Dan Klock Federal Student Aid

1. Return of Title IV Funds With Changes from the Higher Education Reconciliation Act (HERA) of 2005 Public Law 109-171 Dan Klock Federal Student Aid

2. Today’s Agenda • Regulation changes from HERA • R2T4 calculation with HERA changes • Compliance self-monitoring • Questions & answers

3. Limitations on Making Late Disbursement • No Pell Grant without valid SAR / ISIR by deadlines in Federal Register • No 2nd pp Pell if 1st pp not completed • No 2nd pp FFEL / DL if 1st pp not completed

4. HERA Regulation Changes

5. Programs Specified for R2T4 • Perkins • Direct Loan • FFEL • Pell Grant • Academic Competitiveness Grant • National SMART Grant • FSEOG

6. Post-withdrawal Disbursement - HERA • Credit grant for tuition and fees & room and board (without authorization) and for other charges (with authorization)

7. Post-withdrawal Disbursement - HERA • Credit loan for tuition and fees & room and board (without authorization) and for other charges (with authorization) • Written notification to the student / parent and their confirmation must be received before the loan funds may be credited to the account or directly disbursed

8. Written Notification (within 30 days of date of determination of withdrawal) • Identifies loan to be credited & grant and loan available as direct disbursement • Asks if student / parent wants • loan credited & • grant or loan as direct disbursement

9. Written Notification (explains) • Student / parent can accept some / all of aid • If student / parent declines credit of loan, she may not receive direct disbursement unless institution agrees • Obligation to repay loan • 14 day (or later) response time

10. Written Notification • Deadline to accept PWD either directly or as credit to account must be same • PWD must be disbursed in manner specified by student / parent within 120 days of date of determination of withdrawal

11. Written Notification • If response from student / parent is late, institution may make or not make PWD • If institution declines to make PWD, it must inform student / parent • If there is no response to notification, no loan may be credited to account & no grant or loan may be disbursed directly

12. Clock Hour Changes • Scheduled clock hours always used • Scheduled clock hours as of withdrawal divided by clock hours in period • If greater than 60%, student earns 100%

13. Clock Hour Changes • Scheduled clock hours must be: • established prior to beginning of classes (or modified before withdrawal date) • consistent with: • published materials • accrediting agency / state

14. Grant Overpayment Protection (to amounts student is required to return) • 50% of amounts disbursed (and that could have been disbursed) • $50.00 or less per program (but, not remaining balances of $50.00 or less) • Waiver of overpayments for students residing in, employed in, or attending institutions in declared disaster areas

15. Return of Funds Order • Loan Programs • Pell Grant Program • Academic Competitiveness Grant Program • National SMART Grant Program • FSEOG Program

16. R2T4 Worksheets/Software

17. Step 1:

18. Step 1: Student’s Title IV Aid • All information collected about Title IV aid either “disbursed” or “could have been disbursed” • Broken down by Grants and Loans • This is straight-forward, although the data is collected as noted on the next slide

19. Step 1: Student’s Title IV Aid • Box E. Total Title IV aid disbursed for the PP or POE • Used to determine the amount of PWD or returned

20. Step 1: Student’s Title IV Aid • Box F. Total Title IV grant aid disbursed + could have been disbursed for the PP or POE • Used to determine the TIV grants amount that is protected under HERA

21. Step 1: Student’s Title IV Aid • Box G. Total of all aid disbursed or could have been disbursed • Used to determine the amount of TIV aid earned

22. Step 2: Credit hour

23. Step 2: Clock hour

24. Step 2: Percentage of TIV Aid Earned • Credit-hour program - same as pre-HERA • If % is > 60% = 100% TIV earned

25. Step 2: Percentage of TIV Aid Earned • Clock-hour program • This becomes a one-step calculation • Hours scheduled to complete • Total hours in period (PP or POE) • If % is > 60% = 100 % TIV earned

26. Step 3:

27. Step 3: Amount of TIV aid Earned by the Student • Remains % earned (Box H) X Total of TIV aid disbursed or could have been disbursed (Box G)

28. Step 4:

29. Step 4: Total Title IV Aid to be Disbursed or Returned • PWD or Amount to be Returned • Remains same as before: • Amt earned > Amt disb’d = PWD • Amt earned < Amt disb’d = Amt to be Returned

30. Step 5:

31. Step 5: Amount of Unearned Title IV Aid Due from the School • Unearned amount of Title IV aid due from the school is calculated the same as before • Lesser of • Total amount of unearned aid, or • Institutional charges X % of unearned aid

32. Step 6:

33. Step 6: Return of Funds by the School • Return order of TIV aid has changed • Loans • Unsubsidized FFEL/DL • Subsidized FFEL/DL • Perkins • FFEL/DL PLUS (Graduate student) • FFEL/DL PLUS (Parent)

34. Step 6: Return of Funds by the School • Grants • Pell Grant • Academic Competitiveness Grant • National SMART Grant • FSEOG

35. Step 7:

36. Total amount unearned TIV aid - Amount school has to repay Amount student has responsibility to repay Step 7: Initial Amount of Unearned TIV Aid Due from the Student

37. Step 8:

38. Student repays what he has earned plus what he has not earned that the school does not repay Total TIV net loans disbursed - Amount of TIV loans school repaid Remaining balance of TIV loans Step 8: Repayment of the Student’s Loans

39. Step 8: Repayment of the Student’s Loans • If the amount of unearned less the amount the school repaid (Step 7) is greater than the remaining balance of TIV loans outstanding – go to Step 9

40. Step 9:

41. Initial amount of unearned aid that the student has responsibility for (Step 7) - Amount to be repaid by student on loans Initial amount of TIV grants for student to repay Step 9: Grant Funds to be Returned

42. NEW: Amount of TIV grant protection: Total of TIV grants disbursed or could have been disbursed X 50% = the protected amount Step 9: Grant Funds to be Returned

43. Initial amount of TIV grants for student to repay - the protected amount of TIV grants Amount of TIV grants to be returned by the student Step 9: Grant Funds to be Returned

44. Step 10:

45. Step 10: Return of Grant Funds by the Student • Pell Grant • Academic Competitiveness Grant • National Smart Grant • FSEOG Note that the student is not responsible for returning funds to any program to which the student owes $50.00 or less that is NOT a declining balance

46. Student A • Pell Grant: $2025 • Student attended 10%

47. Earned and unearned: 10% X $2,025 = $202.50 amount earned Amount to be returned: $2,025 - $202.50 = $1,822.50 Amount school returns: $1,000 (Inst charges) X 90% (Unearned %) = $900 * [The lesser of $1,822.50 or $900] Student A

48. Initial amount student owes: $1,822.50 less $900 = $922.50 Amount of TIV grant protection: $2,025 X 50% = $1,012.50 Amount of TIV grant funds for student to repay $922.50 less $1,012.50 = $0 (Negative # set to zero) Student A

49. Student B • Pell Grant: $500, SMART: $2,000, • FSEOG: $1,000 • Student attended 10%

50. Earned and unearned: 10% X $3,500 = $350 amount earned Amount to be returned: $3,500 - $350 = $3,150 Amount school returns: $1,000 X 90% = $900 * [The lesser of $3,150 or $900, so $500 Pell and $400 SMART repaid by inst.)] Student B