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Return of Title IV Funds (With Changes from HERA) Higher Education Reconciliation Act of 2005
(P. L. 109-171)
Brian Kerrigan
Dan Klock
Session 11
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Today’s Agenda
• DCL issues
• Regulation changes from HERA
• R2T4 calculation with HERA changes
• Compliance self-monitoring
• Questions & answers
3
Presentation Objectives
• Bring you up to date on R2T4 changes
• Demonstrate changes in calculation
• Understand that R2T4 non-compliance is a top
finding
• Answer questions
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Dear Colleague Letter (GEN-04-03)
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Dear Colleague Letter (GEN-04-03)
• Title IV credit balance
• Aid that could have been disbursed
• Verification not completed before withdrawal
• No passing grades
• Withdrawal – credit hr, non-term program
• Date of determination of withdrawal for institution
required to take attendance
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Title IV Credit Balances
• Hold credit balance - do R2T4 first
• Credit balance is “Aid Disbursed”
• See if credit balance changes because of R2T4
• Repay grant overpayment on behalf of student
• Release credit balance within 14 days
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Aid That Could Have Been Disbursed
• All aid for period, if late disbursement conditions
met before student withdraws (668.164(g)(2))
• However, if limitations apply, aid may not be paid
to student (668.164(g)(4))
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Conditions for a Late Disbursement(need to be before student withdraws)
• For all aid (except PLUS) – process date for
official EFC on SAR / ISIR
• For FFEL / Direct Loan – loan certified or
originated
• For Perkins / FSEOG – award made
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Limitations on Making Late Disbursement
• No second or subsequent disbursement of FFEL /
DL, unless student completes period
• No FFEL / DL unless student completes 30-day
delay period
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Limitations on Making Late Disbursement
• No Pell Grant without valid SAR / ISIR by
deadlines in Federal Register
• No 2nd pp Pell if 1st pp not completed
• No 2nd pp FFEL / DL if 1st pp not completed
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Verification
• Must complete R2T4 within 45 days
• If verification not completed
– Return interim disbursements of aid
– Only unsubsidized and PLUS loans in R2T4
• If verification completed later – new R2T4
calculation using additional eligible aid
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No Passing Grades
• Institution must have process for determining if
student completed period
• Institution must document completion of period
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Withdrawal from Credit Hour Non-term Program
• Percentage earned is equal to calendar days
completed divided by calendar days in period
• Project calendar days in period if student is in a
self-paced program
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Date of Determination that Student WithdrewFor School Required to Take Attendance
• No later than two weeks after last date of
attendance
• Based on attendance records
• Date of official notification if prior to that
• After end of institution’s absence policy
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HERA
Regulation Changes
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Programs Specified for R2T4
• Perkins
• Direct Loan
• FFEL
• Pell Grant
• Academic Competitiveness Grant
• National SMART Grant
• FSEOG
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Post-withdrawal Disbursement - HERA
• Credit grant for tuition and fees & room and board
(without authorization) and for other charges (with
authorization)
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Post-withdrawal Disbursement - HERA
• Credit loan for tuition and fees & room and board
(without authorization) and for other charges (with
authorization)
– Written notification to the student / parent and
their confirmation must be received before the
loan funds may be credited to the account or
directly disbursed
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Written Notification (within 30 days of date of determination of withdrawal)
• Identifies loan to be credited & grant and loan
available as direct disbursement
• Asks if student / parent wants
– loan credited &
– grant or loan as direct disbursement
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Written Notification (explains)
• Student / parent can accept some / all of aid
• If student / parent declines credit of loan, she may
not receive direct disbursement unless institution
agrees
• Obligation to repay loan
• 14 day (or later) response time
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Written Notification
• Deadline to accept PWD either directly or as
credit to account must be same
• PWD must be disbursed in manner specified by
student / parent within 120 days of date of
determination of withdrawal
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Written Notification
• If response from student / parent is late, institution
may make or not make PWD
• If institution declines to make PWD, it must
inform student / parent
• If there is no response to notification, no loan may
be credited to account & no grant or loan may be
disbursed directly
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Clock Hour Changes
• Scheduled clock hours always used
• Scheduled clock hours as of withdrawal divided
by clock hours in period
• If greater than 60%, student earns 100%
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Clock Hour Changes
• Scheduled clock hours must be:
– established prior to beginning of classes (or
modified before withdrawal date)
– consistent with:
• published materials
• accrediting agency / state
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Grant Overpayment Protection (to amounts student is required to return)
• 50% of amounts disbursed (and that could have
been disbursed)
• $50.00 or less per program (but, not remaining
balances of $50.00 or less)
• Waiver of overpayments for students residing in,
employed in, or attending institutions in declared
disaster areas
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Return of Funds Order
• Loan Programs
• Pell Grant Program
• Academic Competitiveness Grant Program
• National SMART Grant Program
• FSEOG Program
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R2T4 Worksheets/Software
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Step 1:
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Step 1: Student’s Title IV Aid
• All information collected about Title IV aid either
“disbursed” or “could have been disbursed”
• Broken down by Grants and Loans
• This is straight-forward, although the data is
collected as noted on the next slide
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Step 1: Student’s Title IV Aid
• Box E. Total Title IV aid disbursed for the PP or
POE
– Used to determine the amount of PWD or
returned
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Step 1: Student’s Title IV Aid
• Box F. Total Title IV grant aid disbursed + could
have been disbursed for the PP or POE
– Used to determine the TIV grants amount that
is protected under HERA
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Step 1: Student’s Title IV Aid
• Box G. Total of all aid disbursed or could have
been disbursed
– Used to determine the amount of TIV aid
earned
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Step 2: Credit hour
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Step 2: Clock hour
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Step 2: Percentage of TIV Aid Earned
• Credit-hour program - same as pre-HERA
– If % is > 60% = 100% TIV earned
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Step 2: Percentage of TIV Aid Earned
• Clock-hour program
– This becomes a one-step calculation
• Hours scheduled to complete
• Total hours in period (PP or POE)
– If % is > 60% = 100 % TIV earned
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Step 3:
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Step 3: Amount of TIV aid Earned by the Student
• Remains % earned (Box H) X Total of TIV aid
disbursed or could have been disbursed (Box G)
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Step 4:
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Step 4: Total Title IV Aid to be Disbursed or Returned
• PWD or Amount to be Returned
– Remains same as before:
• Amt earned > Amt disb’d = PWD
• Amt earned < Amt disb’d = Amt to be Returned
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Step 5:
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Step 5: Amount of Unearned Title IV Aid Due from the School
• Unearned amount of Title IV aid due from the
school is calculated the same as before
– Lesser of
• Total amount of unearned aid, or
• Institutional charges X % of unearned aid
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Step 6:
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Step 6: Return of Funds by the School
• Return order of TIV aid has changed
– Loans
• Unsubsidized FFEL/DL
• Subsidized FFEL/DL
• Perkins
• FFEL/DL PLUS (Graduate student)
• FFEL/DL PLUS (Parent)
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Step 6: Return of Funds by the School
– Grants
• Pell Grant
• Academic Competitiveness Grant
• National SMART Grant
• FSEOG
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Step 7:
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Step 7: Initial Amount of Unearned TIV Aid Due from the Student
Total amount unearned TIV aid
- Amount school has to repay
Amount student has responsibility to
repay
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Step 8:
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Step 8: Repayment of the Student’s Loans
• Student repays what he has earned plus
what he has not earned that the school does
not repay
Total TIV net loans disbursed
- Amount of TIV loans school repaid
Remaining balance of TIV loans
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Step 8: Repayment of the Student’s Loans
• If the amount of unearned less the amount the
school repaid (Step 7) is greater than the
remaining balance of TIV loans outstanding – go
to Step 9
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Step 9:
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Step 9: Grant Funds to be Returned
Initial amount of unearned aid that the
student has responsibility for (Step 7)
- Amount to be repaid by student on
loans
Initial amount of TIV grants for student
to repay
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Step 9: Grant Funds to be Returned
NEW: Amount of TIV grant protection:
Total of TIV grants disbursed or could
have been disbursed X 50% = the
protected amount
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Step 9: Grant Funds to be Returned
Initial amount of TIV grants for student to
repay
- the protected amount of TIV grants
Amount of TIV grants to be returned by
the student
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Step 10:
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Step 10: Return of Grant Funds by the Student
• Pell Grant
• Academic Competitiveness Grant
• National Smart Grant
• FSEOG
Note that the student is not responsible for returning funds to any program to which the student owes $50.00 or less
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Student A
• Pell Grant - $2025
• Student attended 10%
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Student A• Earned and unearned:
10% X $2,025 = $202.50 amount earned
Amount to be returned:
$2,025 - $202.50 = $1,822.50
Amount school returns:
$1,000 (Inst charges) X 90% (Unearned %) = $900 *
[The lesser of $1,822.50 or $900]
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Student AInitial amount student owes:
$1,822.50 less $900 = $922.50
Amount of TIV grant protection:
$2,025 X 50% = $1,012.50
Amount of TIV grant funds for student to repay
$922.50 less $1,012.50 = $0
(Negative # set to zero)
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Student B
• Pell Grant - $500, SMART - $2,000, FSEOG -
$1,000
• Student attended 10%
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Student B• Earned and unearned:
10% X $3,500 = $350 amount earned
Amount to be returned:
$3,500 - $350 = $3,150
Amount school returns:
$1,000 X 90% = $900 *
[The lesser of $3,150 or $900, so $500 Pell and $400 SMART repaid by inst.)]
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Student BInitial amount student owes:
$ 3,150 less $900 = $2,250
Amount of TIV grant protection:
$3,500 X 50% = $1,750
Amount of TIV grant funds for student to repay
$2,250 less $1,750 = $500
[Since Pell fully repaid, goes to SMART]
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De minimis Amount
Q: Is the $50.00 de minimis amount applicable to the total
amount of grant funds owed or is it program by program?
A: The $50.00 de minimis amount is applicable on a program
by program basis. Therefore, if after the amount that the
school must return, the student owes $50 or less to each
program - Pell, ACG, National SMART, and FSEOG, the
student would not owe a Title IV grant overpayment to any
of these funds
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De minimis Amount
Q: Is the $50.00 de minimis amount also applicable to overpayments of FSEOG and Federal Perkins loans?
A: No. Under the provisions of 34 CFR 673.5(f), an overpayment made by the institution to a student (that is not a remaining balance) of less than $25 is not referred to the Secretary for repayment – it is considered a de minimis amount. When the HERA increased the amount of a de minimis amount of a Return of Title IV Funds grant overpayment to $50 or less, it did not alter Part 673 on overawards of Perkins and FSEOG.
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Post-withdrawal Disbursements
Q: Are the new notification requirements limited to when a
portion of the PWD is from a TIV loan program?
A: No. If the PWD includes any TIV grant funds that will be
directly disbursed to the student, they too must meet the
notification requirements.
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Post-withdrawal DisbursementsQ: What are the notification requirements?
A: 1. The notification must be written
2. Must request confirmation to credit loan funds to the student’s account (also need 34 CFR 668.164 authorization for certain charges for both grants and loans)
3. Must identify the types and amounts of the loan that will be credited to the account; and the types and amounts of loans and grants that will be directly disbursed to the student/borrower
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Post-withdrawal Disbursements 4. Must explain that the student/borrower can decline or reduce any amount of those funds
5. Must establish a deadline for the student/borrower to provide confirmation to the school
6. Explains that if the confirmation of crediting loan funds to the student’s account is not provided, rather that all the loan funds should be directly disbursed to the student/borrower, that the student/borrower may not receive any loan funds as a direct disbursement, unless the school concurs
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Post-withdrawal Disbursements
7. Must explain the obligation to repay
8. The deadline established by the school must be the same for both the confirmation of a direct disbursement and a confirmation to credit loan funds to the student’s account
9. If confirmed, the PWD must be made within 120 days of the date of determination by the school that the student withdrew
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Post-withdrawal Disbursements
10. If the student/borrower provides confirmation after
the deadline, the school may elect not to provide the
PWD, but if the school chooses not to provide the
PWD, it must contact the student/borrower
11. If the student/borrower does not respond, no portion
of the loan may be credited to the student’s account,
nor may any amount to be directly disbursed be
released
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Clock Hour Programs Scheduled HoursQ: Under HERA, the scheduled hours must be those
established prior to the student’s beginning class date. Can
you provide an example of how the school can establish
the scheduled hours?
A: Yes. When the student enrolls, generally, the number
of clock hours would be established as a part of the
student’s enrollment agreement.
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Clock Hour Programs Scheduled HoursQ: Can the established scheduled hours ever be changed
once the student has begun classes?
A: Yes. Except the change cannot be related to or as a
result of the student’s withdrawal.
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50% Grant Protection Q: The statute states that the grant overpayment amount is
the amount that exceeds 50% of the total Title IV grants “received” by the student. Does that include grant amount that could have been received by the student or does it mean only the disbursed amounts?
A: Yes. Amounts “received” generally means the amount of Title IV grants disbursed and those that could have been disbursed for the period for which the calculation is performed.
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Disaster Waiver Q: Under what conditions is the student’s portion of a Title IV
grant overpayment forgiven due to a disaster?
A: Under Public Laws 109-66 and 109-67 a student's Title IV
grant overpayment otherwise due under the Return of Title IV
Aid requirements is waived if the student withdrew because of a
disaster under the following conditions:
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Disaster Waiver
• The student was residing in, employed in, or attending an
institution that is located in an area in which the President
has declared that a major disaster exists;
• The student withdrew because of the impact of the disaster
on the student or the institution; and
• The student's withdrawal occurred within the award year
during which the designation as a major disaster occurred
or during the next succeeding award year.
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Disaster Waiver
• For purposes of this waiver, a "major disaster"
must have been declared by the President in
accordance with the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C.
5170).
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Order of Return
Q: If the amount of Return reduces the Pell Grant to zero and the student has received or is eligible to receive the ACG or SMART Grant, will the student remain eligible for the new grant or must the student repay the new grant because s/he is no longer eligible once the Pell is fully repaid?
A: The student was a recipient of the Pell Grant at the time the ACG/SMART grant was disbursed and otherwise eligible; therefore, the full repayment of the Pell as a result of R2T4 does not make the student ineligible for the new grant.
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LEAP/SLEAP/GEAR-UP SSS Grants Q: When a student withdraws on or after July 1, 2006, and
the student has one or more of these grants, what happens
in the R2T4 calculation?
A: The amount of the grants listed above would not be
included in the Return calculation with withdrawal dates
on or after July 1, 2006.
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ACG/SMART Grants Q: If a student withdraws and was awarded a second year
ACG or SMART grant, but the school did not have the
student’s GPA, may the grant amount be included in the
R2T4 calculation as “aid that could have been disbursed?”
A: No. The school has to have the GPA before either grant
can be included as aid that could have been disbursed.
Note that the school has up to 45 days from the date of
determination to perform the R2T4 calculation.
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Compliance Self-Monitoring
• R2T4 is one of the most common audit findings
– Use our free software
– Ease of use
– Use reports to manage the process and assure
compliance
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Compliance Self-Monitoring
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Compliance Self-Monitoring
• How do I access R2T4OTW?
• It’s Easy!
• Signup via SAIG Enrollment website
– https://www.fsawebenroll.ed.gov/PMEnroll
Note: The R2T4 Web Application when available will be accessed via FAA Access
https://fafsa.ed.gov/faa/faa.htm
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Compliance Self-Monitoring
• CUSTOMER SERVICE
• Software Support
– CPS/WAN Technical Support
• (800) 330-5947
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Compliance Self-Monitoring
• CUSTOMER SERVICE
• Policy
– ED's Customer Support center
• (800) 433-7327
