an income tax return with a government of a U.S. territory or commonwealth or a foreign central government, accept a copy of a wage and tax statement or a signed statement certifying the amount of AGI and taxes paid for 2016. (See AVG-88.)

It is important to know that it is a strong likelihood that the application will be selected for verification.

You may want to take the opportunity to educate the prospective student about the importance of resolving the tax matter as it may impact her in other ways in her future, as well.  She may want to contact her personal attorney or Legal Aid Society, etc., for assistance in tracking down the employer to obtain her pay records (at a minimum, copies of her pay stubs, if not the actual W-2s themselves) so she can file her taxes (although late, explaining the extenuating circumstances).  She may also check with whatever the state agency it is that employers have to report earnings to in her state (e.g., State Department of Revenue and Taxation, State Department of Labor, etc.), to see if they have any record of the former employer having reported any earnings data for the individual before going out of business.


Q7:  In the scenario described above, can we make an award offer if the individual completes the FAFSA utilizing “best estimates.”


A7:  From a technical standpoint, as stated in the prior question’s response, she can use estimates to complete the FAFSA.  Since she has not provided any evidence to affirm her claim about the company closing and not receiving W-2s, and the case is all based upon what she said, you or she may request from the state (agency that licenses businesses) confirmation that the business is no longer in existence or doing business, and date of cessation of business.  That would at least give some credence to her story beyond her just telling you the story.

That being said, as previously indicated, there is a strong likelihood that her application would be selected for verification, and she will need to be prepared for that, as will you.  Accordingly, she may want to initiate her 2016 tax filing by completing IRS Form 4852 (“Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.”).  (See the prior Q&A response above about ways she might be able to ascertain the amount of her income.)  When she completes that form, she will need to send it to IRS–along with her appropriate 1040, etc.  (The Form 4852 states that it is to be submitted with an attached 1040.)

Form 4852 is at

While we do not serve as tax attorneys or advisors, submitting Form 4852 would seem to be a good faith effort she could take toward getting herself straightened out from a tax filing standpoint.  But, all of her tax and income or legal details are not known based upon the question asked.  She may want to consult a tax attorney, or tax accountant or advisor.  But, if she submits the Form 4852 with the 1040 to IRS, and she provides you with a copy of her submitted forms, it would provide the school with some documentation to affirm the legitimacy of her story.


Verification and Deadlines

Q8:  Is an incarcerated spouse included in the household size?  They do not have any intention of separating or divorcing.


A8:  Yes, generally speaking.  In most cases, temporary absences or separation due to illness, education, incarceration, military service or business do not equal the spouses being considered as divorced or separated.  Thus, the student should answer the questions with the information that was correct as of the time the FAFSA was completed.

Separated is defined as a choice the couple makes to live apart, or as defined as “separated” by the state.  That is, “a married couple is separated if the couple is considered legally separated by a state, or if the couple is legally married but has chosen to live separate lives, including living in separated households, as though they were not married” (as stated in “Filling Out the FAFSA® Form” online at  See also, the FSA Handbook’s, “Application & Verification Guide 2018-2019,” page AVG-29, and the PDF version of Completing the FAFSA® Form 2018–19, page 14.

Unless the spouse committed the crimes with the intent of being incarcerated so that he/she would be living separately, they are not meeting the definition of separated, i.e., they did not “choose” to live separately, but are forced to.

Finally, in general, including the incarcerated spouse in the household size will generally be to a student’s advantage as well, due to the EFC formula calculations.


Program Acceleration

Q9:  Our institution has a non-term credit hour program of 50 credits and 30 weeks in length.  The academic year definition is the same.  The first disbursement of Title IV aid is not paid until 25 credits are earned and 15 weeks have elapsed.  If a student completes the 50 credits in less than 30 weeks, do we have to do any kind of proration because the student graduated in less than 30 weeks?


A9:  No.  However, if student acceleration in the program continues to be a common occurrence, ED’s School Participation Division team that determines institutional and program eligibility may question the reality of the full program length.  That is, they may ask, is the academic program length defined accurately:  is it really 30 weeks long?


Satisfactory Academic Progress and Excused Absences

Q10:  I know that institutions are able to have a policy that permits students to have excused absences of up to 10% of the scheduled hours in the payment period for clock hour programs if the institution has a written policy defining such, and if the hours do not have to be made up.

My question is, if an institution (which has an excused absence policy) is checking satisfactory academic progress (SAP), should they include excused absences in determining the hours completed for the payment period?  The institution does consider the absences when they determine if the student is eligible to get a subsequent disbursement.


A10:  Yes, excused absence hours are counted in determining the number of hours completed since ED treats excused absences as completed hours that do not have to be made up.  (Note, however, that if the program’s or institution’s accrediting agency, or the state agency that approves the licensing of students has a policy that is stricter, e.g., allows fewer absent hours or no absent hours, that stricter policy must be followed.  For example, in a program that has the exact number of hours required for licensing in the state, the institution would not be able to incorporate a 10% excused absence policy in its attendance policy for the program since all hours are required to be attended to meet licensing requirements.)  See the 2018-2019 FSA Handbook, Volume 3, page 3-19, and 34 CFR 668.4(e).


Disbursements of Subsequent Loans

Q11:  I would appreciate clarification on the concept of “subsequent” disbursement.  For example, a student was enrolled in a clock-hour program last March and had a loan originated and disbursed, but then withdrew in August.  The student resumed enrollment the end of October.  The scenario is a situation where we did not reinstate aid from the prior enrollment when the student was not out of school for more than 180 days before re-enrolling, and we originated a new loan for the new enrollment, scheduled for two disbursements.  The student subsequently withdrew again and the funds arrived after the LDA.

The clarification needed is whether the “first” disbursement of the loan originated for the new enrollment would be considered for a post-withdrawal disbursement (PWD), if otherwise eligible, and after the R2T4 calculation.  It is clear that the “second” (or “subsequent”) disbursement of the second loan would not be considered for a PWD.  The question is, what determines a “second” or “subsequent” disbursement?  In this particular case, the student has a new loan processed, arriving in two disbursements after the LDA.

Would the “first” of the two disbursements be considered potentially eligible for a PWD.  I do not see this particular scenario described in Volume 4 or Volume 5 of the Federal Student Aid Handbook, nor in the regulations.  Where is the definition or example provided that discuss this type of situation?


A11:  In the situation described, you would treat the disbursement that the student was expected to receive following his/her re-enrollment in October as the first disbursement of the loan, and therefore the institution would be permitted to offer a post-withdrawal disbursement of those loan funds to the student if called for after the R2T4 calculation.

The limitations on making a late disbursement in 34 CFR 668.164(j) – which govern whether an institution may ultimately make a post-withdrawal disbursement following an R2T4 calculation – refer to a prohibition on making “a late second or subsequent disbursement of a loan under the Direct Loan program.”  In a plain language reading of that rule, each loan is treated separately.  Therefore, if the institution originated a new Direct Loan following the student’s return to the program, then the first disbursement of that new (second) loan would not be subject to the prohibition on making a late second or subsequent disbursement of a Direct Loan.

It is important to note, however, that the institution should implement appropriate procedures to ensure that ED’s guidance is followed regarding students who withdraw, but who return/re-enroll within 180 days, should have their Title IV aid reinstated as originally awarded prior to withdrawal (rather than originating new Direct Loans).  See the 2018-2019 FSA Handbook, Volume 5, pages 5-31 and 5-38.)


Record Retention

Q12:  Does ED provide any specific guidance on how we are required to store old financial aid files?  I am referring to files for students who are no longer attending our school and have not been enrolled in our program for many years (i.e., non-active files).  Are these files required to be stored in a “fire proof” file cabinet or can they simply be placed into cardboard storage boxes and locked up in a secure file room that is only accessible by specific people with a key?  We have files that are very old and finding storage for them in “fire proof” filing cabinets is becoming very difficult due to lack of space. 


A12:  ED does not provide much specific guidance regarding the mode, method, or location of record retention, other than related to Federal Perkins Loans, for which, paper Perkins Master Promissory Notes and the related repayment schedules are indicated that they should be kept in a locked, fireproof container.  See CFR 674.19(e)(4).  Keep in mind that the most records must be only maintained for three years beyond when the loan is repaid, canceled, or otherwise satisfied.  (Electronic records must also be maintained and accessible during the required record retention periods.)

Beyond that, ED simply states that records are to be maintained “in a systematically organized manner.”  See CFR 668.24(d).  Again, keep in mind the record retention requirements applicable to Federal Student Aid.  In most cases, the length of time for retention is three years after the end of the award year or FISAP submission for the award year, and for Direct Loans, three years from the end of the award year in which the student last attended etc.  The 2017-2018 Federal Student Aid Handbook, Volume 2, Chapter 7, as well as, the 2018-2019 FSA Handbook, Volume 6, Chapter 1, pages 6-31 and 6-32 will be helpful for a more detailed discussion regarding the length of time records are to be retained.

One key point to keep in mind, is that unless you have a real “need” to retain records indefinitely, it can potentially be advantageous to securely shred or otherwise securely eliminate old records when they are beyond the required regulatory record retention requirements.  Ensure that you also confirm knowledge of and compliance with any state or local record retention requirements.  (This is not as likely a concern for private institutions as public institutions that may be under state law record archival requirements, but you should confirm what state/local requirements are, to be sure.)  But, generally speaking, once old records are appropriately disposed of at the appropriate time, it eliminates future potential for liabilities in audits, lawsuits, etc., related to those records.  Again, if there is any concern about if something should be disposed of, do check with legal counsel.  But, generally, if it is past the federal record retention requirements time frame, and the records are not necessary for, or part of an ongoing unresolved audit, program review, investigation, or law suit, it is good to eliminate them.

A thorough reading of CFR 668.24 and 674.19 will reveal the specifics (or lack thereof) of record retention and accessibility requirements.  The basics are as highlighted above.


Natural Disasters

Q13:  Are there any resources available specific to the students who may be affected in California due to the recent wildfires there?  And, is there any other specific guidance applicable to the affected students themselves and the application process, as well as any specific guidance related to institutions helping students who are impacted by the wildfires in California?


A13:  The latest Dear Colleague Letters on the subject of natural disasters are GEN-17-08 and 17-09.  Accordingly, institutions may allow for professional judgment in documented cases, as well as allow for LOAs with the exceptions indicated (e.g., requests may not have to be made in advance, etc.).  An affected institution may also apply special circumstances for SAP, late disbursement considerations, etc.  However, there is no other specific guidance that is in writing that is applicable to the affected students themselves and the application process, nor other specific guidance related to institutions helping students who are impacted by the 2018 wildfires in California.

ED did emphasize at the 2018 Federal Student Aid Conference (General Session #4), in a comment made, that institutions who were affected and/or that are assisting students impacted by major natural disasters should avail themselves of the assistance provided as a result of the Bipartisan Budget Act of 2018.  See the May 3, 2018 Federal Register, and the corrections made to that Federal Register in the May 21, 2018 Federal Register.  (Note that the funds available under this Bipartisan Budget Act of 2018 were specifically related to disasters in 2017, e.g., Hurricanes Harvey and Irma, etc., and the California wildfires of 2017.  To date, we are not aware of any specific written guidance or funding designated specifically for the California wildfires of 2018, or related to the effects of Hurricane Michael of 2018.)  Institutions and/or families affected by one of these natural disasters should not forget to seek assistance, as available, under other agencies such as the Federal Emergency Management Agency (FEMA), etc.

Schools who may be specifically impacted by the natural disasters should reach out to their regional School Participation Team.  (See IFAP at for a listing of regional ED offices’ School Participation Teams’ contact information.)


The material in this “Since You Asked” is presented for informational and educational purposes only and should not be considered to be giving legal advice.

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