Session 10

1. Session 10 General Provisions Update: Changes made by the HERA Carney McCullough

2. Student Eligibility • Independent Student • Repayment of Fraudulently Obtained Funds • Drugs

3. Independent Student Individuals who are currently serving on active duty in the U.S. Armed Forces for purposes other than training are now considered to be independent students.

4. Independent Student, cont’d. • Includes applicants who have been called to Federal active duty for purposes other than training from the National Guard or Ready Reserves.

5. Independent Student, cont’d. • For 2006-07 – Dependency Override • For 2007-08 and beyond – FAFSA • Student’s self certification is sufficient documentation.

6. Repayment of Fraudulently Obtained Funds • A student who has been convicted of, or pled nolo contendere or guilty to, a crime involving fraud in obtaining Title IV aid must have completely repaid the fraudulently obtained funds before regaining eligibility for Title IV aid.

7. School responsibility • Don’t have to collect certification from each student • Handle when become aware of the situation

8. Drug Offenses • Student is ineligible for Title IV aid only if the conviction for a Federal or State offense involving the possession or sale of a controlled substance is for conduct that occurred during a period of enrollment for which the student was receiving Title IV aid.

9. Drug Offenses, cont’d. • Limits the timeframe • Does not change the period of ineligibility

10. Drug Offenses, cont’d. • For 2006-07 • Beginning 6/30/06, FAFSA on the Web has a revised drug conviction question and worksheet • Around 6/30/06, ED sent a special notice to applicants with total or limited ineligibility so they can determine if their response should be changed • Schools may, but are not required to identify applicants whose eligibility may have been restricted because of their response to the drug conviction question

11. Drug Offenses, cont’d. • For 2007-08 and beyond • FAFSA and worksheet will reflect the new provisions.

12. Need Analysis • Cost of Attendance (COA) • Estimated Financial Assistance (EFA) • Expected Family Contribution (EFC)

13. Cost of Attendance (COA) • An institution may exclude from both COA & EFA any assistance provided by a State and designated by the State to offset a specific component of COA

14. Cost of Attendance, cont’d. • An institution may choose to include room and board in the COA for a less-than-half-time student • Up to 3 semesters (or equivalent) with no more than 2 semesters being consecutive • Applies on an institution by institution basis

15. Cost of Attendance, cont’d. • An institution may include in a student’s COA the one-time cost of obtaining a first professional license or certificate • May only be provided one time per student • Must be for direct costs for obtaining 1st license or certification

16. Cost of Attendance, cont’d. • Allowable direct costs include licensing exam fees and costs of applying for and obtaining the license • Does not include costs associated with preparing for an exam unless part of eligible program • Costs must be incurred while student is enrolled

17. Estimated Financial Assistance (EFA) • Revised definitions of EFA and Resources • Renamed “resources” as EFA for campus-based programs • Included ACG and National SMART Grants and Chapter 1607, Reserve Education Assistance Program benefits • Standardized definitions

18. EFC – Dependent Students • IPA • Increased income protection allowance to $3,000 for the 2007-08 award year • The $3,000 IPA will be indexed for inflation beginning with the 2008-09 award year

19. EFC – Dependent Students, cont’d. • Contribution from assets • Assessment rate for contribution from assets is reduced to 20%

20. EFC – Independent Students Without Dependents (other than a spouse) • IPA • Increased income protection allowance • Single students and married with spouse in college to $6,050 • Married with spouse not in college to $9,700 • These new IPAs will be indexed for inflation beginning with the 2008-09 award year

21. EFC – Independent Students Without Dependents (other than a spouse), cont’d. • Contribution from assets • Assessment rate for contribution from assets is reduced to 20%

22. EFC – Independent Students With Dependents (other than a spouse) • Contribution from assets • Assessment rate for contribution from assets is reduced to 7%

23. EFC – Treatment of Qualified Education Benefits • The term “qualified education benefits” includes • Coverdell Education Savings accounts • Prepaid tuition plans offered by a State • Qualified tuition programs (529 prepaid tuition plans and 529 savings plans)

24. EFC – Treatment of Qualified Education Benefits, cont’d. • Makes the treatment consistent in need analysis • Are not treated as an adjustment to COA or as estimated financial assistance in packaging • Treated as assets of the owner of the plan unless owned by dependent student

25. EFC – Treatment of Qualified Education Benefits, cont’d. • If owned by dependent student, not counted • If plan owned by someone whose information is not included on the FAFSA, not counted

26. EFC – Treatment of Qualified Education Benefits, cont’d. • Value of asset reported – • For savings plans or savings accounts, the balance of the account on the date the FAFSA is signed. • For prepaid tuition plans, the “refund” value of any tuition credits or certificates purchased. It is the amount the owner of the plan would receive if the account is liquidated. Available from plan administrator.

27. EFC – Treatment of Qualified Education Benefits, cont’d. • Value of all plans owned by the parent of dependent applicant must be reported (such as plans for the applicants siblings). • Value of all plans owned by independent student (and spouse) must be reported (such as plans for children).

28. EFC – Treatment of Qualified Education Benefits, cont’d. • For 2006-07, if institution is aware that parents of dependent student or an independent student (or spouse) own a qualified education benefit, need to ensure that the value is included as an asset in the student’s EFC calculation. If institution has treated prepaid tuition plans as adjustments to COA or as EFA in packaging, must reverse those amounts and modify package accordingly.

29. EFC – Means-Tested Federal Benefit Program • May qualify if, in addition to meeting the relevant income criteria, the student (or spouse) or dependent student’s parent(s) received benefits from one of the following means-tested Federal benefit programs –

30. EFC – Means-Tested Federal Benefit Program, cont’d. • Supplemental security income (SSI) program • Free and reduced price school lunch program • Temporary assistance for needy families (TANF) • Special supplemental nutrition program for women, infants, and children (WIC) • Food Stamps

31. EFC – Means-Tested Federal Benefit Program, cont’d. • Receipt by anyone included in the household size • Must be received in base year (may use professional judgment to consider receipt after end of base year) • No required documentation – self-certification is sufficient

32. EFC – Means-Tested Federal Benefit Program, cont’d. • Alternative to the tax return filing standard • For 2006-07, if institution is aware that the student (or spouse) or dependent student’s parent(s) received benefits from a means-tested Federal benefit program, the institution must submit a work-around correction – “Correct” to “yes” the FAFSA question relating to eligibility to file a 1040A or 1040EZ (questions #34 and #72)

33. EFC – Simplified Needs Test (SNT) and Auto Zero – Type of Tax Return • Only the type of tax return filed by a dependent student’s parents is considered for SNT and auto-zero EFC calculations

34. EFC – Simplified Needs Test (SNT) and Auto Zero – Type of Tax Return, cont’d. • For 2006-07 • Modified our systems. All CPS transactions with a process date of May 24, 2006 or later used the revised criteria • Reprocessed earlier applicants who met income criteria but not tax filing criteria of dependent student. Sent system-generated ISIRs to institutions

35. EFC – Maximum Income Amount for Auto Zero EFC • Raised maximum AGI to $20,000 • For dependent student, AGI of parents is used • For independent students with dependents other than a spouse, AGI of student and spouse is used • Auto Zero EFC calculation is not available to an independent student without dependents other than a spouse

36. EFC – Maximum Income Amount for Auto Zero EFC, cont’d. • For 2006-07 • As of May 24, 2006, CPS began using new income level when determining eligibility for auto zero. • Reprocessed earlier applicants who now are eligible based on the increased income threshold. Sent system-generated ISIRs to institutions.

37. EFC – Treatment of Small Business Assets • Excludes from assets the net value of a family-owned and controlled small business with not more than 100 full-time or full-time equivalent employees.

38. EFC – Treatment of Small Business Assets, cont’d. • For 2006-07, if the institution becomes aware that a student or dependent student’s parents reported a family-owned small business as an asset on the FAFSA, it should assist the student in correcting the net worth of investments fields (FAFSA Questions #45 and #83).

39. EFC – Updated Tables • Income protection allowances are increased annually based on inflation. • For 2007-08, the Secretary’s estimate for inflation is 2.8%. • Under HERA, for 2007-08, and only for independent students with dependents other than a spouse, the IPAs will be increased 5%.

40. EFC – Verification of Income Data • Clarifies that the data ED may verify with IRS is limited to the taxpayer ID, AGI, and tax filing status reported on the FAFSA • Authority not implemented at this time – will only be implemented when an IRS match is authorized under the Internal Revenue Code.

41. Institutional Eligibility and Participation • Distance Education • Program Eligibility • Academic Year Definition • Return of Title IV funds

42. Distance Education – Modification of the 50% Rules • Prior to HERA, institutions that offered over 50% of their courses via correspondence (or through a combination of telecommunications and correspondence) or enrolled 50% or more of their students in such courses were ineligible to participate in the Title IV programs.

43. Distance Education – Modification of the 50% Rules, cont’d. • Under HERA, courses offered by telecommunications are not considered correspondence and students enrolled in telecommunications courses are not considered correspondence students.

44. Distance Education – Modification of the 50% Rules, cont’d. • August 9, 2006 regulations • New definition of telecommunications course –

45. Telecommunications Course A course offered principally through the use of one of a combination of technologies including television, audio, or computer transmission through open broadcast, closed circuit, cable, microwave, or satellite; audio conferencing, computer conferencing, or video cassettes or discs to deliver instruction to students who are separated from the instructor and to support regular and substantive interaction between these

46. Telecommunications Course, cont’d. students and the instructor, either synchronously or asynchronously. The term does not include a course that is delivered using video cassettes or disc recordings unless that course is delivered to students physically attending classes at the institution providing the course during the same award year. If the course does not qualify as a telecommunications course, it is considered to be a correspondence course.

47. Distance Education – Modification of the 50% Rules, cont’d. • The 50% limits continue to be in effect for correspondence courses and students

48. Distance Education – Programs Offered in Whole or Part Via Telecommunications • Eligible if – • Programs are otherwise eligible • Offered by a domestic institution accredited by recognized agency that has distance education in its scope of recognition • Institution has been evaluated by the accrediting agency and been determined to have the capability to effectively deliver distance education programs

49. Distance Education – Programs Offered in Whole or Part Via Telecommunications • Programs offered by foreign schools through distance education are not eligible programs. However, participating foreign schools may use telecommunications technology to supplement and support instruction.

50. Distance Education – Programs Offered in Whole or Part Via Telecommunications • Students in short-term certificate programs of less than one year offered by telecommunications are now eligible for Title IV aid.