DIRECT LOAN CLOSEOUT INFORMATION FOR 2017-2018 PROGRAM YEAR

DIRECT LOAN CLOSEOUT INFORMATION FOR 2017-2018 PROGRAM YEAR

On February 5, 2019, Federal Student Aid posted on the Information for Financial Aid Professionals (IFAP) website the first in a 3-part series of Direct Loan closeout announcements that informs schools of the closeout deadline for the 2017-2018 Program Year. The Direct Loan closeout deadline for the 2017-2018 Program Year is Wednesday, July 31, 2019. This is the last processing day of the program year, so all school data must be received and accepted by this date to be included in a school’s final Ending Cash Balance for the year. To be considered successfully closed out, a school must:

Have an Ending Cash Balance of $0 and Total Net Unbooked Disbursements of $0 internally, and as reflected on the School Account Statement (SAS), and Complete the Balance Confirmation form on the COD Web Site.

According to FSA, the best way to ensure an easy reconciliation and closeout is by staying on top of the process. They offer this advice:

  • Complete required monthly reconciliation. This should include:
    • Internal reconciliation – compare internal student accounts and Business Office/Bursar records with Financial Aid Office records. Also, a part of the reconciliation should include ensuring that the school’s internal records match the third-party servicer’s records as well as what is in the COD System.
    • External reconciliation – compare internal records to your Direct Loan School Account Statement sent via your SAIG mailbox.
    • Resolution of any discrepancies and documentation of any outstanding timing issues.
  • Ensure that all drawdowns and refunds of cash are accounted for and applied to the correct program and award year.
  • Ensure that all batches have been sent to and accepted by the COD System, all disbursements and adjustments are accurately reflected on the COD System, and all responses are imported into the school’s system.
  • Review all pending disbursements and determine whether the disbursements need to be reported as actuals (Disbursement Release Indicator (DRI) = TRUE) or, if not, reduce them to $0 and make changes to loan period dates and loan amounts, if needed. This will ensure that all disbursement data has been correctly reported to the COD System, and will ensure subsidized usage limit calculations are correct for your borrowers. For more information on Subsidized Usage Limit Applies (SULA) reductions.
  • Ensure that all unbooked loans are booked or inactivated (reduced to $0).
  • Resolve all outstanding rejected records.
  • Return all refunds of cash. All refunds for the Direct Loan Program must be returned electronically via G5.
  • Request any remaining funds owed to the school based on actual disbursements accepted by the COD System.

 

For more information, refer to the Electronic Announcement.

INCREASED CIVIL MONETARY PENALTIES

INCREASED CIVIL MONETARY PENALTIES

Blame Inflation but beginning on February 1, 2019 the Civil Monetary Penalties for violations that occurred after November 2, 2015 have increased. According to the notice published in the Federal Register, the Department of Education has adjusted the following penalties for inflation:

20 U.S.C. 1015(c)(5) (Section 131(c)(5) of the Higher Education Act of 1965 (HEA)). Provides for a fine, as set by Congress in 1998, of up to $25,000 for failure by an institution of higher education (IHE) to provide information on the cost of higher education to the Commissioner of Education Statistics. New Maximum Penalty – $38,549

20 U.S.C. 1022d(a)(3) (Section 205(a)(3) of the HEA). Provides for a fine, as set by Congress in 2008, of up to $27,500 for failure by an IHE to provide information to the State and the public regarding its teacher- preparation programs. New Maximum Penalty – $32,110

20 U.S.C. 1082(g) (Section 432(g) of the HEA). Provides for a civil penalty, as set by Congress in 1986, of up to $25,000 for violations by lenders and guaranty agencies of Title IV of the HEA, which authorizes the Federal Family Education Loan Program. New Maximum Penalty – $57,317

20 U.S.C. 1094(c)(3)(B) (Section 487(c)(3)(B) of the HEA). Provides for a civil penalty, as set by Congress in 1986, of up to $25,000 for an IHE’s violation of Title IV of the HEA, which authorizes various programs of student financial assistance. New Maximum Penalty – $57,317

20 U.S.C. 1228c(c)(2)(E) (Section 429 of the General Education Provisions Act). Provides for a civil penalty, as set by Congress in 1994, of up to $1,000 for an educational organization’s failure to disclose certain information to minor students and their parents. New Maximum Penalty – $1,692

31 U.S.C. 1352(c)(1) and (c)(2)(A). Provides for a civil penalty, as set by Congress in 1989, of $10,000 to $100,000 for recipients of Government grants, contracts, etc. that improperly lobby Congress or the Executive Branch with respect to the award of Government grants and contracts. New Maximum Penalty – $20,134 to $201,340

31 U.S.C. 3802(a)(1) and (a)(2). Provides for a civil penalty, as set by Congress in 1986, of up to $5,000 for false claims and statements made to the Government. New Maximum Penalty – $11,463

You can read the full Federal Register here: https://ifap.ed.gov/fregisters/attachments/FR020119.pdf

NEW CPS FUNCTION FOR RESENDING DHS SAVE SYSTEM MATCHES

On February 17, 2019, a new function was added to the Financial Aid Administrator Access to Central Processing System (FAA Access to CPS) that allows financial aid administrators to resend record matches to the DHS SAVE System to complete Third Step Verification. There are two situations where this is necessary. On the SAVE system, when the Case Status is “Case Closed” and the SAVE Response is “Resubmit Doc”, or the SAVE Response is “Applicant Status” or “Applicant is a” field statuses do not match the student’s immigration documents, this new functionality will allow you to resend a student’s ISIR record to matching agencies including the DHS. If a student’s eligibility is not confirmed a new DHS verification number will be provided so that you can resubmit the Third Step verification request through the SAVE system.

FSA provided instructions in a recent electronic announcement, noting that this process replaces the guidance on pages 32-34 of the SAVE instructions for School Users 2.0 document “Requesting a new DHS Verification Number”. Check out their announcement for more details on how to navigate through this streamlined procedure and be sure to check out their presentation on resending record matches too.

FY 2016 3-YEAR DRAFT COHORT DEFAULT RATES RELEASED

On February 25, 2019, the Department of Education distributed the FY 2016 3-Year Draft Cohort Default Rate (CDR) notification packages to schools via their Student Aid Internet Gateway (SAIG) mailbox. The package includes a cover letter and Loan Record Detail Report (LRDR). It’s important for schools to review their draft data because there are sanctions for schools with high cohort default rates and benefits for schools with low ones and the draft cycle is one of the only opportunities to challenge certain data.

The Fiscal Year 2016 3-Year Draft CDR is calculated by dividing the number of borrowers who entered repayment in 2015 by the number of borrowers who entered repayment in 2016 and defaulted in 2016, 2017 or 2018.

Although there are no sanctions or benefits associated with the draft rates themselves, the draft rates become official in September. During the draft cycle, schools have an opportunity to challenge incorrect data or challenge their (low) participation rate. The challenge and appeals cycle begins on March 5, 2019 and lasts for 45 days. More information about submitting an Incorrect Data Challenge or a Participation Rate Index Challenge can be found in the Cohort Default Rate Guide,

Benefits
A school whose most recent official cohort default rate is less than 5.0 percent and is an eligible home institution that is originating loans to cover the cost of attendance in a study abroad program may disburse loan proceeds in a single installment to a student studying abroad regardless of the length of the student’s loan period, and may choose not to delay the disbursement of the first installment of loan proceeds for first year first-time borrowers studying abroad.

A school with a cohort default rate of less than 15.0 percent for each of the three most recent fiscal years for which data are available, including eligible home institutions and foreign institutions, may disburse, in a single installment, loans that are made for one semester, one trimester, one quarter, or a four-month period and may choose not to delay the first disbursement of a loan for 30 days for first time, first-year undergraduate borrowers.

Sanctions
If a school’s three most recent official cohort default rates are 30.0 percent or greater for the three-year calculation it will lose Direct Loan and Pell Grant program eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years.

If a school’s current official cohort default rate is greater than 40.0 percent, for the three-year CDR calculation, it will lose Direct Loan and Pell Grant program eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years.

FSA UNVEILS NEW COLLEGE FINANCING PLAN

FINANCIAL AID SHOPPING SHEET REDUBBED “COLLEGE FINANCING PLAN”
In January, the U.S. Department of Education’ s (ED) Office of Postsecondary Education (OPE) released a new beta-version of the 2019-2020 Financial Aid Shopping Sheet that was first introduced in 2012. According to the OPE announcement, the Financial Aid Shopping Sheet was redubbed the “College Financing Plan” to “more accurately reflect that loans may be a significant part of the student’s investment, and to emphasize to students that they are making a financial transaction when enrolling in an institution.” Although the beta-version of the College Financing Plan looks very similar to the Financial Aid Shopping Sheet institutions have been using, some data elements have changed, some have been expanded and some section headings have been restructured to better illustrate a rather simple formula its predecessor didn’t do so well; Total Cost of Attendance – Grants and Scholarships = Net Cost.
For the 2019-2020 award year, schools may continue using the current FA shopping sheet if they wish to do so, however ED is asking schools to voluntarily adopt the College Financing Plan. Schools that plan to begin using the new sheet for the 2019-2020 award year or wish to provide feedback should contact ED by April 1, 2019.
Schools that signed the Memorandum of Understanding (MOU) to comply with the Principles of Excellence (POE) in Executive Order 13607 will be required to begin using the new format for the 2020-2021 award year once it is released however ED has not provided clarification as to when, and whether or not schools currently using the FA Shopping sheet need to adopt the College Financing Plan.

VETERANS BENEFITS AND TRANSITION ACT OF 2018 SIGNED INTO LAW

In the final days of the 115th Congress, legislators passed the Veterans Benefits and Transition Act of 2018. The new law which was signed by President Trump contains several provisions to assist and protect student veterans. Under the new law, institutions that accept GI Bill benefits could face losing participation in Veteran’s educational benefits for programs if an institution prevents a veteran student from attending or participating in their courses because of delays in Chapter 31 or 33 benefits.
If a student veteran provides certification of eligibility to the school, it can’t impose any penalties on the student including the assessment of late fees, the denial of access to classes, libraries, or other institutional facilities, or the requirement that a covered individual borrow additional funds. State approving agencies which grant approval to programs at institutions of higher education may terminate a program’s approval if an institution violates these provisions.
Additionally, the law requires the Veterans Affairs to provide timely payment of VE Educational Benefits. Under the “Prompt Payments” provisions, the Secretary of Veterans Affairs must ensure that payment is made to institutions on behalf of eligible students within 60 days after the institution certifies a student’s eligibility.
The Forever GI Bill Housing Payment Fulfillment Act of 2018 was also signed into law at the end of 2018. The law addressed problems with the Harry W. Colmery Veterans Educational Assistance Act of 2017, also known as the Forever GI Bill. Under the Forever GI Bill, monthly housing stipends were supposed to be based on the location of the campus of the institution where a veteran student attends classes, a change from the previous direction that the calculation was to be based on the location of the institution, but outdated information technology systems at the Veteran’s Administration “stymied efforts to update necessary information that enable proper housing payments, resulting in a months long backlog. The Forever GI Bill Housing Payment Fulfillment Act of 2018 the VA is expected to begin reimbursing student veterans who did not receive their full housing benefits.

NEW 2019-2020 FEDERAL PELL GRANT PAYMENT AND DISBURSEMENT SCHEDULES

2019-2020 FEDERAL PELL GRANT PAYMENT AND DISBURSEMENT SCHEDULES RELEASED

The 2019-2020 Federal Pell Grant Payment and Disbursement Schedules are here. On September 28, 2018, the President signed the 2019 HELP appropriations act, Public Law (P.L.) 115-245 which included an increase to the maximum Pell Grant award. For the 2019-2020 award year, the maximum Pell Grant award is $6195.00 for students with a zero EFC. The minimum Pell Grant award also increased to $650.00 for students with an expected family contribution (EFC) of 5576.
Although $6195.00 is the maximum Pell Grant scheduled award for the 2019-2020 award year, beginning with the 2017-2018 award year, a student may be eligible to receive Pell Grant funds for up to 150 percent of the student’s Pell Grant scheduled award for an award year. To be eligible for the additional Pell Grant funds, the student must be otherwise eligible to receive Pell Grant funds for the payment period and must be enrolled at least as a half-time student, as defined in 34 CFR 668.2(b), in the payment period(s) for which the student receives the additional Pell Grant funds in excess of 100 percent of the student’s Pell Grant scheduled award. For additional information see Dear Colleague Letter GEN-19-01.

GOVERNMENT SHUTDOWN IMPACTED 600,000 ISIR TRANSACTIONS

GOVERNMENT SHUTDOWN IMPACTED 600,000 ISIR TRANSACTIONS
Last month, FSA released an announcement informing the Financial Aid community that the Central Processing System was skipping the database match with Selective Service System during the government shutdown.
According to the electronic announcement FSA states that “during this match bypass, Student Aid Reports (SARs) and Institutional Student Information Records (ISIRs) will display Comment Code 390: “We were unable to verify your eligibility for federal student aid with one or more other federal agencies through computer matching programs. Your school will contact you if additional information is needed.”  The CPS will assign a blank value to the Selective Service Match Flag on SARs and ISIRs unless the corrected transaction already has a valid SSS match flag value that the CPS can pull forward to the new transaction.
You can read all about it here in this electronic announcement from FSA.
Now that the shutdown is over, CPS will reprocess ISIR records for impacted students. In an announcement posted on January 31, 2019 FSA announced that CPS will begin reprocessing over 600, 000 ISIR records. Given immense volume of records requiring correction, CPS will only reprocess up to 50,000 record per day. At that rate it will take at least until February 12, 2019 for CPS to get caught up.

ED IDENTIFIES WIDESPREAD PERKINS ERRORS ON NSLDS

The Department of Education is asking schools with Perkins Loans that were awarded or disbursed to students after the expiration of the Perkins Loan Program to review all its Perkins Loan data on NSLDS. The ask follows an announcement last month that ED has identified many Perkins Loans on NSLDS with errors. The most common errors are loan dates reported after 9/30/16 for graduate borrowers, 9/30/17 for undergraduate borrowers and loans with a disbursement date after 6/30/18 for all borrowers.

According to ED, the issue typically occurs when a school or its third-party servicer reports updated batch information that overwrites the information that was previously reported to NSLDS correctly. Schools using third party servicers can work directly with their servicer to resolve any errors. Schools can request a Perkins Loan Reconciliation Report (REC005) from NSLDS which will help ensure that all Perkins Loan information is reported accurately.

If your school awarded a loan or disbursement in error, your school must reimburse the Perkins Loan Revolving Fund for the amount of the loans, correct the FISAP, notify the borrower, and update NSLDS accordingly.

ED RELEASES NEW PUBLIC SERVICE LOAN FORGIVENESS TOOL

Borrowers with questions about qualifying for Public Service Loan Forgiveness have a new tool to help them understand their options and how to qualify to have their loans forgiven. Now, when a student calls with questions, you can direct them to the studentloans.gov website at StudentLoans.gov/PSLF. Borrowers will be able to:

  • assess whether their employer qualifies for PSLF;
  • assess whether their loans qualify for PSLF;
  • decide which PSLF form to submit; and
  • learn about other actions borrowers should or must take if they want to receive PSLF.

For more information and PSLF resources, check out this electronic announcement from FSA.