Title IV Administration for Clock-Hour Programs

MAFAA

2012 Spring Conference

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Topics

• Title IV foundations• Federal Pell Grant information• Direct Loan information• R2T4

Title IV Foundations for Clock Hour Programs

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Academic Year

• Must be defined by school using statutory guidelines for each academic program– Must use that definition for all students in the same

program– Must use that definition for all Title IV purposes

• Program length may be longer or shorter than the definition of an academic year• Does not always correspond to a school’s

scheduled academic calendar

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Academic Year

• Academic year is used to:– Determine payment periods– Prorate Direct Stafford Loans– Determine eligibility for second scheduled Pell

awards

• Sometimes confused with:– Grade level classification, often set by Registrar– Award year defined by ED

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Clock Hour Academic Year

• Statutory minimum definition for programs that measure progress in clock hours– 900 clock hours– 26 weeks of instructional time– A week is a 7-day period in which there is at least one

day of instruction or exams– Need not correspond to a calendar week

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Academic Year Examples

• 1050 clock hour, 35 week program– Some academic year options

• 900 clock hours, 26 weeks• 900 clock hours, 30 weeks• 1050 clock hours, 35 weeks

• 2000 clock hour, 80 week program– Some academic year options

• 900 clock hours, 26 weeks• 900 clock hours, 36 weeks• 1000 clock hours, 40 weeks

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Clock Hour Enrollment Status

• Minimum full-time standard for undergraduate clock-hour programs is 24 clock hours per week– A student attending 24 hours per week will complete

900 hours in 37.5 weeks– If attending 30 hours per week, will complete 900

hours in 30 weeks– If attending 35 hours per week, will complete 900

hours in 26 weeks

• Half-time is half of full-time (minimum 12 hours)

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Payment Period

• The academic year is divided into payment periods• Payment periods used for:

– Pell Grant calculations and disbursements– Direct Loan disbursements

• Calculation of payment periods varies based on the published length of the program• A change in award years does not change the

defined payment periods

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Payment Period

• For clock-hour programs, the payment period is defined not only in clock hours, but also in weeks of instructional time• A student must successfully complete the clock

hours AND weeks of instructional time in a payment period to progress to the next payment period

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Payment Period – Programs of One Academic Year or Less

• The program is divided into two equal payment periods– CANNOT have more than two payment periods in an

academic year– 1st payment period is the period of time when the

student completes half the number of clock hours and half the weeks of instructional time in the program

– 2nd payment period is the period of time in which the student successfully completes the remainder of the program

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Payment Period Example

• Programs of one academic year in length• Medical Assistant program is 900 clock hours

with 36 weeks of instructional time– Academic year is 900 clock hours and 36 weeks

• 1st payment period = Clock hours 1-450 and 18 weeks elapse

• 2nd payment period = Remainder of program – clock hours 451-900 and remaining 18 weeks

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Payment Period – Program Greater Than One Academic Year

• For the first academic year and any full academic year after that:– First payment period is the period of time when the

student completes half the number of clock hours and half the weeks of instructional time in the academic year

– Second payment period is the period of time in which the student successfully completes the remainder of the academic year

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Payment Period – Program Greater Than One Academic Year

• Example – Nursing program is 1800 hours and 52 weeks, academic year definition is 900 clock hours and 26 weeks– First academic year

• 1st payment period = 450 clock hours & 13 weeks• 2nd payment period = 450 clock hours & 13 weeks

– Second academic year• 1st payment period = 450 clock hours & 13 weeks• 2nd payment period = 450 clock hours & 13 weeks

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Payment Period – Program Greater Than One Academic Year

• If the remainder of a program than is more than half an academic year but less than a full academic year in length– 3rd payment period is half the clock hours and half the

weeks of instructional time remaining in the program– 4th payment period is the time necessary to complete

the remainder of the program

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Payment Period Example

Cosmetology Program• 1500 clock hours and 48 weeks• Academic year is 900 clock hours and 26 weeks

Year 1: 450 hours/13 weeks and 450 hours/13 weeks

Year 2:300 hours/11 weeks and 300 hours/11 weeks

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Payment Period – Program Greater Than One Academic Year

• If the remainder of a program than is less than half an academic year– 3rd payment period is the remainder of the academic

program

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Payment Period Example

Automotive Technology Program• 1330 clock hours and 38 weeks• Academic year is 900 clock hours and 26 weeks

• 1st payment period – hours 1-450 and 13 weeks elapse• 2nd payment period – hours 451-900 and 26 weeks

elapse• 3rd payment period – remainder of program – hours 901

to 1330 and remainder of weeks

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Payment Period Disbursements

• At least one disbursement must be made in each payment period• The full amount due the student for a payment period

should be disbursed to the student before the end of the payment period

• Disbursements must be made to best meet the needs of the student– Institution may not have a practice of delaying

disbursement beyond the 60% point in time to avoid R2T4 calculation

TERM

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Clock Hours and Terms• How does this work with your term

structures?– Rule 1—Ignore the fact that you have

terms!!– Rule 2—Terms do not apply!!– Rule 3—Regardless of terms, track

progression to the next payment period using clock hours and weeks of instruction, not terms!

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Federal Pell Grant Calculations and Requirements

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Annual/Scheduled Pell Award

• The maximum amount a student would receive during a full academic year for a given enrollment status, EFC and COA• The annual award for a student in a clock-hour

program is taken from the full-time payment schedule, even if the student is attending less than full-time– Thus, the annual award will always equal the

scheduled award

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Pell Calculation for Payment Period

Formula 4

Scheduled Award times THE LESSER OF:

Number of clock hours in the payment periodNumber of clock hours in program’s academic year

or

Number of weeks of instructional time in the payment periodNumber of weeks of instructional time in program’s academic year

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Pell Calculation Example 1

• Program less than one academic year– 650 clock hour, 18 week program– Academic year defined as 900 clock hours, 26 weeks– Payment periods defined as 325 clock hours and 9

weeks– Take lesser of 325/900 = .361 or 9/26 = .346 times

the annual award• $5,000 X 9/26 = $1,730.77

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Pell Calculation Example 2

$4,000 X 450 or 13 = $2,000

900 26

First Academic Year

1500 clock hour program over 48 weeksAcademic year definition – 900 clock hours and 26 weeks

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Pell Calculation Example 2

$4,000 X 11 or 300 = 26 900

Second Academic Year

$1,333.33

11/26 = .423270/900 = .333

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Title IV Disbursements

• An institution makes a disbursement of Title IV program funds on the date that the institution credits a student’s account at the school or pays the student directly with – – Funds received from the Department– Institutional funds used in advance of receiving funds

from the Department

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Disbursing by Payment Period

• Student must successfully complete the required clock hours and weeks in a payment period before receiving disbursements for a subsequent payment period• Excused absences may be included when

determining clock hours completed under certain circumstances

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Excused Absences

• Absences must be ones that the student does not have to make up• School must have written policy that permits

excused absences• Number of excused absences may not exceed

the lesser of:– Allowed excused absences per accrediting agency or

state authorizing agency– 10% of the clock hours in the payment period

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Disbursement Reporting to COD

• Report the actual disbursement date and amount– Report as early as 7 days before actual (true) date of

disbursement– Report no later than 30 days of crediting the student’s

account

• Direct Loans – interest begins to accrue on the actual disbursement date reported by the school

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Federal Direct Loan Information

Determining Loan Periods

• Loan period may be the same as the period of enrollment for programs one academic year in length or less– Loan periods may cross award years

• Loans must be disbursed equally by payment period– The loan period determines the payment periods

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Determining Loan Periods

• Maximum loan period– Generally school’s academic year. – Can be the length of program if program longer than

an academic year (for example, program 900 hours over 40 weeks and academic year is 26 weeks)

• Minimum loan period – the lesser of:– The academic year, the student’s program, OR– The remaining portion of the program, OR– The remaining portion of an academic year

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Monitoring Annual Loan Limits

• Borrower-based Academic Year (BBAY)– Must be used for clock-hour and nonterm programs

and – May be used by term-based credit hour programs– Moves with student’s attendance and progression in

program– Student becomes eligible for new annual loan limit

after successful completion of clock hours AND weeks in academic year

Prorating Annual Loan Limits

• Student enrolled in program less than an academic year in length

• Student enrolled in program that is longer than an academic year and is in a final period of study that is less than an academic year

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Prorating Annual Loan Limits

Program less than an academic year

Use lesser of:

Weeks enrolledWeeks in AY

or

Hours enrolledHours in AY

Final period less than an academic year

Use:

Hours enrolledHours in AY

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BBAY – Clock-Hour Program

1200 Clock-Hour/32 Week Program 900 Clock-Hour/26 Week Academic Year

450 hrs/13 wks 450 hrs/13 wks

1st BBAY

$5,500 annual loan limit

*You must prorate annual loan limit for final period less than an academic year

$4,500 x 300 / 900 = $1,500 Sub$2,000 x 300 / 900 = $667 Unsub

300 hrs/6 wks

2nd BBAY

$6,500 annual loan limit*

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Frequency of Annual Loan Limits Example

• Program is 1800 clock hour over 72 weeks• Academic year is defined as 900 clock hours

and 36 weeks• Student completes 900 hours in 30 weeks• Student not eligible for new annual loan limit

until 36 weeks have elapsed– Student will have completed 1100 hours then

• Second loan prorated– 700/900 X $4,500 = $3,500

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Transfer and Program Change

• Transfers in with accepted clock hours and has overlapping loan period from prior school– New loan period is remaining portion of prior school’s

academic year– Eligible for remaining amount of annual loan limit

• Student completes program and begins new programs at same school during academic year– New loan may be originated for remainder of

academic year in first program

Return to Title IV Funds

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Attendance

• Under the new regulations, schools that are required to measure the clock hours that a student completes in a program are considered to be institutions that are required to take attendance for R2T4 purposes– See preamble page 66898 of October 29, 2010

Federal Register

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Required to Take Attendance

• Last date of attendance must be withdrawal date• Date of determination of withdrawal cannot be

more than 14 calendar days after withdrawal date

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Re-entry/Transfer Within 180 Days

• If withdrawn student re-enters same program of study within 180 days, or transfers into new program at any time and at least some hours transfer in– Student begins new payment period upon re-entry or

transfer– Remaining portion of program treated as length of

entire program for awarding Title IV funds

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Transfer Into New Program

• If a student transfers into a new program at the same school she can be considered in the same payment period if:– Continually enrolled– Coursework transferring out of is substantially similar

to coursework in new program– Payment periods are substantially equal in clock

hours and weeks– Little or no changes to institutional charges for

payment period– Clock hours transfer

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Questions??

THANK YOU!