Title IV Aid - Valencia College

USA Funds University

Fall 2009 Financial Aid Workshop

Special Note

This publication is for the benefit of financial aid administrators. It is intended to provide current

information and is not intended to be legal advice. This manual contains material related to Federal

Title IV student aid programs. This manual has neither been reviewed nor approved by the U.S.

Department of Education. USA Funds® disclaims all responsibility for any claim arising from reliance

on the information provided.

© Copyright 2009 United Student Aid Funds, Inc. All Rights Reserved.

Questions regarding the content of this publication should be addressed to USA Funds University

(M482), 11100 USA Parkway, Fishers, Indiana 46037 or by calling (317) 806-4994.

Information in this training manual is current as of Sept. 22, 2009.

Fall 2009 Financial Aid Workshop Agenda

8 a.m. Registration.

8:30a.m.

Welcome and introductions.

8:45 a.m. Federal update.

Professional judgment in today’s economy.

USA Funds ® update.

Life cycle of a stafford loan.

12:30 p.m. Adjournment.

Federal Update

Federal Update

Many events have shaped and reshaped the financial aid landscape over the past several years. This

has been a time of extraordinary change that extends far beyond the financial aid office: wars in Iraq

and Afghanistan, financial disruptions throughout the world, economic uncertainty and a new U.S.

administration.

Within this context, the financial aid community continues to deal with change due to the effects of

Reauthorization, the 2010 budget process and negotiated rulemaking. This update will examine how

this recent legislation and these pending provisions will affect students and their families, military

veterans and their dependents, borrowers in repayment, financial aid offices and postsecondary

educational institutions in general.

Numerous laws, regulations and rules have formed institutional policies and procedures over recent

years.

Date Legislation/Regulation Citation

Published by Nov. 1, 2009. Final Regulations: Spring 2009 Negotiated Rulemaking. N/A

Issued July 15, 2009. Student Aid and Fiscal Responsibility Act of 2009. H.R. 3221

Enacted July 1, 2009. Higher Education Act Technical Corrections Bill. P.L. 111-39

Published May 1, 2009.

Interim Final Rule: Teacher Education Assistance for College

and Higher Education Grant; Federal Pell Grant; Academic

Competitiveness Grant and National Science and

Mathematics Access To Retain Talent Grant.

74 FR 20210

Enacted June 24, 2009. 2009 Supplemental Appropriations Bill. P.L. 111-32

Issued Feb. 26, 2009. Administration's Fiscal Year 2010 Budget. N/A

Enacted Feb. 17, 2009. American Recovery and Reinvestment Act of 2009. P.L. 111-5

Published Dec. 9, 2008. Family Educational Rights to Privacy Act Final Rule. 73 FR 74806-74855

Published Oct. 23, 2008. Final Regulations: Title IV Loan Provisions. 73 FR 63232–63259

Enacted Oct. 7, 2008.

Ensuring Continued Access to Student Loans Act of 2008

Extension.

P.L. 110-350

Enacted Aug. 14, 2008. Higher Education Opportunity Act of 2008. P.L. 110-315

Enacted June 30, 2008. Supplemental Appropriations Act of 2008. P.L. 110-252

Enacted May 7, 2008. ECASLA of 2008. P.L. 110-227

Enacted Dec. 21, 2007.

College Cost Reduction and Access Act Technical

Amendments.

P.L. 110-153

Published Nov. 1, 2007. Final Rule; Federal Student Aid Programs. 72 FR 62014–62034

Enacted Sept. 30, 2007.

Higher Education Relief Opportunities for Students Act of

2003 amended.

P.L. 110-93

Enacted Sept. 27, 2007. College Cost Reduction and Access Act of 2007. P.L. 110-84

Enacted Feb. 8, 2006. Higher Education Reconciliation Act of 2005. P.L. 109-171

1

Legislation Watch

During 2009, all eyes have been focused on three

primary pieces of legislative and regulatory

activity: the HEA Technical Corrections Bill, the

Administration's budget proposal for FY 2010

and the U.S. Department of Education's

negotiated rulemaking process. The outcomes

forecast even more change in the financial aid

industry.

HEA Technical Corrections Bill

P.L. 111-39.

When a law like the HEOA totals more than 1,000

pages, it is highly likely that minor changes,

clarifications and updates will be necessary.

Congress passed the HEA Technical Corrections

bill in June 2009, which the President signed into

law on July 1, 2009. While parts of this law simply

corrected typos and citations, several important

provisions are summarized below, along with

applicable action items for schools. The effective

date of these provisions corresponds to the

original HEOA enactment date, unless otherwise

specified.

Private Loan Certification

Section 1021(b).

Amends HEA Section 155(a).

Effective: Aug. 14, 2008.

ED and the Federal Reserve System developed a

self-certification form for private loans, to meet

the requirements of the Truth-in-Lending Act. The

school must make available to the applicant the

standardized form, upon request. The Technical

Corrections Bill excludes the requirement to

provide the Expected Family Contribution on the

form.

Action:

Train appropriate staff members on

helping students with this selfcertification

form.

Free Application for Federal

Student Aid Simplification

Section 407.

Amends HEA Section 483(a), (c) and (f).


Delays the implementation of the "EZ FAFSA," a

simplified format for use in applying for federal

student aid, until after the 2010-2011 award year.

Action:

Watch for requests for comments to

ensure important institutional and state

required questions are not eliminated.

Loan Counseling

Section 402.

Amends HEA Section 485(1).


Guarantors and lenders are permitted to provide

entrance counseling for students.

Action:

Review entrance counseling policies and

procedures.

Rehabilitated Loans

Section 402 and 404.

Amends HEA Section 428F(a).


When students default on FFEL loans held by

private lenders, guaranty agencies work with

those defaulted borrowers in an attempt to reestablish

loan repayment. Once students have

made nine consecutive, voluntary, on-time

monthly payments of a reasonable and

affordable amount, they are considered to have

“rehabilitated” their loans. The final step in the

rehabilitation process is for these rehabilitated

loans to be sold either to FFEL lenders or in

secondary markets, thereby allowing the default

status to be removed from the borrowers’ credit

reports. However, in recent months, buyers for

rehabilitated loans have been in short supply due

to current market conditions. The Technical

2

Corrections bill authorizes ED to purchase these

rehabilitated loans in those instances where the

guaranty agencies are unable to locate lenders

willing to purchase those loans.

Trainer’s Tidbit

Rehabilitated loans are defaulted loans

returned to full repayment status, as

defined under federal rules. Borrowers with

rehabilitated loans are eligible to have their

credit ratings restored.

Action:

No action required by school.

Prohibited Inducements

Section 402.

Amends HEA Section 487(e).


Every institution must develop and publish a

code of conduct. The institution must require

that all of the organization’s agents with loanrelated

responsibilities are annually informed of

and comply with the provisions of the code of

conduct. Last year's enactment of the HEOA

significantly amended the inducement

prohibition narrowing its scope to only prohibit

payments made to schools and their employees.

The Technical Corrections Bill expands the reach

of the provision to include lender payments "to

any institution of higher education, any

employee of an institution of higher education,

or any individual or entity in order to secure

applicants for FFELP loans."

Action:

Develop and publish a code of conduct

on the institution's Web site, if applicable.

Communicate code of conduct

requirements to appropriate parties.

Experimental Sites

Section 407.

Amends HEA Section 487A.


Extends the current operation of experimental

sites that have not been deemed "successful" to

June 30, 2010.

The experimental sites initiative provides eligible

schools the opportunity to develop and test

different ways to meet federal student aid

program requirements with the goals of

providing better service to students and

reducing administrative burden. No additional

schools are allowed to become an experimental

site at this time.

Action:

Currently participating financial aid

offices may continue using experimental

approaches when administering financial

aid.

3

Veterans Educational Benefits

Section 406.

Amends HEOA Section 473(c).

Amends HEA Section 480(j)(l) and 480(c).

Effective: July 1, 2009.

The Technical Corrections Bill updated the

definition of veterans educational benefits and

revised the effective date for the exclusion of

benefits from estimated financial assistance to

July 1, 2009.

Montgomery GI Benefits (Ch. 30) already were

excluded from EFA for subsidized Stafford loans.

The following VA educational benefits as defined

in Part F of the HEA are excluded from the

definition of EFA:

Chapter 103 of title 10, United States Code

(Senior Reserve Officers’ Training Corps).

Chapter 106A of title 10, United States Code

(Educational Assistance for Persons Enlisting

for Active Duty).


(Selected Reserve Educational Assistance

Program).


(Educational Assistance Program for Reserve

Component Members Supporting

Contingency Operations and Certain Other

Operations).

Chapter 30 of title 38, United States Code (All-

Volunteer Force Educational Assistance

Program, also known as the Montgomery GI

Bill-active duty).


(Training and Rehabilitation for Veterans with

Service-Connected Disabilities).


(Post-Vietnam Era Veterans’ Educational

Assistance Program).


(Post-9/11 Educational Assistance).


(Survivors’ and Dependents’ Educational

Assistance Program).

Section 903 of the Department of Defense

Authorization Act, 1981 (10 United States

Code 2141 note) (Educational Assistance Pilot

Program).

Section 156(b) of the “Joint Resolution

making further continuing appropriations

and providing for productive employment for

the fiscal year 1983, and for other purposes”

(42 United States Code 402 note) (Restored

Entitlement Program for Survivors, also

known as “Quayle benefits”).

The provisions of chapter 3 of title 37, United

States Code, related to subsistence

allowances for members of the Reserve

Officers Training Corps.

Trainer’s Tidbit

This exclusion applies regardless of whether

the benefits are received by veterans, their

spouses or their dependents.

Action:

Include updated list of excludable

veterans educational benefits in policies

and procedures.

Consider the effect this change in

eligibility may have on packaging policies

and procedures.

Revise financial aid packages for 2009-

2010, as necessary.

Adjust financial aid management system,

if applicable.

4

Example

Andy Perez is a fourth-year, independent undergraduate student at Private University. His cost of

attendance is $23,570 and he has an Expected Family Contribution of $455. His Pell Grant is $4,900

and his Chapter 31 benefits total $5,200.

Example – Old EFA Guidelines

Fourth-Year, Independent Undergraduate

Chapter 31 Benefits of $5,200

Subsidized

Loan Eligibility

Unsubsidized

Loan Eligibility

COA $23,570 COA $23,570

EFC -455 Pell -4,900

Need 23,115 FSEOG -2,000

State Aid -7,505

Pell -4,900 Scholarship -2,250

FSEOG -2,000 Chapter 31 -5,200

State Aid -7,505 Subsidized -1,260

Scholarship -2,250 455

Chapter 31 -5,200

Unmet Need 1,260

Subsidized $1,260 Unsubsidized $455

Total EFA = $23,570

Example – New EFA Guidelines

Fourth-Year, Independent Undergraduate

Chapter 31 Benefits of $5,200

Subsidized

Loan Eligibility

Unsubsidized

Loan Eligibility

COA $23,570 COA $23,570

EFC -455 Pell -4,900

Need 23,115 FSEOG -2,000

State Aid -7,505

Pell -4,900 Scholarship -2,250

FSEOG -2,000 Chapter 31 0

State Aid -7,505 Subsidized -5,500

Scholarship -2,250 1,415

Chapter 31 0

Unmet Need 6,460

Subsidized $5,500 Unsubsidized $1,415

Total EFA = $23,570

570*

*Total aid available to the student = $28,770

What are some unintended consequences of this change?

NOTES

5

Automatic-Zero EFC for

Qualifying Students

Section 401.

Amends Section 401 HEOA.

Amends HEA Section 401(f)(4).


The EFC for a Pell-eligible student will be set to

zero if a parent or guardian died as a result of

military service in Iraq or Afghanistan after

Sept. 11, 2001, if the student was either under 24

years of age or enrolled in an institution of higher

education. This amendment clarifies that

students must have a calculated EFC in the Pelleligible

range to qualify for the reduction to zero.

This change eliminates any confusion that would

have resulted from one EFC for Pell and another

for other Title IV programs.

Action:

Communicate this change to interested

parties.



and procedures.

Contact ED for assistance with selfidentified

students:

Dr. Thurman McClain, thurman.mcclain@ed.gov.

Adjust financial aid packages for selfidentified

students.

Watch for additional guidance from ED

regarding automated processing,

beginning with the 2010-2011 award year,

based on information from the U.S.

Department of Defense and the VA.

Iraq and Afghanistan

Service Grants

Section 401.

Amends HEA Section 401.


A new Title IV grant program will be available to

undergraduate students pursuing a first

baccalaureate degree who are not Pell-eligible,

but whose parents or guardians died as a result

of military service in Iraq or Afghanistan after

Sept. 11, 2001. To qualify, the students must have

been either under 24 years of age or enrolled in

an institution of higher education at the time of

their parents' or guardians' death.

Financial need is not required and the grant

award will not count as part of the EFA. Award

amounts will be based on the maximum Pell

Grant award for each year, including adjustments

for less than full-time enrollment, and cannot

exceed the cost of attendance. Funding will be

subject to the federal appropriations process.

Action:

Communicate this change to interested

parties.



and procedures.

Watch for additional guidance from ED

regarding automated processing,

beginning with the 2010-2011 award year,

based on information from the DoD and

the VA.

NOTES

6

Federal Budget Process for Fiscal Year 2010

The federal budget sets priorities, levels of spending and ways to finance government spending. The

budget reflects the goals and priorities of the President and Congress. On Feb. 26, 2009, President

Obama submitted his $3.45 trillion budget proposal to Congress, which included a request for $46.7

billion for education.

After the President's submission of his budget proposal, Congress prepared a budget resolution.

Drafted by House and Senate Budget Committees, the resolution is an agreement between the two

chambers and governs any Congressional activity and procedures related to the budget process. The

resolution passed on April 29, 2009, and Congress agreed to use the budget reconciliation process as

a way to pass significant legislation related to the FY 2010 budget. On May 7, 2009, the President

submitted details regarding the proposed budget.

President

President submits initial

budget request to

Congress.

Congress

Budget resolution

process.

March and April 2009.

Appropriations

Committees

Budget Conference

Report passed by

Congress.

President submits

detailed budget

request to Congress.

May 7, 2009.

Appropriation

Committees draft bills.

By Oct. 15, 2009.

Appropriations bills

voted on and passed.

Date: TBD.

Trainer’s Tidbit

The budget reconciliation process improves the odds of the budget being adopted because only a

simple majority vote, or 51 percent, is needed in the Senate to adopt a budget resolution that calls

for the reconciliation process. It often is proposed as a way to consider major shifts in federal policy.

Congress used reconciliation legislation in 2007 to adopt the CCRAA.

There are three major changes proposed in the 2010 budget related to federal student aid: expansion

of the Pell Grant program, the shift from FFELP to Direct Lending by 2010 and the restructuring of the

Perkins loan program.

7

Expansion of Pell Grant Program

By law, the Federal Pell Grant program relies on the annual budgeting and appropriations process for

funding. The proposed budget would make Pell Grant funding mandatory and eliminates the yearly

discretionary appropriation of funds, ensuring a regular stream of funding. This is intended to make it

easier for schools to make earlier determinations of awards so students and families will be able to

make better decisions about postsecondary education plans.

Federal Pell Grant Program

Proposed Provisions

Pell Grant funding changes from discretionary to

mandatory.

Pell Grant maximum indexed to the Consumer Price

Index plus one percent.

Maximum amount for 2010-2011 is $5,550.

Potential Action

Determine earliest possible date to notify

students and parents of eligibility.


Anticipate increases or decreases based on

economic conditions.

Make adjustments in FAM system.

Update packaging policies accordingly.

Federal Student Loans

The federal government began guaranteeing student loans provided by banks and non-profit

lenders in 1965, creating the program that is now called the Federal Family Education Loan Program.

In 1993, Congress passed a budget reconciliation bill that was intended to phase in the Federal Direct

Loan Program, starting with colleges that volunteered to participate. The budget proposal would

require that, as of June 30, 2010, loans no longer would be made under FFELP.

NOTES

8

Proposed Provisions

Federal Student Loans

Potential Action

Beginning July 1, 2010, all Stafford (subsidized and

unsubsidized), PLUS and Consolidation loans will be

made from the William D. Ford Federal Direct Student

Loan Program.

As of June 30, 2010, loans no longer will be made

under FFELP.

Existing loans will continue to be serviced by

previous servicer and guaranteed by the same

guarantor.

Any FFELP loans purchased by ED under ECASLA will

be serviced by one of the four private sector servicers

selected: Sallie Mae, Nelnet, Great Lakes Higher

Education Corporation and Pennsylvania Higher

Education Assistance Agency. Borrowers will be

contacted by the new servicer and ED. Toll free

numbers for borrowers and schools are available at

www.ed-servicing.com.

As of Aug. 1, 2010, private-sector servicers perform

origination, servicing, loan collections and related

services through performance-based contracts with

ED.

The Common Origination and Disbursement System

will be used to process all loans. This is the same

electronic system used for Pell Grant processing.

ED provides Web-based entrance and exit

counseling.

Review internal policies, business processes and

systems to determine what changes are needed

for conversion to FDLP. Modify if necessary.

Request to activate participation in FDLP at

www.eligcert.ed.gov.

Participate in training for implementing the new

program.

Determine the last date to accept FFELP

applications.

Continue relationships with servicers and

guarantors.

Inform financial aid staff and other campus

departments of changes.

Compile contact list for financial aid office and

students.

Compile contact list for financial aid office and

students.

Sign up for COD access at www.cod.ed.gov.

Redirect students to ED's Web site for these

services, as appropriate.

NOTES

9

Restructured Perkins Loan Program

The proposed restructuring of the Perkins loan program would provide $6 billion in loan volume each

year, six times the previous $1 billion in funding. The number of colleges in the program is expected

to increase from 1,800 to 4,400, with no currently participating schools losing their ability to

participate. Funds would be distributed to schools based on the need-based aid provided to students,

reasonable costs compared to other schools in their peer group and graduating low-income students.

Previously, the formula for distributing Perkins loans was weighted by a formula that included tuition

costs.

Proposed Provisions

Federal Perkins Loan Program

Potential Action

The last day a Perkins loan can be disbursed under

the existing program is June 30, 2010.

Using its existing systems, ED would be responsible

for making, servicing and collecting new Perkins

loans.

Loans made on or after July 1, 2010, are unsubsidized.

Most of the terms and conditions of the new Perkins

loans would be similar to those that apply to Stafford

loans made under the FDLP.

The five percent interest rate, annual and aggregate

loan limits and school-match requirements remain

the same.

Make adjustments to school's FAM system.

Update policies and procedures.

Inform financial aid staff and other campus

departments of change.

Discontinue making, servicing and collecting new

Perkins loans.

Continue to allocate Perkins loans to students.

Update publications and Web site indicating

changes to program.


Action Required:

Continue to monitor progess of proposal.

NOTES

10

Other Title IV Aid Programs

Like Perkins loans, the Federal Supplemental Educational Opportunity Grant and Federal Work-Study

programs are referred to as "campus-based" programs. Funds for these programs are made directly to

participating institutions and financial aid offices have flexibility in packaging these awards. Though

the proposed budget increased funding for Perkins loans, FSEOG and FWS funding for FY 2010 are

scheduled to remain level with FY 2009 amounts.

HERA authorized two grant programs for Pell recipients: ACG and National SMART Grant. The budget

reflected a proposed increase in these programs for FY 2010 due to accounting adjustments, but the

administration has indicated no plans to extend the programs beyond the June 30, 2011, expiration

date.

Action:

Watch for announcements about the future of these programs.

Negotiated Rulemaking

New laws related to higher education funding, such as HEOA, may require ED to create new and

update existing regulations. During 2009, ED is involved in two rounds of negotiated rulemaking:

spring and summer/fall.

Section 492 of the HEA requires ED to follow a specific process when making substantive new

regulations. Through a series of meetings, representatives from various interest groups attempt to

reach consensus with ED negotiators on proposed regulatory language. After negotiations have

ended, if consensus is achieved, ED uses the proposed regulatory language in its Notice of Proposed

Rulemaking. If consensus is not achieved, ED may use the proposed regulatory language developed

during the negotiations or may develop its own regulatory language for all or a portion of the NPRM.

The NPRM is published in the Federal Register and includes a request for public comment as well as a

deadline for submitting those comments — normally 30-60 days. ED will review comments and

suggestions, amend the proposed rules and publish final rules no later than Nov. 1, for most

provisions to become effective the following July 1. If early implementation is permitted it is noted in

the final rule.

Comments can be submitted through the Federal e-Rulemaking Portal at www.regulations.gov, or by

postal mail, commercial delivery or hand delivery. Comments by fax or by e-mail will not be accepted.

Trainer’s Tidbit

The National Association of Student Financial Aid Administrators has produced a guide, entitled

"How to Communicate With the Department of Education: Responding to a Notice of Proposed

Rulemaking." For more information, visit www.nasfaa.org. Membership may be required.

11

The Regulatory Process at a Glance

U.S. Department of

Education


Committee

Higher Education

Community

Solicit comments

regarding issues to be

regulated.

Determine topics for

negotiated rulemaking

committees.

Nominate negotiated

rulemaking committee

members.

Appoint committee

members to represent

stakeholders such as

students, schools, lender,

guarantors and ED.

If consensus is reached,

ED is required to abide

by the consensus in

NPRM. If consensus is not

reached, ED is free to

draft proposed

regulations as it sees fit.

Committees meet to

discuss topics, with the

goal of consensus.

Committees present

findings (with or without

consensus) to ED.

NPRM published in

Federal Register for

public comment.

After comment period,

ED publishes final

regulations, addressing

any substantive public

comments.

12

2009 Negotiated Rulemaking — Spring

During the spring 2009 negotiated rulemaking session, five committees worked from February to

May to develop the regulatory language that will determine how legislation reauthorizing the HEA

will be implemented. After a public comment period, final regulations must be published in the

Federal Register no later than Nov. 1, 2009, for the provisions to become effective no later than July 1,

2010. In some cases, the provisions may become effective on the publication date, which means that

institutions may need to adjust policies and procedures once the final regulations are published.

Committee

Consensus

Reached

NPRM

Release

Date

Comment

Period Ends

Final Rule

Published

Loans — Lender/General Loan Issues. Yes July 23, 2009 Aug. 24, 2009

Loans — School-Based Loan Issues. Yes July 28, 2009 Aug. 27, 2009

Accreditation. Yes Aug. 6, 2009 Sept. 8, 2009

Discretionary Grants.

No

General and Non-Loan Programmatic Issues. No Aug. 21, 2009 Sept. 21, 2009

There were two loan committees during the spring round of negotiated rulemaking. In July, ED

published two NPRMs in the Federal Register. Both NPRMs proposed changes to the regulations for

the Title IV student loan programs. One, published July 23, 2009, covers lender and guarantors. The

other, dated July 28 includes school-based issues.

Loans — Lender/General Loan Issues

The Lender/General Loan Issues committee reached consensus on all issues. One of the topics was

added to the committee agenda at the request of negotiators: Income-Based Repayment. IBR is a new

repayment option — effective July 1, 2009 — created by the CCRAA. Under this repayment plan an

eligible borrower's monthly federal loan payments cap at 15 percent of income above 150 percent of

the poverty level based on the borrower’s family size. The program covers nearly all federal education

loans made to undergraduate and graduate students, past, present or future. The remaining debt and

interest owed after 25 years of payments may be forgiven.

In the formula used to determine eligibility for IBR, existing rules penalize married individuals who file

joint tax returns by counting both spouses' incomes but not their combined loan debt. This has made

it more difficult for married borrowers to qualify for this new repayment plan. The negotiated

rulemaking team discussed this inadvertent disparity and ED agreed to publish language that would

allow married borrowers to combine their loan debts when applying for IBR. ED indicates that a

borrower must have a "partial financial hardship" to qualify for IBR.

13

Estimate eligibility using calculators provided by www.studentaid.ed.gov, www.usafunds.org,

www.IBRInfo.org or www.FinAid.org/calculators/ibr.phtml.

Trainer’s Tidbit

The Poverty Guideline is published annually by the U.S. Department of Health and Human Services,

categorized by state and family size. For more information about the 2009 guidelines, visit

www.aspe.hhs.gov/poverty/09poverty.shtml.

14

Lender/General Loan Issues Committee

Topic

HEOA Section

Determining borrower eligibility for in-school deferment. 422

Borrower notification when the transfer, sale or assignment of a loan results in a

change where payment is sent.

422

Total and permanent disability loan discharge. 437

PLUS loan repayment, post-enrollment deferment and interest capitalization. 424

FFELP and FDLP Teacher Loan Forgiveness. 429 and 454

Prohibited inducements for lenders and guarantors. 422 and 436

New audit requirements for FFELP school lenders and Eligible Lender Trustees

originating FFELP.

Eligibility for IBR.

436

493C

Until final regulations are published and effective, schools and lenders are required to comply with the statutory language as

written.

NOTES

15

Loans — School-Based Loan Issues

Negotiators working on issues related to school-based loans reached consensus on new rules for all

issues.

ED agreed that the new conflict-of-interest rules governing private loans should not apply to loans

made by higher education institutions themselves. Without this exemption, colleges would have

been required to certify information about their own loans and would have been barred from using

their institution's name or logo on promissory notes or payment-plan agreements. Employees

administering the programs also could not have been paid by the institution.

ED also clarified that colleges may offer recourse loans to their high-risk borrowers as long as they

didn't enter into a "quid pro quo" (the giving of something in return for something else) arrangement

with the lender. This will not violate new conflict-of-interest rules.

On the issue of loan disclosures, ED previously had said there was no way around a requirement that

colleges with preferred lender lists disclose an array of information about student aid options in "all

informational materials" that "describe or discuss loans." After negotiations ED will allow colleges to

provide a link to information found on the college's Web site, as long as the school lists contact

information on the site that can be used by an individual who wishes to request the information in

writing.

In response to changes in the calculations of cohort default rates, college negotiators asked ED to

exempt colleges with small numbers of borrowers from new rules requiring them to calculate the

rate over a three-year period, rather than two-year period, and to make public only final, official rates.

ED agreed not to publish draft rates, but did not provide any exemptions for colleges with few

borrowers.

Loans — School-Based Loan Issues Committee

Topic

HEOA Section

Required disclosures for covered entities. 120

Program Participation Agreement: code of conduct. 493

Advisory board reimbursements. 1011

Private education loan certification. 1021

Information and dissemination activities.

Entrance and exit counseling.

488(a)

488(b) and 488(g)

Program Participation Agreement: preferred lending lists. 493

Cohort default rate calculations. 436

Minimum information requirements for loan borrowers. 120


written.

16

Accreditation

Negotiators on accreditation issues reached consensus on all issues. The proposed language affects

how accrediting organizations monitor their institutional members and are themselves monitored by

ED. The negotiated rules that will be published will be based on the team’s concensus.

The draft rules originally suggested several indicators that accrediting agencies might use to measure

an institution's performance, including financial audits, student retention rates, graduation rates, job

placement statistics and data about the number of students who passed state licensing exams. The

language to which negotiators agreed uses broader terms, saying "the [accrediting] agency must

regularly collect and analyze key data and performance indicators, including but not limited to

financial information and measures of student success."

Accrediting agencies also were worried about rules that would prohibit them from informing

institutions if ED made an inquiry about that college. The compromised language approved by

negotiators relaxes that condition slightly, by allowing accrediting agencies to decide on a case-bycase

basis whether to inform an institution about a department investigation, unless ED specifically

requests that the agency keep that inquiry confidential.

Accreditation Committee

Topic

HEOA Section

Distance and correspondence education. 495(1)(A) and (5)

Due process and appeals.

Operating procedures.

495(1)(C)

495(2)(C),(D) and (F)


written.

NOTES

17

Discretionary Grants

The panel working on issues related to federal grant programs reached agreement on issues

involving Gaining Early Awareness and Readiness for Undergraduate Programs, which helps lowincome

students prepare for college, and migrant education programs, but not on issues related to

the TRIO programs for disadvantaged students. Concerns included how colleges can use money for

Talent Search, a college-preparatory program, and the appeals process for unsuccessful applicants for

TRIO funding. Without consensus, ED is not obligated to honor agreements reached with the nonfederal

negotiators when it writes regulatory language to be published as a proposed rule.

Discretionary Grants

Topic

HEOA Section

TRIO Programs. 403

GEAR UP. 404

Migrant Education Programs. 408


written.

General and Non-Loan Programmatic Issues

Negotiations on general and non-loan issues failed to reach agreement on regulations governing

year-round Pell Grants and consumer information. Without consensus, ED is not obligated to honor

agreements reached with the non-federal negotiators when it writes regulatory language to be

published as a proposed rule.

Year-Round Pell Grant Awards

The HEOA established that a student may receive up to two Pell Grant scheduled awards during a

single award year if the student is pursuing a certificate, associate degree or a baccalaureate degree

and is enrolled at least half time for more than one academic year, more than two semesters or the

equivalent time during a single award year.

Disagreement during negotiations centered on the interpretation of "accelerate the student's

progress" as it relates to eligibility for a second scheduled award within one award year. Some nonfederal

negotiators believed the statutory language was intended to allow even a part-time student

to be considered to “accelerate” attending year-round. Proposed language, however, would require

that a student complete all hours in the school's defined academic year before receiving a second

scheduled Pell Grant award in the same award year.

NOTES

18

Negotiators representing community colleges and four-year public institutions said the rule would

prevent students who enroll less than full time for one or more terms or who fail a course from ever

receiving a second Pell Grant. ED countered that it wanted to be sure that recipients were truly

"accelerating" academically.

Trainer’s Tidbit

ED implemented additional COD System functionality to support 2009-2010 Pell Grant changes

related to the HEOA. EDExpress contains a new field "Additional Eligibility Indicator" which, if

checked, will allow users to originate Pell Grant awards up to 200 percent of a scheduled award. The

National Student Loan Data System also will display the additional eligibility indicator.

General and Non-Loan Programmatic Issues Committee

Topic

HEOA Section

Year-round Pell Grant. 401

Pell Grants to children of soldiers. 401

TEACH Grant extenuating circumstances.

Federal Work-Study.

412(a)(1)

441(2), 443, 444, 446

and 447

90/10 Rule. 493

Consumer information. 488 and 493

Financial assistance for students with intellectual disabilities. 485(a)(8) and 709

Readmission requirements for service members. 487

Definition of baccalaureate "liberal arts" programs at proprietary schools.

102(d)(1)(A)(i)


written.

NOTES

19

2009 Negotiated Rulemaking —

Summer/Fall

As announced in May 2009, ED plans to engage

in another round of negotiated rulemaking.

Negotiations should begin in late summer/early

fall, with two committees discussing issues

submitted by interested parties from three

public meetings conducted in June.

ED plans to convene a committee to develop

regulations to implement changes made by the

HEOA that affect foreign schools.

The topics under consideration (as of September

2009) by a second committee addressing

program integrity include:

Satisfactory Academic Progress.

Incentive compensation paid by institutions

to persons or entities engaged in student

recruiting or admissions activities.

Definition of a credit hour, particularly in the

context of awarding Pell Grants.

Verification of information included on

student aid applications.

Definition of a high school diploma as a

condition of receiving federal student aid.

Gainful employment in a recognized

occupation.

State authorization for institutional

participation.

ED expects to issue the NPRMs for this round of

meetings after negotiations conclude by March

2010. Final rules should be issued by July 1, 2010,

with an effective date of July 1, 2011. Early

implementation may be allowed.

Other Legislative Activity

Student Aid and Fiscal Responsibility Act of

2009.

H.R. 3221.

Credit Card Accountability, Responsibility and

Disclosure (CARD) Act of 2009.

P.L. 111-024.

Proposed Medical Economic Deferment for

Students (MEDS) Act.

H.R. 1615.

Proposed Tax Relief for IBR Loan Forgiveness.

H.R. 2492.

Proposed Consumer Financial Protection

Agency.

H.R. 3126.

Military Benefits

Legislation passed by Congress on June 30, 2008,

is considered the most extensive educational

benefit package for veterans authorized since

the original GI Bill was signed into law in 1944.

The bill, called the Post-9/11 Veterans

Educational Assistance Act, was part of the 2008

Supplemental Appropriation Act and established

both the Post-9/11 GI Bill and the Yellow Ribbon

Program.

Since then, the HEA Technical Corrections and

the 2009 Supplemental Appropriations Act

became law. The DoD also announced its policies

on transferability of veterans educational

benefits and included a number of changes and

clarifications.

NOTES

20

Post-9/11 GI Bill

Chapter 33

Under the Post-9/11 GI Bill, eligible veterans will

receive education benefits sufficient to cover

tuition and fees, up to the rate charged at the

most expensive public institution in the state

where the student is enrolled. They also will

receive a stipend for books and supplies up to

$1,000 per year. Most veterans will qualify for a

monthly housing allowance as well. The benefit

amount is determined by the aggregate length

of service.

Yellow Ribbon Program

The Yellow Ribbon Program allows a

postsecondary school in the United States to

enter into an agreement with the VA to provide

additional funds to veterans when the school’s

tuition and fees exceed the highest in-state

undergraduate rate. Veterans may receive funds

through the Yellow Ribbon Program if they

attend a participating school and are receiving

full benefits under Chapter 33. A list of

participating Yellow Ribbon Program institutions

is posted on the VA Web site at www.gibill.va.gov.

Transferability of Benefits

One of the benefits requested by veteran

advocacy groups was transferability allowing

service members to share their education

benefits with immediate family members. The

DoD has announced its policy for Post-9/11 GI Bill

transferability. On or after Aug. 1, 2009, the

eligible service member may transfer entitlement

of the Post-9/11 GI Bill to a spouse or child.

Spouse:

The spouse is not eligible for the monthly

housing allowance or stipend for books and

supplies while the service member is on

active duty.

A subsequent divorce will not affect eligibility,

though the service member has the right to

revoke the transfer at any time.

The spouse will remain eligible to use

transferred entitlement until the earliest of:

Child:

15 years from the service member’s last

discharge from active duty.

The date the service member revokes the

transferred entitlement (in the case of

divorce).

The service member dies while on active

duty.

15 years after the service member’s date

of death.

The child is eligible for the monthly housing

allowance or stipend for books and supplies,

even if the parent is on active duty.

A child's subsequent marriage will not affect

eligibility to receive the educational benefits;

however, the military parent has the right to

revoke the transfer at any time.

The child will remain eligible to use the

transferred entitlement until either their 26 th

birthday or the date the military parent

revokes the transferred entitlement.

Trainer’s Tidbit

Eligible service members can transfer benefits

to their spouses or children online at

www.dmdc.osd.mil/TEB/.

21

2009 Supplemental

Appropriations Act

P.L. 111-32.

Effective Aug. 1, 2009.

The final 2009 Supplemental Appropriations Act

includes a provision to expand GI Bill benefits to

the children of fallen U.S. soldiers of the wars in

Iraq and Afghanistan, regardless of the soldiers’

length of military service. The new benefit will be

known as the “Marine Gunnery Sergeant John

David Fry Scholarship.”

The benefits include:

Tuition and fees up to the maximum in-state

tuition rate and fees at a public institution in

the state where they are enrolled.

A monthly housing allowance at the location

of the school, based on the Basic Housing

Allowance for an E-5 with dependents.

An annual stipend for books and supplies of

up to $1,000.

This new benefit allows children to use Post-9/11

GI Bill benefits that could have been transferred

to them if their military parent had lived. It is

slightly different than the normal family transfer

option under the Post-9/11 GI Bill.

Trainer’s Tidbit

U.S. Rep. Chet Edwards (D-TX) included a

provision in the 2009 Supplemental

Appropriations bill that named the program

the "Marine Gunnery Sergeant John David Fry

Scholarship" to honor a father of three in his

congressional district who was killed in action.

Sergeant Fry was an explosive device disposal

technician who was credited with saving

numerous lives before sacrificing his own in

Iraq.

Dependent

Eligibility

Military

Service

Requirements

Age

Restriction

Post-9/11 GI Bill

Allows more than

one person to

receive transferred

benefits, but no

more than 36 total

months can be

transferred.

Requires the

parent to have

completed a

minimum of

military service for

their benefits to

transfer to their

children (six years

with an additional

four-year

commitment).

Ends benefits to

children at age 26.

Fry

Scholarship

Will qualify

each

dependent for

36 months of

benefits.

Extends the full

benefit to each

dependent

child.

No minimum

length of

parental

military service

to qualify.

Ends benefits

to children at

age 33.

Because this is a last-minute addition to the VA

benefits program, the bill includes language

giving the VA until Aug. 1, 2010, to create a

process for applying promised retroactive

payments to dependents using the benefits

between Aug. 1, 2009, and Aug. 1, 2010.

22

Emergency Preparation

In light of recent natural disasters and other

emergencies affecting college campuses, ED has

a renewed focus on emergency preparation.

Schools are encouraged to review and update

their primary and alternate contact information

on the Program Participation Agreement at

http://eligcert.ed.gov.

If an event occurs that affects a school’s ability to

operate normally, the school should call

(800) 433-7327 to discuss the situation with ED

representatives.

Trainer’s Tidbit

Schools may find additional information online

at http://ifap.ed.gov/ifap/disaster.jsp.

Keeping Current

Keeping current with what is happening with

reauthorization, the federal budget process and

negotiated rulemaking can be a challenge,

especially in recent times.

USA Funds’ Education Access Report.

www.usafunds.org/apps/eareport/

default.aspx.

USA Funds’ Education Access Report is a free

online publication providing weekly news on

topics important to the financial aid and

education lending communities. To subscribe

to the Education Access Report, simply access

the site and input an e-mail address.

ED Schools Portal.

www.ifap.ed.gov/ifap/mailinglist.jsp.

Schools can sign up to receive e-mail notices

when new documents are posted, such as

Federal Registers and Dear Colleague Letter.

Information for Financial Aid

Professionals.

www.ifap.ed.gov.

Provides Dear Colleague Letters, electronic

publications and numerous other references

that are excellent resources for financial aid

administration.

The Federal Student Aid Handbook.

www.ifap.ed.gov.

The FSA Handbook is published each year by

ED as a primary resource for financial aid

administrators. The electronic version may be

downloaded and is searchable using PDF

search features.

NOTES

23

The Blue Book.

www.ifap.ed.gov/bbooks/102005BlueBook.

html.

Addresses the rules and procedures that

schools must follow in requesting,

maintaining, disbursing and managing Title

IV funds. It is not published annually.

The ISIR Guide.

www.ifap.ed.gov/ifap/byAwardYear.jsp

?type=isirguide.

Assists in interpreting student information on

the Institutional Student Information Record

sent electronically to schools by the Central

Processing System. ISIRs contain processed

student information reported on the FAFSA,

as well as key processing results and NSLDS

financial aid history information.

Audit Guide of Federal Student Financial

Assistance Programs.

www.ifap.ed.gov/ifap/byYear.jsp?type=

aguides.

Assists independent public auditors in

performing audits of Title IV aid programs.

National Association of Student Financial

Aid Administrators.

www.nasfaa.org.

Provides a daily newsletter with legislative

and regulatory analysis related to federal

student aid programs. Membership may be

required.

The Library of Congress.

http://thomas.loc.gov/.

Public access to government documents and

related resources.

GovTrack.

www.govtrack.us.

An online resource to track specific federal

legislation.

U.S. Government Printing Office.

www.gpoaccess.gov.

Provides an online gateway to the Code of

Federal Regulations, Federal Register

publications and the Unified Agenda.

Regulations.gov.

www.regulations.gov.

A source for all regulations issued by U.S.

government agencies, including ED. This site

contains all federal regulations that are open

for public comment (proposed rules) and

closed for public comment (final rules), as

published in the Federal Register.

U.S. Department of Veterans Affairs.

www.va.gov.

A resource for veterans and non-veterans

about the various benefits and programs

available through the VA.

NOTES

24

Putting It To Work

The topics covered in this training session are conveyed in general terms to encompass learners from

all types of postsecondary institutions. You should consider how the concepts covered in the training

apply to your school.

Schools are often given the flexibility in administering and applying guidelines to certain federal

student aid programs. That's why it is essential that you discuss these items (shown below) with your

supervisor.

Your supervisor can give you institution-specific guidelines on how the material we discussed in this

training session can be applied to your job.

1. How does our financial aid office ensure all legislative and regulatory changes are effectively

incorporated into policies and procedures?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

2. What information should be shared with other campus departments? How will it be

communicated?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

3. List some key resources our office uses to stay informed and research new legislation and

regulations.

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

4. Does our office review new bills, legislation and regulation and submit comments? If not, why?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

25

Trainer's Toolkit

The Trainer's Toolkit is a listing of terms, Web sites

and reference material directly related to the

Federal Update.

Terms, Acronyms and

Abbreviations

ACG

Academic Competitiveness Grant.

The Academic Competitiveness Grant provides

up to $750 for the first year of undergraduate

study and up to $1,300 for the second year of

undergraduate study to full-time students who

are eligible for a Federal Pell Grant and who have

successfully completed a rigorous high school

program, as determined by the state or local

education agency and recognized by the U.S.

Secretary of Education. Students enrolled at least

half time qualify for prorated grant amounts.

Active Duty

Serving in full-time duty in the active military

service of the U.S., not including training or

attendance at a service school.

AGI

Adjusted Gross Income.

AGI is defined as taxable income from all sources,

minus specific deductions allowed by the

Internal Revenue Service. Parent and student AGI

is reported on the Free Application for Federal

Student Aid.

Alternative/Private Loans

Education loans made available from nonfederal

sources — such as banks, credit unions and

endowment associations. The term alternative or

private is used to define these loans.

Award Year

An award year begins on July 1 in one calendar

year and ends on June 30 of the following

calendar year. For example, the 2009-2010 award

year begins July 1, 2009, and ends June 30, 2010.

Awarding/Packaging

The process used by institutions to combine the

various forms of financial aid — including aid

such as grants, loans, scholarships and workstudy

— for students to attend school.

AY

Academic Year.

An undergraduate academic year for credit-hour

programs must consist of at least 30 weeks of

instructional time. An undergraduate clock-hour

program must consist of at least 26 instructional

weeks. The minimum number of instructional

weeks for graduate programs is defined by the

school.

Campus-Based Aid Programs

Federal Perkins Loans, Federal Work-Study and

Federal Supplemental Educational Opportunity

Grants are the three campus-based aid programs.

Campus-based aid programs are federal financial

aid programs administered by the institution,

rather than ED. ED provides a fixed pool of money

to participating schools, with some programs

requiring a contribution from the institution as

well.

CCRAA

College Cost Reduction and Access Act of

2007.

The College Cost Reduction and Access Act (P.L.

110-84) provides numerous changes in federal

financial aid administration. The CCRAA was

signed into law on Sept. 27, 2007, with some

provisions retroactively applied to the 2007-2008

academic year; others were implemented Oct. 1,

2007, and the majority took effect either July 1,

2008, or July 1, 2009. Technical amendments to

the CCRAA were signed into law on Dec. 21, 2007

(P.L. 110-153).

27

CDR

Cohort Default Rate.

The CDR is the percentage of borrowers of

certain federal education loans who default

before the end of the fiscal year following the

fiscal year in which they entered repayment on

their loans. ED annually calculates this rate to

determine the default experience of students

who attended a particular school during a

specific time period.

CFR

Code of Federal Regulations.

The CFR is a collection of federal regulations

disseminated by the U.S. government. ED’s

regulations are codified in Volume 34 of the CFR.

Search the most recent CFR at

www.access.gpo.gov/nara/cfr/cfr-tablesearch.html#page1

or go to www.ifap.ed.gov and

click on “Code of Federal Regulations (GPO

Compilation)” under “Laws & Regulations.”

COA

Cost of Attendance.

The total estimated cost for a student to attend

school, including tuition and fees, room and

board, allowances for books and supplies,

transportation and personal and incidental

expenses.

COD

Common Origination and Disbursement.

The COD is a common process integrated with a

system designed to support origination,

disbursement and reporting for Direct Loans and

Pell Grants, and reporting for campus-based

programs. The COD System is a technical solution

designed to accommodate the COD Process for

Federal Pell Grant and Direct Loan funding and

campus-based reporting.

Code of Conduct

Institutions are required to develop and maintain

a code of conduct prohibiting any conflicts of

interest with respect to Title IV loans. Schools

must inform officers, employees and agents of

the institutions with loan-related responsibilities

about the institution’s code of conduct

provisions each year.

Common Manual

www.commonmanual.org.

A compilation of federal statute, regulation and

other guidance to assist schools and lenders in

administering the FFELP. Written in a life-of-loan

sequence and in the simplest terms, the manual

provides an efficient “first source” to locate

important guidance on daily processing

questions. The manual also includes an extensive

array of hyperlinks from its text to its source

material in statute, regulations and the

Department’s subregulatory publications.

Consumer Information

Information provided to students, faculty, staff

and the community about an institution of

higher education. ED regulates and mandates

this disclosure of information.

CPS

Central Processing System.

The CPS is ED’s processing facility for Free

Application for Federal Student Aid data.

28

DCL

Dear Colleague Letter.

ED distributes DCLs to schools, lenders, servicers

and guarantors to provide interpretive policy

guidance about federal student aid programs.

Typically, a DCL provides interim guidance after

Congress reauthorizes the Higher Education Act

or between releases of final regulations. Recent

and archived DCLs are available in the Letters

and Announcements section on the Information

for Financial Aid Professionals Web site at

www.ifap.ed.gov. Listed below are the types of

DCLs that ED publishes:

General Distribution (GEN).

Training Announcements (ANN).

Campus-based Programs (CB).

Pell Grant Program (P).

Financial Partners (FP).

DoD

U.S. Department of Defense.

www.defense.gov.

The DoD is charged with supplying military

service members in order to discourage

waractivities and ensure the security of the

United States. DoD is the largest and oldest

government agency and the nation’s largest

employer.

ECASLA

Ensuring Continued Access to Student Loans

Act of 2008.

The ECASLA (P.L. 110-227) provides numerous

changes in federal financial aid administration.

The ECASLA was signed into law on May 7, 2008,

to ensure that students and families would

continue to be able to borrow federal student

loans for the 2008-2009 academic year. The bill

was enacted less than one month after its

introduction. Subsequent revisions clarified some

of this bill’s provisions.

ED

U.S. Department of Education.

www.ed.gov.

ED was created in 1980 when several federal

agencies were combined. Its mission is to ensure

equal access to education and to promote

educational excellence throughout the nation.

ED’s purpose is to:

Establish policies on federal financial aid for

education.

Distribute and monitor federal student aid

funds.

Collect data on schools and disseminate that

research.

Focus national attention on key educational

issues.

Prohibit discrimination and ensure equal

access to education.

EFA

Estimated Financial Assistance.

The school’s estimate of the amount of financial

assistance that a student has been or will be

awarded for the enrollment period for which a

loan is sought. The EFA includes assistance from

federal, state, institutional, scholarship, grant,

financial need-based employment, or other

sources. EFA does not include veterans

educational benefits or ROTC payments.

EFC

Expected Family Contribution.

The EFC figure is determined by Congressionallyapproved

Federal Methodology need-analysis

formulas. The EFC is an index that colleges use to

determine financial aid eligibility.

29

Experimental Site

The experimental sites initiative provides eligible

schools the opportunity to develop and test

different ways to meet federal student aid

program requirements with the goals of

providing better service to students and

reducing administrative burden. Schools

complete an annual report and ED may use the

results to propose legislative and regulatory

changes.

FAA

Financial Aid Administrator.

An FAA is a college or university employee who is

responsible for the administration of financial

aid.

FAFSA

Free Application for Federal Student Aid.

The FAFSA is ED’s official form used to apply for

aid from all federal student aid programs.

FDLP

Federal Direct Student Loan Program.

The FDLP is similar to the Federal Family

Education Loan Program. The funds for these

loans are provided by the U.S. government

directly to students and their parents through

their schools.

Federal Pell Grant

Federal Pell Grants are the foundation of financial

aid awards for students who demonstrate

financial need. Because it is the foundation of

financial aid award packages, Pell Grant funds

always must be awarded to students who are

eligible. Students’ eligibility is based on the

Expected Family Contribution as calculated from

information provided on the FAFSA.

Federal Perkins Loans

Federal Perkins loans are intended to assist

students with exceptional need by providing

long-term federal loans with a fixed interest rate

of 5 percent. Interest does not accrue on Perkins

loans while the student is in school and during

authorized periods of deferment. Individual

award amounts and awarding policies are

determined by the school.

Federal Stafford Loans

Federal Stafford loans are available to

undergraduate and graduate students enrolled

at least half time. Students may borrow up to

established annual loan limits, based upon their

grade level. Stafford loans may be subsidized

(need-based) or unsubsidized (non-need-based).

Recipients have a six-month grace period upon

ceasing to be enrolled at least half time.

FFELP

Federal Family Education Loan Program.

Loan programs authorized by Title IV, Part B of

the Higher Education Act of 1965, as amended,

that includes Federal Stafford loans, Federal

Unsubsidized Stafford loans, Federal PLUS loans

and Federal Consolidation loans. These loan

programs are funded by lenders, guaranteed by

guarantors and reinsured by the federal

government. These programs are defined

individually in 34 CFR 682.

FSEOG

Federal Supplemental Educational

Opportunity Grant.

FSEOG is a federal grant program for

undergraduate students with exceptional

financial need. FSEOG grants are awarded by

schools and they provide up to $4,000 per year

to students. First priority for FSEOG funds must

go to students with the lowest EFC who also

receive Pell Grants. If funds remain after Pell

Grant recipients receive FSEOG, you may award

funds to students with the lowest EFCs who are

not receiving Pell Grants.

30

FWS

Federal Work-Study.

FWS is a self-help form of financial aid that

provides students with part-time employment

during the school year. The federal government

pays a portion of the student's salary, while the

employer pays the remaining portion. Eligibility

for FWS is based on financial need. Money earned

from a FWS job is not counted as income for the

subsequent year's need-analysis process.

FY

Fiscal Year.

The FY is the 12-month period during which

financial assistance is awarded through the

federal government. The federal fiscal year is

Oct. 1 - Sept. 30.

GEAR UP

Gaining Early Awareness and Readiness for

Undergraduate Programs.

www.ed.gov/gearup.

GEAR UP is a federal program designed to better

prepare middle and high school students for

college through mentoring programs and

scholarships, as well as new academic

preparation and awareness programs for

students and parents.

Guarantor

A private, nonprofit organization or state

government entity that guarantees to the lender

repayment of federal student loans. The

guarantor works with borrowers whose student

loan payments are seriously past due to help

them avoid default. If a borrower defaults, the

guarantor partially reimburses the lender,

purchases the defaulted loan and continues

efforts to recover the amount owed by the

borrower.

HEA

Higher Education Act of 1965, as amended.

The HEA is the law that authorizes most federal

programs and activities that assist and enable

students to enter and succeed in postsecondary

education. The primary focus of the HEA is

student aid, in the form of grants, loans and workstudy

assistance.

HEOA

Higher Education Opportunity Act of 2008.

The HEOA (P.L. 110-315) reauthorized the Higher

Education Act of 1965, as amended. The HEOA

was signed into law on Aug. 14, 2008, with some


academic year; others are to be implemented at

later dates.

HERA

Higher Education Reconciliation Act of 2005 (P.L.

109-171) reauthorizes portions of the Higher

Education Act of 1965, as amended. HERA was

signed into law on Feb. 8, 2006 and contains

provisions that affect the federal student

financial aid programs authorized by Title IV.

Some key provisions include: fixed interest rates

for Stafford and PLUS loans, increases in Stafford

Loan limits and the introduction of two new

grant programs.

HHS

U.S. Department of Health and Human

Services.

www.hhs.gov.

HHS is the U.S. government's principal agency for

protecting the health of Americans and

providing essential human services, especially for

those who are least able to help themselves. The

department has more than 300 programs,

covering a wide spectrum of activities including

financial assistance for students seeking training

in medicine, dentistry, nursing and other healthrelated

fields.

31

IBR

Income-Based Repayment.

Effective July 1, 2009, any borrower who is in

repayment or enters repayment and has a partial

financial hardship is eligible for income-based

repayment. Borrowers who participate in IBR may

be eligible for forgiveness of any outstanding

loan balance that remains after 25 years.

IFAP

Information for Financial Aid Professionals.

www.ifap.ed.gov.

Information for Financial Aid Professionals is a

Web site that was developed to provide school

and financial partners with electronic access to

the many FSA publications that guide the

administration of the Title IV Student Financial

Assistance programs.

IRS

Internal Revenue Service.

www.irs.gov.

The IRS is the federal agency responsible for

administering and enforcing the U.S. Treasury

Department's revenue laws, through the

assessment and collection of taxes,

determination of pension plan qualification and

related activities.

ISIR

Institutional Student Information Record.

The ISIR is an electronic record provided to the

school by ED’s Central Processing System. The

ISIR includes information provided by students

on the FAFSA. The ISIR also contains students’

Expected Family Contribution and the results of

federal database matches (including citizenship,

names, dates of birth and Social Security number

matches).

Lender

The organization that funds education loans for

students and parents under the FFELP.

32

Loan Forgiveness

Federal education loans may be discharged,

canceled or forgiven, which relieves the borrower

from any further obligation to repay the

remaining amount due. Some borrowers may

qualify for forgiveness of a portion of the loan

principal. Forgiveness of loan debt usually is tied

to service for a specified period of time, such as

teaching.

NASFAA

National Association of Student Financial Aid

Administrators.

www.nasfaa.org.

NASFAA supports financial aid professionals at

colleges, universities and career schools. NASFAA

is the only national association with a primary

focus on student aid legislation, regulatory

analysis and professional development for

financial aid administrators.

National SMART Grant

National Science and Mathematics Access to

Retain Talent Grant.

A National SMART Grant provides up to $4,000

for each of the third and fourth years of

undergraduate study to students who are

eligible for a federal Pell Grant and are majoring

in physical, life or computer sciences,

mathematics, technology or engineering, or in a

foreign language determined critical to national

security. The recipient also must have maintained

a cumulative grade point average of at least 3.0

in coursework related to the major. The National

SMART Grant is awarded in addition to the Pell

Grant award.

NPRM

Notice of Proposed Rulemaking.

An NPRM is a notice printed in the Federal

Register of proposed regulations from a

government agency, such as ED. Interested

parties are invited to submit comments and

recommendations about proposed regulations.

ED reviews comments and then issues final

regulations.

P.L.

Public Law.

A P.L. is designated by the number of the

Congress and the order in which it is enacted. For

example, P.L. 106-10 is the tenth law enacted

during the 106 th Congress.

PLUS

Formerly Parent Loans for Undergraduate

Students.

PLUS loans are federal loans available to parents

of dependent undergraduate students and to

graduate/professional students. Borrowers may

obtain up to the full cost of education, less the

amount of any other financial aid received or

anticipated. Borrowers must not have adverse

credit, as defined in regulation, to qualify for a

PLUS loan.

Preferred Lender Arrangement

Exists when a covered institution or institutionaffiliated

organization recommends the

education loan products of a lender, and that

lender provides education loans to students or

parents of dependent students attending a

covered institution.

SAP

Satisfactory Academic Progress.

SAP is a set of qualitative and quantitative

standards set by a school that require its students

to maintain an academic standing consistent

with the school's policy on progression toward

graduation requirements.

SAR

Student Aid Report.

The SAR is the report sent to students that

summarizes the information included in the

FAFSA. The SAR also indicates the amount of Pell

Grant eligibility, if any, and the Expected Family

Contribution, as well as any eligibility issues. The

SAR is the student’s version of the ISIR.

TEACH Grant

Teacher Education Assistance for College and

Higher Education Grant.

The College Cost Reduction and Access Act of

2007 created the TEACH Grant program. The

program provides grants of up to $4,000 per year

to students who intend to teach in a high-need

subject area in a public or private elementary or

secondary school that serves students attending

Title I schools. In exchange for receiving a TEACH

Grant, recipients must agree to teach full time for

at least four academic years within eight

academic years. If this obligation is not met, the

TEACH Grant converts to an unsubsidized Direct

Stafford loan.

Title IV Aid

Federal student financial aid programs

administered by ED that include Pell Grants,

Academic Competitiveness Grants, National

SMART Grants, Federal Supplemental Educational

Opportunity Grants, TEACH Grants, Federal Work-

Study Program, Federal Perkins loans, subsidized

FFEL/Direct Stafford loans, unsubsidized

FFEL/Direct Stafford loans, FFEL/Direct PLUS

loans for parents and FFEL/Direct PLUS loans for

graduate or professional students.

TRIO Programs

Six TRIO programs exist to assist students from

disadvantaged backgrounds: Educational

Opportunity Centers, Ronald E. McNair

Postbaccalaureate Achievement, Student

Support Services, Talent Search, Upward Bound

and Upward Bound Math-Science.

VA


www.va.gov.

The VA provides patient care, veterans benefits

(including educational benefits) to U.S. veterans.

33

References, Resources and Web Sites

Technical Corrections Bill

Federal Legislation or Regulations.

To make technical corrections to the Higher Education Act of 1965, as amended, and for other

purposes.

P.L. 111-39.

July 1, 2009.

www.govtrack.us.


P.L. 110-315.

Aug. 14, 2008.

www.ed.gov/policy/highered/leg/hea08/index.html.


Dear Colleague Letter GEN-08-12/FP-08-10.

Subject: The Higher Education Opportunity Act.

December 2008.

www.ifap.ed.gov/dpcletters/GEN0812FP0810.html.

Press Release.

Obama Administration Announces Streamlined College Aid Application.

June 24, 2009.

www.ed.gov/news/pressreleases/2009/06/06242009.html.

National Association of Student Financial Aid Administrators.

HEOA Technical Corrections Bill Adopts Provisions Advocated by NASFAA.

NASFAA News.

June 25, 2009.

www.nasfaa.org/publications/2009/gheacorrections062509.html.

HEOA Technical Corrections Bill Adopts Provisions Advocated by NASFAA.

NASFAA News.

June 25, 2009.

www.nasfaa.org/publications/2009/ln1777signed070609.html.

House and Senate Pass HEA Technical Amendments Bill.

NASFAA News.

June 24, 2009.

www.nasfaa.org/publications/2009/ghr1777062409.html.

Other Resources.

Chronicle of Higher Education.

Congress Approves Technical Amendments to Higher Education Act.

June 24, 2009.

www.chronicle.com/article/Congress-Approves-Technical/47800.

34

Federal Budget Process


Budget Office – Overview.

www.ed.gov/about/overview/budget/index.html.

Budget Process in the U.S. Department of Education.

www.ed.gov/about/overview/budget/process.html.

Press Release.

U.S. Department of Education Expands Its Student Loan Servicing Capacity.

June 12, 2009.

www.ed.gov/news/pressreleases/2009/06/06172009b.html.

Fiscal Year 2010 Budget Summary.

May 7, 2009.

www.ed.gov/about/overview/budget/budget10/summary/edlite-section1.html.

Questions & Answers on the Pell Grant Program.

April 6, 2009.

www.ed.gov/about/overview/budget/budget10/finaid/faq-pell.html.

Questions & Answers on the Transition to 100 Percent Direct Lending.

April 6, 2009.

www.ed.gov/about/overview/budget/budget10/finaid/faq-ffel-dl.html.

Questions & Answers on Updates to the Perkins Loan Program.

April 6, 2009.

www.ed.gov/about/overview/budget/budget10/finaid/faq-perkins.html.


Department Official Gives Additional Details on Obama's Perkins Loan Proposal.

April 3, 2009.

www.nasfaa.org/publications/2009/gperkins040309.html.

Other Resources.

The New America Foundation.

Federal Education Budget Project.

www.febp.newamerica.net/background-analysis/federal-budget.


Federal Legislation and Regulations.

Negotiated Rulemaking Committees; Establishment.

74 FR 24728.

May 26, 2009.

www.ifap.ed.gov/fregisters/FR05262009.html.

Notice of establishment of negotiated rulemaking committees.

73 FR 80314

Dec. 31, 2008.

www.ifap.ed.gov/fregisters/FR12312008.html.

35


The Negotiated Rulemaking Process for Title IV Regulations — Frequently Asked Questions.

www.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html.

2009 Negotiated Rulemaking for Higher Education — Team I— General/Lender Loan Issues.

www.ed.gov/policy/highered/reg/hearulemaking/2009/loans-lender.html.

2009 Negotiated Rulemaking for Higher Education — Team II — Loans-School-Based Loan Issues.

www.ed.gov/policy/highered/reg/hearulemaking/2009/loans-school-based.html.

2009 Negotiated Rulemaking for Higher Education — Team III— Accreditation.

www.ed.gov/policy/highered/reg/hearulemaking/2009/accreditation.html.

2009 Negotiated Rulemaking for Higher Education — Team IV— Discretionary Grants.

www.ed.gov/policy/highered/reg/hearulemaking/2009/grants.html.

2009 Negotiated Rulemaking for Higher Education — Team V — General and Non-Loan

Programmatic Issues.

www.ed.gov/policy/highered/reg/hearulemaking/2009/gen-program.html.

2009 Negotiated Rulemaking for Higher Education — Summer/Fall.

www.ed.gov/policy/highered/reg/hearulemaking/2009/negreg-summerfall.html.

Office of Postsecondary Education — Policy Initiatives.

www.ed.gov/about/offices/list/ope/policy.html.

Conference Call with Deputy Undersecretary Robert Shireman of the U.S. Department of Education

Transcript.

May 29, 2009.

www.ed.gov/policy/highered/reg/hearulemaking/2009/call-analysts.pdf.


HEOA NegReg Team V (General and Non-Loan Issues): Round 3 Ends Without Consensus.

NASFAA News.

May 15, 2009.

www.nasfaa.org/publications/2009/anteamvr3051509.html.

HEOA NegReg Team IV, Final Round Concludes Without Consensus.

NASFAA News.

May 4, 2009.

http://www.nasfaa.org/publications/2009/anteamiv050409.html.

HEOA Negreg Team V, Round Two — General and Non-Loan Programmatic Issues.

NASFAA News.

April 29, 2009.

www.nasfaa.org/publications/2009/rteamv042909.html.

HEOA Negreg Team II, Round Two: School-Based Loan Issues Team Reaches Tentative Agreement on

Most Issues.

NASFAA News.

April 8, 2009.

www.nasfaa.org/publications/2009/annegreg040809.html.

36

Other Resources.

Chronicle of Higher Education.

Negotiations Over Rules for Higher Education Act End With Mixed Success.

June 1, 2009.

www.chronicle.com/weekly/v55/i38/38negreg.htm.

Other Legislative Activity


Credit Card Accountability Responsibility and Disclosure Act of 2009.

P.L. 111-24.

May 22, 2009.

www.govtrack.us.

H.R. 3221: Student Aid and Fiscal Responsibility Act of 2009.

www.govtrack.us.

H.R. 3126: Consumer Financial Protection Agency Act of 2009.

www.govtrack.us.

H.R. 2492: To amend the Internal Revenue Code of 1986 to exclude from gross income discharges of

student loans the repayment of which is income contingent or income based.

www.govtrack.us.

H.R. 1615: Medical Economic Deferment for Students (MEDS) Act.

www.govtrack.us.

Veteran's Benefits


Supplemental Appropriations Act, 2009.

P.L. 111-32.

June 24, 2009.

www.govtrack.us.

Post-9/11 GI Bill; Final Rule.

74 FR 14654.

March 31, 2009.

http://edocket.access.gpo.gov/2009/pdf/E9-7052.pdf.


Electronic Announcement.

Subject: Change of Effective Date for the Exclusion of Federal Veterans Education Benefits as

Estimated Financial Assistance for Purposes of the Title IV Student Assistance Programs.

July 2, 2009.

www.ifap.ed.gov.

U. S. Department of Defense.

Directive Type Memorandum (DTM) 09-003: Post-9/11 GI Bill.

www.dantes.doded.mil/DANTES_WEB/library%5Cdocs%5Cnews%5C20090623_post911gibill.pdf.

37


GI Bill Website.

www.gibill.va.gov/.


Post-9/11 GI Bill Resource Center.

www.nasfaa.org/subhomes/GIBill/GIhome.html.

GI Bill Educational Assistance.

2009 NASFAA Conference presentation by:

Lynn Nelson, Department of Veterans Affairs.

www.nasfaa.org/Subhomes/AnnualConference2009/handouts.html.

Other Resources.

American Council on Education.

Serving those who Serve: Higher Education and America’s Veterans.

www.acenet.edu/stws.

38

Federal Student Aid Legislative and Regulatory Process

Federal Student Aid Legislative and

Regulatory Process

Federal student aid programs originally were

authorized by the Higher Education Act of 1965.

The HEA was enacted by Congress to provide

financial assistance for students attending

postsecondary educational institutions and to

fund educational programs that strengthen

colleges and universities. Since the enactment of

the HEA in 1965, reauthorization, regulation,

budget resolutions, negotiated rulemaking and

technical corrections have amended the HEA and

shaped the federal student aid programs.

To understand the legislative process it is

important to acknowledge the major players

involved in the creation of the laws, regulations

and policies that govern federal student aid

programs.

The Players

The U.S. Congress

Congress passes laws, establishes basic program

rules and appropriates funds for the federal

student aid programs. Congress also conducts

studies and hearings to gather information used

to create new laws and make changes to the

HEA. Each federal student aid program is based

on legislation enacted by Congress. Congress

delegates the regulation and administration of

the law to the executive branch, specifically the


U.S. Department of Education

As a member of the executive branch of the U.S.

government, ED regulates the federal funding for

education in the United States. ED’s

responsibilities include:

Proposing financial aid legislation and

making annual budget requests.

Publishing regulations and policies, based on

law, to maintain program integrity within the

Title IV student aid programs.

Evaluating eligibility of schools and

educational programs for Title IV

participation by performing on-site program

reviews for schools and Federal Family

Education Loan Program lenders and

guarantors.

Helping schools resolve issues with annual

audits and initiating enforcement action

when program funds are misused.

Assisting with the delivery of federal student

aid. ED maintains databases and the

application and need analysis systems to

determine students’ federal financial aid

eligibility, and operates systems for delivering

program funds to schools.

Providing training and technical assistance to

schools, as well as access to various resources

to assist in maintaining program integrity.

These resources include Web sites,

publications, free software and conferences.

Handling billing and collections for the

Federal Direct Loan Program.

Office of Management and Budget

The role of the Office of Management and

Budget is to set funding priorities and levels for

executive branch departments. In relation to

federal student aid, the OMB also reviews federal

regulations in order to limit the burden of

information collection requirements placed on

schools.

1

How a Bill Proceeds Through the U.S. House of

Representatives and the U.S. Senate

A legislative proposal begins as a bill that can be

drafted by anyone. It may be introduced either in the

House or in the Senate, or similar bills may be

introduced in both chambers. Only elected members

of Congress, however, have the right to introduce a

bill to the legislative chamber to which they are

elected.

A Congress lasts for two years, beginning in January

of the year following the biennial election of

members, and is divided into two one-year sessions.

S. ###

Introduced in

House.

Committee

hearings

Committee vote.

Full House vote.

Bill drafted.

Introduced in

Senate.

Committee

hearings.

Committee vote.

Full Senate vote.

H.R. ####

Each bill is designated as H.R. for the House of

Representatives or S. for the Senate, with a unique

number designating the sequence in which it was

introduced during the two-year Congress. For

example, H.R. 1, The American Recovery and

Reinvestment Act, was the first bill introduced in the

House of Representatives during the 111 th Congress.

Bills that are not acted on expire at the end of the

two-year Congress.

Resulting bill sent to opposite chamber.

Conference Committee resolves differences. Bill

returned to both House and Senate for final vote.

Presidential action.

After a bill is introduced, it generally is referred to the

appropriate committee or subcommittee for review,

study, hearings and a vote. In the House of

Representatives, bills that affect federal student aid

programs are referred to one of the following

committees:

House Committee on Education and Labor.

Subcommittee on Higher Education, Lifelong

Learning and Competitiveness.

House Committee on Appropriations.

Subcommittee on Labor, Health and Human

Services, Education and Related Services.

House Committee on the Budget.

The following committees in the Senate deal with

student aid legislation:

Senate Committee on Health, Education, Labor

and Pensions.

Senate Committee on Appropriations.

Subcommittee on Labor, Health and Human

Services, Education and Related Services.

Senate Committee on the Budget.

S. ###

Introduced in

House.

Committee

hearings

Committee vote.

Full House vote.

Bill drafted.


Introduced in

Senate.

Committee

hearings.

Committee vote.

Full Senate vote.

H.R. ####




2

Bill drafted.

Introduced in

House.

Introduced in

Senate.

After subcommittee hearings, a vote will determine if

the bill is to be referred to the full committee for

further review. The full committee votes on the bill

and if approved, the bill is sent to the chamber floor

for further debate and a vote.

S. ###

Committee

hearings

Committee vote.

Full House vote.

Committee

hearings.

Committee vote.

Full Senate vote.

H.R. ####





Bill drafted.

If the bill passes one chamber, it is referred to the

other chamber where it usually follows the same path

through committee and floor action. This chamber

may take the following actions on the bill:

Approve it.

Reject it.

Ignore it.

Change it.

S. ###

Introduced in

House.

Committee

hearings

Committee vote.

Full House vote.


Introduced in

Senate.

Committee

hearings.

Committee vote.

Full Senate vote.

H.R. ####




NOTES

3

Bill drafted.

If there are differences between the House- and

Senate-passed versions of a bill, a joint conference

committee is formed to reconcile the differences. If

agreement is reached, a conference report, including

the text of the bill and a description of committee

findings, recommendations and intentions, is issued

to both the House and Senate for a final vote. Both

houses of Congress must approve the bill in identical

form for it to move forward to the president.

S. ###

Introduced in

House.

Committee

hearings

Committee vote.

Full House vote.


Introduced in

Senate.

Committee

hearings.

Committee vote.

Full Senate vote.

H.R. ####




The president has various options with respect to the

bill:

If the president approves of the legislation, it is

signed and becomes law.

If the president takes no action for 10 days and

Congress still is in session, the bill automatically

becomes law.

If the president takes no action, and Congress has

adjourned its second session, the legislation dies

as a “pocket veto.”

If the president opposes the bill, he can veto it.

Congress can override the veto if two-thirds of

each chamber votes for the override. The

overruled bill then becomes law.

S. ###

Introduced in

House.

Committee

hearings

Committee vote.

Full House vote.

Bill drafted.




Introduced in

Senate.

Committee

hearings.

Committee vote.

Full Senate vote.

H.R. ####


A bill passed by both chambers of Congress and signed by the president becomes a public law. The law is

identified by an alpha-numeric designation beginning with the letters P.L. The first number represents the

Congressional term and the second number represents the number of the law enacted by that Congress. For

example, P.L. 89-329 was the identifier for the Higher Education Act when it first passed into law in 1965. The

identifier shows that the 89 th Congress passed the HEA, and that it was the 329 th law enacted by that

Congress.

Reauthorization

Congress rarely passes laws that give permanent authority to the programs authorized. Instead, the

authority is for a limited time. For example, the HEA typically is reauthorized every five to six years.

During reauthorization, Congress re-examines the HEA and votes to maintain, modify or add to the

federal student aid programs. Since 1965, Congress has reauthorized the HEA eight times: 1968, 1972,

1976, 1980, 1986, 1992, 1998, and 2008. As a result, the HEA is officially referred to as the “Higher

Education Act of 1965, as amended.”

4

Year of

Enactment

1968

1972

1976

1980

1986

1992

1998

2008

Reauthorization of the Higher Education Act of 1965, as amended

P.L. 89-329

Common Provisions

Financial aid to students will not be considered as income or

resources when determining eligibility for Title IV and certain other

programs.

Created Basic Educational Opportunity Grant.

Renamed National Defense Student Loan to National Direct

Student Loan.

Renamed Educational Opportunity Grant to Supplemental

Educational Opportunity Grant.

Created State Student Incentive Grant program.

Required each state to have a guarantor.

Required participating institutions to provide consumer

information to students.

Established Satisfactory Academic Progress requirements.

Created Parent Loans for Undergraduate Students program.

Renamed BEOG to Pell Grant in honor of Senator Claiborne Pell.

Created need analysis formulas.

Created Supplemental Loans for Students loan program.

Renamed NDSL to Perkins Loans in honor of Senator Carl Perkins.

Consolidated congressional methodology with Pell formula into

one federal need analysis methodology.

Required that financial aid application — Free Application for

Federal Student Aid — be free to students.

Created unsubsidized Stafford loan program.

The private lender loan program was renamed Federal Family

Education Loan Program.

Created the Federal Direct Student Loan program.

Established Return to Title IV provisions.

Increased FFELP default period from 180 to 270 days.

Removed bankruptcy protection for student loans.

Developed Stafford Master Promissory Note.

Expanded consumer information requirements.

Implemented year-round Pell Grants.

Made changes to need analysis, definition of independent student

and expanded professional judgment provisions.

Expanded eligibility for armed service members and families.

Made changes to calculation of cohort default rate.

Public Law

P.L. 90-575

P.L. 92-318

P.L. 94-482

P.L. 96-374

P.L. 99-498

P.L. 102-325

P.L. 105-244

P.L. 110-315

5

The reauthorization process begins when the

congressional committees responsible for

authorizing and reauthorizing legislation

conduct public hearings on proposed legislation.

In these hearings, individuals representing

postsecondary schools, students, parents, lenders,

guarantors, education associations and federal

agencies testify about the effects of the

proposed legislation and make their

recommendations. These hearings are important

forums in which interested parties have the

opportunity to influence the shape of legislation.

Reauthorization gives Congress, interested

parties and the public an opportunity to:

Review each program authorized by the law.

Recommend whether each program should

stay the same, be modified or be eliminated.

Suggest new programs for Congress to

authorize.

The Regulatory Process

When new legislation is enacted it often is

necessary for ED to develop regulations that

provide clarification or implementation guidance

to assist schools in administering the federal

student aid programs. Additionally, regulations

can make changes in ED policy and address

administrative problem areas. Schools are

required to comply with regulations as if they

were law.

Notice of Proposed Rulemaking

The 1992 amendments to the HEA require ED to

follow a specific process when making new

regulations. The negotiated rulemaking process

begins with a series of regional hearings that

identify issues or topics that require regulation.

Teams of education community experts and

other stakeholders join with ED representatives

to analyze existing legislation and regulations,

with the goal of reaching consensus, and develop

a document called a Notice of Proposed

Rulemaking.

According to ED’s master calendar, NPRMs are

published in the Federal Register in the spring or

early summer. Each NPRM will include the

language developed during the negotiation

sessions, indicate if consensus was reached and

provide an opportunity for noncommittee

members to comment on the proposed rules. The

NPRM states the length of time the public has to

comment on the proposed regulations. The

comment period can range from 30 to 120 days,

depending on the NPRM’s content and the

degree of urgency for publishing final

regulations. Most NPRMs have a 45- or 60-day

comment period. Comments from interested

parties can be submitted through the Federal

e-Rulemaking Portal at www.regulations.gov or

by postal mail, commercial or hand delivery.

Comments may not be submitted via fax or

e-mail. Once the comment period has ended, ED

will review comments and suggestions, amend

the proposed rules and publish final regulations.

The OMB also reviews regulations for:

Overall federal policy.

Budget implications.

Potential paperwork burden.

Cost to the populations it serves (in this case,

institutions of postsecondary education,

lenders, guarantors, students and parents).

6

Negotiated Rulemaking Process

U.S. Department of

Education


Committee

Higher Education

Community

Solicit comments

regarding issues to be

regulated.

Determine topics for

negotiated rulemaking

committees.

Nominate negotiated

rulemaking committee

members.

Appoint committee

members to represent

stakeholders such as

students, schools,

lenders, guarantors

and ED.

If consensus is reached,

ED is required to abide

by the consensus in

NPRM. If consensus is not

reached, ED is free to

draft proposed

regulations as it sees fit.

Committees meet to

discuss topics, with the

goal of consensus.

Committees present

findings (with or without

consensus) to ED.

NPRM published in

Federal Register for

public comment.

After comment period,

ED publishes final

regulations, addressing

any substantive public

comments.

NOTES

7

Final Regulations

Final regulations have the impact of law. Once the negotiated rulemaking process is complete, ED

analyzes the comments it receives and uses them to develop the final regulations. In a preamble to

final regulations, ED summarizes the comments it received and indicates whether it made any

changes to the proposed regulation on the basis of specific comments. ED publishes final regulations

in the Federal Register. The goal is to publish the final regulations by Nov. 1, to be effective July 1, the

beginning of the next award year. The purpose of the Nov. 1 deadline is to give schools sufficient time

to prepare for regulatory changes.

2009 2010

2011

Final Regs. Pub.

Prepare for Reg. Changes

Interim Final Regulations

Final Regs. Effective

Financial Aid Award Year

July 1 Oct. 1 Jan. 1 April il1 July 1 Oct. 1 Jan. 1 April il1 July 1

In some cases, NPRMs do not precede final regulations. There may be a situation in which there is

need for quick action after Congress passes new legislation. In such situations, ED publishes interim

final regulations. One example occurred after the passage of the Higher Education Reconciliation Act

in February 2006. The legislation stated that some provisions must be implemented by July of that

year, so there was no time for the negotiated rulemaking process. In this case, interim final regulations

included an invitation for schools and the public to comment and a due date for comments. After ED

assessed the comments, it published the final regulations in December 2006.

Another situation that calls for the use of interim final regulations is when ED receives comments on

an NPRM that show that a major policy issue still needs to be addressed. In that case, ED publishes

interim final regulations to guide program activities until the policy decisions are made and final

regulations are published. When this happens, ED usually asks for comments again before publishing

final regulations.

NPRMs, interim final regulations and final regulations are all published in the Federal Register. Access

the Federal Register through ED’s Information for Financial Aid Professionals Web site at

www.ifap.ed.gov or through the U.S. Government Printing Office Web site at www.gpoaccess.gov/fr.

NOTES

8

Policy and Operational

Guidance

ED may provide policy guidance to clarify

provisions in the HEA or in regulations. Generally,

the purpose is to help schools, lenders,

guarantors and groups participating in Title IV

programs comply with legislative and regulatory

requirements. This additional guidance is

provided in the form of Dear Colleague Letters,

Electronic Announcements, program manuals,

technical references and other publications.

Dear Colleague Letters

ED publishes Dear Colleague Letters by posting

them on its IFAP Web site www.ifap.ed.gov. DCLs

are organized by their publication year and by

categories that correspond to federal student aid

programs and certain participants.

Dear Colleague Letter Types

ANN

CB

FP

GEN

P

Training announcements.

Campus-based Programs (Federal

Perkins loans, Federal Supplemental

Educational Opportunity Grants and

Federal Work-Study).

Financial Partner letters.

General distribution.

The Federal Pell Grant Program.

Electronic Announcements

Electronic announcements are posted on IFAP

and categorized according to type:

Application processing.

Campus-based.

COD system.

Direct loans.

EDESuite.

FFEL.

General.

Grants.

Loans.

The Budget Cycle

The budget process determines how much

money the federal government can spend on its

programs, including federal student aid

programs. The budget process begins when the

president submits the executive branch’s

proposed budget for the upcoming federal fiscal

year to Congress, reflecting the president’s

spending priorities and recommendations. The

president submits the budget no earlier than the

first Monday in January and no later than the first

Monday in February. The president’s budget,

developed by OMB, outlines federal fiscal policy,

including:

Amount federal government should spend.

Projected tax revenues.

Anticipated federal government deficit or

surplus (difference between government

spending and tax revenues).

NOTES

9

House and Senate budget committees review the president's plan along with information about

spending and revenues from other sources, including the Congressional Budget Office. Congress is

expected to adopt a budget resolution by April 15. Because it is agreed upon by both chambers of

Congress, the budget resolution is called the “Concurrent Budget Resolution.” The Concurrent Budget

Resolution guides Congress as it considers legislation throughout the year. The Concurrent Budget

Resolution and its accompanying conference report contain fiscal-year spending ceilings. The

resolution also includes instructions that guide congressional committees when they consider

appropriations and other legislation. The instructions, called "reconciliation instructions," explain the

assumptions used in developing the Concurrent Budget Resolution. Examples of assumptions include

changes in revenue, changes in authorized programs and amounts to be appropriated.

The Budget Cycle and the Financial Aid Award Year

The budget cycle in Congress follows the federal fiscal year, beginning on Oct. 1 and ending on

Sept. 30. The financial aid award year, however, begins on July 1 and ends on June 30. How do the two

calendars reconcile?

Many schools prepare for financial aid application processing in the winter before the new award

year. For an award year that begins on July 1, students begin filing the Free Application for Federal

Student Aid in January, and schools begin packaging students’ awards soon thereafter. Schools need

to know the amount of federal campus-based student aid dollars available for the upcoming award

year before student award packages are finalized. Because the budget cycle begins in October, the

process accommodates schools' planning and operating needs by setting the funding levels in

advance of the award year. This process is called "forward funding."

An example of this is illustrated below:

2009 2010

2011

Appropriations

Federal Fiscal Year

Preparation for Processing

Financial Aid Award Year

July 1 Oct. 1 Jan. 1 April il1 July 1 Oct. 1 Jan. 1 April il1 July 1

NOTES

10

Spending Limits

Congress limits the amount that can be spent in

each federal student aid program, with different

spending limits for each program. The federal

student aid programs fall under two spending

categories: discretionary and mandatory.

Discretionary Spending

Each year Congress must enact limits for

discretionary spending based on the president's

recommendations. Appropriations bills contain

these spending limits. The following federal

financial aid programs are subject to

discretionary spending limits:

Federal Pell Grant.


National Science and Mathematics Access to

Retain Talent Grant.

Teacher Education Assistance for College and

Higher Education Grant.

Federal Perkins Loan.

Federal Supplemental Educational

Opportunity Grant.

Federal Work-Study.

Mandatory Spending

Spending levels governed by authorizing

legislative formulas or other criteria are

considered mandatory spending. These spending

levels do not require enactment through

appropriations legislation. Many of the programs

subject to mandatory spending are considered

entitlements. The two federal financial aid

programs subject to mandatory spending are

the:


Federal Direct Loan Program.

The HEA authorizes the funding for these

programs, which is in effect until legislative

action makes changes. The Direct Loan Program

is fully funded by the federal government. The

federal government funds the subsidies for the

FFELP, while private lenders provide the capital.

NOTES

11

Reconciliation

The process of passing legislation that reflects

the assumptions made in the Concurrent Budget

Resolution is called “reconciliation.” Typically, a

reconciliation bill makes changes in the laws

governing taxes, discretionary and mandatory

spending and the debt ceiling. Reconciliation

legislation also can take the form of a single

omnibus reconciliation bill that covers most or all

legislative changes, including spending for

discretionary spending programs. The Higher

Education Reconciliation Act of 2005 was part of

an omnibus reconciliation bill called the Deficit

Reduction Act of 2005. Examples of changes

made to financial aid administration through

reconciliation legislation included:

Addition of new programs: Grad PLUS, ACG

and National SMART Grant.

Loan limit increases for first- and second-year

undergraduate students and for graduate

students.

Loan origination fee reductions.

Expanded loan forgiveness for teachers in

math, science and special education.

Adjustments to federal need analysis

methodology.

Trainer’s Tidbit

An omnibus bill is a measure that packages

together the provisions of several different

subjects into a single and often extensive bill.

Examples include reconciliation bills and

combined appropriations bills.

The reconciliation schedule calls for Congress to

complete action on reconciliation legislation by

June 15 of each year, but the schedule is not

always followed. There are no built-in

consequences if Congress does not meet this

statutory schedule. After both the House and

Senate pass their versions of the reconciliation

bill, both bills are referred to a conference

committee.

Appropriations

By custom, appropriations measures originate in

the House of Representatives. Generally, starting

in late May, the House Committee on

Appropriations (including its subcommittees)

begins to mark up annual appropriations bills.

The House Appropriations Subcommittee on

Labor, Health and Human Services, Education and

Related Services is responsible for educationspending

legislation. The full House Committee

on Appropriations is scheduled to report its last

version of the annual appropriations bill by June

10, with House floor action completed by June

30.

Trainer’s Tidbit

Markup describes the process by which

congressional committees and subcommittees

review, debate, amend, and rewrite proposed

legislation. Generally markups end with a

committee vote to send the new version of the

bill to the floor for a final vote.

Meanwhile, the Senate Appropriations

Committee and its Subcommittee on Labor,

Health and Human Services, Education and

Related Services work on appropriations bills. The

Senate does not have a specific schedule for

completing appropriations legislation.

The schedule calls for all Congressional action

(House, Senate and the full Congress) to be

completed by Sept. 30, because Oct. 1 is the

beginning of the new fiscal year. If a new

appropriations law is not enacted before the old

one expires, any agency covered by the

appropriations must cease its ongoing functions.

For example, if by Oct. 1 Congress hasn’t passed

appropriations to fund ED’s programs, including

its federal student aid programs, ED has to stop

work.

To avoid interruptions in federal programs if

appropriations bills are delayed, Congress usually

passes a continuing resolution to keep the

government operating until annual

appropriations are passed. A CR is a temporary,

limited spending measure that allows a federal

12

agency to continue operating for a set period,

such as a week or 10 days. If Congress still does

not pass an annual appropriations bill before the

expiration of the CR, Congress generally passes

another CR, and so on, until Congress can pass an

annual funding bill and it goes to the president.

Committee reports accompany each

appropriations bill as it goes through the process

of becoming a law. These reports include

explanations of committee actions, expectations

for results and directives to the federal agency

affected by the appropriations legislation. Unlike

language in the legislation, the report language

does not have the force of law and, at least

technically, does not require compliance. ED tries

to carry out the directives in the report language

because the report clarifies Congressional intent

for the appropriations legislation.

Resources for Financial Aid

Administrators

Financial aid administrators often must research

federal student aid law, regulations and ED policy

guidance to ensure office policies and

procedures are correct and current, to respond to

inquiries from school administrators, students or

parents, or to stay informed and advocate for

change. The appendix includes a resource to

assist in comparing statutory (HEA Title IV, U.S.

Code Titles 20 and 42) and regulatory (Code of

Federal Regulations Title 34) federal student aid

provisions.

Higher Education Act

www.ifap.ed.gov.

Original federal student assistance authorizing

legislation (P.L. 89-329) signed into law by

President Lyndon Johnson on Nov. 8, 1965. The

HEA was an important component of Johnson’s

Great Society domestic agenda to end poverty

and racial injustice.

United States Code

www.gpoaccess.gov/uscode/index.html.

The U.S. Code is the codification by subject of the

general and permanent laws of the United States.

It is divided into 50 titles and published by the

U.S. House of Representatives.

Code of Federal Regulations

www.gpoaccess.gov/CFR.

The CFR is the codification of the general and

permanent rules published in the Federal

Register by the departments and agencies of the

executive branch of the federal government. It is

divided into 50 titles representing the areas

subject to federal regulation. Each volume of the

CFR is updated once each calendar year and is

issued on a quarterly basis.

Information for Financial Aid Professionals

www.ifap.ed.gov.

IFAP probably is the best known site to financial

aid administrators. Created by ED as a

comprehensive resource, it contains links to:

The HEA.

United States Code.


Federal Registers.

Dear Colleague Letters.

Electronic Announcements.

Federal Student Financial Aid Handbooks.

Forms and other important documents for

federal financial aid programs.

13

USA Funds

www.usafunds.org.

Education Access Report: A weekly electronic

newsletter reports legislative action and links to

some of the most authoritative sources of

information about pursuing and financing higher

education.

Askpolicy@usafunds.org is a resource to help

financial aid administrators understand and

follow the rules of the student loan program.

Questions of day-to-day situations, examples, or

scenarios can be sent to the USA Funds policy

staff. Answers with regulatory citations usually

are returned within one business day.

National Association of Student Financial

Aid Administrators

www.nasfaa.org.

The NASFAA Web site (membership may be

required) includes a Regulatory and Legislative

Resources section as well as a legislative center

with a Student Aid Bill Watch center and links to

congressional sites. The regulatory center links to

newly enacted laws, regulatory resources and ED

announcements and guidance. Two other helpful

NASFAA resources:

Policies and Procedures tools – Reading and

Interpreting Regulation & Statute.

NASFAA Monograph #18 – A Primer on the

Federal Budget Process.

Govtrack.us: A Civic Project to Track

Congress

www.govtrack.us.

Govtrack.us is a Web site that enables the public

to track the status of legislation and view voting

records and committee assignments. Govtrack.us

is non-partisan and is not affiliated with the U.S.

government.

THOMAS: Legislative Information on the

Internet

www.thomas.gov.

Named in honor of Thomas Jefferson, this Library

of Congress site provides access to bills and

public laws from the 93 rd Congress to the present.

U.S. House of Representatives and U. S.

Senate

www.house.gov.

www.senate.gov.

These sites outline all of the activities of the U.S.

House of Representatives and the U.S. Senate and

their respective committees and provide links to

contact representatives and senators.

NOTES

14

Trainer’s Toolkit

The Trainer’s Toolkit is a list of terms, Web sites


Federal Student Aid Legislative and Regulatory

Process.

Terms, Acronyms and

Abbreviations

Award Year





Authorization/Reauthorization Bills

Versus Appropriations Bills

Authorization/Reauthorization bills are known as

“authorizing legislation.” Once signed into law,

this type of bill will enact specific programs

based on specific goals outlined within the

legislation. The bill also authorizes spending

ceilings for the program.

Appropriation bills authorize the budget for

programs that were created through authorizing

legislation. The budget is set within the spending

ceiling established by Congress set for the

program.

For example, a reauthorization bill may create a

new need-based grant program with a spending

ceiling that will provide up to $10,000 per

student who meets the eligibility requirements.

Later, an appropriations bill could be signed into

law that budgets only $2,000 per student.

AY

Academic Year.

An undergraduate academic year for credit-hour

programs must consist of at least 30 weeks of

instructional time. An undergraduate clock-hour

program must consist of at least 26 instructional

weeks. The minimum number of instructional

weeks for graduate programs is defined by the

school.

Branches of the United States

Government

The United States government is made up of

three branches: the executive branch, the

legislative branch and the judicial branch. The

three branches were designed to create a system

of checks and balances.

The executive branch consists of the

president and cabinet. The president may

sign into law or veto a bill sent from the

legislative branch. The legislative branch may

override the veto if a two-thirds majority

supports the bill. If a two-thirds majority is

not reached, the president’s veto will stand.

The secretary of education is a member of

the president’s cabinet, making the

Department of Education part of the

executive branch.

The legislative branch contains the Congress.

Congress is made up of representatives from

the 50 states and is divided into two houses,

the House of Representatives and the Senate.

Members of each house can write and

introduce a bill that the entire Congress

eventually may vote to send to the executive

branch to be signed into law.

The judicial branch is the Supreme Court. The

nine justices of the court rule on laws

through court cases based on their

interpretation of the U.S. Constitution and

other legal sources.

CCRAA

College Cost Reduction and Access Act of

2007.










(P.L. 110-153).

15

CFR










DCL


















ECASLA


Act of 2008.










ED


www.ed.gov.







education.


funds.


research.


issues.



FDLP

Federal Direct Student Loan Program.

The FDLP is similar to the Federal Family

Education Loan Program. The funds for these

loans are provided by the U.S. government

directly to students and their parents through

their schools.

FFELP











16

FSA

Federal Student Aid.

http://federalstudentaid.ed.gov.

The office within the U.S. Department of

Education responsible for the overall

management and administration of most of the

Title IV programs and their operating systems.

FY

Fiscal Year.

The FY is the 12-month period during which

financial assistance is awarded through the

federal government. The federal fiscal year is

Oct. 1 - Sept. 30.

GAO

General Accounting Office.

www.gao.gov.

The GAO is the arm of Congress that investigates

the performance of the federal government. GAO

evaluates the use of public funds and the

performance of federal programs, while also

providing analytical, investigative and legal

services to support Congress in its policy

formulation and decision-making processes.

HEA







assistance.

HEOA







later dates.

IFAP


www.ifap.ed.gov.







Legislation Versus Regulation

Legislation consists of laws enacted by Congress

and signed by the president. Legislation

authorizes or reauthorizes programs or provides

spending limits for existing programs.

Regulations are developed by ED, which provides

instruction on how to follow the laws. The final

regulations have the weight of law.

NASFAA


Administrators.

www.nasfaa.org.







NPRM

Notice of Proposed Rulemaking.

An NPRM is a notice printed in the Federal

Register of proposed regulations from a

government agency, such as ED. Interested

parties are invited to submit comments and

recommendations about proposed regulations.

ED reviews comments and then issues final

regulations.

17

P.L.

Public Law.

A P.L. is designated by the number of the

Congress and the order in which it is enacted. For

example, P.L. 106-10 is the tenth law enacted

during the 106 th Congress.












18



Information for Financial Aid Administrators - IFAP Web site.

www.ifap.ed.gov.

NASFAA

A Primer on the Federal Budget Process.

Monograph #18.

April 2006.

www.nasfaa.org.

Policies and Procedures Tools.

Reading and Interpreting Regulation and Statute 2008.

www.nasfaa.org.

Other Resources

How Our Laws Are Made.

Office of the Parliamentarian of the U.S. House of Representatives in consultation with the Office

of the Parliamentarian of the U.S. Senate.

http://thomas.loc.gov/home/lawsmade.toc.html.

The Legislative Process: Background Information.

www.lexisnexis.com/help/CU/The_Legislative_Process/Stage_0.htm.

19

Appendix

Federal Student Aid Statutory and Regulatory Sources

21

Federal Student Aid Statutory and Regulatory Sources

HEA

http://republicans.edlabor.house.

gov/archive/publications/comp

index.htm

U.S. Code

www.gpoaccess.gov/uscode/browse.html

Regulations

http://ecfr.gpoaccess.gov/e/ecfr/ecfrbrowse/

Title34/34cfrv3_02.tpl

Title IV Student Assistance

Title 20 Education

Chapter 28 Higher Education Resources &

Student Assistance

Subchapter IV Student Assistance

Title 34 Education

Subtitle B Education

Chapter IV Office of Vocational & Adult

Education

Provision Part Section Part Section Subpart

Grants A 400-420 A 1070 - 1070f

FFELP B 421-440 B 1071 - 1087-4

Wm. D. Ford

Direct Loan

Perkins

Loans

Need

Analysis

General

Provisions

Program

Integrity

Federal

Work-Study

D 451-460 C 1087a - 1087j

E 461-469 D 1087aa - 1087ii

F 471-480 E 1087kk - 1087w

G 481-493 F 1088 - 1099

H 495-498 G 1099a - 1099c

Title 42 – Public Health & Welfare

Chapter 34 – Economic Opportunity

Programs

Subchapter I – Research & Demonstrations

C 441-448 C 2751 - 2757

668.1 – 668.198 Student Assistance

General Provisions

673.1 – 673.7 General Provisions

Campus-Based

676.1 – 676.21 FSEOG

686.1 – 686.43 TEACH

690.1 – 690.83 Pell

691.1 – 691.83 ACG/SMART

692.1 – 692.80 LEAP


General Provisions

682.100 – 682.800 FFELP


General Provisions

685.100 – 685.402 Wm. D. Ford Federal

Direct Loan

668.1 - 668.198 Student Assistance

General Provisions

673.1 - 673.7 General Provisions

Campus-Based

674.1 - 674.64 Federal Perkins Loan

Program


General Provisions


General Provisions


General Provisions


General Provisions

673.1 - 673.7 General Provisions

Campus-Based

675.1 - 675.50 Federal Work-Study

22

FAFSA and Delivery System Update

FAFSA and Delivery System Update

The 1992 Reauthorization of the Higher

Education Act of 1965, as amended, mandated

the creation of a common financial form,

provided at no cost, which families would use to

apply for federal financial aid. Since its inception

in 1993, the Free Application for Federal Student

Aid has undergone numerous transformations.

Simplification

The Higher Education Opportunity Act of 2008

mandated the simplification of the FAFSA. Some

of the changes go into effect for the 2009-2010

award year; however, full implementation of the

new provisions will be for 2010-2011.

2009-2010 FAFSA

Enhancements

FAFSA on the Web Address

In May 2009, the FOTW address changed to

www.fafsa.gov. The former address,

www.fafsa.ed.gov, still will continue to work. The

change was made to decrease the likelihood of

an applicant going to a non-government or paid

site.

FAFSA on the Phone

HEOA Section 483(a).

On Dec. 17, 2008, the Department of Education

announced a new filing option: FAFSA on the

Phone. FAFSA on the Phone is a non-Web,

paperless filing alternative for students with

limited access to the Internet who are facing fastapproaching

state application deadlines. Instead

of filing an electronic or paper FAFSA, students

call the Federal Student Aid Information Center

at (800) 4-FED AID and relay their FAFSA data to a

customer service representative. The process is

expected to take approximately 30 minutes. A

Student Aid Report is sent to the student within

seven to 10 days after submitting the

information, which then will need to be reviewed

by the student (and parent, if appropriate),

signed and sent back to an address provided.

Reducing Data Elements


The 2009-2010 FAFSA is a six-page application

with more than 100 questions and four pages of

instructions. ED is charged with reducing the

number of data elements required from

applicants by at least half. After consulting with

financial aid administrators, students and

families, as well as reviewing various research

studies, ED submitted a report to Congress on its

progress in January 2009. The report may be

viewed as an Electronic Announcement at

www.ifap.ed.gov.

1

2009-2010 Mid-Year Enhancements

ED implemented a number of enhancements for the 2009-2010 award year.

FOTW Confirmation Page

As of May 2009, the 2009-2010 confirmation page now provides additional information to FAFSA

applicants:

An estimate of aid eligibility from the following Title IV programs:

Federal Pell Grants.

Academic Competitiveness Grants.

Federal Stafford loans.

A link to the College Navigator Web site.

An option to e-mail the confirmation page to a personal e-mail address.

In August 2009, the following information from the Integrated Postsecondary Education Data System

for the school(s) indicated on the FAFSA was added to the confirmation page:

Retention rates.

Graduation rates.

Transfer rates.

NOTES

2

Sample Confirmation Page

Mid-Year Enhancements.

555666777 0234

3

Enhanced Skip Logic

FOTW currently employs skip logic to reduce the number of questions an applicant must answer. By

incorporating enhanced skip logic technology, ED anticipates that navigation time will be reduced by

more than half for many applicants. The number of questions will be reduced by 20 percent and the

number of Web pages required to complete an application will be reduced by 50 percent. The

following enhancements were implemented in August 2009 for the remainder of the 2009-2010

award year and beyond.

Dependency Status

Students who are independent because of their age or marital status will be asked only the

dependency status questions regarding children or other dependents. The remaining dependency

status questions will not appear.

Selective Service

Male students over the age of 26 will not be asked whether they want to be registered for Selective

Service.

Homeless Students

The College Cost Reduction and Access Act added criteria for certain homeless students to be

considered independent. All applicants will be asked if they are homeless or at risk for being

homeless. Depending on the answer provided and age of the student, the application will employ

the following decision tree to determine which additional homeless questions will display:

Is the student homeless or at risk for being homeless?

No

Yes

No further homelessrelated

questions asked.

What is the student’s

age?

21 or younger

Three homeless-related

questions are asked.

22 or older

“Yes” to at least

one question

Student is homeless and

not required to provide

parental information on

the FAFSA.

“No” to all three

questions

Applicant can submit

FASFA without parental

information, but is

directed to contact the

financial aid office.

4

Trainer’s Tidbit

Due to the provisions in the McKinney-Vento Homeless Assistance Act, the following students are

directed to a financial aid administrator for a homeless determination and/or a dependency override:

Students who are under the age of 22 and unable to answer “yes” to any of the homeless-related

questions.

Students who are between the ages of 22 and 24 and are homeless or at risk for being homeless.

Identifying Students for Unsubsidized Loans Only

Additional questions will be listed on the FAFSA for dependent students to indicate if their parents

refuse to complete the FAFSA and no longer provide financial support. The student will be allowed to

submit the FAFSA without parental data, but an Expected Family Contribution will not be generated.

The Institutional Student Information Record will note that the student submitted the FAFSA without

parental data and the SAR will direct the student to contact the financial aid office.

Trainer’s Tidbit

Schools have discretion to use professional judgment to award unsubsidized Stafford loans when

the student’s parents will not provide FAFSA data and financial support to the student. Schools

that exercise professional judgment must collect appropriate documentation. Generally, the

documentation requirement may be met by obtaining a signed and dated notice from the parent(s)

stating that they:

Have ended their financial support, including the date the support ended.

Will not provide financial support in the future.

Will not complete the parental section of the FAFSA.

If parents refuse to provide a statement, schools must obtain documentation from a third party that

describes the parental relationship with the student.

NOTES

5

Reduction of Income and Asset Information


The HEOA requires that ED continue to work with the Internal Revenue Service to determine if tax

data could be shared with the FOTW application to generate an EFC. Beginning in January 2010, a

new IRS data share process will be implemented on a pilot basis for the 2009-2010 award year, with

full implementation expected in July 2010 for the 2010-2011 award year.

IRS Data Share

FOTW applicants will have the option of retrieving their tax data from the IRS to automatically

populate certain income-related questions on the FAFSA. Both student and parent data may be

retrieved from the IRS. The tax data will not be shared with a third party, only the tax filer; therefore,

tax filer consent is not required.

Trainer’s Tidbit

The IRS data share process is not a database match with the IRS.

NOTES

6

IRS Data Share Process

FOTW applicants will be directed to link to the IRS in the “Finances” portion of the application.

Sample Student Finances Screen

“You may access the IRS site

to retrieve your income data

to complete your application

or use your tax return. If you

would like to retrieve your

data from the IRS click here.”

7

Applicants will be required to provide their PIN to authenticate their identity. Conditional PINs, or

those generated in real time, are acceptable for the IRS data share process.

The IRS request screen will open in a new window. It will be pre-populated with the appropriate tax

year and Social Security number, which the tax filer cannot update; however, the pre-populated name

and date of birth may be changed in order to match the IRS database. The tax filer will be required to

provide an address and filing status, for example, single, married filing jointly or head of household.

Any data entered or changed on this screen will not update information in FOTW.

Sample IRS Request Screen

Trainer’s Tidbit

If the filing status is married filing jointly, either tax filer’s name or SSN will work to retrieve tax data.

NOTES

8

Upon clicking “submit,” the tax filer will be shown the FAFSA questions and the tax data that can be

used to populate the answer fields.

Sample IRS Data Screen

If the tax filer clicks the “transfer” button, the IRS data automatically is sent to FOTW and the browser

window closes. The tax data transferred to the FAFSA, however, may be changed by the tax filer.

Instead of transferring the data, the tax filer could elect to print the information on this screen, close

the browser window and enter the information manually on the FAFSA.

Trainer’s Tidbit

Income earned from work is not available in the IRS data share process because information only is

retrieved from the tax return, not W-2 or 1099 forms.

9

IRS Data Share Exceptions

During the 2009-2010 award year, only a subset of applications will be authorized to use the IRS data

share feature. ED will analyze data from the pilot group to make any necessary adjustments before

full implementation in July 2010 for the 2010-2011 award year.

Certain groups of tax filers will not be eligible for the IRS data share process for 2009-2010 or

2010-2011:

Non-tax filers.

Tax filers using a Taxpayer Identification Number, rather than an SSN.

Tax filers who changed their marital status after Dec. 31 of the tax year.

Tax filers who request an extension beyond the Apr. 15 deadline.

Tax filers who file as married filing separately.

Students making changes to a previously processed FAFSA.

IRS Data Share and Verification

There will be no indication on the 2009-2010 SAR or ISIR that IRS data was used on the application.

For 2010-2011, however, a flag will appear on the ISIR indicating that IRS data was used. If the

applicant changed any IRS data after the transfer from the IRS, the flag will not appear.

NOTES

10

2010-2011 FAFSA Enhancements

FAFSA on the Web

ED implemented a technology upgrade that allowed a full redesign of the 2010-2011 FOTW

application. The enhancements will reduce the number of pages in the FOTW application.

Additionally, status indicators will be added to FOTW screens to guide applicants through each

section. Parent and student sections will be more clearly identified, with targeted instructions and

help screens based on responses.

Sample 2010-2011 FOTW Screen

11

State of Legal Residence

Questions regarding the student’s state of legal residence and length of residency will not display for

applicants who confirm they have lived at their current address for at least five years.

Drug Conviction

First-time college students will not see the drug conviction eligibility questions because these

applicants have never received Title IV aid.

Additional Financial Information and Untaxed Income

Instead of having all applicants enter dollar amounts for additional financial information and untaxed

income, FOTW will ask applicants to check boxes for each type of income. Only those applicants who

indicate they have income from these sources will be prompted to enter dollar amounts.

Paper FAFSA

While less than one percent of FAFSA filers utilize the paper form, enhancements for the 2010-2011

paper FAFSA will be implemented. These changes also will translate to the FOTW application.

12

Veterans Benefits

As of July 1, 2009, veterans educational benefits are not considered as estimated financial assistance.

As a result, all questions related to veterans educational benefits will be removed from the FAFSA.

Marital Status

The marital status question will be expanded to four options to accommodate the IRS data share

process:

Single.

Married/Remarried.

Separated.

Divorced/Widowed.

Military Housing and Allowances

Additional text will be added to the FAFSA explaining that military housing and allowances should

not be included as untaxed income.

Earnings from Cooperative Education Programs

A new question will be added to the FAFSA explaining that earnings from a cooperative education

program will be excluded from income.

NOTES

13

Summary of FAFSA Changes

FOTW Paper/PDF Effective Year*

Location:

Web address: www.fafsa.gov. May 2009 2009-2010

Questions added:

Homeless students (identify potential students to

utilize skip logic).

August 2009 2009-2010

Students whose parents will not provide FAFSA data

and financial support.

August 2009 2009-2010

Earnings from cooperative education program. January 2010 2010-2011

Questions deleted:

Selective Service Registration (for male students age

26 or older).

August 2009 2009-2010

Drug conviction (for first-time college students)

(2009-2010 FAFSA Q23).

January 2010 2010-2011

Veterans benefits (2009-2010 FAFSA Q44-45). January 2010 2010-2011

Independent student status questions for students

age 24 or older, or married (2009-2010 FAFSA

Q48-60).

Graduate student.

Veteran.

Orphan, foster care or ward of court.

Emancipated minor.

Legal guardianship.

August 2009 2009-2010

Questions/Instructions reworded or reformatted:

Homeless students (enhanced skip logic). August 2009 2009-2010

Marital status (2009-2010 FAFSA Q16 and Q61). January 2010 2010-2011

Additional financial information presented in checkbox

format (2009-2010 FAFSA Q46 and Q94).

January 2010 2010-2011

Untaxed income presented in check-box format

(2009-2010 FAFSA Q47 and Q95).

January 2010 2010-2011

Value of military housing and allowances (2009-2010

FAFSA Q47g and Q95g).

January 2010 2010-2011

Confirmation Page Information:

Estimated Federal Pell Grant amount. May 2009 2009-2010

Estimated Stafford loan amount. May 2009 2009-2010

Link to College Navigator Web site. May 2009 2009-2010

Ability to e-mail FOTW confirmation page. May 2009 2009-2010

Retention, graduation and transfer rates. August 2009 2009-2010

* Enhancements implemented in 2009-2010 also will be effective in future award years.

14

2010-2011 Key Dates

August 2009

Software Developers:

Draft EDExpress Technical Reference.

Draft Application Processing System Specifications.

Software Developers Conference, Aug. 20, 2009.

October 2009

EDExpress Packaging Technical Reference.

Summary of Changes for the Application Processing System.

Student Web Application Products Process Guide.

Central Processing System Test System User Guide.

November 2009

School Electronic Process Guide.

ISIR Guide.

SAR Comments Codes and Text.

EFC Guide.

January 2010

Jan. 1, 2010:

FAA Access to CPS Online available.

FOTW available.

Jan. 4, 2010:

CPS begins processing ISIRs.

EDExpress Release 1.0 available.

Final Application Processing System Specifications for Software Developers.

NOTES

15

Trainer’s Toolkit

The Trainer’s Toolkit is a listing of terms, Web sites


FAFSA and Delivery System Update.

Terms, Acronyms and

Abbreviations

ACG


The Academic Competitiveness Grant provides

up to $750 for the first year of undergraduate

study and up to $1,300 for the second year of

undergraduate study to full-time students who

are eligible for a Federal Pell Grant and who have

successfully completed a rigorous high school

program, as determined by the state or local

education agency and recognized by the U.S.

Secretary of Education. Students enrolled at least

half time qualify for prorated grant amounts.

Award Year





CCRAA

College Cost Reduction and Access Act 0f

2007.










(P.L. 110-153).

College Navigator Web Site

http://nces.ed.gov/collegenavigator/.

The College Navigator Web site provides data

from the National Center for Education Statistics

about a variety of school characteristics, such as

admissions, cost, financial aid, academic

programs, retention and graduation rates.

Comment Codes

Comments range from providing general

financial aid information to notifying the student

or financial aid administrator that action may be

necessary to process financial aid. Comment

codes are located in the last line of the FAA

Information section of the SAR or ISIR. Some

comments are tied to C flags or rejects based on

the student’s FAFSA data or database matches.

Cooperative Education Program

Programs that combine traditional classroom

learning with practical work experience.

CPS

Central Processing System.

The CPS is ED’s processing facility for Free

Application for Federal Student Aid data.

Dependency Override

For the purpose of determining student aid

eligibility, a financial aid administrator may use

professional judgment to override a student’s

dependency status. The decision for the override

must be based on unusual circumstances faced

by the student.

Dependent Student

A student who does not meet the eligibility

requirements for an “independent student,”

under the Higher Education Act of 1965, as

amended.

17

DoD

U.S. Department of Defense.

www.defense.gov.

The DoD is charged with supplying military

service members in order to discourage war

activities and ensure the security of the United

States. DoD is the largest and oldest government

agency and the nation’s largest employer.

ED


www.ed.gov.







education.


funds.


research.


issues.



EDExpress

A software program provided by ED to process

financial aid data. This software is used to enter

new applications and make changes or

corrections to existing applications. It also is used

to calculate financial aid packages for students.

EFA

Estimated Financial Assistance.

The school’s estimate of the amount of financial

assistance that a student has been or will be

awarded for the enrollment period for which a

loan is sought. The EFA includes assistance from

federal, state, institutional, scholarship, grant,

financial need-based employment, or other

sources. EFA does not include veterans

educational benefits or ROTC payments.

EFC






FAA



responsible for the administration of financial aid.

FAA Access to CPS Online

www.faaaccess.ed.gov.

A Web tool that financial aid administrators use

to enter application data, view student

information, make corrections, check the status of

applications, request ISIRs, and access the ISIR

Analysis Tool and R2T4 on the Web.

FAFSA




FAO

Financial Aid Office.

The FAO is the college or university office that is

responsible for determining students’ financial

need and awarding them financial aid.

18

Federal Pell Grant


















FM

Federal Methodology.

FM is the need-analysis formula used to

determine the EFC. FM takes family size, the

number of family members in college, taxable

and nontaxable income, and assets into account.

FOTP

FAFSA on the Phone.

(800) 4-FED-AID.

FAFSA on the Phone is the telephone-based

version of the FAFSA.

FOTW

FAFSA on the Web.

www.fafsa.gov.

FOTW is the electronic version of the FAFSA.

FSA

Federal Student Aid.

http://federalstudentaid.ed.gov.

The office within the U.S. Department of

Education responsible for the overall

management and administration of most of the

Title IV programs and their operating systems.

FSAIC

Federal Student Aid Information Center.

(800) 4-FED-AID.

The Federal Student Aid Information Center

serves the public with information about the

federal student aid application process. FSAIC's

primary role is to respond to student and parent

inquiries. Customer service representatives

provide comprehensive assistance in English, as

well as Spanish, on general information related to

federal student aid (Title IV programs), the FAFSA

application (paper and online), pre-filled FAFSA

on the Web, FAFSA corrections, FAFSA4caster, the

U.S. Department of Education's federal student

aid grant and loan programs and student loan

history.

HEA







assistance.

HEOA







later dates.

19

IFAP


www.ifap.ed.gov.







Independent Student

A student who meets one or more of the criteria

listed on the FAFSA that classify a student as

independent for Title IV purposes. Students also

may be classified as independent if a financial aid

administrator determines and documents that

the student is independent based on the

financial aid administrator’s professional

judgment of the student’s unusual

circumstances.

IPEDS

Integrated Postsecondary Education Data

System.

www.nces.ed.gov/ipeds/.

IPEDS is the postsecondary education data

collection program for the National Center for

Education Statistics. All primary providers of

postsecondary education in the United States

submit data that includes enrollments, program

completions, graduation rates, faculty, staff,

finances, institutional prices and student financial

aid. The data are made available to students,

researchers and others.

IRS

Internal Revenue Service.

www.irs.gov.

The IRS is the federal agency responsible for

administering and enforcing the U.S. Treasury

Department's revenue laws, through the

assessment and collection of taxes,

determination of pension plan qualification and

related activities.

IRS Form 1040

The basic form that is used by taxpayers to file

their income tax returns.

IRS Form 1099

A tax statement showing how much the taxpayer

received in interest, capital gains, and dividends,

along with other financial information.

IRS Form W-2

A federal wage and tax statement showing:

Total earnings.

Federal state and municipal taxes withheld.

FICA taxes.

Various other deductions including

contributions to retirement accounts,

unemployment insurance and health

insurance.

ISIR



school by ED’s Central Processing System. The ISIR

includes information provided by students on

the FAFSA. The ISIR also contains students’




matches).

NASFAA


Administrators.

www.nasfaa.org.







20

PIN

Personal Identification Number.

www.pin.ed.gov.

PINs are four-digit numbers assigned to students

by ED. PINs electronically identify a student.

Students can use their PINs to access their FAFSA

data, to make corrections to that data and

electronically sign an initial FAFSA on the Web or

Renewal FAFSA on the Web and to view their

information in the National Student Loan Data

System.

PJ

Professional Judgment.

PJ is the delegation of authority from the federal

government to a financial aid administrator to

make changes on a case-by-case basis when

extenuating circumstances exist.

Selective Service

Selective Service is the federal agency

responsible for ensuring that all men between

the ages of 18 and 25 are registered with the

Selective Service System for the purpose of

having information available about potential

soldiers in the event of war.

SSN

Social Security Number.

The SSN is the number assigned by the Social

Security Administration that identifies a

particular individual's Social Security account.

This number is used as a personal identifier and

is required on the FAFSA to receive Title IV

financial aid.












VA

U.S. Department of Veteran’s Affairs.

www.va.gov.

The VA provides patient care, veterans benefits

(including educational benefits) to U.S. veterans.

Verification

The process a school follows to check the

accuracy of the information reported by the

student on the FAFSA. The information reported

is compared against documents, such as signed

federal tax forms and signed Verification

Worksheets, which the student provides to the

school.

21



Electronic Announcement.

Subject: Report to Congress on Efforts to Simplify the Free Application for Federal Student Aid.

Jan. 21, 2009.

www.ifap.ed.gov.

Dear Colleague Letter GEN-08-12.

Subject: The Higher Education Opportunity Act.

December 2008.

www.ifap.ed.gov.

FAFSA Simplification - What Does That Mean and How Do We Get There?

2006 FSA Conference presentation by:

Carney McCullough and Michele Brown.

www.ifap.ed.gov/presentations/attachments/06FSAConfSession24.ppt.

NASFAA

Application Processing System Update.


Michele Brown and Marilyn LeBlanc.


Simplifying the Financial Aid Process.


David Bergeron and Jeff Baker.


22

Appendices

Appendix A

FASFA on the Phone Fact Sheet

Appendix B

Draft 2010-2011 FAFSA

23

Appendix A

FASFA on the Phone Fact Sheet

25

Appendix B

Draft 2010-2011 FAFSA

Use this form to apply free for federal and

STATE TE AID DEADLINESDLINES

state student grants, work-study and loans.

Check with your financial aid administrator for these

Or apply free online at

states and territories:

www.fafsa.ed.gov. .

AL, AS *, AZ, CO, FM *, GA, GU *, HI

*, MH *, MP *, NC,

NE, NM, NV *, OR, PR, PW *, SD *, TX *, UT, VA *, VI

*,

Applying by the Deadlines

VT *, WA, WI and WY *.*

For federal aid, submit your application as early as possible, but no earlier er than

Pay attention to the symbols that may be listed after

January 1, 2010. We must

receive your application no later

than June 30, 2011.

your state deadline.

Your college must have your correct, complete information

n by your last day of

AK April 15, 2010 (date received)

enrollment in the 2010-2011 011 school year.

AR

Academic Challenge - June

1, 2010 (date received)

For state or college aid, the deadline may be as early as January 2010.

See the table

Workforce Grant - Contact your financial aid

to the right for state deadlines. You may also need to complete additional forms.

administrator. r.

Higher Education Opportunity Grant

Check with your high school guidance counselor or a financial ncial aid administrator at

- June 1, 20100 (fall term)

(date received)

your college about state and college sources of student aid

and deadlines.

9D

- November 1, 2010 (spring

term) (date received)

CA Initial awards

- March 2, 2010 + *

If you are filing close to one of these deadlines, we recommend mend you file online at

Additional community college awards

www.fafsa.ed.gov. This is the fastest and easiest way to

apply for aid.

- September 2, 2010

(date postmarked) + *

CT

February 15, 2010

(date received) eived)

#*

Using Your Tax Return

DC June 30, 2010 0

(date received

by state)

# *

DE April 15, 2010 0

(date received)

If you are supposed to file

a 2009 federal income tax return, we recommend mend that

FL

May 15, 20100

(date processed)

ed)

you complete it

before filling ling out

this

form.

If

you have not

yet

completed your

2009

IA

July 1, 2010

(date received)

tax return, you can still submit your FAFSA using best estimates. After

you submit

ID Opportunity Grant - March

1, 2010 (date received)

# *

your tax return, correct any income or tax information that

is different from what

you initially submitted on

your FAFSA.

IL First-time applicants - September ember 30, 2010 (date

received)

#

mit0

Filling Out the FAFSA

Your answers on this form

will be read electronically. 2

Therefore: efore:

Correct

Incorrect r

2t

2rec

otx

x √

1 5

E

L M S

T

e1

ts

D

Blue is for student information and purple ple is for parent information.

uand

If you or your family has unusual usual circumstances

(such as loss of employment),

complete this form to the

extent Jupurp

Jh

you can, then submit Dch it as

instructed

and consult

with the financial aid office at the college you plan to attend.

For more information or help in filling out the FAFSA, go to

www.studentaid.ed.gov/completefafsa or call 1-800-4-FED-AID

0-4-FED-AID

(1-800-433-3243). TTY users (for the hearing impaired) may

call 1-800-730-8913.

2or2

$

1 2356

nno no cents

,

Mailing Your FAFSAA

After you complete this application, make a copy of pages

3 through 8 for your

records. Then mail the original of pages 3 through 8 in the

attached envelope or

send it to:

Federal Student Aid

Programs, P.O. Box 4691, Mt. Vernon, IL 62864-0059.

After your application is processed, you will receive a summary mary of your

information

in your Student Aid Report

(SAR). If you provide an e-mail address, your SAR will be

sent by e-mail within 3-5

days. If you do not provide an e-mail address, your SAR will

be mailed to you within three weeks. If you would like to check the status

of your

FAFSA, go to

www.fafsa.ed.gov a.ed.gov

or call 1-800-4-FED-AID. D.

Let’s Get Started!

Now go to page 3 of the

application form and begin filling ing it out. Refer to the

notes as instructed.

CTD

Continuing applicants - August 15, 2010 (date

breceived)

#

IN March 10, 2010 (date received)

ed)

KS

April 1, 2010 (date received)

# *

KY March 15, 2010

(date received) ed)

#

LA

July 1, 2010 (date received)

MA May 1, 2010 (date received)

#

MD

March 1, 2010 (date received)

ME

May 1, 2010 (date received)

MI


MN

30 days after term starts (date received)

MO

April 1, 2010 (date received)

#

MS

MTAG and MESG Grants - September 15, 2010 (date

received)

#

HELP Scholarship - March 31, 2010 (date received)

#

MT

March 1, 2010 (date received) #

ND


ed)

NH

May 1, 2010 (date received)

NJ

2009-2010 Tuition Aid Grant recipients - June 1, 2010

(date received)

All other applicants

- October 1, 2010, fall & spring terms (date received)

- March 1, 2011, spring term

only (date received)

NY May 1, 2011 (date received)

+ *

OH

October 1, 2010 (date received)

OK

April 15, 2010 (date received) #

PA

All 2009-2010 State Grant recipients & all non-

2009-2010 State Grant recipients in degree program

- May 1, 2010 (date received)

*

All other applicants - August 1, 2010 (date received)

*

RI

March 1, 2010 (date received) #

SC Tuition Grants - June 30, 2010 (date received)

SC Commission on Higher Education - no deadline

TN State Grant - March 1, 2010 (date received)

#

State Lottery - September 1, 2010 (date received)

#

WV

April 15, 2010 (date received) # *

# For priority consideration, submit application plication by date specified.

+ Applicants encouraged to obtain proof of mailing.

* Additional form may be required.

ap

bmOpportunity

bmFirst-time

1 2

June

ne

e2

29,

9,

2009

09

9D

Draft

CADr

aft

t

pDo

on ,n

not

Mno

ts

sub sub

ubmit.

(sucD

ectot

ot√

STATE TE AID DEADLINES

27

Notes for questions 14

and 15 (page 3)

Notes for questions 38 (page 4)

If you are an eligible noncitizen, write in your eight- or nine-digit Alien

and 86

(page 7) — Notes for those

who filed a 1040EZ

Registration ti Number. Generally, erally, you are an eligible ibl noncitizen if you are

On the 1040EZ, if a person didn’t check either box on line 5, enter

(1) a permanent U.S. resident ent with a Permanent Resident Card (I-551); (2)

01 if he

or she is single, or 02 if he or she is married. If a person

a conditional permanent resident (I-551C); or (3) the holder

of an Arrival-

checked either the “you” or “spouse” box on line 5, use 1040EZ

Departure Record (I-94) from the Department of Homeland

Security showing worksheet line F to determine the number of exemptions ($3,500

any one of the following designations: “Refugee,” “Asylum Granted,” “Parolee”

equals one exemption).

(I-94 confirms

that

you were paroled for

a minimum of

one

year and status has

not expired), “Victim of human trafficking,” T-Visa holder (T-1, T-2, T-3, etc.) or

Notes for questions 42 and 43 (page 4)

“Cuban-Haitian Entrant.”

and 90

and 91 (page 7)

If you are in the U.S. on an

F1 or F2 student visa, a J1 or J2 exchange visitor

visa, or a G series visa (pertaining to international organizations), ions), select “No,

I am not a citizen or eligible le noncitizen.” You will not be eligible for federal

student aid; however, you

should still complete the application i

because you

may be eligible for state or

college aid.

Notes for question 22

(page 3)

The Selective Service System, and the registration requirement for young

men, preserves America’s ability to provide manpower in an

emergency to the

U.S. Armed Forces. Almost

all men—ages 18 through 25—must register. For

more information about Selective Service, visit www.sss.gov.


(page 4)

For undergraduates, select

the enrollment status for the college you will most

likely attend.

“Full-time” generally means taking at least 12 credit hours in

a term or

24

clock hours per week.

“Three-quarter-time” generally means taking at least 9 credit

hours in a

term or 18 clock hours per week.

“Half-time” generally

means taking at least 6 credit hours in a

term or 12

clock hours per week.


(page 4)

120

The Teacher Education Assistance sistance for College and

Higher Education (TEACH)

Grant Program provides grants to students enrolled ed in a participating

9atin

9n college who intend to teach in a public or private elementary or secondary

school that serves students ts from low-income families. Answer 29ducation

2ry “Yes” to learn

more about the TEACH Grant. Answer “No”

if you are

not interested in the

TEACH Grant. Answer “Don’t know”

if you are not sure but

would like more

information about the TEACH Grant. Additional information

n about the TEACH

Grant Program is available

at

www.teachgrant.ed.gov. ed.gov.

neinfor


(page 4)

and 81 (page 6)

If you filed or will file a foreign tax return, a tax return with Puerto Rico,

another U.S. territory (e.g.,

Guam, American Samoa, the U.S.

. Virgin Islands,

Swain’s Island or the Northern Marianas Islands) or one of the Freely

Associated States (i.e., the

Republic of Palau, the Republic of the Marshall

Islands or the Federated States of Micronesia), use the information from that

return to fill out this form.

If you filed a foreign return, convert all monetary

units to U.S. dollars, using

the exchange rate that is in effect

today. To view

the daily exchange rate, go

to www.federalreserve.gov/releases/h10/

eleases/h10/

update.

Net worth means current value minus debt. If net worth is

negative, e, enter 0.

Investments include real estate (do not

include the home you

live in), trust funds, UGMA and UTMA accounts, counts, money market

funds, mutual funds, certificates of deposit, stocks, stock options,

bonds, other securities, installment and land sale contracts

(including ng mortgages held), commodities, etc.

Investments also include qualified educational benefits or

education savings accounts

tq

(e.g. Coverdell ell savings accounts, 529

college savings plans and the refund value of 529 prepaid tuition

plans). For a student who does not report

parental information,

the

accounts owned by the student (and/or the student’s spouse)

repoD

are

reported as student investments in question 42. For a student

muD

who must report parental information, the accounts are reported

as parental

Dorted

investments in question 90, including all accounts

owned by the student and all accounts owned by the parents for

any member mber of the household.

old.

Investments do not include the home you live in, the value

0Invest

of life insurance, retirement

plans (401[k]

plans, pension funds,

annuities, non-education IRAs, Keogh plans, etc.) or cash, savings

and checking accounts already reported in questions 41 and 89.

Investments also do not include UGMA

and UTMA accounts for

which ubes,

you are the custodian, but not the

owner.

Investment ent value means the

current balance ance or market value of

these investments as of today. Investment nt debt means only those

debts that are related to the investments.

Business ss and/or investment farm value

includes the market

value of

land, buildings, machinery, equipment, inventory, etc.

Business

s and/or investment farm debt means only those debts for

which the business or investment farm was used as collateral.

Business ss value does not include the value of a small business

if your family owns and controls more than 50 percent of the

business

s and the business has 100 or fewer full-time or full-time

equivalent ent employees. For small businesss value, your family

includes

(1) persons directly related to you, such as a parent,

sister or

cousin, or (2) persons who are or

were related to you by

marriage, such as a spouse, stepparent or

sister-in-law.

Investment farm value does not include the value of a family

farm that you (your spouse and/or your parents) live on and

operate.

Notes for questions 49 (page 5)

June ne

e2

29, 9,

2009 09

9D

Draft

aft

Do

hDo

on

not

ts

sub sub

ubmit.


(page 4)

Answer

“Yes” if you are currently serving

in the U.S. Armed Forces

and 82 (page 6)

or are a

National Guard or Reserves enlistee who is on active duty

for other than state or training purposes.

In general, a person is eligible ible to file a 1040A or 1040EZ if he

or she makes

less than $100,000, does not itemize deductions, does not receive income

Answer

“No” if you are a National Guard

or Reserves enlistee who

from his or her own business or farm and does not receive alimony. A person

is on active duty for state or training purposes.

poses.

is not eligible to file a 1040A 0A or 1040EZ if he or she makes $100,000 or more,

itemizes deductions, receives income from his or her own business or farm,

is self-employed, receives

alimony or is required to file Schedule D for capital

gains. If you filed a 1040 only to claim Hope or Lifetime Learning credits, and

you would have otherwise

e been eligible for a 1040A or 1040EZ, 0EZ, you should

answer “Yes” to this question. If you filed a 1040 and were not required to file

a tax return, you should answer “Yes” to this question.

Page 2

Notes

continued on page 9.

28

Step One (Student): For questions 1-32, leave blank any questions that do not apply to you (the student).

Your full name (exactly as it

appears on your Social Security card)

1. Last

2. First

name

name

OMB # 1845-0001

3. Middle

initial

Your mailing address

4. Number and

street (include

apt. number)

5. City (and

country if not

U.S.)

8. Your Social Security Number 9. Your date

MONTH

DAY

YEAR

10. Your permanent telephone number

of birth

tm

– –

M M

D D 1 9

Y

Y

Your Driver’s license

number (if you have one)

11. Driver’s license

number

19. Did you become a legal

resident of

this

state

before January 1, 2005? 05?

Ju19.

@

6. State

te

7. ZIP code

( ) –

12. Driver’s license

state

13. Your e-mail address.

If you provide your e-mail address, we will communicate municate with you electronically. cally. For example, when

your FAFSA has been processed, you will

be notified by e-mail. Your

e-mail address will also be shared with your state and the colleges listed

on your FAFSA to allow

them to communicate municate with you. If you

prefer to be contacted by

postal mail or do not have an e-mail address, s, please leave this field blank.

su

14. Are you a U.S.

Yes, I am a U.S. citizen (U.S. national). Skip to question 16.

1

15. Alien Registration Number

citizen?

No, in 2

Mark only one.

but I am an eligible noncitizen. Fill question 15.

bA A

See Notes page 2. . No, I am not a citizen or noncitiz9

eligible noncitizen. Skip to question 16. 3

Report your marital status as of the date you sign your FAFSA. A.

If your marital status changes after you sign your FAFSA, you

cannot not change this information.

n.

16. What is your

17. Month and year you

MONTH

I am

single

1

I am separated

3

marital status as

were married,

of today?

I am

married/remarried

2

divorced or e1

I am

widowed

4 separated,

M M

divorced or widowed

18. What is your

state of legal

residence?

STATE

TE

am

arried/remarriedne ne

uaryD

orcednorn

Yes

No

1

2

D

your

aratednot

1

o

bmg

20. If the answer to question 19

is “No,” give month and year

you became a legal resident.

M M Y

Y

Y

Y

MONTH

)

Jun une

ne2

2e

29,

2009 009

09 9D

Draft raft

Do on

not

ts

su2u

sub u1ub

ubm

bmi

mit.

YEAR

YEAR

M M Y

Y

Y Y

21. Are you male

or female?

Male

Female

1

2

If female, skip to question 23.

22. Most male students must register with Selective Service to receive

federal aid. If you are male, age 18-25 and not registered, fill in the

circle and we will register you.

See Notes page 2. .

Register me

1

23. Have you been convicted for the possession or sale of illegal drugs for an offense that occurred while you were receiving

federal student aid (such

as grants, loans or work-study)?

Answer “No” if you have never received federal student aid or if you have never had a drug conviction

n while receiving federal student aid.

If you have a drug conviction for an offense that occurred while

you were receiving federal student aid, answer “Yes,” but complete and

submit this application, and

we will mail you a worksheet to help

you determine if your conviction affects your eligibility for aid. If you are

unsure how to answer this question, call 1-800-433-3243 for help.

No

Yes

1

3

Some states t and colleges offer aid idbased on the level l of schooling your

parents completed.

24. Highest

school

your

father completed

Middle school/Jr. high

25. Highest

school

your

mother completed

Middle school/Jr. high

High school

High school

College or

beyond

3

College or beyond

Other/unknown

1

2

3 4

Other/unknown

1

2

3

4

26. When you begin collegee in the 2010-2011 school year, what will be your high school completion status?

High school diploma

....................................................................

1

........................................................... Homesch

General Educational

Development (GED) certificate

........

2

Homeschooled ....................................................................

None of

the above

..............................................................

3

4

For Help–www.studentaid.ed.gov/completefafsa

d.gov/completefafsa

Page

3

29

1. J

1

2

27. Will you have your first

bachelor’s degree before July 1, 2010?

Step One CONTINUED from page 3

28. When you begin the 2010-2011 school year, what will be

your grade level?

29. When you begin the 2010-2011 school year, what degree or certificate cate

will you be working on?

Never attended college and

1st year

undergraduate

.........................

0

1st bachelor’s degree .........................................................................................................

1

Attended college before and 1st

year undergraduate ........................

1

2nd bachelor’s degree ......................................................................................................... 2

Associate degreee (occupational or technical program)

..........................................

3

2

2nd year

undergraduate/sophomore .......................................................

Associate degreee (general education or transfer program) ram) ..................................

4

3rd year undergraduate/junior nior

....................................................................

3

Certificate or diploma (occupational, technical or education program of

less than two years) ............................................................................................................

5

4

4th year undergraduate/senior nior ....................................................................

Certificate or diploma (occupational, technical or education program of

two ormore years) ................................................................................................................

5

6

5th year/other undergraduate ate

....................................................................

7

Teaching credential (nondegree program)

................................................................

1st year graduate/professional onal

....................................................................

6

Graduate or professional degree

....................................................................................

8

Continuing graduate/professional essional or beyond

......................................

7

Other/undecided d

..................................................................................................................

9

30. When you begin the 2010–2011 school year, what do you

expect

31. In addition to

grants, are you interested in being considered for work-

your enrollment status to be?

See Notes page 2.

study or student loans?

1

1

Full-time

...............................................................................................................

Work-study (student aid that you earn through work)

..........................................

2

2

Three-quarter-time

..........................................................................................

Student

loans (which you

must

pay

back) ..................................................................

3

3

Half-time

..............................................................................................................

Both

work-study and

student

loans

f...... ..............................................................................

4

Less than half-time

...........................................................................................

Neither

......................................................................................................................................

D

4

5

5

Don’t know

.........................................................................................................

Don’t

know

..............................................................................................................................

32. Are you planning to complete course work necessary to

become an elementary or secondary

Yes

know

now page school teacher, either or in the future? See Notes 2.

1 No

2 Don’t tkno

3

Answer questions 33–58 3–58 about yourself

(the student). If you are single, separated, divorced or widowed,

Step Two (Student):

answer only about yourself. If you are married as of today, include information about your spouse

(husband or wife).

33. For 2009, have you (the

student) completed your IRS income tax

34. What income

b

tax return did you file or will you file for 2009?

return or another tax return listed in question 34?

1

IRS

1040

...................................................................................................................................

1

2

I have already completed my return.

........................................................

IRS

1040A or 1040EZ ...........................................................................................................

2

A foreign tax return. See Notes page 2.

.....................................................................

3

I will file, but I have not yet

completed my return.

...............................

uturn.

ub.............................................

A tax return with

Puerto Rico, another

U.S. territory or

Freely Associated

3

4

I’m Im not going to file.

Skip to

question 39.

.............................................

State. te.

See Notes

page 2. ..................................................................................................

93

9...

35. If you have filed or will file a 1040, were you eligible to file a 1040A Yes

know

See Notes page 2.

For questions 36–45,

if

the

answer is

zero

or

the question does not apply enter Report 36. What was your (and spouse’s) income Adjusted line 37; 1040A—line 21;

negible

n

or 1040EZ? tStat

1 No

2 Don’t 3

to you,

0.

whole dollar amounts with no cents.

napply

se’s) adjusted gross D

for 2009?

gross income is on IRS Form 1040—

or

1040EZ—line 4.

$

,

37. Enter your (and spouse’s) income tax for 2009. Income tax amount is on IRS Form 1040—line 56; 1040A—

line 35; or 1040EZ—line

11.

$

thee

tes

.....b

A t

sub

38. Enter your (and spouse’s) exemptions for 2009. Exemptions are on

IRS Form 1040—line 6d

or Form 1040A—

line 6d. For Form 1040EZ, see Notes page 2.

Yes 1

No

2

Questions 39 and 40 ask about earnings (wages, salaries, tips, etc.) in 2009. Answer the questions whether or not a tax return was filed. This information

may be on the W-2 forms, or on IRS Form 1040—lines 7 + 12

+ 18 + Box 14 of IRS Schedule K-1 (Form 1065); or 1040A—line 7; or 1040EZ—line 1. If any

individual earning item is negative, do not include that item

in your calculation.

Yes

econdD

Jun

ne2

29, 2009 009

09

9D

Draft

aft

ft

Do on

not

ts

sub

ubmit.

,

No

39.

How much did you earn

from working in 2009?

40. How much did your

spouse earn from working in

2009?

$

$

,

,

41. As of today, what is your (and spouse’s) total current balance ance of cash,

savings and checking accounts?

Do not include student

financial aid.

42. As of today, what is the net worth of your (and spouse’s)

investments, including real estate? e?

Don’t include the

home you live in. Net worth means current value minus debt.

See Notes page 2.

43. As of today, what is the net worth of your (and spouse’s)

current businesses and/or investment farms?

For a family farm or family business, see Notes page 2.

For Help — 1-800-433-3243

Page

4

$

$

$

,

,

,

Step Two CONTINUED on page 5

30

Step Two CONTINUED from page 4

44. Student’s 2009 Additional Financial Information (Enter the ecombined amounts for you and your spouse.)

a. Education credits (Hope and Lifetime Learning tax credits) from

IRS Form 1040—line 50 or 1040A—line 31.

$

b. Child support paid because of divorce or separation or as a result of a legal requirement. Don’t include support for children in

your household, as reported rted in question 94.

c. Taxable earnings from need-based employment programs, such as Federal Work-Study and need-based employment portions

of fellowships and assistantships. antships.

$

$

,

,

,

d. Student grant and scholarship aid reported to the IRS in your adjusted gross income. Includes AmeriCorps benefits (awards,

living allowances and interest accrual payments), as well as grant and scholarship portions of fellowships and assistantships. e. Combat pay or special combat pay. Only enter the amount that was taxable and included in your adjusted gross income.

Do not enter untaxed combat pay reported on the W-2 (Box 12, Code Q).

f. Earnings from work under

racooperative education program offered by acollege

college.

$

$

$

,

,

,

45. Student’s 2009 Untaxed dInc

Income (Enter the combined amounts for you and your spouse.)

a.

Payments to tax-deferred

pension

and

savings

plans (paid directly or

withheld

from earnings), including, but not limited

$

to,

amounts reported

on

the

W-2 forms in Boxes 12a through h 12d, codes D, E, F,

G, H and S.

,

b. IRA deductions and payments to self-employed SEP,

SIMPLE, Keogh and

other

qualified

plans from IRS Form 1040—line fted

t+

Draft28

2 +

line 32 or

1040A—line 17.

$

,

c. Child support received for

any of your children.

Don’t include

foster care or adoption payments.

$

,

d.

Tax exempt interest

income from IRS Form 1040—line 8b or 1040A—line 8b.

$

,

e.

Untaxed portions of IRA distributions from IRS Form 1040—lines (15a

minus 15b) or

1040A—lines (11a 1a minus

11b).

Exclude rollovers.

If negative, enter a zero here.

$

,

f. Untaxed

portions

of pensions from IRS Form 1040—lines (16a minus

16b) v2

1040A—lines minus 12b).

Exclude rollovers.

If negative, enter

a zero here.

g. Housing, food and other living allowances paid to members of military, cler2 2

or

(12a

$

,

the clergy and

others (including ing cash payments and

cash

value of benefits).

Don’tinclude the value of on-base military housing or the 2y,

2gy value of

a basic military allowance for housing. $

,

uy

ub12b).

h.

Veterans noneducation benefits, such as Disability,

Death 2

Pension, or Dependency & Indemnity Compensation (DIC) and/or VA

Educational

Work-Study allowances. lowances.

$

sy ,

i. Other untaxed income not

reported, such as workers’ compensation, disability, etc.

Don’t include student aid,

earned income credit, ee

additional ditional child tax welfarot

credit, welfare e payments, untaxed Social Security benefits,

$

Supplemental Security Income, WorkforceInvestment

estmen

educational 2d al benefits, combat pay, benefits

from flexible spending

,

arrangements (e.g., cafeteria er

plans), foreign income exclusion orcredit tfor federal o,

tax on

special fuels.

j. Money received, or paid on

your behalf (e.g., ., bills), not reported elsewhere e on this form.

$

eclu

ex

ee

etAct ,

Step Three (Student): t): Answer all l questions s in this step to determine if you will need to provide parental information.

uarJ

g

9

whernot

edero

Do

(J

46. Were you born before January ......................................................................................................................................................................................

47. Asoftoday,

are you married? “Yes” you arD

1, 1987?

(Also answer

if are separated but not divorced.) ...........................................................................

48. At the beginning of the

2010–2011 school year, will you be working on a master’s ordoctorate program (such as an

MA, MBA, MD, JD, PhD, EdD,

graduate certificate, etc.)?

....................................................................................................................................................

49. Are you currently serving on active duty in the U.S. Armed Forces for purposes other than

training? See Notes page 2.

50. Are you a veteran of the

U.S. Armed Forces? See Notes page 9.

....................................................................................................................................

51. Do you have children who will receive more than half of their support from you between July 1, 2010 and June 30, 2011? Yes 1 No

2

52. Do you have dependents (other than your children or spouse) who live with you and who

receive more than half of

their supportfrom you,

now and through June 30, 2011?

.............................................................................................................................................

Yes

1 No

2

53. At any time since you turned age 13, were both your parents deceased, were you in foster

care or were

you a

dependentorward oft

the court?

See Notes page 9.

.............................................................................................................................................................

Yes

1 No

2

54. Are you or were you an

emancipated minor as determined ed by a court in your state of legal

l residence? See Notes page 9.

Yes 1 No

2

55. Are you or were you in legal guardianship as determined d by a court in your state of legal residence? See Notes page 9.

56. At tany time on or after July 1, 2009, did your high school

or school district ict homeless liaison

determine ermine that you were

an unaccompanied youth who was homeless? See Notes page 9.

.............................................................................................................................

57. Atany time on or after July 1, 2009, did the director of an

emergency shelter or transitional al housing program funded

by the U.S. Department

of Housing and Urban Development determine that you were an

unaccompanied youth who

was homeless?

See Notes page 9.

....................................................................................................................................................................................................

58. Atany time on or after July 1, 2009, did the director of a runaway or homeless youth basic

center or transitional living

program determine that t you were an unaccompanied youth who was homeless or were self-supporting and at risk of

being homeless?

See Notes page 9.

................................................................................................................................................................................................

For Help–www.studentaid.ed.gov/completefafsa d.gov/completefafsa

Page

5

af

ftt

JAJ

Jun une ne

e2

29, 2009009

09

9D

D

Do

on

no

ot

c.ot

ts

sub

ubmit.

1 2

Yes

No

1 2

Yes

2

No

No

2

1 2

Yes

1 2

Yes

2

No

1 2

Yes

2

No

2

No

1 2

Yes

2

No

1 2

Yes

1 2

Yes

2

No

1 2

Yes

2

No

31

If

you (the

student)

answered ed

“No” to every question in Step Three, go

to Step Four.

If

you

answered

“Yes” to any question in Step Three, skip Step Four and go

to Step Five on page

8.

(Health professions ons students:

Your

college may require you to complete Step Four even

if you answered

“Yes”

to any Step Three question.)

Step Four (Parent Information): Complete this

step

if

you (the

student) answered

“No”

to all

questions

in Step Three.

Answer all

the

questions

in Step Four

about

your parents

even

if

you do

not

live with them.

Grandparents, nts, foster

parents,

legal

guardians,

aunts

and

uncles

are

not

considered parents on this form unless

they

have legally adoptedd you.

If your parents

are living and

married

to each

other,

answer

the

questions about

them.

If your

parent is single, widowed,

divorced, separated or remarried,

see

the Notes

on page

9 for

additional

instructions.

59. Whatisyo

your ourparents’marit

marital alstatusasof

as ftoday today? 60.

Month

and

year

MONTH YEAR

they were married,

1

3

Married or remarried

Divorced or

separated

separated, divorced

M M

Y

Y

Y

Y

2

4

or widowed

Single

Widowed

What

are the

Social Security Numbers,

names

and

dates

of

birth

of the

parents

reporting

information on this form? If your

parent does

not

have

a

Social

Security

Number,

you

must

enter

000-00-0000.

0000

Enter

two

digits it

for

each

day

and

month

(e.g.,

for

May 31, enter

05

31).

61. FATHER’S/STEPFATHER’S SOCIAL

SECURITY NUMBER

62. FATHER’S/STEPFATHER’S LAST NAME, AND

63. FIRST INITIAL

64. FATHER’S/STEPFATHER’S DATE OF

BIRTH

– –

– –

M M D D

M M

DD

D

1 9 Y Y

65.

MOTHER’S/STEPMOTHER’S

SOCIAL SECURITY NUMBER

66. MOTHER’S/STEPMOTHER’S LAST NAME,

AND

67. FIRST INITIAL 68. MOTHER’S/STEPMOTHER’S DATE OF

BIRTH

yourr

19 Y

Y

D

69. Your parents’

e-mail

address.

If you provide your parents’ e-mail

address, we will let

them know your FAFSA has been en processed. This e-mail address will

also be shared with

your state and the colleges listed on your

FAFSA to allow them to communicate your

parents.

Dwith

9

@

70. What

is your

answer STATE

71. Did your parents

72. If the

to question 71 is “No,”

MONTH YEAR

parents’

become legal

month

b

and year legal residency

Yes

10give state of legal

residents

of this

state

began

for

the

parent

who

has

2005?

2

residence?

before January 1,

No

lived in the state

the

longest.

inb

M M Y Y

Y Y

73. How many people

are in your parents’

household? hold?

Include:

2

yourself, even

if you

don’t live with your

parents,

your parents,

your parents’ other

children if (a) your parents

will provide

than between 2011, (b) the

children

could

answer

“No”

to every question in Step Three 5 this

other people

if they now

live with your

parents, your parents continue

to provide more

than

half of

their

support

between een July andnot

more

half of their support

July 1, 2010 and June 30,

or

2e

on page of

form, and

provide

more than half of their support and your parents will

nue

1, 2010 0 and June

30,

2011. 1.

eyo

74. How many people

in your parents’

household will college Always count yourself

as

a

college Do neJuly

yD

D

be

students between July 1, 2010 and June 30, 2011?

lege student. not

include your parents. You may include others

only if they

w ill

attend, at least

half- time

in 2010-2011,

a program

that leads

a college

degree or

certificate.

or

uto

In 2008 or 2009, did you,

your parents

or anyone

in your parents’ household

(from question

73) receive

benefits from any of the

federal

benefits

programs listed? Mark all the

programs

that

apply.

Answering

Dth these questions

will not

reduce your

eligibility for

student aid or

for these

other

benefits.

TANF may

have a different name

in

your

parents’

state.

Call 1-800-4-FED-AID

to

find out

the

name of the

state’s

program.

Don

stion2in2

June

ne 29,

2020

2009 100

09

9D

Draft

aft ,a

ft

67ḟt

Do n

not

5ot

ts

sub

ubmit

mit

it.

,

,

tFIRST

75.

Supplemental

Security

Income

76.

Food

Stamps

77. Free or

Reduced

Price Lunch

78. Temporary

Assistance

for Needy Families

(TANF)

79.

Special

Supplemental

Nutrition Program

for

Women,

Infants and Children (WIC)

80. For 2009, have your parents completed their IRS income

tax return

or another tax return

listed in question

81?

My parents have already completed their return

.....................................

2

My parents will file, but they have not yet completed their

return. rn.

My parents are not going to file.

Skip to question 87. ........................

1

3

81. What

income tax return

did your

parents

file or

will

they

file

for 2009?

IRS 1040

...................................................................................................................

IRS 1040A or 1040EZ

...........................................................................................

Af

foreign tax

return. See Notes page 2.

.....................................................

A tax return

with Puerto Rico, another U.S. territory ry or Freely

Associated State.

See Notes page 2.

............................................................

1

2

3

4

82. If your parents

have filed or will file a 1040,

were they

eligible to file

a 1040A

or 1040EZ?

See Notes

page

2.

Yes

No

Don’t know

1

2

3

83.

As

of

today,

is either

of your parents

a

dislocated worker? See Notes

page

9.

Yes

No

Don’t know

1

2

3

For Help — 1-800-433-3243

Page

6

Step Four CONTINUED on page 7

32

Step Four CONTINUED from page 6

For questions 84–93, if the

answer is zero or the question does not apply, enter 0. Report whole dollar amounts with no cents.

84. What was your parents’

adjusted gross income for 2009?

Adjusted gross income is on IRS

Form 1040—line 37;

1040A—line 21; or 1040EZ—line 0EZ—line 4.

$

85. Enter your parents’ income tax for 2009. Income tax amount is on IRS Form 1040—line 56; 1040A—line 35; or

1040EZ—line 11.

86. Enter your parents’ exemptions for 2009. Exemptions are

on IRS Form 1040—line 6d or on

Form 1040A—line 6d.

For Form 1040EZ,

see Notes page 2. .

Questions 87 and 88 ask about

earnings (wages, salaries, tips, etc.) in

2009. Answer the questions whether er or not a tax return was filed. This information may be on

the W-2 forms, on IRS Form 1040—lines 40—lines7+12+18+Box14ofIRSS

+ 18 + 14 of Schedule K-1 (Form 1065); on 1040A—line 7; or on 1040EZ—line 1. If any individual earning item is

negative, do not include that t item in your calculation.

l 87. How much did your father/stepfather earn from working

in 2009?

$

88. How much did your mother/stepmother earn from working in 2009?

$

89. As of today, what is your parents’ total current balance of cash, savings and checking

accounts?

90. As of today, what is the net worth of your parents’ investments, including ng real estate? e?

Don’t include

the home

you live in? Net worth means current value minus debt.

See Notes page 2.

91. As of today, what is the

net worth of your parents’ current businesses s and/or investment farms?

For a family farm or family business, see Notes page 2. .

92.

Parents’

2009 Additional i

Financial

i Information

(Enter

the

amounts

for

your

parent[s].)

[])

a. Education credits (Hope and Lifetime Learning tax credits) from

IRS Form 1040—line 50 or 1040A—line 31.

$

b. Child support paid because of divorce or separation or as a result of a

legal requirement. Don’t include support for children

in your parents’ household, as reported in question 73.

$

0Don’t c. Your parents’ taxable earnings from need-based employment programs, Feder09

such as Federal Work-Study and need-based

employment portions of fellowships and assistantships.

$

d. Student grant and scholarship aid reported to the IRS in your parents’ adjusted gross income. Includes AmeriCorps benefits

(awards, living allowances

and interest accrual payments), as well as grant and scholarship ship portions fellowships and

assistantships.

uof $

e. Combat pay or special combat pay. Only enter the amount 29t that

was taxable able and included din your parents’ adjusted

d

gross income. Do not enter er untaxed combat pay reported on the W-2

(Box 12, Code Q).

$

f. Earnings from work under a cooperative education program offered by a college.

$

nt.0

93.

Parents’

2009 Untaxed

Income (Enter

amounts for your parent[s].)

a. Payments to tax-deferred pension and savings plans (paid directly including, amounts reported on the

forms in unthe

Boxes 12a through 12d,

b. IRA deductions and payments Junamo

D

or withheld from earnings), but not limited to,

W-2

codes D, E, F, G, H and S.

to self-employed l SIMD

SEP, SIMPLE, Dgh

Dour

Keogh and other qualified plans from IRS Form 1040—line 28 +

line 32 or 1040A—line 17.

’ Jun

ne 2

29, h29

2009

09

9D

Draft

aft

Do

on

not

ts

sub

ubmit.

$

$

$

$

$

$

$

,

,

,

,

,

,

,

,

,

,

,

,

,

,

,

c. Child support received for

any of your parents’ children.

Don’t include foster care or adoption payments.

d. Tax exempt interest income from IRS Form 1040—line 8b or 1040A—line 8b.

e. Untaxed portions of IRA distributions from IRS Form 1040—lines (15a minus 15b) or 1040A—lines (11a 1a minus 11b).

Exclude rollovers. If negative, enter a zero here.

f. Untaxed portions of pensions from IRS Form 1040—lines (16a minus 16b) or 1040A—lines (12a minus 12b).

Exclude rollovers. If negative, enter a zero here.

g. Housing, food and other living allowances paid to members of

the military, clergy and others (including cash payments and

cash value of benefits). Don’t include the value of on-base military itary housing or the value of a basic military allowance for

housing.

h. Veterans noneducation benefits, such as Disability, Death Pension, or Dependency & Indemnity Compensation (DIC) and/or

VA Educational Work-Study allowances.

i. Other untaxed income not

reported, such as workers’ compensation, disability, etc.

Don’t include student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits,

Supplemental Security Income, Workforce investment Act educational benefits, combat pay, benefits from flexible spending

arrangements (e.g., cafeteria eria plans), foreign income exclusion or credit for federal tax on special fuels.

For Help–www.studentaid.ed.gov/completefafsa d.gov/completefafsa

Page

7

$

$

$

$

$

$

$

,

,

,

,

,

,

,

33

Step Five (Student): Complete this step only if

you (the student) answered “Yes”

to any questions in Step Three.

94. How many people are in your household?

Include:

yourself (and your spouse),

your children, if you will provide more than half of their support port between July 1, 2010 and June 30, 2011, and

other people if they now live with you, you provide more than half of their support and you will continue to provide more than half of

their support between

July 1, 2010 and June 30, 2011.

95. How many people in your (and your spouse’s) household

will be college students between en July 1, 2010 and June 30, 2011?

Always count yourself as a college student. Include others only

if they will attend, at least half-time in

2010-2011, a program that leads to

a college degree or certificate. cate.

In 2008 or 2009, did you (or

your spouse) or anyone in your household (from question 94) receive benefits from any of the federal eral benefits programs

listed?

Mark all the programs

that apply. Answering these questions will not reduce your eligibility for student aid or for these other benefits. TANF may have a different

name in your state. Call 1-800-4-FED-AID -4-FED-AID to find out the name of the

state’s program.

96.

Supplemental

l

Security

Income

97.

Food

Stamps

98.

Free or

Reduced

Price Lunch

101. As of today, are you (or your spouse) a dislocated worker? See Notes page 9.

99.

Temporary Assistance

for Needy Families

(TANF)

Step Six (Student): Indicate which colleges es you want to receive your FAFSA FSA information.

102.c

102.e

102.g

2ND FEDERAL SCHOOL CODE

3RD FEDERAL SCHOOL CODE

4TH FEDERAL SCHOOL CODE

OR

OR

OR

ADDRESS

AND CITY

NAME OF

COLLEGE

ADDRESS

AND CITY

NAME OF

COLLEGE

ADDRESS

AND CITY

NAME OF

COLLEGE

ADDRESS

AND CITY

Step Seven (Student and Parent): Read, sign and date.

100.

Special Supplemental

ental

Nutrition Program

for

Women,

Infants

and

Children (WIC)

STATE

STATE

STATE

off campus

102.d

on campus

with parent

off campus

102.f

on campus

with parent

off campus

102.h

on campus

with parent

off campus

D

If you are the student, by signing ng this application you certify that you

Date this completed.

and/or state student financial ial aid only to pay the cost of attending an

higher

education, (2) are not in default on a federal student loaD

loan or have made arrangements to repay it, (3) onD

Dan

Df (1) institution will use federal 103.

atethisformwascompleted

of MONTH DAY

satisfactory

do not owe money back on a federal eral student grant or have

arrangements made satisfactory to repay it, (4) will notify your college if you default on a M M D D 2010 or 2011

federal student t loan and (5)

will not receive a Federal Pell Grant from more than one college

for the same period of time.

104. Student(Signbelow

below)

If you are the parent or the student, by signing this application

you agree, if asked, to

provide information that will verify the accuracy of your completed form. This information on

1

may include U.S. or state income tax forms that you filed or are

required to file. Also, you

certify that you understand

that

the Secretary of Education has the authority to verify

information reported on this application with the Internal Revenue Service and other

federal agencies. If you sign any document related to the federal eral student aid programs

Parent (A parent from Step Four sign below).

electronically using a Personal Identification Number (PIN), you

certify that you are the

person identified by the PIN

and have not disclosed that PIN to

anyone else. If you purposely

2

give false or misleading information, you may be fined up to $20,000, sent to prison, or both.

Yes

1

ormaaf

No

Don’t know

2

3

f.

Enter the six-digit federal school code and your housing plans. You can

find the school codes

at

www.fafsa.ed.gov or you can

call 1-800-4-FED-AID.

If you cannot get the code,

write in the complete name, address, dress, city and

state of the college. For state aid, you may wish to list your preferred college

first. To have more colleges

receive your FAFSA information,

read What is the FAFSA?

on

page 10.

HOUSING PLANS

1ST FEDERAL SCHOOL CODE

STATE

NAME OF

102.a

COLLEGE

102.b

on campus

OR

with parent

June

ne 2

29,

2009

09D

Draft

raft

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not

ts

sub

ubmit

bmit.

mit.

ft1

1

2

3

1

2

3

1

2

3

1

2

3

If you or your family paid a fee

e for someone to

fill out this form or to advise you on how to fill

it out, that person must complete this part.

Preparer’s name, firm and address. dress.

105.

Preparer’s Social Security Number (or 106)

–

– –

106.

Employer ID

number (or 105)

107.

Preparer’s signature and date

COLLEGE USE ONLY

D/O

1

FAA Signature

1

Federal School Code

1

DATAA ENTRY

USE ONLY:

P

* L E

For Help — 1-800-433-3243

Page 8

34


(page 5)

Answer “Yes” (you are a veteran) if you (1) have engaged in

active duty

in the U.S. Armed Forces (Army, Navy, Air Force, Marines or

Coast Guard)

or are a National Guard or

Reserve enlistee who was called

to active duty

for other than state or training purposes, or were a cadet or midshipman

at one of the service academies, and (2) were released under a condition

other than dishonorable.

Also answer “Yes” if you are not a veteran now

but will be one by June 30, 2011.

Answer “No” (you are not a veteran) if you (1) have never engaged in

active duty in the U.S. Armed Forces, (2) are currently a ROTC student or

a cadet or midshipman at

a service academy, (3) are a National Guard

or Reserve enlistee activated ted only for state or training purposes, poses, or (4)

were engaged in active duty in the U.S. Armed Forces but released under

dishonorable conditions.

Also answer “No” if you are currently serving in the U.S. Armed Forces

and will continue to servee through June 30, 2011.


(page 5)

Answer “Yes” if you had no living parent (biological or adoptive) at any

time since you turned age

13, even if you are now adopted. d.

Answer “Yes” if you were in foster care at any time since you turned age

13, even if you are no longer in foster care as of today.

Answer “Yes” if you were a dependent or ward of the court

at any time

since you turned age 13, even if you are no longer a dependent d

or ward of

the court as of today.

Note that the financial aid

administrator at your school may require you

to provide proof that you

were in foster care or a dependent nt or 20

ward of

the court.


and 55 (page 5)

Answer “Yes” if you can provide a copy of a court’s decision today you are an emancipated minor or are in legal guardianship. Also2

that as of

anship. Also

answer “Yes” if you can provide a copy of a court’s decision

that you were

an emancipated minor or

were in legal guardianship immediately ely before

you reached the age of fb

being an adult ltin your state. t

The court must tb

be

9t

located in your state of legal residence at the time

the court’s decision was

issued.

2rt’s

29must

Answer “No” if you are still a minor and the court decision is no longer

in effect or the court decision was not in effect at the time you became

an adult.


administrator Junr at your

college lege may require

you to provide proof that

you were an emancipated ated

minor

or in legal

guardianship.

Notes for questions 56–58 58 (page 5)

Answer “Yes” if you received a determination at any time on or after

July 1, 2009, that you were e an unaccompanied youth who

was homeless or,

for question 58, at risk of being homeless.

“Homeless” means lacking fixed, regular and adequate

e housing,

which includes living in shelters, motels or cars, or temporarily living

with other people because you had nowhere else to go.

“Unaccompanied” means you are not living in the physical custody of

your parent or guardian.

an.

“Youth” means you are 21 years of age or younger or you are still

enrolled in high school ol as of the day you sign this application.

Answer “No” if you are not homeless, at risk of being homeless or if you

do not have a determination. tion. You should contact your financial aid office

for assistance if you do not have a determination but believe you are an

unaccompanied youth who is homeless or are an unaccompanied youth

providing for your own living expenses who is at risk of being homeless.


administrator at your college may require you

to provide a copy of the determination if you answered “Yes” to any of

these questions.

Page 9

Notes

for Step Four, questions 59–93 – 93 (pages 6 and 7)

Additional instructions about who is considered a parent on this

form:

If your parent is widowed or single,

answer the questions

about that parent.

If your widowed parent is remarried

as of today, answer the

questions about that parent and your stepparent.

If your parents are divorced or separated, answer the

questions about the parent you lived with more during the

past 12 months. (If you did not live

with one parent more

than the other, give answers

about

the parent

who provided

more financial support during the past 12 months, or during

the most recent year that you actually ally received support

from a parent.) If this parent is remarried as of today, answer

the questions about that parent and your stepparent.

Notes

for questions 83 (page 6)

and 101 (page 8)

In

general, eral, a person may be

considered

a dislocated worker if he

or

she:

is

D

receiving unemployment ment benefits due to being laid

off

or losing a job and

is unlikely to

return to a previous

occupation;

has been laid off or received a lay-off notice from a job;

Dccupation;

was self-employed but is now unemployed due to

economic conditions or natural disaster; or

9

is

a displaced homemaker. A displaced homemaker is

generally b

a person who previously

provided unpaid

services to the family (e.g., a stay-at-home t-home mom or

dad), is no longer supported ported by the

husband or wife, is

unemployed or underemployed, and is having trouble

finding or upgrading employment.

ubmit.or natural

If a person quits work, generally erally he or she is not considered

a dislocated worker even if, for example,

the person is

receiving i

unemployment benefits.

is no longer supp

or under

ubnemployed

ubad),

29, 099DD

en

fiub uub

Answer

“Yes” to question 83 if your parent is a dislocated

worker. r. Answer “Yes” to question 101 if you or your spouse is a

dislocated worker.

Answer

“No” to question 83 if your parent is not a

dislocated worker. Answer “No” to question 101 if neither

you nor your spouse is a dislocated worker.

Answer

“Don’t know” to question 83 if you are not sure

whether er your parent is a dislocated worker. Answer “Don’t

know” to question 101 if you are not sure whether you

or your

spouse is a dislocated worker. You can contact

your financial aid office for assistance in

answering these

questions.

Note that the financial aid administrator

r at your school may

requiree you to provide proof that your parent is a dislocated

worker, r, if you answered “Yes” to question 83, or that you or

your spouse is a dislocated worker, if you

answered “Yes” to

question 101.

p

receivin

June ne e2

29,

9,

2009 9D

haD

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aft

ft

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uiren

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not ts

sub sub

bmit.

35

What is the FAFSA?

Why fill out a FAFSA?

The Free Application for Federal eral Student Aid (FAFSA) is the first step in the financial aid

process. You use the FAFSA to

apply for federal student aid, such

as grants, loans and

work-study. In addition, most

states and colleges use information

from the FAFSA to award

nonfederal aid.

Why all the questions?

The questions on the FAFSA are required to calculate your Expected Family Contribution

(EFC). The EFC measures your

family’s financial strength and determines your eligibility

for federal student aid. Your state and the colleges you list may also use some of your

responses. They will determine if you may be eligible for school or state aid, in addition to

federal aid.

How do I find out what my Expected Family Contribution (EFC) is?

Your EFC will be listed on your Student Aid Report

(SAR). Your SAR

summarizes the

information you submitted on

your FAFSA. It is important to review ew your SAR to make sure

all of your information is correct and complete. Make corrections or provide additional

information, as necessary.

How much aid do I get?

Using the information on your FAFSA and your EFC, the financial aid office at your college

will determine the amount of

aid you will receive. The colleges use your EFC to prepare a

financial aid package to help you meet your financial need. Financial need is the difference

between your EFC and your college’s cost of attendance (which can include living

expenses), as determined by the college. If you or your family have unusual circumstances

that should be taken into account, contact your college’s financial aid office. Some

examples of unusual circumstances are: unusual medical or dental expenses enses or a large

change in income from last year to this year.

When do I get the aid?

Any financial aid you are eligible to receive will be paid to you through your college.

Typically, your college will first use the aid to pay tuition, fees and

room

and board (if

provided by the college). Any

remaining aid is paid to you for your other educational

expenses. If you are eligible for a Federal Pell Grant, you

may receive 9,m it from

only one

college for the same period of

enrollment.

2

How can Ih have more colleges receive my FAFSA

Ai information?

If you are completing a paper

FAFSA, you can only list four colleges in the school code step.

You may add more colleges by doing one of the following:

2es 1.

Use the Federal Student Aid PIN you will receive after your FAFSA has been processed

and go to FAFSA on the Web

at

www.fafsa.ed.gov. . Select ect the “Add or Delete a School

Code” link.

2.

Use the Student Aid Report

(SAR), which you will receive after your FAFSA is processed.

Your Data Release Number

(DRN) verifies your identity and will be listed on the first page

of your SAR. You can call 1-800-4-FED-AID 0-4-FED-AID and provide DRN to a customer service

representative, who will add more school codes youD

for

you. u.Dyour

3.

Provide your DRN to the financial aid administrator at tth the llD

college you want added, and

he or she can add their school code to your FAFSA.

Note:

Your FAFSA record can

only list up to ten school codes. If there are ten school codes

on your record, any new school codes that you add will replace one or more of the school

codes listed.

Where can I get more information on student aid?

The best place for informationn about student financial aid is the financial aid office at the

college you plan to attend. The financial aid administrator can telll you about student aid

available from your state, the

college itself and other sources.

You can also visit our web sites www.FederalStudentAid.ed.gov d.gov or

www.studentaid.ed.gov.

For information by phone you can call our Federal Student Aid Information Center

at 1-800-4-FED-AID (1-800-433-3243). TTY users (for the hearing impaired) may call

1-800-730-8913.

You can also check with

your high school counselor, your state aid agency or your

local library’s reference section.

Information about other nonfederal assistance may be available from

foundations, religious

organizations, community organizations and civic groups, as well as

organizations related to

your field of interest, such as the American Medical or American Bar Association. Check with

your parents’ employers or unions to see if they award scholarships or have tuition payment

plans.

Page

10

Information on the Privacy Act and use of

your Social Security Number

We

use the information that you provide on this form to determine

if you are eligible to receive federal student financial aid and the

amount that you are eligible to receive.

Sections 483 and 484 of the

Higher Education Act of 1965, as amended, give us the authority to

ask

you and your parents these questions, and to collect the Social

Security Numbers of you and your parents. We use your Social

Security Number to verify your identity

and retrieve your records,

and we may request your Social Security Number again for those

purposes.

poses.

State te and institutional student financial

aid programs may also use

the

information that you provide on this

form to determine if you

are

eligible to receive state and institutional aid and the need that

you

have for such aid. Therefore, we will l disclose the information

thatt you provide on this form to each institution you list in questions

102a - 102h, state agencies in your state

of legal residence and the

state te agencies of the states in which the

colleges that you list in

questions 102a - 102h are

located.

If you are applying solely for federal aid,

you must answer all of the

following owing questions that apply to you: 1-9, 14-16, 18, 21-23, 26-28,

33-37, 37, 39-59, 61-68, 70, 73-85, 87-101, 103-104. If you do not answer

these questions, you will not receive federal aid.

Without your consent, we

may disclose

information that you

provide to entities under a published “routine use.” Under such a

routine use, we may disclose information on to third parties that we

have authorized to assist

us in administering the above programs;

9ha

9ro

9p

to

other federal agencies

under computer matching programs,

such b

as those with the Internal Revenuee Service, Social Security

Administration, Selective

Service System, Department of Homeland

Security, Department of Justice and Veterans erans Affairs; to your parents

or spouse; and to members ers of Congresss if you ask them to help you

with

student aid questions.

ubpouse;

uburity,

If the federal government, the U.S. Department of Education, or

an employee of the U.S. Department of Education is involved in

litigation, we may send information to the Department of Justice, or

a court or adjudicative body, if the disclosure is related to financial

aid

and certain conditions are met. In addition, we may send

your information to a foreign, federal, state, or local enforcement

agency if the information that you submitted indicates a violation

or potential violation of law, for which that agency has jurisdiction

for investigation or prosecution. Finally,

we may send information

regarding a claim that is determined to

be valid and overdue to a

consumer reporting agency. This information includes identifiers

from

the record; the amount, status and

history of the claim; and the

program under which the claim arose.

29, D

orub

a

r

www.fafsa.ed.gove

June ne

e2

29

9, 2009 09

9D

WithD

Draft

aft

ft

ecb

Do not

tsubsub

ubmit.

wub

it.

Doo

be

State Certification

By submitting this application, you are giving your state financial

aid

agency permission to verify any statement on this form and to

obtain income tax information for all persons required to report

income on this form.

The

Paperwork Reduction Act of 1995

The

Paperwork Reduction Act of 1995 says that no one is required to

respond to a collection of information unless it displays a valid OMB

control number, which for this form is 1845-0001. The time required

to complete this form is estimated to be

one hour, including time to

review ew instructions, search data resources, es, gather the data needed,

and

complete and review the information on collection. If you have

comments about this estimate or suggestions for improving this

form, please write to:

U.S. Department of Education, Washington, DC 20202-4700.

We

may request additional information

from you to process

your application more efficiently. We will collect this additional

information only as needed and on a voluntary basis.

36

Professional Judgment in Today’s Economy

Professional Judgment

in Today’s Economy

“In our current economy, the need for financial aid is greater than ever. The Pell Grant program and other

federal financial aid programs are an economic lifeline for students at colleges and universities.”

U.S. Secretary of Education Arne Duncan

(July 21, 2009)

Students and their families recognize the long-term value of pursuing a postsecondary certificate or

degree, even during an economic downturn. As they cope with unemployment, loss of savings and

investments, foreclosure and even bankruptcy, students and families depend on the knowledge and

experience of financial aid administrators for help as they explore their options based on their own

unique set of circumstances.

Authority to Make Adjustments

HEA Section 479A.

Professional judgment is the discretionary action available to a financial aid administrator to address

special circumstances that affect a student’s ability to pay educational expenses. Exercising the

authority to make adjustments on a case-by-case basis using professional judgment helps aid

administrators ensure Title IV rules and processes address most students’ needs. Even if adjustments

do not create or increase eligibility for Federal Pell or other grant programs, students may benefit in

other ways, such as qualifying for the federal interest subsidy on need-based federal student loans or

for Federal Work-Study funding.

Some aid administrators are reluctant to make adjustments based on professional judgment

decisions that might change a student’s eligibility. The subjective nature of the process can create

uncertainty, and the action of reevaluating eligibility takes time away from other essential processing.

Some aid administrators have been concerned that too many adjustments might attract unwanted

attention from auditors or even result in a program review by the U.S. Department of Education.

During 2009, ED encouraged schools to make adjustments as necessary and indicated that an

increase in professional judgment processing is both acceptable and understandable. ED does

monitor the percentage of applications for which an exception is processed and uses the

determination to select schools for audit review. Due to the state of the U.S. economy and the

unemployment rate, however, ED announced that an adjustment would be made to the “risk-based

model” that triggers program reviews to reflect a more realistic percentage for both the 2008–2009

and 2009–2010 award years.

Trainer’s Tidbit

According to Dear Colleague Letter GEN-09-05, the U.S. Departments of Education and Labor

collaborated to establish an online resource for those who are recently unemployed, available at:

www.opportunity.gov.

1

Unusual Circumstances

HEA Section 479A.

The Higher Education Act of 1965, as amended,

outlines what may constitute unusual

circumstances, including the following

suggestions:

Tuition expenses at an elementary or

secondary school.

Medical, dental or nursing home expenses

not covered by insurance.

Unusually high child care or dependent care

costs.

Recent unemployment of a family member or

an independent student.

Student or family member who is a dislocated

worker (as defined in section 101 of the

Workforce Investment Act of 1998).

Parents enrolled at least half time in a degree,

certificate or other program leading to a

recognized educational credential at an

eligible institution.

Change in housing status that results in an

individual being homeless (as defined in

section 103 of the McKinney-Vento Homeless

Assistance Act).

Other changes in a family’s income, a family’s

assets or a student’s status.

These circumstances must be considered on a

case-by-case basis for conditions that

differentiate an individual student from a defined

group of students, rather than for conditions that

exist across a group.

Aid administrators must make reasonable

decisions that support the intent of the law.

Schools are accountable for their PJ adjustments

and for documenting each decision (2009-2010

Federal Student Aid Handbook, p. AVG-106). A

financial aid administrator’s decision is final and

cannot be appealed to ED.

The financial aid office may receive subsequent

requests for an adjustment made in a prior year. It

is acceptable to make the same adjustment for

multiple award years, as long as updated

documentation is submitted by the family to

ensure that the professional judgment still is

appropriate.

Trainer’s Tidbit

Before a financial aid administrator can

exercise PJ, the verification process must be

completed (if the student is selected by the

Central Processing System or the school) and

all conflicting information must be resolved.

Policies and Procedures

34 CFR 668.14.

Institutions must have written policies and

procedures outlining which types of

circumstances will be considered and how any

recalculation will be performed. Policies and

procedures should not be so restrictive as to

eliminate possible consideration of an

unanticipated special circumstance, nor be so

open that almost any situation qualifies. Schools

need to collect and retain applicable

documentation.

NOTES

2

New Guidance

Dear Colleague Letter GEN-09-04

In April 2009, ED published GEN-09-04, reminding financial aid administrators of their authority to

make adjustments addressing unique circumstances not already reflected in a student’s Free

Application for Federal Student Aid. Delegated Assistant Secretary for Postsecondary Education

Daniel T. Madzelan encouraged administrators to consider the special circumstances of students and

families during economically difficult times, saying:

“I encourage you to do more than provide good service to the students who request that you make

an adjustment. I would ask you to reach out to your students (and prospective students), particularly

those who seem to have hit a rough patch, to make sure that they know there may be ways that you

can help” (GEN-09-04, p. 1).

Schools are encouraged to consider making adjustments for changes in circumstances that result in

changes in income such as loss of a job or a reduction in work hours, or even a “student's decision to

leave the workforce or to reduce work hours in order to return to school” (GEN-09-04, p. 1).

Among other recommendations, ED suggests an alternate approach to making adjustments related

to loss of income. To better reflect the “current and near-term economic situation” students and

families are facing, the suggestion is to consider using projected income for the next 12 months

(GEN-09-04, p. 2).

NOTES

3

Example

Michael is an independent student enrolled full time in his first semester of a four-year radiology

program at your school. Before he enrolled, Michael was working full time as assistant manager at an

electronics store when he decided to switch to a career offering greater job security. Michael was

excited when a local hospital awarded him a semester-long internship for which he is being paid

$1,000 per month during his first semester (Aug. 1 - Dec. 1). He applied for financial aid last January,

quit his job on July 31 and enrolled full time in August. On Dec. 1, Michael contacts your office to talk

about whether he can afford to continue his studies as a full-time student for the spring term.

To help Michael achieve his goals, the financial aid office could reevaluate his eligibility using one of

several different approaches:

FAFSA filed

for 2010-2011

Adjustment requested

for 2010-2011

2009-2010 FAFSA 2010-2011 FAFSA 2011-2012 FAFSA

1 Prior Tax Year (2009)

2 Current Tax Year (2010)

3 Current Academic Year

4 Next 12 Months

Jan. 1, 2009 Jan. 1, 2010 Jan. 1, 2011 Jan. 1, 2012

Option 1: Continue to Use Income from the Prior Tax Year

Michael reported income last year of $32,000. You might choose not to adjust the income on his

FAFSA for his first year, knowing that he is likely to qualify for more need-based federal, state and

institutional aid next year when he reapplies for financial aid. To help him transition from working full

time to attending college full time, you might use professional judgment to award additional

institutional aid for his first year or for next semester once his internship funding has ended.

Option 2: Adjust Income Based on Current Tax Year

You could collect documentation of this year’s earnings to date and a signed statement from Michael

of his projected earnings through the end of the current tax year. If income from his full-time job

ended in July, his projected income for the current tax year might be two-thirds of last year’s income,

or approximately $18,667, plus his internship income of $4,000. Adjustments to his adjusted gross

income, income earned from work and taxes paid, are likely to result in a lower Expected Family

Contribution on which to base his revised award offer.

NOTES

4

Option 3: Adjust Income Based on Current

Academic Year

The majority of Michael’s income during the

current tax year will be from his full-time job,

which ended in July. You could collect a signed

statement from Michael, and any supporting

documentation you require, of his projected

earnings for the 12-month period from August

through the following July. Depending on his

enrollment and employment plans next spring

and summer, Michael’s projected income might

be only $4,000, which represents his earnings

from his paid internship. The larger adjustment to

his AGI, income earned from work and taxes paid,

is likely to result in an even lower EFC on which

to base his revised award offer.

Option 4: Adjust Income Based on Next 12

Months

Based on ED’s guidance in GEN-09-04, Michael’s

projected income could be determined for the

12-month period of time from the date the

significant loss of income occurred, Dec. 1. You

could collect a signed statement from Michael,

and any supporting documentation required,

regarding his projected earnings for the 12-

month period from Dec. 1 through the following

Nov. 30.

Depending on his future enrollment and

employment plans, Michael’s projected income is

unknown for the next 12 months without

additional documentation. Adjustments to his

AGI, income earned from work and taxes paid, is

likely to result in additional eligibility for needbased

federal, state and institutional aid, and you

could revise his award offer accordingly.

What other options may exist?


In May 2009, ED published GEN-09-05, providing

additional guidance to aid administrators on

documenting and making adjustments related to

unemployment. To increase awareness of the

range of opportunities available to them, each

state will provide recipients of unemployment

benefits with a letter encouraging them to

consider attending an institution of higher

education, for which financial aid may be

available. To ease the administrative burden on

unemployed individuals, aid administrators may

use this letter or other evidence of receipt of

unemployment benefits to document that the

recipient’s projected income earned from work is

zero. These letters are valid for this purpose for

up to 90 days from the date the agency issued

them, unless other employment has been found.

Schools can accept other documentation of

receipt of unemployment benefits.

For these circumstances only, unemployment

benefits also may be considered to be zero

because ED determined that unemployment

benefit amounts would not have a measurable

effect on the EFC of an independent student. ED

expanded the recommendations further to

indicate that, if other members of the student’s

family are receiving unemployment benefits,

schools should make appropriate adjustments

based on the entire family’s economic situation.

In this letter, ED again encourages aid

administrators to use their professional

judgment to assist the unemployed, reassuring

the financial aid community that the “risk-based

model” that triggers program reviews will be

adjusted accordingly for both 2008–2009 and

2009–2010.

5

Dislocated Workers

29 U.S.C. 2801.

As defined in the Workforce Investment Act,

dislocated workers are employees who have lost

their jobs or received notice of termination of

employment, especially those in an industry or

occupation to which they are unlikely or unable

to return. This may include self-employed

persons, such as farmers or fishermen, who

become unemployed due to natural disasters or

economic downturns. This definition also covers

“displaced homemakers” who were not working

outside the home, and were dependent on

another family member for support that has

ended, and are now unemployed or

underemployed.

Dislocated worker status is not dependent upon

receipt of unemployment benefits, and receipt of

unemployment benefits does not automatically

qualify an individual as a dislocated worker. For

example, employees who leave voluntarily might

qualify for unemployment benefits, but they are

not considered dislocated workers.

The effect on Title IV aid eligibility depends on

which family member meets the definition and

when the change occurred.

Status Changes Before Filing

the FAFSA

The College Cost Reduction and Access Act of

2007 adds “dislocated worker” status to the

qualifying criteria for the simplified needs or

auto-zero EFC calculation. The status is reported

as of the date the FAFSA is signed, and the

resulting EFC may be lower than if the standard

calculation were used, which may help the

student to qualify for additional financial

assistance.

The AGI reported on the FAFSA is from the base

(prior) year, which may no longer reflect the

resources currently available to the family.

Instead, schools could reevaluate Title IV aid

eligibility based on projected income and assets,

using professional judgment to modify the

appropriate FAFSA data elements relevant to the

family’s situation:

AGI.

Income earned from work.

Federal income taxes paid.

Cash, savings and checking.

Net worth of investments.

Net worth of businesses and/or

investment farms.

It is possible that an adjustment to the AGI based

on the family’s circumstances might enable the

student to qualify for one of the alternate EFC

calculations, which is likely to improve the

student’s eligibility for aid even further. Since this

also might make any potential adjustments to

assets unnecessary, it usually is helpful to

simulate the effect of various types of

adjustments before determining which types of

information and documentation to collect from

the student.

Status Changes After Filing the

FAFSA

Schools are encouraged to consider making

adjustments even after the FAFSA is signed and

processed. In the event that a wage-earner

becomes a dislocated worker after applying for

federal financial aid, the student’s eligibility still

may be reevaluated.

A student cannot update the dislocated worker

question on the FAFSA if the dislocated worker

status occurred after the FASFA was signed.

However, a financial aid administrator can adjust

the dislocated worker question on the FAFSA

based on a PJ request from the student, even if

the status changed after the FAFSA was signed. If

this adjustment, plus the change in income,

makes the family eligible for the simplified needs

test or auto-zero EFC, the CPS will use this

adjusted information to calculate the new EFC for

the family.

6

Trainer’s Tidbit

The 2009-2010 Federal Student Aid Handbook

Application and Verification Guide (p. AVG-35)

states that dislocated worker status is not a

required verification item. Schools choosing to

verify this answer on the FAFSA or require

documentation as part of a reevaluation of

eligibility using professional judgment might

collect:

Letter from the employer.

Notice of layoff or termination.

Verification from the unemployment

insurance system.

State workforce agency statements.

Federal income tax returns.

Newspaper articles.

A signed statement from the dislocated

worker.

Dependency Override

GEN-03-07.

Students who do not meet the criteria to be

classified as an independent student for financial

aid purposes may be declared independent by

professional judgment based on unusual

circumstances; however, schools may not

consider an independent student as dependent

under any circumstances.

ED has interpreted “unusual circumstances” to

mean conditions that make it inappropriate to

expect a parental contribution. An abusive family

environment or abandonment by parents may

be grounds for a dependency override.

Documentation must be submitted to support

such claims and may come from the student,

family members or others with knowledge of the

situation. Letters, court documents or school

records may be required for review when

considering a dependency override request.

GEN-03-07 identifies four conditions that,

individually or in combination with one another,

do not qualify as unusual circumstances for a

dependency override.

Parents’ refusal to contribute to the student’s

education.

Parents’ unwillingness to provide information

on the FAFSA or for verification.

Parents’ inability or decision not to claim the

student as a dependent for income-tax

purposes.

Student’s demonstration of total selfsufficiency.

The CCRAA allows financial aid administrators to

grant dependency overrides based on a

documented override at another institution for

the same award year.

Overrides do not carry over from one year to the

next. Students must reaffirm each year that the

unusual circumstances persist and schools must

determine whether an override still is justified.

7

Parental Refusal to

Provide Support

HEOA Section 472.

Amends HEA Section 479A.

To address the needs of students who do not

qualify for a dependency override, the Higher

Education Opportunity Act of 2008, gave aid

administrators new authority, on a case-by-case

basis, to provide unsubsidized Stafford loans to

students whose parents refuse to help them

apply for financial aid or provide any financial

support.

Support includes direct or indirect financial

assistance provided to the student. Direct

support includes cash or checks (other than gifts

for holidays) intended to help students pay bills,

maintain their cost of living or cover their

educational expenses. Indirect support includes,

but is not limited to:

Living or renting rooms in parents’ homes.

Providing coverage under parents’ medical or

auto insurance.

Making car payments or paying rent.

Before approving this exception, schools must

thoroughly document that the student’s

situation meets specific criteria. Generally, the

documentation requirement may be met by

obtaining a signed and dated notice from the

parent(s) stating that they:

Have ended their financial support, including

the date the support ended.

Will not provide financial support in the

future.

Will not complete the FAFSA.

If the parent(s) refuses to provide a statement,

schools must obtain documentation from a thirdparty

that describes the parental relationship

with the student.

The maximum unsubsidized Stafford loan that

may be awarded is based on grade level, cost of

attendance, estimated financial assistance and

limited to the following amounts:

8

Students approved for this exception do not

qualify for any additional unsubsidized Stafford

loan on the basis of a parent’s inability to obtain

approval to borrow a Federal PLUS loan. These

students will not qualify for any other aid that

requires an official EFC.

Reporting Professional

Judgment Decisions

Once the professional judgment is complete,

schools must remember to set the “professional

judgment” flag in their data system before

transmitting the record to the Central Processing

System. The CPS processes the adjustment, the

results are reflected on the Institutional Student

Information Record and a flag is added to the

comment section on the last page of the ISIR.

The following flags indicate the status of an EFC

adjustment resulting from a professional

judgment decision by an aid administrator.

ISIR

Value

Blank

Unsubsidized Federal Stafford

Loan Annual Limits

Grade Level

Adapted from the 2009-2010 ISIR Guide.

Total

Year 1 $5,500

Year 2 $6,500

Year 3 and beyond $7,500

Value Printed

on ISIR

Blank

1 Yes

2 Failed

Description

No EFC adjustment

processed.

EFC adjustment

processed.

EFC adjustment

attempted but failed.

“When a financial aid administrator uses

professional judgment to change a data item on

the ISIR, only the school that made the change

remains listed on the new ISIR transaction” (2009-

2010 ISIR Guide, p. 18).

Case Study

Rochelle Key, a current student at your school, and her parents, Marlon and Patricia, completed the

FAFSA for the 2009-2010 academic year. The CPS selected her application for verification and your

office corrected her FAFSA based on the following documents submitted by the family:

Dependent Verification Worksheet.

Rochelle’s federal tax return.

Marlon and Patricia's joint federal tax return.

In accordance with GEN-09-04, your office reaches out to all current and prospective students

encouraging them to contact the financial aid office if they are experiencing financial difficulties. In

response, Mr. Key requests consideration of the family’s circumstances due to lost wages, hoping

Rochelle may qualify for additional financial aid.

Is this a potential professional judgment? Why or why not?

Background Information

Professional Judgment Options

Option 1: Continue to Use Income from the Prior Tax Year.

Option 2: Adjust Income Based on Current Tax Year.

Option 3: Adjust Income Based on Current Academic Year.

Option 4: Adjust Income Based on Next 12 Months.

U.S. Tax Paid Proration Calculation

Previous U.S. Tax Paid

Previous AGI

x New AGI = New (prorated) U.S. Tax Paid

Case Study Instructions

Based on the documentation provided, only option 2 or 3 would result in an adjustment at this time.

Option 1 would not require any adjustments and option 4 would require additional documentation.

Use option 2 or 3 and review the provided documentation to complete the following worksheet.

9

Changes to Data Elements: Dependent Student

Option: ______

Component of AGI ISIR 01 ISIR 02

Father’s income $52,621 $52,621

Earnings from work $52,621 $52,621

PJ

Adjustment

Action

Parental Income Details

Business income $0 $0

Partnership income $0 $0

Mother’s income $44,250 $44,250


Business income $0 $2,490


Interest income $380 $380

Severance pay N/A N/A

Unemployment

compensation

N/A

N/A


AGI $94,381 $97,251

PJ

Adjustment

Action

Parent(s)

U.S. tax paid $4,863 $9,906

Untaxed income and

benefits

$0 $0

Number in household 5 5

Number in college 3 2

Type of return filed 1040 1040

Eligible to file

1040A/1040EZ

Cash, savings and

checking

Net worth of

investments/business

Don’t know

No

$5,208 $5,208

$0 $0

EFC Result 9,862 9,516

10


Option: ______


Father’s income $52,621 $52,621


PJ

Adjustment

Action


Business income $0 $0


Mother’s income $44,250 $44,250


Business income $0 $2,490


Interest income $380 $380

Severance pay N/A N/A

Unemployment

compensation

N/A

N/A


AGI $94,381 $97,251

PJ

Adjustment

Action

Parent(s)

U.S. tax paid $4,863 $9,906

Untaxed income and

benefits

$0 $0

Number in household 5 5

Number in college 3 2

Type of return filed 1040 1040

Eligible to file

1040A/1040EZ

Cash, savings and

checking

Net worth of


Don’t know

No

$5,208 $5,208

$0 $0

EFC Result 9,862 9,516

11

Marlon B. Key

3447 Overhill Ave.

Wyandotte, OK 74370

May 15, 2009

RE: Rochelle Key

School ID: 111111

To whom it may concern:

At the time of filing my daughter’s 2009-2010 FAFSA I was employed full time. However, due to a

plant closure I was laid off on May 1, 2009.

From January through May 1, 2009, I received $17,540 in wages. I also received two weeks of

severance pay. I have enclosed a copy of my unemployment information and I expect to receive

unemployment benefits of $350 per week, for up to a maximum of 26 weeks.

Here is a breakdown of what I anticipate my income to be through the end of 2009:

Actual wages earned by me: $17,540.

Severance pay received: $2,023.88.

Unemployment expected: $9,100.

My wife's income also is changing for this year. As of Jan. 1, 2009, she left her job as a health care

manager to take a position as a sales manager with another company. As a result of this job change,

her income will decrease to $35,000 for the year. She also decided to close her side business selling

cosmetics to focus on this new job opportunity.

We greatly appreciate any consideration you might give regarding our unexpected change in

income. Please let me know if there is anything else you need from me to complete my daughter’s

file.

Marlon Key

13

ABC Company

Oklahoma City, OK 73105

April 1, 2009

Re: Severance Agreement

Dear Marlon Key:

Following up on our recent discussions, I would like to confirm the terms of a proposed severance

agreement. We have advised you that, unfortunately, we deem it necessary to terminate the

employment relationship. We would like to ensure an amicable parting and a smooth transition. To

that end, ABC Company is willing to provide you with the following:

(1) We will pay you two weeks' severance pay at your current base rate, payable on the date of

your separation, in one lump sum less the usual tax withholdings.

(2) We will continue your group medical benefits by paying your "COBRA” premiums for a period of

six months following your termination date. After that, you will have the right to continue the

benefits at your own expense for the remainder of the 18-month COBRA period.

(3) We will not oppose any claim for unemployment compensation benefits that you may file.

The effective date of your separation from the ABC Company will be May 1, 2009. You will be paid

through that date.

In exchange for these payments and promises, which exceed anything to which you would already

be entitled under ABC Company’s policies and benefit programs, you would agree to release and

hold ABC Company harmless from any claims you might have arising out of your employment with

the company and the termination of your employment.

In addition, you agree to keep this agreement strictly confidential, not disclosing its terms to any

other persons except your legal counsel, immediate family members, financial advisors, taxing

authorities, or as otherwise required by applicable law.

You may take up to 21 days to decide whether you wish to enter into this agreement. We

encourage you to consult an attorney regarding this agreement before signing it. If you sign the

agreement you will have up to seven days thereafter to revoke it. The agreement will not take

effect until this seven-day period has expired.

If you have any questions, let me know. If these terms are acceptable to you, please sign, date and

return the original copy to me. An extra copy is enclosed for your records.

We appreciate your past contributions on behalf of ABC Company, and we wish you all the best in

your future career endeavors.

Very truly yours,

Mark Q. Johnson

Vice President of Operations

ABC Company

Agreed: ____________________________________

Dated: _______________

14

EMPLOYMENT BENEFIT OFFICE

OKLAHOMA CITY, OK 73105

MARLON B KEY Mail Date: 05/12/2009

3447 OVERHILL AVE. SSN: BBB-BB-BBBB

WYANDOTTE OK 74370

Telephone Number

1-888-980-WORK

NOTICE OF UNEMPLOYMENT INSURANCE AWARD

1. Claim Beginning Date: 05/03/2009 2. Claim Ending Date: 05/01/2010

3. Maximum Benefit Amount: $9,100 4. Weekly Benefit Amount: $350

5. Total Wages: $52,621 6. Highest Quarter Earnings: $13,155.25

7. You must look for full-time work each week. Please see your handbook, A Guide to Benefits and

Employment Services, DE1275A, for more information about looking for work.

8. Employee Name 9. Employee Wages for the Quarter Ending: 10. Employer Name

Marlon B Key MAR. 2008 JUN. 2008 SEP. 2008 DEC. 2008 ABC Company

13,155.25 13,155.25 13,155.25 13,155.25

DE428/z/ Rev. 3 (2-07)

15

2009-2010 Institutional Student Information Record

OMB Number: 9999-9999

Student ID 999-99-9999 AAA-AA-AAAA KE XX 99 02 EFC 9999 9516 X

STEP ONE (THE STUDENT) (Q1 - Q32) Dependency Status DEPENDENT X

Name

XXXXXXXXXXXX XXXXXXXXXXXXXXXX

ROCHELLE A KEY

Address:

STEP TWO (STUDENT & SPOUSE) CONT.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 3447 OVERHILL AVENUE Military or Clergy Allowances 999990

XXXXXXXXXXXXXXXX WYANDOTTE XX OK 99999 74370 Veterans Noneducation Benefits 999990

Social Security Number 999-99-9999 AAA-AA-AAAA Other Untaxed Income 999990

Date of Birth

Permanent Home Phone #

MM/DD/CCYY 02/28/1987

999-999-9999

555-405-5298

Money Received/Paid on Your Behalf 999990

Driver's License # XXXXXXXXXXXXXXXXXXXXX T1234567 STEP THREE (STUDENT STATUS) (Q48 - Q60)

E-mail Address Born Before 01-01-1986?

MM-DD-CCYY? XXX NO

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

rochelle@theinternet.com

Citizenship Status XXXXXXXXXXXXXXXXXXXX U.S. CITIZEN Is Student Married? XXX NO

Alien Registration Number XXXXXXXXX Working on Master's/Doctorate Program? XXX NO

Marital Status XXXXXXXXX SINGLE On Active Duty in U.S. Armed Forces? XXX NO

Marital Status Date MM/DD/CCYY Veteran of U.S. Armed Forces? XXX NO

State of Legal Residence XX OK Have Children You Support? XXX NO

Legal Resident before 01-01-2004? MM-DD-CCYY? XXX YES Dependents Other Than Children/Spouse? XXX NO

Legal Residence Date MM/CCYY Orphan or Ward of the Court? XXX NO

Male or Female? XXXXXX FEMALE Are you an Emancipated Minor? XXX NO

Register for Selective Service? XXX NO Are you in Legal Guardianship? XXX NO

Drug Conv Affecting Elig? XXX NO Homeless Child or Youth? XXX NO

Father's Educational Level XXXXXXXXXXXXXX HIGH SCHOOL Determined by HUD Homeless? XXX NO

Mother's Educational Level XXXXXXXXXXXXXX HIGH SCHOOL At Risk for Homelessness? XXX NO

High School or Equivalent?

XXX YES

First Bachelor's Degree by 07-01-2009? MM-DD-CCYY? XXX NO STEP FOUR (PARENTS) (Q61 - Q95)

Grade Level in College XXXXXXXXXXXXXXXX JUNIOR Marital Status XXXXXXXXX MARRIED

Degree/Certificate XXXXXXXXXXXXXXXX 1ST BACHELORS Marital Status Date MM/DD/CCYY

08/27/1985

Enrollment Status XXXXXXXXXXXXXXXX FULL TIME Father's/Stepfather's SSN 999-99-9999

BBB-BB-BBBB

Interested in Work-Study/Loans? XXXXXXXXXX YES Father's Last Name XXXXXXXXXXXXXXXX KEY

Coursework to become a teacher? XXXXXXXXXX YES Father's First Initial XM

Father's Date of Birth

MM/DD/CCYY

11/13/1951

STEP TWO (STUDENT & SPOUSE) (Q33 - Q47) Mother's/Stepmother's SSN 999-99-9999

CCC-CC-CCCC

Tax Return Filed? ALREADY XXXXXXXXX FILED Mother's Last Name XXXXXXXXXXXX KEY

Type of CCYY 2008 Tax Return Used XXXXXXXXX 1040A/EZ Mother's First Initial XP

Eligible to File 1040A/1040EZ? XXXXXXXXXX YES Mother's Date of Birth MM/DD/CCYY

08/27/1954

Adjusted Gross Income 999999 7045 # E-mail Address

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

88keys@theinternet.com

U.S. Income Tax Paid 99999 159 # State of Legal Residence XX OK

Exemptions Claimed

Student's Income Earned From Work

990

999999 6500

Legal Residents before 01-01-2004?

MM-DD-CCYY? XXX YES

Legal Residence Date MM/DD/CCYY

Spouse's Income Earned From Work 9999990

Number of Family Members 995

Cash, Savings, and Checking 9999990

Number in College 992 #

Net Worth of Investments 9999990

Supplemental Security Income Benefits XXX NO

Net Worth of Business/Farm 9999990

Food Stamp Benefits XXX NO

Receiving Veteran's Benefits? XXX NO Free/Reduced Price Lunch Benefits XXX NO

Type of Veterans Benefits 9 TANF Benefits XXX NO

Student's Addl Financial Information 999990

WIC Benefits XXX NO

Education Credits 999990

Tax Return Filed? ALREADY XXXXXXXXX FILED

Child Support Paid 999990

Type of CCYY 2008 Tax Return Used XXXXXXXXX 1040

Taxable Earnings Need-Based Emply 999990

Eligible to File 1040A/1040EZ? XXXXXXXXXX NO #

Grant & Scholarship Aid Reported 999990

Parent a Dislocated Worker? XXXXXXXXXX NO

Special Combat Pay/Combat Pay 999990

Adjusted Gross Income 999999 97251 #

Student/Spouse Untaxed Income 999990

U.S. Income Tax Paid 99999 9906 #

Tax-Deferred Pension/Savings 999990

Exemptions Claimed 995

IRA Deductions and Payments 999990

Father's Income Earned From Work 99999 52621

Child Support Received 999990

Mother's Income Earned From Work 99999 44250

Tax Exempt Interest Income 999990

Cash, Savings, and Checking 999999 5208

Untaxed IRA Distributions 999990

Net Worth of Investments 9999990

Untaxed Portions of Pension 999990

Net Worth of Business/Farm 9999990

*=assumption h=highlight flag #=corrected this trans @=corrected previous trans

Page 2 of 6

16

2009-2010 Institutional Student Information Record

Student ID 999-99-9999 AAA-AA-AAAA KE 9902

EFC 9999 9516 X

Last Name

XXXXXXXXXXXXXXXX KEY

STEP FOUR (PARENTS) CONT.

STEP SIX (Q104)

Parents' Addl Financial Information 999990

School #1 999999 002451 Housing #1 XXXXXXXXXXX

ON CAMPUS

Education Credits 999990


ON CAMPUS

Child Support Paid 999990


ON CAMPUS

Taxable Earnings Need-Based Emply 999990


ON CAMPUS

Grant & Scholarship Aid Reported 999990

School #5 999999 Housing #5 XXXXXXXXXXX

Special Combat Pay/Combat Pay 999990

School #6 999999 Housing #6 XXXXXXXXXXX

Parents' Untaxed Income 999990

Tax-Deferred Pension/Savings 999990

STEP SEVEN (Q105-109)

IRA Deductions and Payments 999990

Date Application Completed MM/DD/CCYY

02/02/2009

Child Support Received 999990

Signed By XXXXXXXXXXXXXXXXXXXX

STUDENT AND PARENT

Tax Exempt Interest Income 999990

Preparer's SSN 999-99-9999

Untaxed IRA Distributions 999990

Preparer's EIN XXXXXXXX

Untaxed Portions of Pension 999990

Preparer's Signature XXXXXX

Military or Clergy Allowances 999990

Veterans Noneducation Benefits 999990

OFFICE INFORMATION

Other Untaxed Income 999990

Primary EFC Type 94

Secondary EFC Type 94

STEP FIVE (STUDENT HH) (Q96 - Q103) Processed Date MM/DD/CCYY

07/29/2009

Number Family Members 99 Transaction Data Source/Type:

Number in College 99 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Supplemental Security Income Benefits XXX Source of Correction XXXXXXXXX

Food Stamp Benefits XXX Federal School Code Indicator 999999

Free/Reduced Price Lunch Benefits XXX Reject Override Codes:

TANF Benefits XXX A: B: C: G: J: K: N: W:

WIC Benefits XXX 3: 4: 12: 20:

Student/Spouse a Dislocated Worker? XXX Assumption Override Codes:

1: 2: 3: 4: 5: 6:

17

U.S. Department

of Education

Federal Student Aid Programs

Dependent

FORM APPROVED

OMB NO. 1845-0041

Your application was selected for review in a process called

A. Student Information

What you should do

Key Rochelle A AAA-AA-AAAA

Last name First name M.I.

3447 Overhill Ave.

Address (include apt. no.)

Wyandotte OK 74370

City State ZIP Code

B. Family Information

Social Security Number

02/28/87

Date of birth

(555) 405-5298

Phone number (include area code)

parent(s)’ household

Full Name Age Relationship College

Missy Jones 18 Sister Central University

Rochelle Key 22

City University

Marlon Key 57 Father

Patricia Key 54 Mother Local Community College

Molly Key 18 Sister City University

Sierra Key 16 Sister

18

Dependent

1.

2.

Sources of Untaxed Income 2008 Amount Sources of Untaxed Income 2008 Amount

a. Child Support

b. Workman’s Compensation

c. Untaxed Pensions

3.

Sources

2008 Income

$

$

$

1.

2.

Sources of Untaxed Income 2008 Amount Sources of Untaxed Income 2008 Amount

a. Child Support

b. Workman’s Compensation

c. Untaxed Pensions

$

$

$

$

$

$

3.

Sources

2008 Income

$

$

$

d.

e.

f.

d.

e.

f.

$

$

$

$

$

$

Rochelle Key 3/1/09

Student Date

Patricia Key

3/1/09

Parent Date

Do not mail this worksheet to the Department of Education. Submit this worksheet to your

Financial Aid Administrator at your school. Don’t forget to sign your tax forms.

19

Department of the Treasury—Internal Revenue Service

1040 U.S. Individual Income Tax Return 2008 (99) IRS Use Only—Do not write or staple in this space.

For the year Jan. 1–Dec. 31, 2008, or other tax year beginning , 2008, ending , 20

OMB No. 1545-0074

Label

Your first name and initial

Last name

MARLON B

KEY BBB BB BBBB

Form

(See

instructions

on page 14.)

Use the IRS

label.

Otherwise,

please print

or type.

Presidential

L

A

B

E

L

H

E

R

E

If a joint return, spouse’s first name and initial

Last name

Home address (number and street). If you have a P.O. box, see page 14.

City, town or post office, state, and ZIP code. If you have a foreign address, see page 14.

Apt. no.

Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund (see page 14)

Filing Status

Check only

one box.

Exemptions

If more than four

dependents, see

page 17.

Income

Attach Form(s)

W-2 here. Also

attach Forms

W-2G and

1099-R if tax

was withheld.

If you did not

get a W-2,

see page 21.

Enclose, but do

not attach, any

payment. Also,

please use

Form 1040-V.

Adjusted

Gross

Income

Your social security number

Spouse’s social security number

1 Single

4 Head of household (with qualifying person). (See page 15.) If

2 Married filing jointly (even if only one had income)

the qualifying person is a child but not your dependent, enter

3 Married filing separately. Enter spouse’s SSN above

this child’s name here.

and full name here.

5 Qualifying widow(er) with dependent child (see page 16)

Boxes checked

6a Yourself. If someone can claim you as a dependent, do not check box 6a

on 6a and 6b

2

b

Spouse

No. of children

c Dependents:

(4) if qualifying

(2) Dependent’s

(3) Dependent’s

on 6c who:

3

child for child tax

social security number

relationship to

(1) First name Last name

you credit (see page 17)

d

Total number of exemptions claimed

7 Wages, salaries, tips, etc. Attach Form(s) W-2

7

8a Taxable interest. Attach Schedule B if required

8a

b Tax-exempt interest. Do not include on line 8a

8b

9a Ordinary dividends. Attach Schedule B if required

9a

b Qualified dividends (see page 21)

9b

10 Taxable refunds, credits, or offsets of state and local income taxes (see page 22) 10

11 Alimony received

11

12 Business income or (loss). Attach Schedule C or C-EZ

12

13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 13

14 Other gains or (losses). Attach Form 4797

14

15a IRA distributions 15a

b Taxable amount (see page 23) 15b

16a Pensions and annuities 16a

b Taxable amount (see page 24) 16b

17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17

18 Farm income or (loss). Attach Schedule F

18

19 Unemployment compensation

19

20a Social security benefits 20a b Taxable amount (see page 26) 20b

21 Other income. List type and amount (see page 28)

21

22 Add the amounts in the far right column for lines 7 through 21. This is your total income 22

23

PATRICIA M

3447 OVERHILL AVE.

WYANDOTTE OK 74370

Educator expenses (see page 28)

KEY

ROCHELLE KEY AAA AA AAAA DAUGHTER

MOLLY KEY

DDD DD DDDD DAUGHTER

SIERRA KEY

EEE EE EEEE DAUGHTER

24 Certain business expenses of reservists, performing artists, and

fee-basis government officials. Attach Form 2106 or 2106-EZ 24

25 Health savings account deduction. Attach Form 8889 25

26 Moving expenses. Attach Form 3903

26

27 One-half of self-employment tax. Attach Schedule SE 27

28 Self-employed SEP, SIMPLE, and qualified plans

28

29 Self-employed health insurance deduction (see page 29) 29

30 Penalty on early withdrawal of savings

30

31a Alimony paid b Recipient’s SSN

31a

32 IRA deduction (see page 30)

32

33 Student loan interest deduction (see page 33) 33

34 Tuition and fees deduction. Attach Form 8917

34

35 Domestic production activities deduction. Attach Form 8903 35

36 Add lines 23 through 31a and 32 through 35

37 Subtract line 36 from line 22. This is your adjusted gross income

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 88.

23

Cat. No. 11320B

CCC

Checking a box below will not

change your tax or refund.

36

37

You

CC CCCC

You must enter

your SSN(s) above.

Spouse

● lived with you

● did not live with

you due to divorce

or separation

(see page 18)

Dependents on 6c

not entered above

5

94381 00

Add numbers on

lines above

380 00

2490 00

97251 00

97251 00

Form 1040 (2008)

20

Form 1040 (2008)

Tax

and

Credits

Standard

Deduction

for—

● People who

checked any

box on line

39a, 39b, or

39c or who

can be

claimed as a

dependent,

see page 34.

● All others:

Single or

Married filing

separately,

$5,450

Married filing

jointly or

Qualifying

widow(er),

$10,900

Head of

household,

$8,000

Other

Taxes

Payments

If you have a

qualifying

child, attach

Schedule EIC.

Refund

Direct deposit?

See page 63

and fill in 73b,

73c, and 73d,

or Form 8888.

Amount

You Owe

Third Party

Designee

Sign

Here

Joint return?

See page 15.

Keep a copy

for your

records.

Paid

Preparer’s

Use Only

38 Amount from line 37 (adjusted gross income)

38

39a Check You were born before January 2, 1944, Blind. Total boxes

if: Spouse was born before January 2, 1944, Blind. checked 39a

b If your spouse itemizes on a separate return or you were a dual-status alien, see page 34 and check here 39b

c Check if standard deduction includes real estate taxes or disaster loss (see page 34) 39c

40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) 40

41 Subtract line 40 from line 38

41

42 If line 38 is over $119,975, or you provided housing to a Midwestern displaced individual, see

page 36. Otherwise, multiply $3,500 by the total number of exemptions claimed on line 6d 42

43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- 43

44 Tax (see page 36). Check if any tax is from: a Form(s) 8814 b Form 4972 44

45 Alternative minimum tax (see page 39). Attach Form 6251

45

46 Add lines 44 and 45

46

47 Foreign tax credit. Attach Form 1116 if required

47

48 Credit for child and dependent care expenses. Attach Form 2441 48

49 Credit for the elderly or the disabled. Attach Schedule R 49

50 Education credits. Attach Form 8863

50

51 Retirement savings contributions credit. Attach Form 8880 51

52 Child tax credit (see page 42). Attach Form 8901 if required 52

53 Credits from Form: a 8396 b 8839 c 5695 53

54 Other credits from Form: a 3800 b 8801 c

54

55

56

Add lines 47 through 54. These are your total credits

Subtract line 55 from line 46. If line 55 is more than line 46, enter -0-

55

56

57 Self-employment tax. Attach Schedule SE

57

58 Unreported social security and Medicare tax from Form: a 4137 b 8919

58

59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required 59

60 Additional taxes: a AEIC payments b Household employment taxes. Attach Schedule H 60

61 Add lines 56 through 60. This is your total tax

61

62 Federal income tax withheld from Forms W-2 and 1099 62

63 2008 estimated tax payments and amount applied from 2007 return 63

64a Earned income credit (EIC)

64a

b Nontaxable combat pay election 64b

65 Excess social security and tier 1 RRTA tax withheld (see page 61) 65

66 Additional child tax credit. Attach Form 8812

66

67 Amount paid with request for extension to file (see page 61) 67

68 Credits from Form: a 2439 b 4136 c 8801 d 8885 68

69 First-time homebuyer credit. Attach Form 5405

70 Recovery rebate credit (see worksheet on pages 62 and 63)

71 Add lines 62 through 70. These are your total payments

72

73a

b

d

If line 71 is more than line 61, subtract line 61 from line 71. This is the amount you overpaid

Amount of line 72 you want refunded to you. If Form 8888 is attached, check here

Routing number

c Type: Checking Savings

Account number

74 Amount of line 72 you want applied to your 2009 estimated tax 74

75 Amount you owe. Subtract line 71 from line 61. For details on how to pay, see page 65 75

76 Estimated tax penalty (see page 65)

76

Do you want to allow another person to discuss this return with the IRS (see page 66)? Yes. Complete the following.

Designee’s

name

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and

belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Your signature

Date

Your occupation

Daytime phone number

Marlon Key 2/15/09 MANAGER ( 555 ) 405-5298

Spouse’s signature. If a joint return, both must sign. Date

Spouse’s occupation

Preparer’s

signature

Firm’s name (or

yours if self-employed),

address, and ZIP code

Phone

no. ( )

Date

69

70

4863 00

Check if

self-employed

EIN

Phone no.

71

72

73a

Personal identification

number (PIN)

Preparer’s SSN or PTIN

( )

Page 2

97251 00

10900 00

86351 00

17500 00

68851 00

9906 00

9906 00

9906 00

9906 00

4863 00

0 00

0 00

5043 00

No

Form 1040 (2008)

21

Putting It To Work

The topics covered in this training session are conveyed in general terms to encompass learners from

all types of postsecondary institutions. You should consider how the concepts covered in the training

session apply to your school.

Schools often are given flexibility in administering and applying guidelines to certain federal student

aid programs. That’s why it is essential that you discuss these items (shown below) with your

supervisor.

Your supervisor can give you institution-specific guidelines on how the material we discussed in this

training session can be applied to your job.

1. Does my school use professional judgment? If so, in what situations?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

2. Does my office have institutional policies and procedures for exercising professional judgment to

ensure consistent application?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

3. How does my school reach out to our students to address unusual financial and family

circumstances during challenging economic times?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

4. When questions arise from professional judgment, is there continuing conversation among staff

with the objective of serving all students equitably and compassionately?

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

22

Trainer’s Toolkit

The Trainer’s Toolkit is a listing of terms, Web sites

and reference materials directly related to


Terms, Acronyms and

Abbreviations

CCRAA

College Cost Reduction and Access Act 0f

2007.










(P.L. 110-153).

Certification

The act of attesting that something is true or

meets a certain standard. For example, the school

completes its section of a FFELP application,

thereby certifying the borrower’s eligibility for

the guarantee.

CFR










COA

Cost of Attendance.

The total estimated cost for a student to attend

school, including tuition and fees, room and

board, allowances for books and supplies,

transportation and personal and incidental

expenses.

DCL


















23

Dislocated Worker

According to the FAFSA, in general, workers are

considered as dislocated if they meet one of the

following conditions:

They have lost their job.

They have been laid off or received a lay-off

notice from their job.

They are receiving unemployment benefits

due to being laid off or losing a job and are

unlikely to return to a previous occupation.

They are self-employed but are unemployed

due to economic conditions or natural

disaster.

They are receiving unemployment benefits;

however, they may not be considered a

dislocated worker if they have quit their job

and are receiving unemployment benefits.

They are a displaced homemaker. A displaced

homemaker generally is a person who

previously provided unpaid services to the

family (for example, a stay-at-home mom or

dad), is no longer supported by the husband

or wife, is unemployed or underemployed,

and is having trouble finding or upgrading

employment.

A person who quits work generally is not

considered a dislocated worker.

ECASLA


Act of 2008.










ED


www.ed.gov.







education.


funds.


research.


issues.



EFC






FAA



responsible for the administration of financial

aid.

FAFSA




24

FAFSA4caster

www.FAFSA4caster.ed.gov.

FAFSA4caster is a tool created by ED to help

students and families prepare financially and

plan for college before the student’s senior year

in high school.

FAO

Financial Aid Office.

The FAO is the college or university office that is

responsible for determining students’ financial

need and awarding them financial aid.

Federal Pell Grant


















FFELP











HEA







assistance.

HEOA







later dates.

Independent Student

A student who meets one or more of the criteria

listed on the FAFSA that classify a student as

independent for Title IV purposes. Students also

may be classified as independent if a financial aid

administrator determines and documents that

the student is independent based on the

financial aid administrator’s professional

judgment of the student’s unusual

circumstances.

ISIR



school by ED’s Central Processing System. The ISIR

includes information provided by students on

the FAFSA. The ISIR also contains students’




matches).

25

PJ


PJ is the delegation of authority from the federal

government to a financial aid administrator to

make changes on a case-by-case basis when

extenuating circumstances exist.

SAR

Student Aid Report.

The SAR is the report sent to students that

summarizes the information included in the

FAFSA. The SAR also indicates the amount of Pell

Grant eligibility, if any, and the Expected Family

Contribution, as well as any eligibility issues. The

SAR is the student’s version of the ISIR.












Verification

The process a school follows to check the

accuracy of the information reported by the

student on the FAFSA. The information reported

is compared against documents, such as signed

federal tax forms and signed Verification

Worksheets, which the student provides to the

school.

26


Federal Legislation and Regulations


P.L. 110-315 Section 472.

Aug. 14, 2008.

Discretion of Student Financial Aid Administrators.

www.ed.gov/policy/highered/leg/hea08/index.html.

College Cost Reduction and Access Act of 2007.

P.L. 110-84 Section 603.

Sept. 27, 2007.


www.govtrack.us.


P.L. 89-329 Section 479A.


http://republicans.edlabor.house.gov/archive/publications/compindex.htm.

Electronic Code of Federal Regulations.

http://ecfr.gpoaccess.gov/.



Subject: Update on Professional Judgment by Financial Aid Administrators.

May 9, 2009.

www.ifap.ed.gov.


Subject: Use of “Professional Judgmgent” by Financial Aid Administrators.

April 2, 2009.

www.ifap.ed.gov.


Higher Education Opportunity Act.

Dec. 31, 2008.

www.ifap.ed.gov.


Subject: Dependency Overrides.

May 2, 2003.

www.ifap.ed.gov.

2009-2010 Federal Student Aid Handbook.

Application and Verification Guide.

Chapter 2: Filling Out the FAFSA.

Chapter 5: Corrections, Updates and Adjustments.

www.ifap.ed.gov.

27

FSA Assessments.

Verification Activity 5: Dependency Overrides & Professional Judgment.

www.ifap.ed.gov/qahome/fsaassessment.html.

Press Release.

Education Secretary Arne Duncan Issues Statement on Report That Profiles Successful Pell Grant

Recipients.

July 21, 2009.

www.ed.gov/news/pressreleases/2009/07/07212009.html.

USA Funds

USA Funds University Online Course.


Course 204.

www.usafunds.org.

NASFAA

Monograph 22: Professional Judgment in Eligibility Determination and Need Analysis.

May 2009.

www.nasfaa.org/PDFs/2007/Monograph22.pdf.

NASFAA Web Encyclopedia.

Version 2.8, Section: Professional Judgment, 1.26.

28

Appendices

Appendix A


Appendix B


Appendix C

Criteria for Simplified Needs Formulas and Automatic-Zero EFC

Calculation 2009-2010

Appendix D

Case Study Answer

29

Appendix A


Publication Date: April 2, 2009

DCL ID: GEN-09-04

Subject: Use of "Professional Judgment" by Financial Aid Administrators

Summary: This letter reminds financial aid administrators of their ability to

exercise adequately documented professional judgment when determining the

eligibility of students for federal student aid. It encourages aid administrators to

consider special circumstances of students and families during these

challenging economic times.

Dear Colleague:

I am writing to remind you of the authority you, as a financial aid administrator,

have under the law (section 479A of the Higher Education Act) to make

adjustments, on the basis of adequate documentation, and on a case-by-case

basis, to address circumstances not reflected in a student’s original Free

Application for Federal Student Aid (FAFSA). This authority is particularly

important for families who may be struggling during these difficult economic

times. When families experience a layoff, face a costly medical situation, or

lose a house to foreclosure, they are likely to feel vulnerable and unsupported.

Simply stated, most do not know about their right to request that you adjust

one or more of the components that determine their eligibility for financial aid.

It is for this reason that I encourage you to do more than provide good service

to the students who request that you make an adjustment. I would ask you to

reach out to your students (and prospective students), particularly those who

seem to have hit a rough patch, to make sure that they know there may be

ways that you can help.

Your thoughtful use of professional judgment, especially to address a

student’s financial and family circumstances that may have changed from the

base year information originally reported on the student’s FAFSA, may be

critical in determining whether the student can enter or continue in

postsecondary education. A changed circumstance certainly includes the loss

of a job or a reduction in work hours or wages, but it also includes, for

example, the income loss associated with a prospective student’s decision to

leave the workforce or to reduce work hours in order to return to school.

When you make adjustments related to the student’s or the student’s family’s

30

income, it is appropriate to use information that realistically reflects the

individual’s and/or family’s current and near-term economic situation. For

example, for an individual who has lost a job or has taken a significant salary

cut beginning in November of 2008, you may choose to project income for the

next 12-month period (December 2008 through November 2009) and use that

figure instead of the base year income (calendar 2008) that was initially used

in the calculation of the student’s expected family contribution (EFC). Of

course, you should seek to obtain, and maintain verifiable third-party

documentation of the changed circumstances in order to support your decision

to use professional judgment. By way of example, if an individual has lost a

job, and you choose to project income for the next 12-month period, you

should seek to obtain adequate documentation of the individual’s loss of

employment.

While we encourage you to exercise professional judgment where appropriate,

you should be mindful of the statutory limitations. Professional judgment must

only be used to address special circumstances, which are conditions that

differentiate an individual student from a class of students. While students may

face common or similar issues in these economic times, you may not establish

automatic categories of special circumstances and provide identical treatment

to all students in that circumstance. You could, however, identify a category to

reach out to (for example, all students that had a parent that had recently lost

a job) but then would need to assess and document how each individual

student’s situation was affected. (It would not be permissible to assume that

every student in that category was affected in the same way.) You should refer

to the complete information on pages 99-100 of the Application and

Verification Guide of the Department’s 2008-09 Federal Student Aid Handbook

for further guidance on the use of professional judgment.

While not every student will become eligible for a Federal Pell Grant as a

result of an adjustment based on your exercising professional judgment, many

may become eligible for a subsidized Federal Stafford Loan or for assistance

from one of the three campus-based programs. And, of course, most students

are eligible for Federal Unsubsidized Stafford Loans from either the Federal

Direct Loan Program or from the Federal Family Education Loan Program.

These federal student loans have much better interest rates, repayment

options, and other terms than those that are available with private educational

loans, credit cards, or most any other method of credit-based financing.

Most non-federal loans have high, variable interest rates, loan fees well above

those for the federal student loan programs, limited repayment options, and

almost none of the features and protections provided in the federal programs,

including payment deferment, forbearance, and cancellation.

31

For more information about the advantages of federal student loans over

private, non-federal loans, I encourage you to share with your students the

information found at:

http://www.federalstudentaid.ed.gov/federalaidfirst/index.html.

If you have questions regarding the information provided in this letter, please

contact Carney McCullough by phone to (202) 502-7639 or by mail to

carney.mccullough@ed.gov.

Within the next few weeks we will establish a "Frequently Asked Questions"

page on our Information for Financial Aid Professionals (IFAP) website at

www.ifap.ed.gov. An announcement of this new page will be posted to IFAP

as soon as the page becomes live.

On behalf of Secretary of Education Arne Duncan, I thank you in advance for

your cooperation as together we provide opportunities to ensure that all

Americans have the opportunity to participate in our country’s outstanding

postsecondary education system.

Sincerely,

Daniel T. Madzelan

Delegated the Authority to Perform

the Functions and Duties of the

Assistant Secretary for

Postsecondary Education

32

Appendix B


33

Appendix C

Criteria for 2009-2010 Simplified Needs Formulas and Automatic-Zero

EFC Calculation

Dependent Student

Simplified

(assets not considered)

Parents had a 2008 AGI of $49,999 or

less (for tax filers), or if non-filers,

income earned from work in 2008 is

$49,999 or less; and

Either

o Parents filed or are eligible to file a

2008 IRS Form 1040A or 1040EZ (or

not required to file any income tax

return), or

Automatic Zero EFC

Parents had a 2008 AGI of $30,000 or

less (for tax filers), or if non-filers,

income earned from work in 2008 is

$30,000 or less; and

Either

o Parents filed or are eligible to file a

2008 IRS Form 1040A or 1040EZ (or

not required to file any income tax

return), or

o

Anyone in the parents’ household

size (as defined on the FAFSA)

received means-tested federal

benefits during 2007 or 2008, or

o

Anyone in the parents’ household




o Parent is a dislocated worker.

Student (and spouse, if any) had a 2008

AGI of $49,999 or less (for tax filers), or if

non-filers, income earned from work in

2008 is $49,999 or less; and

o

Parent is a dislocated worker.

Independent Student

Without Dependents

(other than a spouse)

Independent Student

With Dependents

(other than a spouse)

Either

o Student (and spouse, if any) filed or

are eligible to file a 2008 IRS Form

1040A or 1040EZ (or not required to

file any income tax return), or

o

Anyone in the student’s household




o Student (or spouse, if any) is a

dislocated worker.


AGI of $49,999 or less (for tax filers), or if

non-filers, income earned from work in

2008 is $49,999 or less; and

Either



1040A or 1040EZ (or not required to

file any income tax return), or

o





Not applicable.


AGI of $30,000 or less (for tax filers), or

if non-filers, income earned from work

in 2008 is $49,999 or less; and

Either



1040A or 1040EZ (or not required

to file any income tax return), or

o





o

Student (or spouse, if any) is a

dislocated worker.

o

Student (or spouse, if any) is a

dislocated worker.

35

Appendix D

Case Study Answer

Rochelle Key, a current student at your school, and her parents, Marlon and Patricia, completed the

FAFSA for the 2009-2010 academic year. The CPS selected her application for verification and your

office corrected her FAFSA based on the following documents submitted by the family:

Dependent Verification Worksheet.

Rochelle’s federal tax return.

Marlon and Patricia's joint federal tax return.

In accordance with GEN-09-04, your office reaches out to all current and prospective students

encouraging them to contact the financial aid office if they are experiencing financial difficulties. In

response, Mr. Key requests consideration of the family’s circumstances due to lost wages, hoping

Rochelle may qualify for additional financial aid.

Is this a potential professional judgment? Why or why not?

Yes, if your school’s policy and procedures allow this type of adjustment.

37

Option 1: Continue to Use Income from the Prior Tax Year.

You might choose not to adjust the income on Rochelle's FAFSA this year, knowing that she is likely to

qualify for more need-based federal, state and institutional aid next year when she reapplies for

financial aid. To help her this year, you might award additional institutional aid.

Option 2: Adjust Income Based on Current Tax Year.

You could choose to convert prior year income to current tax year income.

Father’s earnings from work $17,540

Mother’s earnings from work 35,000

Mother’s business income 0

Interest income 380

Severance pay 2,024

Unemployment compensation + 9,100

Total adjusted AGI 64,044


Previous AGI


9,906

97,251

x 64,044 = 6,524


Option: 2


PJ

Adjustment

Action


Father’s income $52,621 $52,621 $17,540

Earnings from work $52,621 $52,621 $17,540 Wages from Jan. 1 to Apr. 30.

Business income $0 $0 N/A

Partnership income $0 $0 N/A

Mother’s income $44,250 $44,250 $35,000

Earnings from work $44,250 $41,760 $35,000 Current tax year wages.

Business income $0 $2,490 $0


Interest income $380 $380 $380

Business closed on

Dec. 31, 2008.

Assume same interest

earnings.

Severance pay N/A N/A $2,024 Received during May 2009.

Unemployment

compensation

N/A N/A $9,100

Maximum benefit (26 weeks)

during 2009.

38


PJ

Adjustment

Action

Parent(s)

AGI $94,381 $97,251 $64,044

Estimated AGI

(see income details).

U.S. tax paid $4,863 $9,906 $6,524 $9,906 / 97,251 x 64,044

Untaxed income and

benefits

$0 $0 $0

Number in household 5 5 5

Number in college 3 2 2

Type of return filed 1040 1040 1040

Eligible to file

1040A/1040EZ

Cash, savings and

checking

Net worth of


Don’t know No Yes

$5,208 $5,208 $5,208

$0 $0 $0

No business income;

did not itemize.

EFC Result 9,862 9,516 3,857

Option 3: Adjust Income Based on Current Academic Year.

As indicated in GEN-09-05, for other members of the student’s family who are unemployed, you should

examine the totality of the family's economic situation and make appropriate adjustments, such as

zeroing out the unemployed individual’s income and unemployment benefits. As a result, you could

choose to convert prior year income to current tax year income less Mr. Key’s wages, severance pay and

unemployment benefits. You could choose to use only Mrs. Key’s wages of $35,000.

Father’s earnings from work $0

Mother’s earnings from work 35,000

Mother’s business income 0

Interest income 380

Severance pay 0

Unemployment compensation + 0

Total adjusted AGI 35,380


Previous AGI


9,906

97,251

x 35,380 = 3,604

39


Option: 3


PJ

Adjustment

Action


Father’s income $52,621 $52,621 $0

Earnings from work $52,621 $52,621 $0 Exception for unemployed.

Business income $0 $0 N/A


Mother’s income $44,250 $44,250 $35,000

Earnings from work $44,250 $41,760 $35,000 Current tax year wages.

Business income $0 $2,490 $0


Interest income $380 $380 $380

Business closed on

Dec. 31, 2008.

Assume same interest

earnings.

Severance pay N/A N/A $0 Exception for unemployed.

Unemployment

compensation

N/A N/A $0 Exception for unemployed.


PJ

Adjustment

Action

Parent(s)

AGI $94,381 $97,251 $35,380

Estimated AGI

(see income details).

U.S. tax paid $4,863 $9,906 $3,604 $9,906 / 97,251 x 35,380.

Untaxed income and

benefits

$0 $0 $0

Number in household 5 5 5

Number in college 3 2 2

Type of return filed 1040 1040 1040

Eligible to file

1040A/1040EZ

Cash, savings and

checking

Net worth of


Don’t know No Yes

$5,208 $5,208 $5,208

$0 $0 $0

No business income;

did not itemize.

EFC Result 9,862 9,516 1,434

40

Option 4: Adjust Income Based on Next 12 Months.

Mr. Key’s change in employment status results in a significant change to the family’s income. You could

use ED’s suggestion to convert prior year income to projected income for the 12-month period of time

from the date the significant loss of income occurred, May 1, 2009.

Income Consideration

Include in

AGI

Exclude

from AGI

Rationale

Father’s earnings from work Earned before May 1, 2009.

Mother’s earnings from work

Prorate for May 1, 2009 through Dec 31, 2009.

Need to collect documentation regarding

Mrs. Key’s estimated income from

Jan. 1, 2010 through Apr. 30, 2010.

Mother’s business income Closed as of Dec. 31, 2008.

Severance pay

Unemployment

compensation

Received on or after May 1, 2009, but can

exclude based on ED guidance.

Received on or after May 1, 2009, but can

exclude based on ED guidance.

Additional Considerations

In cases where there is significant loss of income, it might be appropriate to reduce or eliminate any

reported assets as well. In this case, the parental Education Savings and Asset Protection Allowance

based on Mr. Key’s age (58) is $68,300, which exceeds the reported assets of $5,208. Adjusting or

eliminating the reported assets will have no effect on this family’s EFC.

When reviewing Rochelle’s paperwork, you find that her sister Molly also attends your institution.

Based on your instituational policies, what additional steps would you take with regard to processing

a professional judgment for Molly?

Other options and appropriate documentation requirements may exist.

41

USA Funds ® Update

Financial Literacy

USA Funds Update

As part of their education, it’s important for students to develop basic life management skills to

enable them to complete their programs of study in a timely manner and graduate with a minimum

amount of debt. USA Funds Life Skills® is a Web-based financial literacy program that equips

postsecondary education institutions to teach their students to manage their time and money wisely

during school and after graduation.

Complex information is organized into a simple, interactive format that helps students understand

and learn basic strategies for managing their finances, graduating on time, minimizing their

education debt and taking full responsibility of their education loans. The curriculum addresses

personal finance topics and debt management challenges that students face once they leave school

— income potential, cost of living, credit and budgets. Because students who fully understand how to

manage their debt and learn the appropriate use of credit are less likely to default on their student

loans, USA Funds Life Skills also supports schools’ efforts to lower education loan default rates.

Topics are presented as life lessons, which can be grouped into customized learning paths. Each life

lesson can be completed in approximately 30 minutes and includes online, printable, professional

resources, interactive exercises, real-life scenarios and a glossary of financial and student loan terms

often unfamiliar to students. Students also are asked to complete a pre- and post-test to measure

their understanding of the material.

Schools can choose to target learning paths to different student groups — undergraduate, adult

learner or graduate and professional students, or to other segments. Other segments such as

students on academic probation, freshmen attending orientation, students graduating or leaving

school, student-athletes or at-risk populations could complete separate learning paths. The

curriculum can be incorporated into either an entirely online or face-to-face delivery, or a blended

approach that uses a combination of both formats. The online delivery also reduces staff resources

required to facilitate the program and allows schools to track status and completion information

online and through downloadable reports.

Sample topics of life lessons include:

Financial Aid and Paying for College

Paying for Higher Education.

Applying for Financial Aid.

Repaying Student Loans.

School and Personal Life Management

Achieving Goals.

Selecting a Program of Study.

Managing School Life.

1

Managing a Personal Life.

Living on a Budget.

Estimating Take-Home Pay.

Credit Management

Managing Credit Card Debt.

Credit Reports, Credit Scores and Credit

Ratings.

Identity Theft.

Graduating Students

Establishing Career Goals.

Expected Income.

Finding a Job.

Preparing for an Interview.

Living on a Budget.

Graduate and Professional Students

Pursuing a Graduate Education.

Cost of a Graduate Education.

Paying for a Graduate Degree.

Managing Debt While Pursuing a Graduate

Degree.

Budgeting While Pursuing a Graduate

Degree.

Surviving During a Medical Residency.

Couples in School

Having a Life with Little Money.

Coping With School and a Relationship.

Managing Money While in School.

Loan Counseling

Entrance and exit counseling help students gain

the fundamentals they need to understand and

manage their student loan debt as they begin

their postsecondary education and select the

repayment plan best suited to their needs as they

prepare to leave school. USA Funds Loan

Counselor® is a suite of custom loan counseling

products designed to help schools fulfill all

federal entrance and exit counseling

requirements and simplify Stafford and Grad

PLUS counseling with one online tool.

Designed with insight from students and

financial aid administrators, USA Funds Loan

Counselor makes information easy for students

to learn, understand and recall, and simple for

administrators to customize to existing office

procedures. Topics are addressed through “big

idea” statements that introduce additional

detailed information. Simplified information

makes it easier for students to grasp the main

ideas, understand key concepts and remember

content. Students are engaged with interactive

tools, like a budgeting calculator and videos that

feature advice and student testimonials.

Metaphorical imagery helps explain topics. For

example, piles of laundry help demonstrate how

unsubsidized interest adds up if not paid while in

school. An interactive budgeting calculator helps

borrowers estimate how much they spend each

month and determine places where spending

can be reduced if necessary.

Multiple choice and true-or-false questions help

students learn and retain information as they

progress through each session, which typically

can be completed in 45 minutes or less. Each

concept is tested and reinforced, helping to

ensure that students understand each topic

NOTES

2

efore moving on. Students have the option to

stop, save and go back to complete the

counseling session later if time is an issue.

USA Funds Loan Counselor is accessible directly

from schools’ Web sites. It can supplement your

current loan counseling process, replace your

existing process or be used in special situations

when a student is unable to complete in-person

counseling. Schools also can customize the tools

by choosing the quiz questions, reinforcement

messages, the number of correct answers

required to pass and add the school logo.

Schools using OpenNet can integrate entrance

counseling into the loan application process for

all borrowers, first-time borrowers or first-time

borrowers at the school.

USA Funds Loan Counselor features six modules

for entrance, interim and exit counseling for

undergraduate, graduate and parent borrowers:

USA Funds Stafford Loan Guide SM entrance

counseling for undergraduate borrowers:

Provides information about borrower rights

and responsibilities, crucial loan terms, the

Master Promissory Note, consequences of

default and repayment options, presented in

a way that relates to students’ everyday

experiences.

USA Funds Loan Review SM interim counseling

for undergraduate, graduate and professional

students: Keeps borrowers informed about

how much they have borrowed and helps

them make smarter choices about their

finances while they’re still enrolled in school.

USA Funds Student Loan Transition Guide SM

exit counseling for undergraduate students:

Reviews key information provided as part of

entrance counseling and provides detailed

loan indebtedness information from the

Meteor network to help students select the

repayment plan best suited to their individual

financial situations.

USA Funds Grad Guide SM entrance counseling

for graduate and professional students:

Addresses the unique issues faced by

graduate and professional students and

offers a set of tools, resources and

information to help students navigate their

options, plan a budget and understand the

details of credit — including student loans.

USA Funds Grad Guide exit counseling for

graduate and professional students: Builds on

the information provided during entrance

counseling by reviewing Stafford and Grad

PLUS loans, repayment options, rights and

responsibilities and the consequences of

default.

USA Funds Parent PLUS Guide for parent

borrowers: Provides an overview of PLUS loan

terms and conditions, rights and

responsibilities, and repayment and payment

relief options to help parent borrowers make

more informed decisions.

USA Funds Loan Counselor helps lower cohort

default rates through regular counseling and

increases efficiency by allowing schools to track

student progress — for only a few students or for

an entire student population. Reports can be

downloaded to monitor students’ progress in

counseling sessions and also can be used to

meet reporting requirements from the U.S.

Department of Education. Results also can be

downloaded directly into the FAM system.

Students’ exit counseling results are

automatically transmitted to guarantors via the

National Student Clearinghouse without any

additional involvement from schools.

3

Student Retention

Keeping students in school is essential to their

success. Successful students get good jobs, which

provide the income students need to repay their

loans. When students stay in school, research

clearly shows it has an impact on lowering cohort

default rates. Because of this link between

student retention and default prevention, USA

Funds soon will offer the USA Funds Retention

Puzzle, an online blueprint that helps schools

boost student retention and reduce loan defaults

by offering resources for creating, refining or

updating retention action plans. The USA Funds

Retention Puzzle provides a form that helps

schools audit current student retention efforts, a

process for retention planning, a list of online

student retention resources and links to awardwinning

student retention best practices.

The four pieces of the retention puzzle include:

1. Institutional assessment — Who are we?

Helps a campus define itself based on

qualitative and quantitative measures by

using local and national benchmarks to

perform a self-assessment that identifies

strengths, opportunities and challenges. This

question challenges an institution to consider

its image and reputation as a retentionfocused

institution that puts students first.

Key measures include:

First-year retention rates.

Gaps in performance.

Graduation rates.

Loan default rates.

These measures must be documented and

validated from multiple perspectives sources and

perspectives.

2. Student assessment — Who are our students?

Helps schools identify students likely to

succeed and those likely to withdraw prior to

graduation. The goals of the student

assessment are to identify variables

associated with students’ retention or early

departure and improve retention strategies

for all student groups. Motivation variables

that guide student behavior include:

Who are the students when they enroll?

How do they change after they enroll?

How well do they make the transition to

college?

How engaged are they in the campus?

What specific information can be

provided about the students?

The following retention formula provides a

framework for analyzing student data:

Entering Student Variables

+ Student Motivation Variables

+ Student Integration Variables

= Student’s Likelihood to Persist

NOTES

4

3. Institutional intervention — What do our

students need? Helps schools examine their

current efforts and develop a proactive

infrastructure to promote student success.

These efforts include a retention index score

that reflects the level of focus on student

retention, a retention audit that documents

retention practices and a retention plan that

is comprehensive, deliberate and intentional.

Successful retention plans:

Are structured.

Are interlocked with other programs and

services.

Rely on extended, intensive student

contact.

Are based on a strategy of engagement.

Place special emphasis on staff quality.

Focus on affective as well as cognitive

needs.

Track and monitor the level of student

satisfaction.

It’s important to be proactive to provide students

with the tools they need to survive — before

they know they need them.

4. Student intervention — How do we know if

our programs are working? Helps evaluate

student outcomes and offers case studies of

successful retention policies. Studentcentered

initiatives represented by these

institutions are grounded in retention theory

and are guided by a philosophy that the most

successful retention programs are defined by

student outcomes. Evaluation of the student

outcomes for each strategy that’s

implemented will determine the next steps,

whether it’s moving forward if outcomes are

successful, adjusting and moving forward if

outcomes are questionable or abandoning

the effort if outcomes are not favorable.

NOTES

5

Debt Management

Consultants

USA Funds debt management consultants work

closely with schools to fine-tune their current

default prevention efforts or to develop a

comprehensive default management plan. The

team offers years of financial aid and debt

management experience to help assess schools’

current practices and suggest improvements.

Debbie Bradford

Debt Management Consultant

(972) 941-8810

deborah.bradford@usafunds.org

Arkansas, Louisiana, Mississippi, Oklahoma, Texas

Carol Buchli


(573) 445-6080

carol.buchli@usafunds.org

Iowa, Idaho, Kansas, Minnesota, Missouri, Montana,

Nebraska, North Dakota, Nevada, Oregon, South

Dakota, Tennessee, Wyoming

Anne Fischer


(773) 561-8131

anne.fischer@usafunds.org

Illinois, Indiana, Kentucky, Michigan, Ohio,

Wisconsin, West Virginia

Eileen Muhlig


(607) 749-2703

eileen.muhlig@usafunds.org

Connecticut, Washington DC, Delaware, Maryland,

Massachusetts, New Hampshire,New Jersey, New

York, Pennsylvania, Rhode Island, Virginia, Vermont

Carole Ann Simpson


(619) 733-6019

caroleann.simpson@usafunds.org

Alaska, California, Hawaii, Guam, Washington

Bonnie Weaver


(480) 375-0267

bonnie.weaver@usafunds.org

Arizona, Colorado, New Mexico, Utah

George Covino

Senior Director

(760) 408-9444

george.covino@usafunds.org

Vernetta Fairley

Managing Director

(601) 545-2449

vernetta.fairley@usafunds.org

Chris Miller


(954) 227-1329

christopher.miller@usafunds.org

Alabama, Florida, Georgia, North Carolina, Puerto

Rico, South Carolina

NOTES

6

Life Cycle of a Stafford Loan

Life Cycle of a Stafford Loan

According to The College Board, federal loans represent more than 40 percent of undergraduate

student aid and more than 60 percent of graduate student aid (Trends in Student Aid, 2008). Federal

Stafford loans have become a staple of financial aid packages for students across the country.

Borrowers benefit from college financing at below-market interest rates with highly flexible

repayment terms.

Undergraduate Student Aid by Source

Graduate Student Aid by Source

(in Billions), 2007-2008 (in Billions), 2007-2008

21%

7%

3%

6%

14%

1%

41%

FederalLoans($43.8)

FederalWorkStudy($1.0)

PellGrants($14.4)

OtherFederalGrants($3.5)

PrivateandEmployer

Grants($7.5)

InstitutionalGrants($22.8)

7% StateGrants($47.8)

EducationTaxCreditsand

Deductions($6.0)

17%

8%

8%

1%

1% 3%

62%

FederalLoans($23.0)

FederalWorkStudy($0.1)

FederalGrantPrograms($3.1)

PrivateandEmployerGrants($3.0)

InstitutionalGrants($6.3)

StateGrants($0.2)

EducationTaxCreditsand

Deductions($1.0)

Adapted from Trends in Student Aid, 2008.

Stafford loan borrowers will deal with their educational debt not only during their time of enrollment,

but also for years — and, in some cases, decades — afterwards. When schools understand the various

requirements for processing Stafford loans, award appropriate loan amounts and provide resources

to students for successful repayment, aid administrators help ensure a positive experience for the

growing population of student borrowers.

Federal Family Education Loan Program

FFELP is the largest source of higher education loans and the largest federally sponsored student aid

program. Established by the Higher Education Act of 1965, as amended, and initially called the

Guaranteed Student Loan program, FFELP is an education loan program through which commercial

lenders — such as banks, credit unions and savings and loan associations — fund Stafford loans.

1

FFELP Players

Player

Federal

Government

Schools

Guarantors

Lenders

Servicers

Secondary

Markets

Borrowers

Responsibility

Congress reviews the Higher Education Act of 1965, as amended, and determines if

changes are necessary.

U.S. Department of Education administers and regulates FFELP.

ED monitors program compliance.

Certify student and parent eligibility and provide loan counseling.

Deliver loan funds, process refunds and conduct other loan-related transactions.

Monitor and report students’ enrollment statuses.

Support schools with policy and process advice and assistance.

Assist borrowers to resolve payment problems and avoid default.

Provide a guarantee of payment to lenders if borrowers fail to repay loans.

Maintain a reserve of funds to pay lender claims.

Recover, on behalf of federal taxpayers, amounts owed by borrowers in default on

their loans.

Monitor school and lender compliance with the HEA, federal regulations and

guarantor policies.

Provide sources of funding for borrowers.

Service loans while a borrower is in repayment.

Deliver customer service to borrowers and school financial aid offices.

Manage loans on behalf of guarantors, lenders and secondary markets.

Serve as point-of-contact for borrowers, schools, loan holders and guarantors.

Purchase loan from lenders, which transfers ownership of the loans and provides

capital for funding new loans.

Service loans while a borrower is in repayment.

Be aware of their rights and responsibilities under the terms and conditions of their

loans and repay the loans according to the repayment plan they selected.

Keep their loan holders informed of their contact information and any information

pertinent to their ability to repay their loans.

Case Study

Toney Richardson completed two years of study at Local Community College and is transferring to

State College for the 2009-2010 academic year to obtain a Bachelor of Science degree in biology.

2

Stafford Loan Eligibility Requirements

34 CFR 668.32.

34 CFR 682.201.

Borrowers of Stafford loans must meet certain eligibility requirements before a loan is certified.

Eligible borrowers must:

Complete a Free Application for Federal

Student Aid.

Provide a valid Social Security number.*

Register with Selective Service (if required).

Be regular students in an eligible program.

Be enrolled at least half time.

Be U.S. citizens or eligible noncitizens.

Meet ability-to-benefit criteria.

Maintain satisfactory academic progress.

Eligible borrowers may not:

Be enrolled in elementary or secondary school.

Be incarcerated.

Be in default on a federal student loan.

Owe an overpayment on a federal grant or loan.

Have pled guilty or no contest to or been

convicted of a crime of fraud in obtaining

Title IV aid.

Have been convicted of certain drug-related

offenses that occurred while enrolled and

receiving Title IV aid.

* Does not apply to students who are residents of the Federated States of Micronesia, Republic of the Marshall Islands or

the Republic of Palau until July 1, 2010.

Toney completed his 2009-2010 Free Application for Federal Student Aid and no reject codes were

indicated on his Institutional Student Information Record. He talks with his advisor about his

schedule for the fall 2009 term. Full-time status at State College is 12 hours per semester and half

time is determined proportionally.

For how many hours does Toney need to register to be eligible for Stafford loans?

NOTES

3

Types of Federal Stafford Loans

Stafford loans are the most common source of federal loan funds and are available to both

undergraduate and graduate students. There are two types of Stafford loans, subsidized and

unsubsidized.

Subsidized Loans

Unsubsidized Loans

Financial Need

34 CFR 682.301(a)(1)

Need-based.

Not need-based.

Eligibility

34 CFR 682.603(d)

Cost of Attendance

- Expected Family Contribution

- Estimated Financial Aid

= Eligibility for Need-Based Aid

Cost of Attendance

- Estimated Financial Aid

= Eligibility for Non-Need-Based Aid

Minimum Amount

34 CFR 682.201

2008-2009 FSA

Handbook, p. 3-121

If a student’s subsidized Stafford loan

eligibility is $200 or less and the amount

can be included as part of an

unsubsidized Stafford loan, schools are

not required to certify a separate

subsidized loan.

No regulatory minimum.

Interest

34 CFR 682.300

Interest Rate

34 CFR 682.202(a)(1)

Federal government pays interest while

the student is in school at least half time,

during the grace period and authorized

periods of deferment.

Undergraduate Borrowers

First Disbursement

Graduate Borrowers

Rate

Prior to 7/1/2006

Variable

7/1/2006-6/30/2008 6.8%

7/1/2008-6/30/2009 6.0%

7/1/2009-6/30/2010 5.6%

7/1/2010-6/30/2011 4.5%

7/1/2011-6/30/2012 3.4%

First Disbursement

Rate

Prior to 7/1/2006

Variable

7/1/2006-6/30/2012 6.8%

Borrower is responsible for interest that

accrues after disbursement. Borrowers

may pay the interest or have it

capitalized.

All Borrowers

First Disbursement

Rate

Prior to 7/1/2006

Variable

7/1/2006-6/30/2012 6.8%

4

Fees

34 CFR

682.202(c) and (d)

Grace Period

34 CFR

682.209(a)(3)(i)

Repayment

34 CFR

682.209(a)(3)(i)

Subsidized Loans

Federal Default Fee

1.0 percent on all loans.

Origination Fee

First Disbursement

Rate

7/1/2007-6/30/2008 1.5%

7/1/2008-6/30/2009 1.0%

7/1/2009-6/30/2010 0.5%

7/1/2010 and after 0%

Six months after student ceases halftime

enrollment.

Begins the day after grace period.

Unsubsidized Loans

Federal Default Fee

1.0 percent on all loans.

Origination Fee

First Disbursement

Rate

7/1/2007-6/30/2008 1.5%

7/1/2008-6/30/2009 1.0%

7/1/2009-6/30/2010 0.5%

7/1/2010 and after 0%

Six months after student ceases halftime

enrollment.

Begins the day after grace period.

Toney borrowed subsidized and unsubsidized Stafford loans between July 1, 2007, and June 30,

2009. He plans to borrow Stafford loans at State College during the next two academic years.

What will be the interest rate on each of Toney’s loans?

Academic Year Subsidized Unsubsidized

2007-2008

2008-2009

2009-2010

2010-2011

NOTES

5

Loan Limits

34 CFR 682.204.

Students have both annual and aggregate limits on the amount they may borrow through the

Stafford loan program. The frequency of annual loan limits is based on the type of academic year used

by the school.

Frequency of Annual Loan Limits

2008-2009 Federal Student Aid Handbook, Volume 3, Chapter 5.

The frequency of borrowing annual loan limits is based on whether the school is using a Scheduled

Academic Year or Borrower-Based Academic Year. Once students have borrowed the maximum

amount for the current SAY or BBAY, they cannot borrow again until the next SAY or BBAY.

Schools can use BBAY for standard-term credit-hour programs for all students, on a case-by-case basis

or for only certain academic programs. Schools also can switch the student to BBAY from SAY, or vice

versa, to best suit the needs of the student.

Trainer’s Tidbit

34 CFR 668.3.

An undergraduate academic year is a time period of at least 30 instructional weeks for a credit-hour

program and 26 weeks for a clock-hour program, in which a student is expected to complete the

minimum of:

24 semester or trimester hours.

36 quarter hours.

900 clock hours.


“There is no minimum hours component to the definition of an academic year for graduate and

professional programs. For purposes of FFEL and DL programs, a loan period certified for an

academic year in a graduate or professional program would include the weeks of instructional time

in the academic year and the hours a full-time student is expected to complete in those weeks”

(p. 3-2).

NOTES

6

Scheduled Academic Year

A scheduled academic year is a fixed period that generally begins and ends at the same time each

calendar year, such as the first day of the fall semester through the end of the spring semester.

Students regain eligibility each scheduled academic year as long as they meet eligibility criteria and

have not exceeded their annual or aggregate limits.

Summer can be designated as either a header to the following SAY, a trailer to the preceding SAY or it

can be either a header or trailer depending on the individual student on a case-by-case basis.

Two Semesters + Summer Trailer

Fall Spring Summer Fall Spring Summer Fall Spring Summer

Year 1 Year 2 Year 3

Two Semesters + Summer Header

Summer Fall Spring Summer Fall Spring Summer Fall Spring


Students are not required to be enrolled in all terms of the SAY for their next loans to be certified.

Schools can certify a new loan before the existing loan period expires, as long as the new loan period

does not cross into the next SAY. One or more loans can be processed for the same SAY, as long as

total amounts borrowed do not exceed annual loan limits based on the student’s grade level.

Borrower-Based Academic Year

Unlike SAY, the beginning and ending dates for a BBAY depend on an individual student’s period of

enrollment and progress. BBAY allows the academic year for the student to begin at any point that

the student enrolls and ends when the student completes the calendar period associated with the

BBAY. Because it is based on each individual student’s enrollment, BBAY requires student-by-student

tracking and may require extra work.

Fall Spring Summer Fall

Spring not

enrolled

Summer


Fall

NOTES

7

Annual Stafford Loan Limits

34 CFR 682.204(a), (c) and (d).

The annual loan limit is the maximum amount a borrower may receive in a single academic year.

Limits are based on the student’s dependency status and current grade level. Students who have

received their full annual loan limit may not receive additional Stafford loan funds until a new

academic year begins, unless they progress to a higher grade level within the same academic year.

The base loan amount may consist of subsidized funds, unsubsidized funds or a combination of the

two. Subsidized amounts are limited by the student’s remaining financial need and unsubsidized

funds may not exceed the COA minus other EFA. All undergraduate loan limits are subject to

proration.

Trainer’s Tidbit


“The annual loan limit applies to the SAY, plus the summer trailer or header. Once the calendar period

associated with all of the terms in the SAY and the summer header or trailer (if any) has elapsed, a

student regains eligibility for a new annual loan limit” ( p. 3-80).

NOTES

8

Annual Undergraduate Stafford Loan Limits

Effective July 1, 2008.

Maximum Annual Loan Limits

Preparatory Coursework for Enrollment

in Undergraduate Programs

Base Stafford Loan

(Subsidized and Unsubsidized)

Dependent

Students

Independent Students or

Parent PLUS Denial/Ineligibility

$2,625 $2,625

Additional Unsubsidized Stafford Loan N/A $6,000

TOTAL $2,625 $8,625

First-Year Undergraduate

Base Stafford Loan


Dependent

Students



$3,500 $3,500

Additional Unsubsidized Stafford Loan $2,000 $6,000

TOTAL $5,500 $9,500

Second-Year Undergraduate

Base Stafford Loan


Dependent

Students



$4,500 $4,500


TOTAL $6,500 $10,500

Third-Year and Beyond Undergraduate

Base Stafford Loan


Dependent

Students



$5,500 $5,500


TOTAL $7,500 $12,500

9

After reviewing Toney’s academic transcript and ISIR, State College determines he is a third-year,

dependent student.

What is Toney’s 2009-2010 Stafford loan limit?

Toney’s EFC is $9,348 for the 2009-2010 academic year. State College’s cost of attendance for the

academic year is $12,548. The only aid for which Toney is eligible is Stafford loans.

Calculate Toney’s eligibility for subsidized and unsubsidized loans for 2009-2010.

Aggregate Stafford Loan Limits

34 CFR 682.204(b) and (e).

The aggregate loan limit is the maximum cumulative amount for a student’s entire undergraduate

and graduate career. This limit includes all amounts that the student has outstanding in loans from

the FFEL and Direct Loan program. As with annual loan limits, the cumulative balance may consist of

subsidized funds, unsubsidized funds or a combination of the two. Once the aggregate limit is

borrowed, the student has no remaining Stafford loan eligibility.

Aggregate Undergraduate Stafford Loan Limits

Base Stafford Loan


Dependent Students



$23,000 $23,000


TOTAL $31,000 $57,500

NOTES

10

Trainer’s Tidbit

34 CFR 682.204.

Some items do not count toward the aggregate Stafford loan limit, such as:

Capitalized interest.

Collection costs.

PLUS loans borrowed by the student or student’s parents.

A TEACH grant that has been converted to an unsubsidized Direct Stafford Loan.

Amounts that are repaid, refunded, returned, prepaid, canceled, discharged or forgiven.

Toney’s aggregate loan history as reported on the National Student Loan Data System is as follows:

$6,328

$5,672

$12,000

$8,000

$6,328

$5,672

$12,000

$8,000

Calculate Toney’s remaining subsidized and unsubsidized aggregate eligibility.

NOTES

11

Transfer Student Monitoring Process

34 CFR 668.19(b).


Financial aid administrators are required to review the financial aid history for all transfer students to

obtain the following information:

Is the student in default on a federal loan?

Does the student owe an overpayment on a federal grant or loan?

What amount of federal Pell Grant, Academic Competitiveness Grant, National SMART Grant

and/or TEACH Grant did the student already receive during the award year?

What amount of Stafford loan did the student already receive during the academic year?

Has the student borrowed the full aggregate Stafford loan limit?

This information must be used to determine a student’s remaining eligibility for federal student aid

funds. Transfer monitoring was created to help financial aid administrators track changes in a

student’s financial aid history that may affect current awards.

ED requires financial aid administrators to use the Transfer Student Monitoring Process through

NSLDS. To add a student to the transfer monitoring list, the school must submit the following student

information to NSLDS:

Student identifiers:

Name.

Social Security number.

Date of birth.

Monitoring information:

Beginning enrollment date.

Identifies the date the school expects the student to begin enrollment.

Beginning monitoring date.

Designates the date NSLDS will begin monitoring the student.

The school can determine this date, to some degree. The monitoring begin date cannot be later than the beginning

enrollment date. If the school notifies NSLDS after the enrollment begin date, or the school does not provide a date,

NSLDS will use the date of notification.

NOTES

12

State College is a term-based, credit-hour school and uses a scheduled academic year with a

summer header. The 2009-2010 academic calendar is as follows:

Summer term: June 29 – Aug. 21.

Fall term: Sept. 1 – Dec. 11.

Spring term: Jan. 25 – May 14.

On July 15, Toney notifies State College that he plans to enroll for the fall term. Later that day the

financial aid office adds him to the transfer student monitoring list.

Complete the following NSLDS Transfer Monitoring Request:

AAA-AA-AAAA

ANTHONY

RICHARDSON

12291988

Schools submit transfer monitoring requests to NSLDS and must wait at least seven days before

disbursing funds. The designated FAA at each school requesting transfer monitoring will receive e-

mail alerts of any changes in financial aid history from NSLDS for 90 days after the Enrollment Begin

Date.

Trainer’s Tidbit

GEN-01-09.

The school is not liable for any overpayments resulting from a change in financial aid history as long

as the school followed the Transfer Student Monitoring Process.

NOTES

13

Lender Choice

34 CFR 682.212(h).

Schools may choose to provide a recommended lender list to Stafford loan borrowers to assist them

in selecting a FFELP lender. If the school provides such a list, the school must:

Not deny or delay processing of a loan based on the borrower’s choice of lender.

Provide a minimum of three unaffiliated lenders.

Disclose the method and criteria that the institution used to select lenders.

List interest rates and other benefits offered by each lender for comparison.

Inform borrowers that they do not have to borrow from a lender on the list.

Not assign a lender to first-time borrowers.

Update the list annually.

Entrance Counseling

34 CFR 682.604(f).

At or prior to the delivery of the first disbursement, schools must ensure that first-time student

borrowers of federal Stafford loans receive simple and understandable information about the loan

terms and conditions and the student's responsibilities. Loan counseling may be conducted online, in

a group setting or in one-on-one sessions.

Some schools consider entrance counseling to be a continual process and provide information to

students throughout their enrollment. Receiving ongoing communication about their loans enables

students to make informed borrowing decisions and remain aware of their overall loan debt and the

implications of that debt upon repayment.

NOTES

14

Stafford Loan Entrance Counseling Minimum Requirements

Effective Aug. 14, 2008.

Use and importance of Master Promissory Note.

First-Time Stafford Loan Borrowers*

Seriousness and importance of the obligation to repay full amount of the loan, even if the borrower:

Does not complete the program or does not complete it within the regular time for program

completion.

Is unable to obtain employment upon completion of the program.

Is dissatisfied with the school or does not receive the service purchased from the school.

Effect of loan acceptance on eligibility for other types of financial aid.

Capitalization of interest and option to pay interest on unsubsidized loans while enrolled in school.

School’s definition of half-time enrollment during any and all terms and the consequences of failing to

maintain half-time enrollment.

Importance of contacting appropriate school office(s) if withdrawing before completion of the student’s

program.

Likely consequences of default, including adverse credit reports, delinquent debt collection procedures

under federal law and litigation.

Sample monthly repayment amounts based on a range of student levels of indebtedness.

Availability of Title IV loan information in NSLDS and how that information can be accessed.

Name and contact information of the person or agency students should contact with questions about their

rights and responsibilities or terms and conditions of their loans.

* Student borrowers are exempt from entrance counseling if they previously received federal Stafford loans or federal

Supplemental Loans for Students at any school.

Is Toney required to receive entrance counseling before receiving his Stafford loan funds? Why or

why not?

What counseling information may be helpful to Toney as a borrower at State College?

15

Master Promissory Note

34 CFR 682.102(a).

Each new borrower of federal Stafford loans must complete and sign a Federal Stafford Loan Master

Promissory Note. Multi-year use of the MPN reduces paperwork and simplifies the loan process for

applicants by essentially opening a line of credit for education expenses during their academic

careers. An MPN typically is valid for up to 10 years. A new MPN may be required in certain situations,

such as students changing lenders, students changing their names, students choosing to complete a

new MPN or the school requiring a new MPN.

The MPN is available in electronic and paper versions. For electronic processing, the school will

transmit the loan certification to the lender or to a guarantor that will process the loan on behalf of

the lender.

Loan Certification

34 CFR 682.603.

After the school determines a student’s eligibility for Stafford loan funds, it is responsible for notifying

the lender and guarantor of the student’s Stafford loan eligibility, identifying the loan period and

providing disbursement dates. Loans typically are electronically certified and submitted to the lender

or guarantor, but also may be sent via hardcopy.

Weeks in an Academic Year

34 CFR 668.3.

An undergraduate academic year for credit-hour programs must consist of at least 30 weeks of

instructional time. An undergraduate clock-hour program must consist of at least 26 instructional

weeks.

Trainer’s Tidbit

34 CFR 668.3(b)(2).

“A week of instructional time is any week in which at least one day of regularly scheduled instruction

or examinations occurs or, after the last scheduled day of classes for a term or payment period, at

least one day of study for final examinations occurs.”

NOTES

16

State College is a term-based, credit-hour school and uses a scheduled academic year with a

summer header. The 2009-2010 academic calendar is as follows:

Summer term: June 29 – Aug. 21.

Fall term: Sept. 1 – Dec. 11.

Spring term: Jan. 25 – May 14.

Shaded areas indicate dates when classes are not in session.

June 2009 July 2009 August 2009

1 2 3 4 5 6 1 2 3 4 1

7 8 9 10 11 12 13 5 6 7 8 9 10 11 2 3 4 5 6 7 8

14 15 16 17 18 19 20 12 13 14 15 16 17 18 9 10 11 12 13 14 15

21 22 23 24 25 26 27 19 20 21 22 23 24 25 16 17 18 19 20 21 22

28 29 30 26 27 28 29 30 31 23 24 25 26 27 28 29

30 31

September 2009 October 2009 November 2009

1 2 3 4 5 1 2 3 1 2 3 4 5 6 7

6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14

13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21

20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28

27 28 29 30 25 26 27 28 29 30 31 29 30

December 2009 January 2010 February 2010

1 2 3 4 5 1 2 1 2 3 4 5 6

6 7 8 9 10 11 12 3 4 5 6 7 8 9 7 8 9 10 11 12 13

13 14 15 16 17 18 19 10 11 12 13 14 15 16 14 15 16 17 18 19 20

20 21 22 23 24 25 26 17 18 19 20 21 22 23 21 22 23 24 25 26 27

27 28 29 30 31 24 25 26 27 28 29 30 28

31

March 2010 April 2010 May 2010

1 2 3 4 5 6 1 2 3 1

7 8 9 10 11 12 13 4 5 6 7 8 9 10 2 3 4 5 6 7 8

14 15 16 17 18 19 20 11 12 13 14 15 16 17 9 10 11 12 13 14 15

21 22 23 24 25 26 27 18 19 20 21 22 23 24 16 17 18 19 20 21 22

28 29 30 31 25 26 27 28 29 30 23 24 25 26 27 28 29

30 31

What are the beginning and end dates of State College’s academic year?

How many weeks are in the academic year?

17

Loan Period

34 CFR 682.200(b).

The loan period, or period of enrollment, is the time frame for which a Stafford loan is intended. For

term-based schools, the period of enrollment must coincide with an academic term as established by

the school for which institutional charges generally are assessed (for example, semester, trimester,

quarter, length of the student’s program or academic year).

Toney does not plan to attend State College during the summer, but plans to enroll and borrow for

the fall and spring terms during the 2009-2010 academic year.

For what loan period(s) will his loan be certified?

Payment Period

34 CFR 682.200(b).

Loans must be disbursed on a payment period basis. The payment period begins on the first day of

regularly scheduled classes and the length is determined by the structure of the school’s academic

program. For example, the payment period for a term-based school would be the academic term.

Toney does not plan to attend State College during the summer, but plans to enroll for both fall and

spring during the 2009-2010 academic year.

What will be the payment period(s) for his loan?

What gross amount (before fees) of subsidized and unsubsidized funds will be certified for the

payment period(s)?

18

Disbursement Schedule

34 CFR 668.167.

A school is required to specify a disbursement schedule for all Stafford loans it certifies, in accordance

with each loan’s payment period. The disbursement schedule should be based on when the school

believes the lender will issue the funds, not when the school anticipates it will receive the funds.

The disbursement schedule is based on the funds delivery method the lender uses. The school must

determine whether the funds are subject to the 30-day delayed disbursement provision for first-year,

first-time undergraduate borrowers and adjust the disbursement schedule accordingly.

Trainer’s Tidbit

34 CFR 682.604(c)(5)(i).

Schools are exempt from the delayed disbursement regulation if their cohort default rates are less

than 10 percent for each of the three most recent fiscal years.

Earliest Disbursement Schedule Dates

Funds Delivery

Method

Electronic Funds

Transfer

Master Check

Individual Check

First-Year, First-Time Borrowers

Subject to Delayed Disbursement

27 days after the first day of the first

payment period.

27 days after the first day of the first

payment period.

First day of the first payment period.

All Other Borrowers

13 days before the first day of the first

payment period.


payment period.


payment period.

NOTES

19

Are Toney’s loans subject to the first-year, first-time borrower delayed disbursement provision? Why

or why not?

August 2009 September 2009 January 2010

1 1 2 3 4 5 1 2

2 3 4 5 6 7 8 6 7 8 9 10 11 12 3 4 5 6 7 8 9

9 10 11 12 13 14 15 13 14 15 16 17 18 19 10 11 12 13 14 15 16

16 17 18 19 20 21 22 20 21 22 23 24 25 26 17 18 19 20 21 22 23

23 24 25 26 27 28 29 27 28 29 30 24 25 26 27 28 29 30

30 31 31

Toney’s lender uses EFT for funds delivery. What is the earliest date the school can set the

disbursement schedule for the fall and spring terms?

NOTES

20

Certification Form

34 CFR 682.603.

Most lenders and guarantors process certifications electronically, but continue to accept paper

certification forms. Both methods, however, require the same information.

Toney plans to complete his biology degree by May 15, 2011, and will enroll in nine hours for the

fall and spring terms.

Complete Toney’s FFELP Stafford Loan School Certification Form.

00000000

State College

90465 Main Street

Indianapolis, IN 46206

Richardson Anthony C AAA-AA-AAAA

67 Ridge Court 555-555-1234 12/29/1988

Indianapolis IN 46032 tcrichardson@theinternet.com

Anytown Bank New York City NY

21

Stafford Loan Notices

34 CFR 668.165(a).

Schools must notify Stafford loan borrowers of various details about their loans prior to disbursing

funds. Notices may be made either in hard copy, electronically or via a Web site. Borrowers must

affirmatively consent to receive information electronically, “…in a manner that reasonably

demonstrates that the individual is able to access the information to be provided in an electronic

form” (GEN-05-16).

In many cases, these notices coincide with other financial aid functions, such as award notification

and disbursement.

Notice

Amount of proceeds from subsidized and

unsubsidized loans.

When loan proceeds will be delivered and in what

method.

Anticipated date and amount of disbursement.

Confirmation that the borrower accepts the loan

under terms of the multi-year MPN.

Amount and date loan proceeds will be credited to

the student’s account.

Right of the borrower to cancel the loan and the

process and deadline to make that request.

Notification by the school to the borrower of the

results of cancellation requests.

Time Frame

Prior to disbursement.




Affirmative confirmation: No earlier than 30 days

before and no later than 30 days after the school

credits the student’s account.

Passive confirmation: No earlier than 30 days

before and no later than seven days after the school


Affirmative confirmation: No earlier than 30 days

before and no later than 30 days after the school


Passive confirmation: No earlier than 30 days

before and no later than seven days after the school


After the cancellation is processed.

NOTES

22

Trainer’s Tidbit

Affirmative Confirmation

A process through which an institution obtains written confirmation of the types and amounts of

Title IV loans that a borrower wants before the institution credits the student's account with those

loan funds.

Passive Confirmation

A process that requires borrowers be notified when a loan is made, but the borrowers must take

action only if they do not want the loan or want to change the loan amount. With a passive process,

loan funds may be disbursed after the borrower has been notified of the new loan.

Loan Cancellation Requests

34 CFR 668.165(a)(4).

Borrowers must notify the school if they wish to cancel all or a portion of their loan. Upon receipt of a

cancellation notice, the school must process that request by returning the loan funds to the lender,

canceling the disbursement or canceling the entire loan, as applicable. Schools must inform

borrowers in writing of the outcome of their cancellation requests.

Cancellation Received


Within 14-day period but after funds are

disbursed to borrower.

After 14-day period or first day of payment

period, as applicable.

Cancellation Time Frame

Affirmative confirmation: The first day of payment period

or 14 days after notifying the borrower of the right to cancel,

whichever is later.

Passive confirmation: No later than 30 days after notifying

the borrower of the right to cancel.

School must return funds applied to student’s account that

paid authorized charges.

School may, but is not required to, return funds and cancel

disbursement, as applicable.

NOTES

23

State College allows students to accept or decline loans via the electronic award notifications the

school provides. Toney accepts his loans on Aug. 17. On Aug. 20, he receives notification that funds

will disburse on Aug. 31. On Aug. 25, he decides to reduce his unsubsidized Stafford loan to $1,000

for the fall term and cancel his spring term unsubsidized loan.

August 2009 September 2009

1 1 2 3 4 5

2 3 4 5 6 7 8 6 7 8 9 10 11 12

9 10 11 12 13 14 15 13 14 15 16 17 18 19

16 17 18 19 20 21 22 20 21 22 23 24 25 26

23 24 25 26 27 28 29 27 28 29 30

30 31

Is the school required to process Toney’s cancellation request? Why or why not?

If so, what is the latest date the school may process the request?

NOTES

24

Maintaining Stafford Loan

Funds

34 CFR 668.163.

Schools must maintain a bank account for federal

funds. The account must be federally insured or

secured by collateral that has a value reasonably

equal to the amount of federal student aid funds

in the account. In most cases, schools are not

required to use a separate account for each

federal aid program. ED may impose this

requirement as a result of administrative action

or program review findings.

If the school maintains funds from multiple

programs in a single bank or investment account,

the school must separately track the flow of

those funds and the interest earned on each

program. Schools are not required to maintain

FFELP funds in an interest-bearing account. If the

school does maintain its FFELP funds in an

interest-bearing account, the school may use the

earned interest to defray the operational costs of

the program.

The school is required to identify that Title IV

funds are held in the account by including the

phrase “federal funds” in the name of the account,

or by notifying the bank or investment company

that the account contains federal funds. If the

school notifies the bank or investment company,

the school should keep a copy of the notification

in its records.

Trainer’s Tidbit

Schools that do not use the phrase “federal

funds” in the name of the account, excluding

public schools, must file a Uniform Commercial

Code Form (UCC-1) statement with the state or

local municipal government to disclose that an

account contains federal funds. The school

must keep a copy of the UCC-1 in its records.

Disbursing Stafford Loan

Funds

34 CFR 668.164.

34 CFR 682.604.

A school disburses FFELP funds when it credits a

student’s school account or pays the student

directly with institutional funds in advance of its

receipt of FFELP funds or with funds received

from a lender.

Lenders may send loan funds to schools via:

EFT: The electronic transfer of funds from the

lender to an account at the school or school’s

financial institution.

Master Check: A single check that includes

loan funds for two or more borrowers at a

single institution.

Individual Check: A single check that

includes loan funds for a single borrower and

requires the borrower’s endorsement, and in

some cases the school’s endorsement, to be

cashed.

Trainer’s Tidbit

Schools must maintain standards of

administrative capability, including dividing

“the functions of authorizing payments and

disbursing or delivering funds so that no office

has responsibility for both functions with

respect to any particular student aided under

the programs” (34 CFR 668.16(c)(2)).

25

Disbursement Frequency

34 CFR 682.604(c)(6).

Loan proceeds must be disbursed to borrowers in substantially equal installments with no single

installment

Title IV Aid - Valencia College

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