Session 10
General Provisions Update: Changes
made by the HERA
Carney McCullough
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Student Eligibility
• Independent Student
• Repayment of Fraudulently Obtained Funds
• Drugs
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Independent Student
Individuals who are currently serving on active duty in the U.S. Armed Forces for purposes other than training are now considered to be independent students.
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Independent Student, cont’d.
• Includes applicants who have been called to
Federal active duty for purposes other than
training from the National Guard or Ready
Reserves.
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Independent Student, cont’d.
• For 2006-07 – Dependency Override
• For 2007-08 and beyond – FAFSA
• Student’s self certification is sufficient
documentation.
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Repayment of Fraudulently Obtained Funds
• A student who has been convicted of, or pled nolo
contendere or guilty to, a crime involving fraud in
obtaining Title IV aid must have completely
repaid the fraudulently obtained funds before
regaining eligibility for Title IV aid.
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School responsibility
• Don’t have to collect certification from each
student
• Handle when become aware of the situation
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Drug Offenses
• Student is ineligible for Title IV aid only if the
conviction for a Federal or State offense involving
the possession or sale of a controlled substance is
for conduct that occurred during a period of
enrollment for which the student was receiving
Title IV aid.
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Drug Offenses, cont’d.
• Limits the timeframe
• Does not change the period of ineligibility
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Drug Offenses, cont’d.
• For 2006-07
– Beginning 6/30/06, FAFSA on the Web has a revised
drug conviction question and worksheet
– Around 6/30/06, ED sent a special notice to applicants
with total or limited ineligibility so they can determine
if their response should be changed
– Schools may, but are not required to identify applicants
whose eligibility may have been restricted because of
their response to the drug conviction question
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Drug Offenses, cont’d.
• For 2007-08 and beyond
– FAFSA and worksheet will reflect the new
provisions.
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Need Analysis
• Cost of Attendance (COA)
• Estimated Financial Assistance (EFA)
• Expected Family Contribution (EFC)
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Cost of Attendance (COA)
• An institution may exclude from both COA &
EFA any assistance provided by a State and
designated by the State to offset a specific
component of COA
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Cost of Attendance, cont’d.
• An institution may choose to include room and
board in the COA for a less-than-half-time student
• Up to 3 semesters (or equivalent) with no more
than 2 semesters being consecutive
• Applies on an institution by institution basis
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Cost of Attendance, cont’d.
• An institution may include in a student’s COA the
one-time cost of obtaining a first professional
license or certificate
• May only be provided one time per student
• Must be for direct costs for obtaining 1st license
or certification
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Cost of Attendance, cont’d.
• Allowable direct costs include licensing exam fees
and costs of applying for and obtaining the license
• Does not include costs associated with preparing
for an exam unless part of eligible program
• Costs must be incurred while student is enrolled
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Estimated Financial Assistance (EFA)
• Revised definitions of EFA and Resources
• Renamed “resources” as EFA for campus-based
programs
• Included ACG and National SMART Grants and
Chapter 1607, Reserve Education Assistance
Program benefits
• Standardized definitions
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EFC – Dependent Students
• IPA
– Increased income protection allowance to
$3,000 for the 2007-08 award year
– The $3,000 IPA will be indexed for inflation
beginning with the 2008-09 award year
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EFC – Dependent Students, cont’d.
• Contribution from assets
– Assessment rate for contribution from assets is
reduced to 20%
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EFC – Independent Students Without Dependents (other than a spouse)
• IPA
– Increased income protection allowance
• Single students and married with spouse in college
to $6,050
• Married with spouse not in college to $9,700
– These new IPAs will be indexed for inflation
beginning with the 2008-09 award year
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EFC – Independent Students Without Dependents (other than a spouse), cont’d.
• Contribution from assets
– Assessment rate for contribution from assets is
reduced to 20%
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EFC – Independent Students With Dependents (other than a spouse)
• Contribution from assets
– Assessment rate for contribution from assets is
reduced to 7%
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EFC – Treatment of Qualified Education Benefits
• The term “qualified education benefits” includes
– Coverdell Education Savings accounts
– Prepaid tuition plans offered by a State
– Qualified tuition programs (529 prepaid tuition
plans and 529 savings plans)
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EFC – Treatment of Qualified Education Benefits, cont’d.
• Makes the treatment consistent in need analysis
• Are not treated as an adjustment to COA or as
estimated financial assistance in packaging
• Treated as assets of the owner of the plan unless
owned by dependent student
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EFC – Treatment of Qualified Education Benefits, cont’d.
• If owned by dependent student, not counted
• If plan owned by someone whose information is
not included on the FAFSA, not counted
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EFC – Treatment of Qualified Education Benefits, cont’d.
• Value of asset reported –
– For savings plans or savings accounts, the balance of the account on the date the FAFSA is signed.
– For prepaid tuition plans, the “refund” value of any tuition credits or certificates purchased. It is the amount the owner of the plan would receive if the account is liquidated. Available from plan administrator.
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EFC – Treatment of Qualified Education Benefits, cont’d.
• Value of all plans owned by the parent of
dependent applicant must be reported (such as
plans for the applicants siblings).
• Value of all plans owned by independent student
(and spouse) must be reported (such as plans for
children).
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EFC – Treatment of Qualified Education Benefits, cont’d.
• For 2006-07, if institution is aware that parents of dependent student or an independent student (or spouse) own a qualified education benefit, need to ensure that the value is included as an asset in the student’s EFC calculation. If institution has treated prepaid tuition plans as adjustments to COA or as EFA in packaging, must reverse those amounts and modify package accordingly.
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EFC – Means-Tested Federal Benefit Program
• May qualify if, in addition to meeting the relevant
income criteria, the student (or spouse) or
dependent student’s parent(s) received benefits
from one of the following means-tested Federal
benefit programs –
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EFC – Means-Tested Federal Benefit Program, cont’d.
– Supplemental security income (SSI) program
– Free and reduced price school lunch program
– Temporary assistance for needy families
(TANF)
– Special supplemental nutrition program for
women, infants, and children (WIC)
– Food Stamps
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EFC – Means-Tested Federal Benefit Program, cont’d.
• Receipt by anyone included in the household size
• Must be received in base year (may use
professional judgment to consider receipt after end
of base year)
• No required documentation – self-certification is
sufficient
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EFC – Means-Tested Federal Benefit Program, cont’d.
• Alternative to the tax return filing standard
– For 2006-07, if institution is aware that the student (or spouse) or dependent student’s parent(s) received benefits from a means-tested Federal benefit program, the institution must submit a work-around correction – “Correct” to “yes” the FAFSA question relating to eligibility to file a 1040A or 1040EZ (questions #34 and #72)
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EFC – Simplified Needs Test (SNT) and Auto Zero – Type of Tax Return
• Only the type of tax return filed by a dependent
student’s parents is considered for SNT and auto-
zero EFC calculations
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EFC – Simplified Needs Test (SNT) and Auto Zero – Type of Tax Return, cont’d.
• For 2006-07
– Modified our systems. All CPS transactions with a process date of May 24, 2006 or later used the revised criteria
– Reprocessed earlier applicants who met income criteria but not tax filing criteria of dependent student. Sent system-generated ISIRs to institutions
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EFC – Maximum Income Amount for Auto Zero EFC
• Raised maximum AGI to $20,000
• For dependent student, AGI of parents is used
• For independent students with dependents other
than a spouse, AGI of student and spouse is used
• Auto Zero EFC calculation is not available to an
independent student without dependents other than
a spouse
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EFC – Maximum Income Amount for Auto Zero EFC, cont’d.
• For 2006-07
– As of May 24, 2006, CPS began using new
income level when determining eligibility for
auto zero.
– Reprocessed earlier applicants who now are
eligible based on the increased income
threshold. Sent system-generated ISIRs to
institutions.
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EFC – Treatment of Small Business Assets
• Excludes from assets the net value of a family-
owned and controlled small business with not
more than 100 full-time or full-time equivalent
employees.
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EFC – Treatment of Small Business Assets, cont’d.
• For 2006-07, if the institution becomes aware that
a student or dependent student’s parents reported a
family-owned small business as an asset on the
FAFSA, it should assist the student in correcting
the net worth of investments fields (FAFSA
Questions #45 and #83).
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EFC – Updated Tables
• Income protection allowances are increased
annually based on inflation.
• For 2007-08, the Secretary’s estimate for inflation
is 2.8%.
• Under HERA, for 2007-08, and only for
independent students with dependents other than a
spouse, the IPAs will be increased 5%.
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EFC – Verification of Income Data
• Clarifies that the data ED may verify with IRS is
limited to the taxpayer ID, AGI, and tax filing
status reported on the FAFSA
• Authority not implemented at this time – will only
be implemented when an IRS match is authorized
under the Internal Revenue Code.
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Institutional Eligibility and Participation
• Distance Education
• Program Eligibility
• Academic Year Definition
• Return of Title IV funds
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Distance Education – Modification of the 50% Rules
• Prior to HERA, institutions that offered over 50%
of their courses via correspondence (or through a
combination of telecommunications and
correspondence) or enrolled 50% or more of their
students in such courses were ineligible to
participate in the Title IV programs.
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Distance Education – Modification of the 50% Rules, cont’d.
• Under HERA, courses offered by
telecommunications are not considered
correspondence and students enrolled in
telecommunications courses are not considered
correspondence students.
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Distance Education – Modification of the 50% Rules, cont’d.
• August 9, 2006 regulations
– New definition of telecommunications course –
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Telecommunications Course
A course offered principally through the use of one of
a combination of technologies including television,
audio, or computer transmission through open
broadcast, closed circuit, cable, microwave, or satellite;
audio conferencing, computer conferencing, or video
cassettes or discs to deliver instruction to students who
are separated from the instructor and to support regular
and substantive interaction between these
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Telecommunications Course, cont’d.
students and the instructor, either synchronously or
asynchronously. The term does not include a
course that is delivered using video cassettes or disc
recordings unless that course is delivered to
students physically attending classes at the
institution providing the course during the same
award year. If the course does not qualify as a
telecommunications course, it is considered to be a
correspondence course.
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Distance Education – Modification of the 50% Rules, cont’d.
• The 50% limits continue to be in effect for
correspondence courses and students
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Distance Education – Programs Offered in Whole or Part Via Telecommunications
• Eligible if –
– Programs are otherwise eligible
– Offered by a domestic institution accredited by
recognized agency that has distance education in its
scope of recognition
– Institution has been evaluated by the accrediting agency
and been determined to have the capability to
effectively deliver distance education programs
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Distance Education – Programs Offered in Whole or Part Via Telecommunications
• Programs offered by foreign schools through
distance education are not eligible programs.
However, participating foreign schools may use
telecommunications technology to supplement and
support instruction.
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Distance Education – Programs Offered in Whole or Part Via Telecommunications
• Students in short-term certificate programs of less
than one year offered by telecommunications are
now eligible for Title IV aid.
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Distance Education – Accrediting Agency Scope of Recognition
• Sent Dear Colleague letter in August 2006 to
institutions that rely, for Title IV eligibility, on an
accrediting agency that does not have distance in
its scope of recognition
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Distance Education – Accrediting Agency Scope of Recognition, cont’d.
• Posted informational copy on IFAP
• Actions that the institution may need to take if it
offers distance education
• Institutions that did not receive the letter do not
need to take action
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Program Eligibility – Direct Assessment Programs
New type of eligible program- instructional
program that uses direct assessment of student
learning or recognizes the direct assessment of
student learning by others, rather than credit or
clock hours.
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Program Eligibility – Direct Assessment Programs, cont’d.
• Assessment consistent with accreditation
• Merely giving credit for direct assessment does
not constitute instruction.
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Program Eligibility – Direct Assessment Programs, cont’d.
Direct assessment of student learning means a measure by
the institution of what a student knows and can do in terms
of the body of knowledge making up the education program.
These measures provide evidence that a student has
command of a specific subject, content area, or skill or that
the student demonstrates a specific quality such as
creativity, analysis or synthesis associated with the subject
matter of the program.
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Program Eligibility – Direct Assessment Programs, cont’d.
• Examples of direct measures include –
– Papers
– Examinations
– Presentations
– Performances, and
– Portfolios
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Program Eligibility – Direct Assessment Programs, cont’d.
• Have to determine equivalency with credit or
clock hours to demonstrate compliance with
regulatory requirements in the following areas –
– Academic year
– Payment period
– Week of instructional time
– Enrollment status (Full-time,half-time, ¾ time)
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Program Eligibility – Direct Assessment Programs, cont’d.
• Provide information to the Secretary including –
– The educational program and field of study
– How the assessment of learning is conducted
– How the program is structured
– How the institution assists students in gaining
knowledge to pass the assessments
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Program Eligibility – Direct Assessment Programs, cont’d.
– Equivalency in terms of credit or clock hours
– Methodology used to determine equivalency
– Documentation from the accrediting agency
– Any other information needed
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Program Eligibility – Direct Assessment Programs, cont’d.
• ED will determine initial eligibility for each program
• Also must meet other eligible program requirements in
668.8
• Direct assessment programs at foreign schools are not
eligible
• A direct assessment program may use learning resources
provided by other entities without regard to the contracting
out limits in 668.5
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Program Eligibility – Direct Assessment Programs, cont’d.
• Title IV funds may only be used for learning
resulting from instruction provided or overseen by
the institution – not for part of the program the
student demonstrated mastery of prior to
enrollment or tests that are not associated with
education activities overseen by the institution.
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Program Eligibility – Direct Assessment Programs, cont’d.
• Title IV funds may not be used for remedial
coursework (668.20) or for preparatory
coursework or teacher certification programs
(668.32(a)(1)(ii)) offered by direct assessment.
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Academic Year Definition
• A minimum of –
– 30 weeks of instructional time for a credit hour
program, and
– 26 weeks of instructional time for a clock hour
program; and
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Academic Year Definition, cont’d.
• For an undergraduate program, at least –
– 24 semester or trimester credit hours, or
– 36 quarter credit hours, or
– 900 clock hours.
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Return of Title IV Aid
• HERA modifications –
– Completion of 60% of the period (clock hour
programs)
– Grant overpayment requirements
– Leaves of absence
– Post-withdrawal disbursement counseling
– Return of funds within 45 days
– Use of scheduled clock hours
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Thank you.
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• Fax: (202) 502-7874
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