ED ANNOUNCES REVISED POLICY FOR STANDARD TERM LENGTH

For financial aid purposes, Standard Terms are by far the simplest to administer of all the academic calendar options. Over the years, academic calendars have evolved from the traditional academic calendar of a 15-week semester in the fall and a 15-week spring semester or its equivalent in trimesters or quarters, as a result of changes in curricula, new delivery modes, and innovative and flexible program schedules designed to meet the needs of students.

Institutions have been asking for flexibility to modify their terms to meet the Standard Term parameters for a long time. Programs got longer and scheduling longer programs became a challenge for institutions. In some cases, they found it simply wasn’t possible to arrange their coursework in way that would meet the criteria ED specified in its longstanding policy for Standard Term length.  Although Standard Terms don’t have a statutory or regulatory definition, the Department of Education’s policy narrowly defined what a Standard Term was and wasn’t. When a program doesn’t meet ED’s criteria for Standard Terms, we call those either nonstandard term or non-term programs. When an institution runs a program offered in a nonstandard term or non-term academic calendar, the rules for disbursing Title IV aid become much more complex.

“Yesterday’s announcement from ED is bigger news than most people realize because it gives institutions the flexibility to deliver innovative programs and specialized coursework while simultaneously simplifying the process of administering disbursements for those who make the change to standard terms.”

Under the department’s old policy, programs offered in credit hours but offered in terms that were either not substantially equal in length or longer than the maximum length promulgated in ED policy were required to be treated as nonstandard term programs. For many institutions, the revised policy ED released earlier this week provides them with much more flexibility to deliver education to their students in Standard Terms without the additional burden imposed on non-term and nonstandard term programs for administering Title IV aid.

Take Pell Grants for example. Standard Term programs base a student’s Pell Grant eligibility off a student’s enrollment status in each term (think, full-time, 3/4-time, half-time etc.), and the term start and end dates. But in Nonstandard Term programs you can’t simply base aid off enrollment status. Instead a student’s award must be multiplied by a fraction that represents the weeks of instructional time in the term divided by the weeks of instructional time in the program’s academic year. This is particularly important in programs that are at least an academic year in length and have a remaining portion of the program that is shorter than an academic year in length.

Things get a little more complicated when it comes to Direct Loans. For a term-based program using credit-hours, a student could receive a Direct Loan disbursement in the spring term even if they failed courses in the fall term, as long as the student was making satisfactory academic progress. However, if the program used nonstandard terms that are not substantially equal in length, they had to use the nonterm-based rules for Direct Loan disbursements and monitor annual loan limit progression accordingly. Those rules require that a student must successfully complete all the coursework in their payment period with a passing grade to receive a second or subsequent loan disbursement in the next term.

The administrative burden imposed on Financial Aid offices under the nonterm rules are onerous for institutions because of the increased monitoring and coordination needed to ensure that aid is properly awarded and disbursed to students.

It creates a problem for students too because failing coursework inevitably leads to delays in the institutions ability to release FSA funds to students. In this situation, a student, might not be able to receive their spring Direct Loan disbursement until the end of the spring semester.

Under the revised policy, terms that are not substantially equal in length can now be considered standard terms, and the number of weeks in any given term can even vary from year to year without affecting the standard term nature of a program. As a result, programs that disburse Title IV aid using nonstandard term rules, but can now meet the expanded criteria in the Department’s revised policy for standard term length, can use the new rules for standard terms if they choose to. Doing so can significantly reduce administrative requirements related to disbursing title IV, so it’s really something to look at closely.

While institutions have always had the flexibility to self-determine which academic calendar they are using for Title IV disbursement purposes (and the risk of liability if they made an incorrect determination on their own and disbursed aid under the wrong formula), yesterday’s announcement from ED is bigger news than most people realize because it gives institutions the flexibility to deliver innovative programs and specialized coursework while simultaneously simplifying the process of administering disbursements for those who make the change to standard terms under ED’s revised (expanded) Policy for Standard Term Length.


Institutions with questions pertaining to this or other matters of compliance with Accreditation, Federal Student Aid standards are welcome to contact our offices for additional assistance.