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UNCLAIMED CREDIT BALANCES RESULTING FROM DISBURSEMENTS WITH THE CORONAVIRUS INDICATOR

When Title IV funds disbursed to a student’s account result in a Title IV credit balance, there may be occasions when the school is unable to deliver the appropriate amount of the credit balance refund (e.g., when the student fails to cash or deposit a check or if an electronic funds transfer is unsuccessful). In these cases, if the school is unable to deliver the proceeds of the credit balance to the student, the school must have a process that ensures that the unclaimed funds never escheat to a State or revert to the school or any other third party. If the school is unable to deliver the funds by the applicable deadlines (see Volume 4, Chapter 2 of the FSA Handbook), the funds must be returned to the Department.

Normally, any such returns would be offset by a downward adjustment in the student’s Pell Grant, Direct Loan, and/or TEACH Grant record in the COD System. However, once a school has assigned the Coronavirus Indicator to a Pell Grant, Direct Loan, or TEACH Grant disbursement, the school is unable to modify the disbursement amount. In these situations, a downward adjustment to the student’s COD records is not required, and the school is instead directed to return the funds using the G5 Miscellaneous Refund process.

CHANGES TO 2021-2022 VERIFICATION REQUIREMENTS

Last month the U.S. Department of Education announced temporary changes to the verification requirements for the 2021-2022 award year. These much welcome changes allow schools to waive verification requirements for students selected for V1 verification and focus verification on identity and fraud. Although students in V4 and V5 verification groups must still provide proof of High School completion, confirm their identity, and sign the Departments Statement of Educational Purpose, the income verification required under V5 is also being waived.

The announcement gives schools flexibility to choose their own verification policies and make their own determination as to how to implement these changes, but FSA reminded schools to review subsequent ISIR transactions and to be sure to resolve any conflicting information. This waiver may apply no matter where institutions are in the verification process, e.g., if documents have been collected or requested, but verification has not been completed, or if an institution has not started the verification process. However, this does not exempt institutions from reviewing all documents for conflicting information concerning a student’s eligibility.

FSA also reminded schools that the in-person submission and notary requirements have been removed temporarily due to the pandemic. To complete verification for Identity and Statement of Educational Purpose, institutions can accept:

  • copies of the required verification documents electronically. This may occur by uploading a photo of the documents (including from a smartphone), PDF, or other similar electronic document through a secure portal at the institution, by email, etc.
  • an electronic signature using a stylus or finger to sign the statement, or an image of the individual’s signature affixed to the statement in lieu of obtaining a wet signature.

The Department hinted that additional adjustments to the verification process may be made in the future to ensure the verification process is “robust and equitable”. That’s something o look forward to.

CARES ACT RELIEF EXTENDED FOR CORONAVIRUS INDICATOR AND R2T4 GUIDANCE

Federal Student Aid announced that they were extending the deadline for schools to add the Coronavirus Indicator and R2T4 reporting deadlines for title iv disbursements until September 30, 2021.

The Coronavirus Indicator will be accepted for any qualifying disbursement with a payment period start date between January 8, 2018, and July 1, 2022, if all other requirements are met. The deadline is applicable only for the 2020-2021 award year. There is no change to the December 31, 2020, deadline to add the Coronavirus Indicator for disbursements from the 2019-2020 award year, but FSA is allowing schools that become aware of withdrawals with qualifying disbursements to add the Coronavirus Indicator as soon as possible.

The extension is applicable to all award years for funds not returned for R2T4 purposes due to Cares Act relief.

NEW CLOCK-TO-CREDIT HOUR CONVERSION FORMULA RULES TAKE EFFECT IN JULY

On July 1, 2021, several regulatory packages take effect including changes to the Clock-to-Credit Conversion formula.  If you offer undergraduate non-degree programs in credit hours the new rules will determine the number of Title IV credit hours associated with each class in a program.

According to an electronic announcement from FSA, under the previous formula, schools were required to use a ratio of 37.5 in-class clock hours to each semester/trimester credit hour, or 25 in-class clock hours to each quarter hour, except that institutions could include “work outside of class” (out-of-class) hours as long as the in-class hours met a lower ratio – 30 clock hours to one semester hour or 20 clock hours to one quarter hour and the institution’s accrediting agency had not identified any problems with the institution’s establishment of credit hours. But under the new rules, out of class work time has been eliminated for the purposes of determining the number of Title IV credits in an eligible program.

Beginning on July 1, 2021the new conversion formula must be applied unless:

  • The program is at least two academic years in length and provides an associate degree, a bachelor’s degree, a professional degree, or an equivalent as determined by the Department (Note that this does not permit an institution to ask for a determination that a non-degree program is equivalent to a degree program); or
  • Each course within the program is acceptable for full credit toward a single associate degree, bachelor’s degree, or professional degree provided by that institution, or equivalent degree as determined by the Department, provided that the institution’s degree requires at least two academic years of study and the institution can demonstrate that students enroll in, and graduate from the degree program.

Make a note – if these changes affect your programs, you will need to report the change to ED on your E-App.

  • If the new calculations result in a change in the number of Title IV credit hours in a program, the institution must submit an E-App immediately at https://eligcert.ed.gov to update both the number of clock hours and Title IV credit hours in the program; or
  • If the new calculation does not change the number of Title IV credit hours in the program, the institution should update the E-App to change the number of clock hours reported for the program when the next update or recertification application is submitted.

Several other changes to regulatory requirements that were also part of the Distance Education and Innovation Final Regulations released on September 9, 2020, take effect on July 1, 2021, unless an institution decided to implement them early, including:

  • Satisfactory Academic Progress
  • Return to Title IV Funds
  • Distance Education
  • Institutional Eligibility
  • Subscription-Based Programs

WHO IS CONSIDERED A STUDENT FOR HEERF EMERGECY FINANCIAL AID GRANT PURPOSES

According to a May 14, 2021, Federal Register notice, The Education Department expanded the definition of who is an eligible “student” for the purposes of making Emergency Financial Aid Grants to Students under the Higher Education Emergency Relief Fund (HEERF) Programs. This rule is effective as of May 14, 2021, and you may need to adjust your HEERF awarding procedures accordingly.

The final regulations define “student,” for purposes of the phrases “grants to students,” “emergency financial aid grants to students,” and “financial aid grants to students” as used in the HEERF programs, as any individual who is or was enrolled (as defined in 34 CFR 668.2) at an eligible institution of higher education (IHE as defined in 34 CFR 600.2) on or after March 13, 2020, the date of declaration of the national emergency concerning the novel coronavirus disease. This definition enables an IHE to appropriately determine which individuals currently or previously enrolled at an institution are eligible to receive emergency financial aid grants to students under the HEERF programs, as originally enacted under the CARES Act and continued through the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260) and American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2).