Federal Student AidEverything FSA and the Kitchen Sink

FACA - What You Need to Know

• It seems like we make it up as we go

• We don’t, but Congress and the DOE do

Financial Aid Coordinators Association

• FACA is a committed group

• FACA is not a group that should be committed

Where we go for help

• Our Bible is the FSA Handbook, • It is released with corrections and updates every year

• Our Web guru is Information for Fin Aid Professionals (IFAP)

• Our daily news is delivered through Dear Colleague letters and Electronic Announcements• They arrive via our SAIG mailbox and IFAP@ed.gov list serve

FACA

Our sanity check is the FACA email group

• We combine lots of old experience with lots of new energy

Thanks for your support

• Remember – New Fin Aid people are required to attend training

• Two classes – Intro and Fundamentals of FSA

• Chicago offers free training classes monthly (register at fsatraining.info)

• Online training also available at http://fsatraining.info/

Maybe we can do more together …..

• FSA for Financial Aid Professionals – Atlanta 11/29 - 12/2, 2016

• NASFAA – National Assn. of Student FAA– Washington DC

7/10 – 7/13, 2016

• MASFAA – Midwest Assn. of Student FAA –Kansas City, MO

10/2 – 10/5, 2016

• OASFAA – Ohio Assn. of Student FAA – Aurora OH 5/4 - 5/6, 2016

• Fundamentals of FSA for Clock Hour Only – Philadelphia 6/6 – 6/10, 2016

Financial Aid Conferences/Training Dates

Books, Supplies in Tuition & Fees

Allowed if:

1. School has arrangement with book publisher or other entity

2. Books/supplies available to students for prices below competitive rates

3. Provides a way for students to obtain the books and supplies by the seventh day of the payment period,

AND

4. Has a policy permitting students to opt out

Books, Supplies in Tuition & Fees

Also allowed in Tuition & Fees if:

1. Books and supplies are not available elsewhere or accessible by students from sources other than those provided or authorized by the school, OR

2. School documents that there is a compelling health of safety reason

Books, Supplies in Tuition & Fees

Deadline for compliance – July 1, 2016

Associated considerations:

• Per DOE – Schools don’t have to offer piecemeal shopping; Students won’t purchase what they want from the school and buy the remaining items elsewhere

• Schools already have textbook disclosure requirements;We will have to publish ISBN for required textbooks and supplemental materials (and retail price information?)

The Rest of the Story - Agenda

• The Basics of Title IV Funding (and Verification)

• School Staffing and Fiduciary Responsibilities

• FSA Funding - Software and Systems

• Disbursing and Applying Funds

• Policies and Reporting

The Basics

• Pell Grants

• Direct Loans

• Counseling

• Repayment

• Default

• Verification

Federal Pell Grants

• Students do not repay grants

• Amount unaffected by dependency status

• $5,815 to $626 in 2016-17

• No grants for Bachelor’s degree and beyond

• Lifetime max – 12 semesters of awards• Tracked in NSLDS

• Three loan types:• Subsidized

• Unsubsidized

• PLUS (for parents of dependent students)

• 10 year repayment at fixed interest rate

• 6 mo. grace period after graduation (except PLUS)

Student’s Loan Requirements• Current FAFSA

• Master Promissory Note

• Entrance Counseling quiz (prior to program)

• Exit Counseling quiz (before program ends)

• Loan application for PLUS loan

School’s Loan Requirements• Ensure student eligibility

• Review pushed and updated ISIRs

• Alert student of each loan disbursement

• Check SAP policy is met after initial disbursement

• Promote repayment and financial literacy

Loan Rates and Fees• Interest rate – Fixed for life of loan• Determined each Spring for upcoming year

• Based on financial market bonds

• Changes July 1

• Ranged from 6.8% to 3.4% from 2006 thru 2015

• Origination fee

• Changes on October 1 for loans disbursed for the first time after that date

Direct Subsidized Loans• 4.29% interest rate, 1.068% origination fee

• DOE pays interest during school

• No payments required during school

• No credit check

• Lifetime maximum $23,000

• Maximum eligibility limited to 150% of published length of your current program• Previous enrollment can limit our student’s Sub eligibility

• Must have at least one year of eligibility left to receive new loan

Direct Unsubsidized Loans

• 4.29% interest rate, 1.068% origination fee

• DOE doesn’t pay interest during school

• No payments required during school

• No credit check

• Lifetime maximum - $34k for Independent

$8k for Dependent

Parent PLUS Loans

• For Dependent student’s parents only

• Higher interest rate, 6.84%; higher fee, 4.272%

• 3 requirements• Credit check, MPN, loan application

• Loan limit is Cost of Attendance• COA is more than tuition + books + fees

• If declined, student can borrow more Unsub

Loan Counseling

• Entrance Counseling – Online or as school activity• First-time borrowers – must be prior to first disbursement

• School must document that requirement has been met

• Individually or in a group

• Electronically or on paper

• Exit Counseling - Prior to graduation or upon withdrawal

Direct Loans Interest rate 4.29%

Loan Amount Months of Payments Payment Amount Total Payments

$1,000 21 $50.00 $1,039

$2,000 44 $50.00 $2,162

$3,000 68 $50.00 $3,383

$3,500 81 $50.00 $4,035

$4,000 95 $50.00 $4,719

$5,000 120 $51.31 $6,158

$6,000 120 $61.58 $7,389

$7,000 120 $71.84 $8,621

$8,000 120 $82.10 $9,852

$9,000 120 $92.37 $11,084

$9,500 120 $97.50 $11,700

Standard Plan Payments

Income Related Repayment Plans

• Income-Contingent (ICR)

• Income-Based (IBR)

• Pay-As-You-Earn (PAYE)

• Revised PAYE• Payments between 10%-15% of discretionary income

• Offer loan forgiveness after 20 or 25 years

• Eliminate 3 years of interest on Sub loans

Loan Statistics 2016 1st Q*• 42 million student borrowers

• $1.2 Trillion is owed

• $120 Billion is in Default

• 8 million borrowers are in Default• Default occurs when payments are 270 days in arrears

• Most common form of debt, 18-24 yr. olds

* From https://studentaid.ed.gov/sa/about/data-center/student/portfolio

Rates

• Draft Default report in Feb., Final report in Sept.

• Based on three year cohort now

• National rate for 2012 cohort was 11.8%

• Penalties – Loss of Title IV eligibility: • 3 years above 30% rate

• 1 year above 40%

Management Plan

• Recommended for every school

• Required of new participants in loan programs

• Required if there is a change in ownership

• Required if Default rate equals 30% • Identify factors causing defaults exceeding 30%• Establish measurable objectives• Specify actions

Visit http://ifap.ed.gov/DefaultManagement/DefaultManagement.html

FAFSA Verification

• School must verify FSA-selected FAFSAs

• School must report completed Verifications in NSLDS

• School can self-select FAFSAs for conflicting data

• Students must:• Complete a Verification worksheet at Student Services

• Provide IRS tax transcript or use IRS Data Retrieval Tool to correct FAFSA

• Provide other docs, as needed (child support, SNAP benefits, etc.)

Verification Policy

School must have written policies about:

• Time period for students to submit documentation

• Consequences for failing to submit in time

• Method for notifying students of change to EFC and Title IV aid

• Procedures you or students will follow to correct FAFSA data

• Procedure for referring a student to the Office of Inspector General

Incomplete FAFSA Verification

• Can originate but not disburse Sub loans

• Can disburse first Pell

• Can disburse first Unsub payment on case-by-case basis if you believe FAFSA info is correct

• Cannot disburse second Pell or Unsub or first Sub until Verification is complete

*See Application and Verification Guide, Interim Disbursements

2015-16 Verification Items

V1 – Standard Group

V1 tax filers must verify:• Adjusted gross income• US income taxes• Untaxed IRA distributions• Untaxed pension distributions• IRA deductions & payments• Tax-exempt interest• Education credits• Household size• Number in college• SNAP benefits• Child support paidV1 Non-tax filers must verify:• Income earned from work• Household size• Number in college• Child support paid

V3 - Child Support Paid

• Child support paid

V4 - Custom

• High School completion

• SNAP benefits

• Child support paid

V5 – Aggregate

• All V1 Standard items

• High School completion

V6 – Household Resources• All V1 Standard items• Tax-deferred pension &

retirement payments• Child support received• Housing, food, & other living

expenses paid to clergy, military• Veteran’s non-education

benefits• Other untaxed income• Money received or paid on

applicant’s behalf• Resources or benefits not

appearing on the FAFSA, such as in-kind support from a relative or government agency

School Responsibilities

• Staffing

• Fiduciary

• Checks and Balances

• Program Reviews and Audits

• Bank Accounts

• Accounting and Financial Audits

Staffing Requirements*

• The FAA must be supported by an ADEQUATE number of professional and clerical personnel

• ADEQUATE depends on:• # of students aided

• # and types of programs the school has

• # of applicants evaluated and processed

• amount of funds administered

• The school’s financial aid delivery system

* From Volume 2 of Federal Student Aid Handbook covering School Eligibility

Staffing Requirements 2

• Who knows what ADEQUATE means?

• What may be adequate at one school may be insufficient at another.

• DOE determines adequate staffing on a case-by-case basis based on:• Program reviews

• Audits

• Data on the school’s PPA application

Fiduciary Responsibilities

• Funds received by a school are held in trust for student beneficiaries. The most important trustee duty is loyalty

• Trustees cannot benefit from or use FSA funds for any other purpose, or as collateral

• Funds received for administrative expenses are exempt from this rule

• Allowable expenses generally apply to Federal Work Study, Perkins Loans, & FSEOG funds

Fiduciary Responsibilities 2

A school must:

• safeguard FSA funds

• ensure FSA funds are only used for intended purposes

• act on the student’s behalf to repay a student’s FSA education loan debt when the school is unable to pay a credit balance directly to the student

• return to the Department any FSA funds that cannot be used as intended

Checks and Balances*

• Schools must provide an adequate system of internal checks and balances

• At minimum, schools must separate:• Authorizations of payments (Fin Aid)

• Disbursements or delivering of funds (Treasurer or Bursar)

• 1 person or 1 office CANNOT do both functions

* From Volume 2 of FSA Handbook, Ch. 3 covering School Eligibility

Checks and Balances 2*

• Authorizing payments • Set amounts and disbursement dates

• Provide data to school’s receivables/payables?

• Upload to COD

• Disbursing or delivering funds• Draw down from G5

• Apply to student account to pay credit balance

* From Volume 2 of FSA Handbook, Ch. 3 covering School Eligibility

Checks and Balances 3*

• School and Staff limitations DON’T matter

• 2 functions can’t be done by: • 2 members of the same family

• 2 people who exercise substantial control over school

• 1 person who can change computer data that affects authorization AND disbursement

* From Volume 2 of FSA Handbook, Ch. 3 covering School Eligibility

Program Reviews and Audits• 2014 DOE hired 60 new reviewers

• Almost 340 final reviews published in 2015*

• Institutional eligibility

• Financial responsibility

• Administrative responsibility

• Clery Act compliance

*Final Program Reviews at https://studentaid.ed.gov/sa/about/data-center/school

Program Reviews and Audits16 final reports completed in Ohio in 2015

• Assesses payment of liabilities for performance errors

• Identifies actions to improve

• Program Review Guide available on IFAP (2009)

• Blog – Managing a DOE Program Review www.Thompson Coburn .com

FSA Funding

• Fed Student Aid Systems and Software

• Advanced Payment Method

• Applying Funds and Disbursement Dates

• Reconciliation

• Refunds

FSA Systems & Software

• SAIG – Student Aid Internet Gateway message system

• EDConnect - creates secure link to SAIG

• COD - web-based FSA processing system

• EDExpress – DB software• for creating Loans & Grants and storing ISIRs

• G5 web-based DOE fund mgmt. system• request payments, adjust drawdowns, and return cash

EDExpress – Dbase where FAA creates Grant and Loan

data using student demographics from FAFSA

(EdExpress receives FAFSA-computed

student aid reports)

EDConnect/SAIG– FAA vehicle for transmitting EDExpress

data to SAIG mailbox

(Creates secure pipeline between school and SAIG

Common Origination & Disbursement (COD)

web site

(Disbursement data flows automatically to G5 – Dept of Ed

Grant Mgmt system)

G5 – DOE grant mgmt. system

Someone OTHER than the FAA pulls funds into school’s

federal bank account

(Funds in G5 = amount of cash in COD Accepted & Posted Disbursements )

School applies G5 amount to students accounts to pay

institutional costs and create credit balances

NSLDS receives loan and grant disbursement data

(Loan servicer assigned; school updates student

contact and program enrollment data)

G5 & Advanced Payment Method• Direct Loan

• School’s initial amount authorized by 7/1

• Based on prior year’s posted disbursements

• Authorization creates G5 Current Funding Level

• Pell• No initial authorization amount

• Limited to immediate need

• Time Frame• Requested funds cannot exceed funds needed for next 3

days of disbursements

Applying and Disbursing Funds

• Disbursement date

• Credit Balance

• Allowable Charges

• 3 Day Rule

• 14 Day Rule

• Reconciliation

Disbursement Date 3 Day Rule

• Disburse from bank account to student account as soon as administratively feasible

• But no later than 3 business days following date school receives funds

• 3 day period begins date funds arrive in bank account

Monday Tuesday Wednesday Thursday Friday

$$$ Arrive!!! Apply $$$ or Apply $$$ or Apply $$$ TOO LATE!!!

Credit Balances

• Occurs when FSA funds credited to student account exceeds school’s “allowable charges”

• Not a refund

• Can meet 14 day requirement by alerting student that funds are available

14 Day Credit Balance Rule• School must pay credit balance ASAP or within 14 days

unless student permits holding funds

• School complies by notifying student within 14 days that funds can be picked up

• Student must be able to leave with payment

• School can hold funds for pickup for 21 days after notifying student

• After 21 days, funds must be mailed to student, transferred electronically, or returned to FSA

• Must pay by end of loan period even if school has permission to extend 14 day rule

Excess Cash Includes all funds undisbursed by 3rd business day following the date that school:• Received those funds from DOE; or

• Deposited or transferred funds that were

received into the school’s Federal bank account

for adjustments, cancellations, etc.

(Frowned on by FSA)

7 Day Tolerance Rule for Excess Cash

• Some reasons school CAN hold funds for 7 days:• Student’s enrollment status changes

• Student fails to attend class as scheduled

• Student’s award changes due to Verification

• Funds cannot exceed 1% of amount drawn down the previous year

• Amount over 1% limit must be returned immediately

• Funds remaining after 7 days must be returned immediately

(Frowned on by FSA)

Monthly Reconciliation

• Comparison of in-house financial records and DOE records to resolve discrepancies, i.e.• Fin Aid disbursement with Bus Ofc posting

• G5 disbursement with COD Cash Accepted & Posted

• Provides one proof of fiduciary responsibility

• Reconciliation procedures must be documented• Who, how, and when

• Monthly reconciliation is the minimum

Year End DL Reconciliation

• Final DL account reconciliation for award year

• Completed on COD web site

• Must be done:• ASAP after end of latest loan period, or

• No later than program year close-out • Last day of July following the award year

• Closeout for 2014-15 is 7/31/16

Policies and Reporting

• FERPA

• Drug and Alcohol Counseling

• Title IV Civic Responsibilities

• Policies

• Reporting

FERPA

• Family Educational Rights and Privacy Act of 1974

• Prohibits access and release of education records

• Exceptions:• Parent who claims student as a dependent on taxes

• School officials with legitimate interest

• People designated by student on FERPA release form

Drug/Alcohol Abuse Prevention Counseling

• Annual Information:• Students

• Employees

• Individual Information:• New students or employees upon enrollment or hire

• Campus Based Schools:• Must have drug-free awareness program

IRS 1098-T Forms

Filing Requirements• Reports student cash & loan tuition payments and grant & scholarship receipts

• Send 1098-T for student’s educational expenses by January 30

• Send IRS copy by February 28, or March 31 if reporting electronically

• Software and web-based 1098 programs available

• Some schools use “Accountability” software by IDMS

Constitution Day / Voter Registration

• Annual September 17 Constitution Day Recognition• Students

• Employees

• Voter Registration Requirement

• Must make forms widely available at least 120 days prior to voter registration deadline

Policies

• Everything (almost) you do requires a written policy• DOE says you MUST follow your own policies

Examples:• Admissions • Refund• Verification • Satisfactory Academic Progress • Excused absence• Leave of absence • Copyright ……............and on and on

• TOOL for writing policies: FSA Assessments on ifap.ed.gov

IPEDS Reporting

3 Annual Fall, Winter and Spring surveys covering:

• Institutional Characteristics

• 12 month enrollments

• Completions for previous year

• Financial Aid awarded

• Graduation rates

• School finances (HELP!)

• Current year Fall enrollments

• Human Resources

Gainful Employment

3 Parts to Gainful Employment• Report information about enrolled students in GE programs

• Disclose information to potential/enrolled students in GE programs

• Notify DOE intent to add a new GE program

Gainful Employment Reporting

Report information about GE programs students • Must report annually through NSLDS or SAIG by October 1st • Info used by DOE to measure our GE programs outcomes, includes:

• Student ID data • Private loan debt

• Program CIP Code • Institutional debt

• Credential level • Tuition and Fees

• Student status during reporting period (F/G)

• Length of program in weeks

Gainful Employment Disclosure

• Disclosure requirements• School’s tuition and fees per program

• Other estimated costs* (Cost of Attendance)

• Program’s median amount borrowed

• Program’s Graduation rate

• Program’s Job placement rate

• On time completion

• Occupations by SOC code

* Transportation, Dependent care, Room & Board, etc.

Gainful Employment Disclosure 2

Report information to potential/enrolled students

• DOE provides software template

• Output disclosed on web site• Each program must have it’s own web page

• Web site must be listed on advertising materials

New GE Program Application

At least 90 days prior to program start, submit to DOE:

• Accrediting agency approval

• State authorizing agency approval

• Notice of intent to offer

• Original signature of appropriate official

• Narrative including, but not limited to, how program meets employment market needs, advisory committee or regulatory board input and oversight, and potential employer input

Clery Security Report

Requires written policies and annual security report

• Includes up to 17 multi-faceted security statements and policies on:

• Crime, drugs, violence against women, counseling, etc.

• Timely warning, emergency notification & response testing reports

• Annual notices must be provided to students, prospective students, and employees

• Visit Campus Safety and Security Data Analysis -www.ope.ed/gov/security

Website for:

• Student loan and grant histories

• Required bi-monthly student enrollment updates

• Annual Gainful Employment submittals

• Student Transfer Monitoring updates

• Requesting Reports (24 reports, most not used much)

Net Price Calculator

• Must be posted on school web site

• www.collegecost.ed.gov/netpricecenter.aspx

• Net Price - amount a student pays to attend a single academic year MINUS scholarships and grants

• Prospective students enter information to find out what students paid to attend the selected institution in the previous year

• College Navigator is a free consumer information tool designed to help students, parents, high school counselors, and others get information about over 7000 schools

• National Center for Educational Statistics

• http://nces.ed.gov/collegenavigator/?q=eastland+fairfield&s=all&id=407461

Completion/Graduation Rates

• Notice of Availability• By July 1st

• Must make available to current/prospective students

• Full report due upon request or prior to enrollment

• Must report to Dept. of Ed annually• IPEDS