TFA TOKENS MUST NOT BE SHARED BY MULTIPLE FSA USER IDS

Do people really have to be told that they can’t share TFA tokens? Seems that way. FSA is “reminding” institutions that TFA tokes used for logging into FSA systems and websites must NOT be shared. According to FSA only one authorized user is permitted per token.
Actually FSA notes that “in most cases, a TFA token that has multiple FSA Users IDs assigned to it is not being shared by multiple users but appears to be, either due to the token being inherited by a new employee, an employee changing his or her name, or other more uncommon situations. The Primary DPA should work with us to determine the best solution for these situations and ensure only one authorized user is registered to each TFA token.”
If ED suspects that users are sharing tokens, they’ll email your institution’s Primary Destination Point Administrator and probably make you order more tokens. ED does caution institutions however, stating that if institutions don’t respond they’ll remove access to FSA systems for affected users.

NEXT GEN FSA WEBSITE LAUNCHES

Federal Student Aid’s Next Gen website has launched, and it looks pretty slick. Last month FSA combined StudentAid.gov, StudentLoans.gov, FSAID.ed.gov, and part NSLDS.ed.gov student access into one website – StudentAid.gov. All of the functions found in these websites has been consolidated and with the exception of FSAID and NSLDS which will remain operational in the short term, the old sites redirect to the new one. While this is just the first step in what ED hopes will be a better aid delivery system for students, parents, borrowers and even aid administrators, more functionality will be rolled out in the coming year. Check out the details in this video ED posted on YouTube.

FSA also announced training for Financial Aid professionals to introduce the functions of the new platform – the first in the series shows you how to log in. Check it out but be sure to use a supported browser like Firefox or Safari.

 

AUTOMATIC DISCHARGES COULD MEAN BIG LIABILITIES FOR CLOSED SCHOOLS

Federal Student Aid is getting ready to begin issuing Automatic Closed School Loan Discharge Liabilities to schools that have abruptly closed and displaced students. The rules for automatic closed school discharges were part of the 2016 Borrower Defense To Repayment regulations which ED implemented in December of 2018. Under those regulations FSA will determine which borrowers are eligible and grant discharge of their loans automatically. According to FSA, automatic discharges will be approved if a borrower was enrolled when a school closed or within 120 days of an institution closing, as long as the borrower did not enroll at another Title IV eligible school within three years.
These rules apply to all borrowers who obtained a federal title iv loan after November 1, 2013, including Direct Loan borrowers, PLUS Loan borrowers and Perkins Loan borrowers.

 

DIRECT LOAN ORIGINATION FEES EFFECTIVE OCTOBER 1, 2019

Did you update your loan origination fees yet?

Before you send your next batch of disbursements, make sure your financial aid management system is up to date with the new loan origination fees that went into effect on October 1st or they’ll bomb out on the Common Origination and Disbursement website. Because of the Budget Control Act of 2011, which was enacted to prevent the United States from breaching the “debt-ceiling” sequestered funds from federal agencies to keep the budget in balance. When the federal government begins their federal fiscal year each October 1st, origination fees on direct loans change as a result. The sequestration law isn’t set to expire until 2021.

Beginning on October 1, 2019 the loan origination fees have gone down slightly. For Federal Direct Loans where the first disbursement is made on or after October 1, 2019, and before October 1, 2020 the origination fees are as follows:
• The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is 1.059%. For example, the fee on a $5,500 loan will be $58.24.
• The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is 4.236%. For example, the fee on a $10,000 PLUS Loan will be $423.60.

Sequestration doesn’t just impact Federal Direct Loans, it impacts other aid programs such as the Iraq – Afghanistan Service Grant Program and TEACH Grant Program.

The Iraq-Afghanistan Service Grant was reduced by 5.9% for FY 20 resulting in a reduced award of $5829.50, a slight increase from last year. The TEACH Grant was also reduced by 5.9% resulting in a maximum award of $3764.00, also a slight increase from last year.

For more information about these programs, check out this electronic announcement from Federal Student Aid.

2018-2019 GAINFUL EMPLOYMENT REPORTING DEADLINE

If you were one of the institutions that chose not to implement the rescinded Gainful Employment rules early, you must still comply with the 2014 GE rules. As such, these institutions must report GE data to NSLDS by October 1, 2019. Everyone else, can relax. For more info about the 2018-2019 Gainful Employment Reporting Deadline, check out Gainful Employment Electronic Announcement 123.

UPDATED FISAP RESOURCES

It’s FISAP Time.

The Fiscal Operations Report for 2018-2019 and Application to Participate for 2020-2021 (FISAP) is now available on the Common Origination and Disbursement (COD) Web Site.

If your school had Campus-Based expenditures for the 2018-2019 Award Year and schools that wish to request funding under the Campus-Based programs for the 2020-2021 Award Year are required to electronically submit a FISAP via the COD Web Site.

The deadline for the electronic submission of the FISAP is 11:59 p.m. Eastern time (ET) on October 1, 2019. Transmission must be completed by midnight.

You have lots of resources to help you with the FISAP including updated FISAP Instructions, Desk Reference and the 2019-20 Technical Reference.

NEW INSTITUTIONAL ACCOUNTABILITY CHANGES

As part of the “Borrower Defense to Repayment Final Rules (dubbed institutional accountability final rules), The U.S. Department of Education amended the Student Assistance General Provisions regulations. New rules were added establishing conditions and events that could have an adverse, material effect on an institution’s financial condition, thus warranting protections for students and taxpayers. These are broken up into two categories; mandatory and discretionary financial responsibility triggering events.

Unlike the Borrower Defense to Repayment regulations included in this package which will go into effect on July 1, 2020, the amendments below are scheduled for immediate implementation.

Financial Responsibility – Mandatory and Discretionary Triggering Events

The Final Regulations establish mandatory and discretionary triggering events that have, or could have, a materially adverse impact on an institution’s financial condition that warrant financial protection. 

The mandatory triggering events are: 

1) Liabilities arising from a settlement, final judgment from a court, or final determination arising from an administrative action or proceeding initiated by a Federal or State entity; 

2) Withdrawal of owner’s equity from the institution, unless the withdrawal is a transfer to an entity included in the affiliated entity group upon whose basis the institution’s composite score was calculated;

3) For publicly traded institutions, the Securities and Exchange Commission issues an order suspending or revoking the registration of the institution’s securities or suspends trading of the institution’s securities on any national securities exchange, the national securities exchange notifies the institution that it is not in compliance with the exchange’s listing requirements and the institution’s securities are delisted, or the SEC is not in timely receipt of a required report and did not issue an extension to file the report; and 

4) For the fiscal year reported, when an institution is subject to two or more discretionary triggering events, those events become mandatory triggering events, unless a triggering event is resolved before any subsequent event(s) occurs.  

Discretionary triggering events in the Final Regulations include:

1) The institution’s accrediting agency issues an order, such as a show-cause order or similar action, that if not satisfied could result in the loss of institutional accreditation; 

2) The institution violated a provision or requirement in a security or loan agreement with a creditor; 

3) The institution’s State licensing or authorizing agency notified the institution that it has violated a State licensing or authorizing agency requirement and that the agency intends to withdraw or terminate the institution’s licensure or authorization, if the institution does not take the steps necessary to come into compliance; 

4) The institution’s failure to meet the 90/10 requirement; 

5) As calculated by the Secretary, the institution has high annual dropout rates; and

6) The institution’s two most recent official cohort default rates are thirty percent or greater, unless the institution files a challenge, which results in reducing below thirty percent the official cohort default rate for either of or both of those years or precludes the rates from either or both years from resulting in a loss of eligibility or provisional certification.

Finally, the Final Regulations also update the definitions and terms used to calculate an institution’s composite score and the composite score methodology to align with changes in FASB accounting standards. Existing leases will be grandfathered, and the new regulations only apply to new leases.  Existing long-term debt rules are also being grandfathered, but the new rules require tie-ins to plant, property, and equipment new long-term debt.  In addition, the Final Regulations revise Appendices A and B of the financial responsibility regulations to conform with the updates and changes in accounting standards.

BORROWER DEFENSE FINAL REGULATIONS RELEASED

The United States Department of Education released final regulations for institutional accountability related to Borrower Defense to Repayment loan discharges for Federal Direct Loans. The new regulations revise the standards the Department will use to adjudicate borrower defense to repayment claims and will take effect for all new loans first disbursed on or after July 1, 2020, while preserving the standards for loans that were issued under prior regulations. The Final Regulations preserve three borrower defense periods: 1) Loans first disbursed prior to July 1, 2017, which are subject to pre-2016 regulations; 2) Loans first disbursed on or after July 1, 2017 and before July 1, 2020, which are subject to final regulations published on November 1, 2016, and 3) Loans first disbursed on or after July 1, 2020, which are subject to the 2019 regulations.

Under the new regulations, borrowers who are misled and can demonstrate financial harm caused by their institution can file a claim to have their loan discharged. The Department’s new rules give borrowers up to three years from the time they leave school to file a claim. Claims will be reviewed by ED staff using the “preponderance of the evidence” standard. Both borrowers filing claims and institutions that the borrower attended will be required to provide supporting evidence to ED which will determine if a discharge is warranted.

In the Final Regulation, the Department defines a “misrepresentation” as: a statement, act, or omission by an eligible school to a borrower that is (a) false, misleading, or deceptive, (b) that was made with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth, and (c) that directly and clearly relates to either 1) enrollment or continuing enrollment at the institution; or 2) the provision of educational services for which the loan was made.

According to ED, some examples of misrepresentation include:

  • actual licensure passage rates that are different from those in marketing materials, website, and communications;
  • actual employment rates materially different from those in the institution’s marketing materials, website, and communications;
  • institutional selectivity or rankings, student admission profiles, or institutional rankings that are materially different from those in marketing materials, websites, and communications;
  • the institution does not possess certifications, accreditation, or approvals for programs that it represents that it possesses; representations regarding the educational resources provided;
  • representations regarding the transferability of credits that, in fact, do not transfer to other institutions;
  • representations regarding the employability or specific earnings of graduates without evidence;
  • representations regarding the availability, amount, or nature of financial assistance provided;
  • representations regarding the amount, method, or timing of payment of tuition and fees that is materially different from the amount, method, or timing of actual tuition and fees;
  • representations regarding whether an institution’s courses or programs are endorsed by employment agencies, industry members, government officials, former students, US armed forces, or others without permission; and
  • representations regarding the prerequisites for enrollment in a course or program.

Within these “Institutional Accountability” regulations, the Department also amended several other regulations including regulations for class action waivers, pre-dispute arbitration agreements, and rules for closed-school and false certification discharges.

The new regulations will permit institutions to use class-action waivers and arbitration agreements if an institution discloses information about their internal dispute resolution and arbitration processes to students as part of in the borrower’s entrance counseling.

The Final Regulations also allow for the borrower to choose whether to apply for a closed school loan discharge or accept a teach-out opportunity. In addition, the closed school discharge window is expanded from 120 days to 180 days prior to the school’s closure. For borrowers claiming a false certification by their school they can also apply and must complete an application.


This information is for informational and educational purposes only.

To learn more about how your institution can adjust its processes and reporting to minimize its risk of these federal student aid compliance issues, please contact us.

REPORT ON BEST PRACTICES FOR FINANCIAL LITERACY AND EDUCATION

In a recent electronic announcement, Federal Student Aid announced that a new report on Financial Literacy Best Practices has been released. The report dubbed Best Practices for Financial Literacy and Education at Institutions of Higher Education is the result U.S. Financial Literacy and Education Commission. According to the Electronic Announcement, the report provides general best practices for financial education programs. Specifically, the report makes recommendations in the following areas:

  • Providing clear, timely and customized information to inform student borrowing;
  • Effectively engaging students in financial literacy and education;
  • Targeting different student populations by use of national, institutional and individual data;
  • Communicating the importance of graduation and major on repayment of student loans; and
  • Preparing students to meet financial obligations upon graduation.

This is useful information for helping student access information to make college affordable.

STATE AUTHORIZATION PING PONG NEARS RESOLUTION 

STATE AUTHORIZATION PING PONG NEARS RESOLUTION 
As we reported in May, the U.S. Department of Education was ordered by a U.S. District Court in California to implement the 2016 State Authorization Regulations. Although the original effective date of the regulations was July 1, 2018, the Department delayed them until July 1, 2020 and began the process of negotiating and writing new regulations which are still expected to be released later this year. The lawsuit brought by student and consumer advocates and the National Education Association, a teacher’s union, sought to force the Department of Education to implement the 2016 regulations and on May 26, 2019 the courts sided with the NEA. As a result, the court ordered the Department to implement the rules right away.

The 2016 state authorization amendments required institutions to obtain approval from each state in which they enroll students via online, distance education, and/or correspondence programs, or participate in a state authorization reciprocity agreement that includes the states they’re enrolling students in. States were required to have a means for students to lodge complaints and as of last year every state except California (and a few U.S. Territories) have either established a complaint process and process for approving out of state entities or joined a reciprocity agreement like NC-SARA.

Recognizing the effect this would have, the court allowed the Department time to consider how to implement the rules, since many schools and colleges have been enrolling Californians with the understanding that the State Authorization regulations had been delayed. On July 22, 2019 the Department released an electronic announcement explaining that the State Authorization rules were put into effect retroactively on May 26, 2016, causing a scramble in the distance education world. Reports of as many as 80,000 to more than 100,000 students enrolled in distance education programs all around the country were suddenly in jeopardy of losing access to their federal financial aid. As an attachment to the electronic announcement the Department provided some information about states’ complaint processes and pointed out that California didn’t have one for its private non-profit and public institutions. California’s Bureau of Private Postsecondary Education handles complaints for out-of-state for-profit institutions.     

California acted quickly to establish a complaint process for these schools, and authorized BPPE through the California Department of Consumer Affairs to begin handling complaints beginning on July 29, 2019. In a statement, the DCA said they expect that the ED will find the proposed process satisfactory, so that California is following federal rules, affected colleges can inform their students of the process, and students will not lose Title IV federal financial aid funding.

Although the Department hasn’t historically approved or denied individual state complaint processes, the U.S. Department of Education and California Regulators appear to be coordinating closely to avoid any missteps that could prolong or further deny federal aid to students receiving distance education because their institutions cannot meet the complaint process requirement due to problems with state procedures. The nation’s college students wait for the Department’s decision. Considering the potential to disrupt the education of thousands of online students affected. a conclusion to this issue needs to be carried out swiftly.

According to WCET, 4-6 states and territories may still be out of compliance after noting that some complaint procedures in some states were unclear and may not meet the federal requirements. So far, they have not released the names of the states or territories in question.  Education Secretary Betsy DeVos has also called for NEA to drop its lawsuit which although unlikely to happen could also resolve this issue by allowing the Department to continue their original plan to delay the regulations until such time as new rules are carried out or states comply.