Introduction to Financial AidIntroduction to Financial Aid

Presented by: Tara FeltonPresented by: Tara FeltonPresented to: ANZFAA, Melbourne VICPresented to: ANZFAA, Melbourne VIC

Date: October, 2014Date: October, 2014

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Agenda

• Terms and Players• The Life of a Loan• Certification Basics• Disbursement Rules• Refund Calculations• Administrative briefing• Resources• Questions

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Terms

• William D Ford Federal Direct Loan Program (DL)• Federal Family Education Loan Program (FFELP)• Stafford• Subsidized (unsubsidized)• PLUS• Consolidation• Dependent• Independent• Master Promissory Note (MPN)

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Players

• Lender/Servicer• Guarantor• Loan holder• Department of Education (ED)• Institution

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Systems

• Student Aid Internet Gateway (SAIG)– National Student Loan Data Center (NSLDS)– Central Processing Service (CPS)– Common Origination and Disbursement (COD)– National Student Loan Data System (NSLDS)– Customer Support Branch (CSB) – G5 (Direct Loan Fund Drawdown)

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The Life of a Federal Education Loan

1.Origination

2.The Interim Period

3.Repayment

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Origination Steps

Requirement Stafford Parent PLUS

Graduate PLUS

1. FAFSA *

2. MPN Completed by Borrower

3. Credit Check by servicer

4. Certification Completed by School

5. Disbursement by ED

6. Delivery by School

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Interim Period

• Stafford loans maintain school status as long as student at least half time– Unsubsidized Stafford loans will accrue interest– Grace period begins 1st time student drops below ½ time

• Grace only occurs once per loan for six month

• Graduate and Parent PLUS may request in-school deferment while student or borrower in school at least half time– Both types accrue interest– No grace period – may request deferment

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Repayment Period

• Stafford loans– Begin six months after student initially drops below half time

• PLUS loans– In repayment within 60 days of final disbursement

• Ten year term initially

• Many repayment, deferment, discharge options available

• Default at 270 days past due

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School Responsibilities• Meeting and maintaining loan-program participation

requirements; • Establishing borrower eligibility; • Loan Certification• Loan disbursement/delivery• Student borrower counseling• Notifying the lender, guaranty agency, ED of changes to

borrower information; and • Reporting borrower enrollment and other information to

NSLDS• Record Retention

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Certification

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Establish Borrower Eligibility

1. Is the student enrolled as a “regular” student?

2. Is the student academically qualified?

3. Is the student enrolled appropriately?

4. Is the student making satisfactory academic

progress?

5. Have you received the ISIR or SAR?

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Cost of Attendance

• COA includes:– Tuition and fees– Living expenses such as room and board– Books and supplies– Personal expenses such as the renting or purchase of a

personal computer– Transportation costs

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Expected Family Contribution (EFC)

• Based on student and (for dependents) parents assets

• Estimated by ED and supplied on ISIR and SAR– 9 month EFC given

• Can be adjusted by school only– And only by adjusting the factors

• For longer or shorter periods, EFC must be prorated

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Estimated Financial Aid (EFA)

• Amount of aid student will receive for the loan period

• Can include– Loans– Grants– Scholarships– Work awarded based on enrollment

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Professional Judgement

• Schools are allowed by law to, on a case by case basis, adjust the following:

– Student’s COA– A data element used to calculate the EFC– Dependency status

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Loan Periods and Amounts

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Academic Year

• Student loans are based on the academic year rather than the calendar year

• Two types:– Scheduled academic year (SAY)– Borrower based academic year (BBAY)

• Clock hour and non-term credit hour schools must use BBAY

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SAY

• Fixed period of time– Generally starts and ends at same time each year– Normally corresponds to schools academic year or published

calendar

• Summer terms are part of the SAY– Trailer– Header

• Can be standard or program by program

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Loan Limits and Amounts

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Dependent Students

Dependent Students (Except Students Whose Parents Cannot Borrow PLUS)

Base amount

(subsidized)

Additional unsubsidized loan amount

Annual Total

1st Year 3500 2000 5500

2nd Year 4500 2000 6500

3rd Year and beyond 5500 2000 7500

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Independent Students

Independent Undergraduate Students and Dependent Students Whose Parents Cannot Borrow a PLUS Loan

Base amount(subsidized)

Additional unsubsidized loan amount

Annual Total

1st Year 3500 6000 9500

2nd Year 4500 6000 10500

3rd Year and beyond 5500 7000 12500

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Graduate Students

Graduate and Professional Students

Base amount(subsidized)

Additional unsubsidized loan amount

Annual Total

All Years 8500 12000 20,500

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Aggregate Limits

Category Subsidized Max

Total Sub and Unsub

Dependent Students 23,000 31,000

Independent Students and Dependents whose parents cannot borrow PLUS

23,000 57,500

Graduate Students 65,500 138,500

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Disbursements

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Method

•School draws down funds and disburses to students via:– Post to school account– Payment of tuition– EFT to students/parents bank account– Checks/cash to students

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Timing for Payments

• Stafford and PLUS loans– The 28th day of the first payment period if the student is a first-

year undergraduate, first-time borrower – 10 days before the first day of the first payment period for all

other borrowers

• School can post own funds earlier – not a disbursement until timing listed above

• Funds must be posted within 3 business days of drawdown

• School must notify when funds credited to account by EFT

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Miscellaneous

• No disbursements can be made more the 180 days from the loan period or last date of attendance or eligibility without express, written permission from ED

• Entrance counseling must be completed prior to 1st year, 1st time borrower disbursements

• Exit counseling must be completed when they are less than half time at your institution

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Administrative Items

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Student Status Confirmation Reports (SSCR)

• Generally sent bi-annually by ED– Enrolled or recently enrolled students sent on list with most recent

enrollment status– Must be returned within 30 days

• Also must report within 30 days if student:– Enrolled at that school but has ceased to be enrolled on at least a half-

time basis;– Has been accepted for enrollment at that school but failed to enroll on

at least a half-time basis for the period for which the loan was intended; – Has changed his or her permanent address.

• Can be removed from Title IV for non-compliance

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Entrance and Exit Counseling

• First year, first time borrowers must complete entrance counseling– Also first time Graduate PLUS borrowers– Student access at www.studentloans.gov – Info sent to school and COD which can be searched by school

• School must provide exit counseling to students before graduation or withdrawal

• If student withdraws without school knowledge, school must send access within 30 days

• Online counseling can be found at:– http://www.nslds.ed.gov

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Staffing / Separation of Duties

•Must have adequate staffing– Enough staff to service amount of students– Minimum of two staff

• One to certify

• One to handle funding

– Staff must be “administratively capable”

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Written Policies• Refund Policy

– Can be different from schools

• Satisfactory Academic Progress– Can be different for loan recipients but must be at

least as strict as general policy– Minimum standard is 150% of program time

• Qualitative and quantitative components

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Resources

• ISIR Guide– https://www.fsadownload.ed.gov/Repository/

ISIRGuide1011Nov/14-15ISIRGuide.pdf

• U.S. School SFA Handbook– www.ifap.ed.gov

• Foreign School Page– http://www.ifap.ed.gov/ForeignSchoolInfo/

ForeignSchoolInfo.html

• www.asa.org

• bmayotte@asa.org