Publication Date: February 2004
DCL ID: GEN-04-04
General guidance for helping Title IV participants affected by a disaster
Posted on 02-24-2004
February
2004
GEN-04-04
FP-04-03
SUBJECT:
General
guidance for helping Title IV participants affected by a disaster.
SUMMARY:
This letter supplements
the 2003-2004 Federal Student Aid Handbook and Disaster Letter 99-28 by providing
guidance to assist Title IV participants affected by a disaster.
Dear
Colleague:
This
letter serves to assist Title IV participants, including students, borrowers,
institutions, lenders, and guaranty agencies, in the event they are impacted
by a Federally-declared disaster (disaster). In the past, the Secretary has
assisted victims of disasters in their recovery by providing certain regulatory
relief to students, as well as to institutions, lenders, and guaranty agencies,
in their administration of the student financial assistance programs authorized
by Title IV of the Higher Education Act of 1965, as amended (HEA). In an effort
to ensure that affected individuals, as well as institutions, lenders, and guaranty
agencies, have the means to act quickly whenever a disaster is declared by the
President, the Secretary is providing general guidance for regulatory relief
in these situations.
Unless
stated otherwise, this regulatory relief applies to all Title IV loan borrowers,
students, and their families who, at the time of a disaster, were residing in,
employed in, or attending an institution located in an area designated as a
Federally-declared disaster area. In addition, it applies to institutions, lenders,
and guaranty agencies if they are located in such areas. Those designations
are available by date of declaration on the Federal Emergency Management Agency's
(FEMA) Web site (www.fema.gov/disasters).
The
information in this letter supplements the 2003-2004 Federal Student Aid Handbook,
as well as Disaster Letter 99-28, published in August 1999, which provided separate
guidance to lenders and guaranty agencies on the treatment of borrowers who
have been affected by a disaster. The guidance in this letter will be incorporated
into the 2004-2005 Federal Student Aid Handbook and updated annually thereafter.
Discussions are presented alphabetically within each general topic. [Note: All
regulatory references are to 34 CFR.]
A
Title IV participant that deviates from otherwise required actions in its administration
of the Title IV programs on the basis of the guidance in this letter must document
that fact and indicate what alternative procedures were followed. As indicated
in this letter, and should further relief be necessary at any point, institutions
are encouraged to contact their Case Management Team representative. For a list
of Case Management Team contacts, go to the schools portal at http://fsa4schools.ed.gov
and click on the “Help Center” button, then choose “Contacts,” and then
“Case Management Teams.” Lenders and guaranty agencies in the Federal Family
Education Loan (FFEL) Program should contact Federal Student Aid’s Financial
Partners regional staff serving the location of the lender or agency.
Anyone
needing further general information may contact the FSA Customer Service Call
Center as follows:
·
Via Phone, Call Center
staff members are available Monday through Friday between the hours of 9:00
AM and 5:00 PM (Eastern Time) at 1-800-433-7327. After hours calls will be accepted
by an automated voice response system. Callers leaving their name and phone
number will receive a return call the next business day.
·
FAX inquiries should
be sent to the Call Center at (202) 275-5532.
·
E-mail inquiries
should be directed to the fsa.customer.support@ed.gov
e-mail address.
·
Via the Schools Portal
on the Internet by going to http://fsa4schools.ed.gov/
then clicking
on the "Help Center" followed by the "Got a Question?" link.
We
hope that these options for regulatory relief will be of use to you in assisting
students whose families have been affected by a disaster.
Sincerely,
Sally L. Stroup
Assistant Secretary for
Postsecondary Education
Attachment:
General guidance for helping
Title IV participants affected by a disaster in PDF Format, Size 689KB, 11 pages
Attachment:
GEN-04-04
FP-04-03
General Guidance for Disasters
February 2004
General Provisions (All
Title IV Programs)
· Agreements to
Permit Study at Another Institution (§668.5) - If an institution is unable
to continue to provide a student's eligible program because of a disaster, the
Secretary strongly encourages the institution to establish a written agreement
with another institution to enable the student to continue his or her academic
program while receiving Title IV assistance. The requirements for such an agreement
are found in §668.5 of the Student Assistance General Provisions regulations.
· Campus Security
Reporting and Equity in Athletics Disclosures (§668.41) - If an institution
is unable to provide the appropriate data to the Department for its Annual Campus
Security Report or its Equity in Athletics Disclosure (EADA) Report by the established
deadlines, because its administrative capability was directly impacted by a
disaster, it should contact its Case Management Team to seek guidance in meeting
the disclosure requirements.
· Length of Academic
Year (§668.2) - If, as a direct result of a disaster, institutions are
temporarily closed for a period of time that impacts the length of their academic
year, we will assist such institutions on a case-by-case basis to determine
the continued eligibility of their programs and their students for Title IV
assistance. Such institutions should promptly contact their Case Management
Team to discuss the specifics of their situation.
Cash Management (Part 668, Subpart K)
For institutions affected
by a disaster, the Secretary will work with institutions to address specific
problems arising from regulatory requirements regarding Credit Balances, Notices
and Authorizations, Excess Cash, and the handling of FFEL Program Fund Proceeds.
Specifically, the Secretary, through the appropriate Case Management Team, will
address concerns about the following regulatory requirements on a case-by-case
basis:
· Credit Balances
(§668.164(e))
· Notices and Authorizations
(§668.165(a)(3)(i) and §668.165(b)(4)(iii))
· Borrower Request
for Loan Cancellation (§668.165(a)(4)(ii))
· Excess Cash (§668.166(a))
· FFELP Funds (§668.167(b)(1))
· Institutional
Eligibility, Financial Responsibility, and Administrative Capability (§§600.40(a)(1)(iii),
668.15, 668.16, and 668.171)
· Late Disbursements
(§668.164(g)) - The regulations allow for a late disbursement of Title
IV funds under certain conditions and within certain timeframes. These regulations
were revised on November 1, 2002, with an effective date of July 1, 2003. The
revised regulations provide the needed flexibility to accommodate students impacted
by a disaster.
General Guidance for Disasters
Page 2
Deadlines related to other
withdrawal issues, including post-withdrawal disbursements, are addressed under
the "Institutional Charges, Refunds, and Return of Title IV Funds Calculations"
section of this letter.
· Lost Student Records
(§668.24) - The Secretary recognizes that records and documentation institutions
are required to keep on file may no longer be available or legible because of
a disaster. Affected institutions are required to attempt to reconstruct financial
aid records lost because of a disaster, but will not be held responsible for
records and documentation that, because of disaster damage, cannot be reconstructed.
The institution must document that the records were lost due to a disaster.
· Need Analysis
- No special aid received by victims of a disaster from the Federal Government
or from a State, for the purpose of providing financial relief, will be counted
as income, other resources, or other financial assistance for the purpose of
calculating a family's Expected Family Contribution (EFC). This aid may, for
example, take the form of grants or low-interest loans.
· Professional Judgment
- Section 479A of the HEA specifically gives the financial aid administrator
(FAA) the authority to use professional judgment to make adjustments on a "case-by-case"
basis to the cost of attendance or to the values of the items used in calculating
the Expected Family Contribution (EFC) to reflect the student's special circumstances.
The use of professional judgment in Federal need analysis is discussed in the
Federal Student Aid Handbook.
The Secretary encourages FAAs to use professional judgment in order to reflect
more accurately the financial need of students and families affected by a disaster.
An FAA still must make adjustments on a "case-by-case" basis and clearly
document the student's file with the reasons for any adjustment.
As usual, any professional
judgment decisions made by an FAA that will affect a student's eligibility for
a Federal Pell Grant must be reported to the Central Processing System (CPS).
· Satisfactory Academic
Progress (§668.34 and §668.16(e)) - In the situation in which a student
fails to meet the institution's satisfactory academic progress standards due
to a disaster, the institution should apply the exception provision of "other
special circumstances" contained in 668.34(c)(3) of the regulations. The
institution must document in the student's file that the student's failure to
maintain satisfactory academic progress was due to a disaster.
· Verification (Part
668 Subpart E) - The Secretary will not enforce the verification requirements
during the award year for those applicants selected for verification whose records
were lost or destroyed because of a disaster. An institution must document when
it does not perform verification for this reason. For these students, Verification
Status Code "S" may be used to report a Federal Pell Grant disbursement.
General Guidance for Disasters
Page 3
Institutional Charges,
Refunds, and Return of Title IV Funds Calculations (§668.22)
If a student withdraws
because of a disaster, the institution must perform the Return of Title IV Funds
calculations in accordance with §668.22, as it must for any student who
withdraws. The statutory provisions for the Return of Title IV Funds calculations
include the concept that a student "earns" a portion of the aid for
the time that he or she was enrolled. Essentially, any disbursed Title IV aid
that is in excess of the amount earned must be returned to the programs. In
many cases, the calculations require the institution to return funds to the
Title IV loan program from which the student borrowed. This, of course, will
benefit the student in that it will reduce the student's loan debt. If the disbursed
amount is less than the calculated amount of earned aid, the student is entitled
to the difference as a post-withdrawal disbursement.
· Deadlines and
Time Frames - The Secretary, through the appropriate Case Management Team, will
address concerns about the deadlines and time frames that are part of the Return
of Title IV Funds requirements on a case-by-case basis.
· Institutional
Charges and Refunds - We strongly encourage institutions to provide a full refund
of tuition, fees, and other institutional charges, or to provide a credit in
a comparable amount against future charges for students who withdraw from school
as a direct result of a disaster. We also urge institutions to consider providing
easy and flexible re-enrollment options to such students. However, before an
institution makes a refund of institutional charges, it must perform the required
Return of Title IV Funds calculations based upon the originally assessed institutional
charges. After determining the amount that the institution must return to the
Title IV Federal student aid programs, any reduction of institutional charges
should take into account the funds that the institution is required to return.
In other words, we do not expect that an institution would both return funds
to the Federal programs, and also provide a refund of those same funds to the
student.
· Leaves of Absence
- A leave of absence that meets the definition of an approved leave of absence
generally applies to clock hour or non-term programs. It is unlikely that a
leave of absence at a term-based institution would meet our definition of an
approved leave of absence.
When requesting a leave
of absence, a student who was directly affected by a disaster need not provide
that request in writing. The institution's documentation of its decision to
grant the leave of absence must include the reason for the leave of absence
and the reason for waiving the required written request.
· Post-Withdrawal
Disbursements - The Secretary, through the appropriate Case Management Team,
will address concerns about the time frame for allowing a student (or parent)
to respond to the offer of a post-withdrawal disbursement on a case-by-case
basis.
· Treatment of Title
IV Credit Balances - If a Title IV credit balance exists for any reason when
a student withdraws, including as a result of an institution's refund policy,
that credit balance must first be applied to any Title IV grant overpayment
that exists as a result of the student's withdrawal.
General Guidance for Disasters
Page 4
Federal Pell Grant Program
· Deadline for Reporting
Disbursement Records (§690.83) - Normally, an institution must submit to
the Department a Federal Pell Grant disbursement record for a student not later
than 30 calendar days after the institution makes a payment to the student.
In addition, if the institution becomes aware that previously-made reports of
payments or expected payments for a student are no longer accurate, the institution
must submit an accurate disbursement record for that student to the Department
not later than 30 calendar days after becoming aware of the need to make the
change.
The Secretary, through
the appropriate Case Management Team, will address concerns about the deadlines
for reporting Federal Pell Grant disbursement records on a case-by-case basis.
· Final Federal
Pell Grant Reporting Deadline - Upon an institution's request, we will grant
an extension to the reporting deadline of final Federal Pell Grant payments
if the institution is unable to meet the published deadline because of a disaster.
Affected institutions should make such a request, as soon as they are able,
by one of two methods. You can submit a request via the COD web site (http://www.cod.ed.gov)
on the "Request Post Deadline Processing" screen located on the left
hand side of the menu under the School tab. Alternatively, you may make such
a request by contacting Pell Grant Customer Service at 800-474-7268.
Campus-Based Programs
Common Items
· Allocation Reduction
Due to Underutilization (§673.4(d)(3)) - The HEA requires that if an institution
returns more than 10 percent of its allocation under the Federal Perkins Loan,
Federal Work-Study (FWS), or Federal Supplemental Educational Opportunity Grant
(FSEOG) program, the institution's allocation for that program for the second
succeeding award year will be reduced by the amount unexpended. The HEA authorizes
the Secretary to waive this reduction for an institution if enforcing the reduction
would be contrary to the interest of the program. The Secretary would consider
the failure of an institution to expend funds solely due to a disaster as an
appropriate waiver criterion. An institution must submit a request for a waiver
of the underutilization penalty along with a statement that explains the reason
for its failure to comply with the requirement. Affected institutions should
make such a waiver request as soon as they are able by contacting the Campus-Based
Call Center at 877-801-7168 for waiver submission guidelines.
· Filing Deadline
for FISAP - The Secretary will consider carefully, on a "case-by-case"
basis, the effect of a disaster on any institution's ability to meet required
reporting deadlines.
If an institution is having
trouble filing its complete Fiscal Operations Report and Application to Participate
(FISAP) by the published deadline because of a disaster, we will assist the
institution in meeting the submission deadline. Affected institutions should
make a request for assistance as soon as they are able by contacting the Campus-Based
Call Center at 877-801-7168.
General Guidance for Disasters
Page 5
Federal Work-Study (FWS)
Program
· Community Services
(§675.2) - The Secretary encourages institutions to employ their FWS students
in the cleanup and relief efforts for the communities affected by a disaster.
These efforts would be considered part of the institution's community services
activities under the FWS Program.
· Community Service
Expenditure Requirement (§675.18(g)) - The HEA requires an institution
to use at least 7 percent of the total amount of its FWS Federal funds granted
for an award year to compensate students employed in community service, except
that the Secretary may waive this requirement if the Secretary determines that
enforcing it would cause hardship for students at the institution. The Secretary
would consider the failure of an institution to expend at least 7 percent of
its FWS allocation for community service due to this disaster as an appropriate
basis for a waiver. An institution must submit a request for a waiver along
with a statement that explains the reason for its failure to comply with the
requirement. Affected institutions should make such a waiver request as soon
as they are able by using the annually-published waiver submission guidelines,
or by contacting the Campus-Based Call Center at 877-801-7168.
Federal Perkins Loan Program
· Borrowers in an
"In-School" Status (§674.31) - The Secretary believes that any
borrower who was in an "in-school" status at the time of a disaster
and was unable to complete course requirements or enroll in classes should continue
to be in an "in-school" status during the period of disaster-related
nonattendance until such time as the borrower withdraws or re-enrolls in the
next regular enrollment period, whichever is earlier. The period of disaster-related
nonattendance should not require a borrower to enter or use any of his or her
grace period. The institution should document this reason for continued "in-school"
status in the student's file.
This guidance does not
affect the way an institution should report a borrower's enrollment status on
its Student Status Confirmation Report.
· Borrowers in Default-Due
Diligence - The Secretary, through the appropriate Case Management Team, will
address concerns about the billing and collection activities required by Part
674, Subpart C - Due Diligence on a case-by-case basis.
· Borrowers in Initial
or Post-Deferment Grace Periods (§674.42) - The Secretary, through the
appropriate Case Management Team, will address concerns about borrowers in initial
and post-deferment grace periods on a case-by-case basis.
General Guidance for Disasters
Page 6
· Borrowers in Repayment
(§674.33) - The Secretary authorizes the institution to grant forbearance,
for a period not to exceed three months, to a borrower who is in repayment at
the time of a disaster but is unable to continue to repay the loan due to the
disaster. The legislation governing the Perkins Loan Program requires that interest
will accrue during any period of forbearance. A borrower may request this forbearance
orally, or in writing, and is not required to submit documentation to be considered
eligible for this forbearance. This period of forbearance is counted toward
the 3-year maximum limit on the number of years of forbearance that may be granted
to a borrower. An institution must document this forbearance in the borrower's
file. In order to receive forbearance beyond the three-month period, the borrower
must make a written request to the institution and provide supporting documentation.
Federal Family Education
Loan (FFEL) Program
· Administrative
Forbearance (§682.211(f)(11)) - In accordance with the regulations, and
as previously discussed in Disaster Letter 99-28 (published on August 5, 1999),
loan holders may grant an administrative forbearance for up to three months
to borrowers who have been adversely affected by a Federally declared disaster.
The holder may grant forbearance for up to three months and must document the
reasons why it granted the forbearance, but does not need to obtain supporting
documentation or a signed written agreement from the borrower.
· Converting the
Borrower to Repayment (§682.209(a) and §682.210) - The Secretary believes
that it is in the best interest of the FFEL Program to consider each Federal
Stafford loan that is in an "in-school" status on the date the borrower's
attendance at the institution was interrupted due to a Federally declared disaster
to be (or have been) in an "in-school" status and to continue each
loan in that status until such time as the borrower withdraws or re-enrolls
in the next regular enrollment period, whichever is earlier. This period of
disaster-related nonattendance should not result in a borrower entering or using
any of his or her grace period.
A borrower whose FFEL loan
was in an "in school" deferment status on the date disaster conditions
interrupted normal operations at the institution shall be treated as if the
loan continues in an "in school" deferment status during this same
period of disaster-related nonattendance.
This guidance does not
affect the way an institution should report a borrower's enrollment status on
its Student Status Confirmation Report. Borrowers (or a member of the borrower's
family or other reliable source) affected by a disaster should notify their
loan holder(s) of their status.
· Guaranty Agency
and Lender Disbursement of Loan Proceeds - The Secretary authorizes lenders
not to disburse loan proceeds to institutions in the affected area according
to the originally established disbursement schedules as required under §682.207(b)(1)(i)(B)
if they have been informed that an institution has delayed opening for a scheduled
term or has ceased operations for an undetermined period of time. Lenders should
await revised disbursement schedules from the affected institutions. Institutions
are also urged to request revised disbursement dates.
General Guidance for Disasters
Page 7
The Secretary instructs
guaranty agencies and lenders to revise information on loan periods, graduation
dates, and so forth, on the loan records related to these disbursements as the
information becomes available. This instruction means that a borrower need not
reapply for the loan. This also will allow a student to receive his or her loan
proceeds according to a schedule that fits the institution's new academic schedule.
· Submission of
Student Status Confirmation Reports (§682.610(c)) - If an institution is
unable to complete and return a Student Status Confirmation Report (SSCR) to
the National Student Loan Data System (NSLDS) according to the established schedule
as a direct result of a disaster, it must contact NSLDS Customer Service at
1-800-999-8219 to modify its reporting schedule. An institution using the National
Student Clearinghouse should contact the Clearinghouse to see if its enrollment
data submission schedule needs to be adjusted. If an institution receives a
warning letter from NSLDS regarding missed reporting deadlines, it should contact
NSLDS Customer Service to ensure that reporting schedule modifications have
been made.
William D. Ford Federal
Direct Loan Program - The Secretary will treat Direct Loan borrowers in accordance
with the administrative forbearance guidance provided in the FFEL section above.
· Repayment of Direct
Subsidized and Direct Unsubsidized Loans (§685.204 and §685.207) -
The Secretary believes that it is in the best interest of the Direct Loan Program
to consider each Direct Subsidized and Direct Unsubsidized loan that had not
entered repayment on the date the borrower's attendance at the institution was
interrupted due to a disaster declared by the President to be (or have been)
in an "in-school" status and to continue each loan in that status
until such time as the borrower withdraws or re-enrolls in the next regular
enrollment period, whichever is earlier. This period of disaster-related nonattendance
should not result in a borrower entering or using any of his or her grace period.
A borrower whose Direct
loan was in an "in school" deferment status on the date disaster conditions
interrupted normal operations at the institution shall be treated as if the
loan continues in an "in school" deferment status during this same
period of disaster-related nonattendance.
This guidance does not
affect the way an institution should report a borrower's enrollment status on
its Student Status Confirmation Report. Borrowers (or a member of the borrower's
family or other reliable source) affected by a disaster should notify their
loan holder(s) of their status.
· Submission of
Promissory Note, and Loan Origination and Disbursement Records (§685.301(d))
- This section requires institutions to submit the promissory note, loan origination
record, and initial disbursement record for a loan to the Secretary no later
than 30 days following the date of the initial disbursement. The Secretary,
through the appropriate Case Management Team, will address concerns about the
promissory note, loan origination records, and initial and subsequent disbursement
records on a case-by-case basis.
General Guidance for Disasters
Page 8
· Submission of
Student Status Confirmation Reports (§685.309(b)) - If an institution is
unable to complete and return a Student Status Confirmation Report (SSCR) to
the National Student Loan Data System (NSLDS) according to the established schedule
as a direct result of a disaster, it must contact NSLDS Customer Service at
1-800-999-8219 to modify its reporting schedule. An institution using the National
Student Clearinghouse should contact the Clearinghouse to see if its enrollment
data submission schedule needs to be adjusted. If an institution receives a
warning letter from NSLDS regarding missed reporting deadlines, it should contact
NSLDS Customer Service to ensure that reporting schedule modifications have
been made.