December 7, 2010

Final Rules and Other ED Announcements

Shortcuts to topics:

• Program Integrity Final Rules
• New Military Deferment Request Form
• NSLDS Transfer Student Monitoring
• Direct Loan Transfer Initiative
• New Address for Submitting Battered Immigrants Forms
• Inaccurate Data on NSLDS Report
• TPD Discharge Update
• DL Processing Information

Program Integrity Final Rules

The Department of Education (ED) announced the final rules for Program Integrity in the Oct. 29 Federal Register. We will provide articles with more in-depth information about each topic in future editions of the Online News. In the meantime, below is a summary of the rules which will go into effect on July 1, 2011:

• Gainful Employment*:
  • Adds/modifies definitions.
  • Adds new reporting and disclosure requirements.

* ED held hearings for several topics under the larger Gainful Employment NPRM.
Those rules are expected to go into effect on July 1, 2012.

• Credit Hour:
  • Adds new definition of “credit hour.”
  • Modifies:
    • Credit hour undergraduate educational programs.
    • Regulations regarding programs not subject to conversion to credit hours.
    • Clock-to-credit-hour conversion.
  • Clarifies when an institution is exempt from the clock-to-credit-hour conversion.
  • Requires:
    • State approval and review of credit hour policies by an accrediting agency.
    • Clock hour program measuring.


• State Authorization:
  • Adds:
    • State authorization requirements for schools.
    • Authority for the state to take adverse action.
  • Modifies definitions.
  • Clarifies:
    • How state authorization is evidenced.
    • When an institution is exempt.
  • Requires the state to:
    • Have a process in place to handle complaints.
    • Enforce applicable state laws concerning the school.


• Full-Time Student definition modified.


• Written Agreements Between Colleges:
  • Clarifies distinction between:
    • Eligible affiliated and unaffiliated institutions.
    • Ineligible institutions and eligible institutions.
  • Exchanges the word “foreign” for “institution in another country.”
  • Adds a requirement that the school disclose to the student the particulars of any written agreement whereby a separate school or other organization will provide a portion of the student’s program.


• Incentive Compensation:
  • Eliminates 12 institutional “safe harbors” under which a school was previously allowed to compensate employees without violating the prohibition against incentive compensation.
  • Authorizes merit-based compensation that is not based on securing enrollment or awarding financial aid, or based on institutional goals related to securing enrollment or awarding financial aid.
  • Clarifies that prohibition does not apply to recruitment of foreign students residing in foreign countries who are not eligible to receive Title IV.


• Satisfactory Academic Progress (SAP):
  • Adds the ability for schools who evaluate for SAP after each payment period to offer a “financial warning” status to borrowers for one payment period before student is ineligible (not provided to schools who evaluate SAP annually).
  • Requires:
    • A school’s policy to adhere to adverse actions when the student does not make SAP.
    • A school’s policy to provide notification to students of SAP evaluation.
  • Replaces the term “satisfactory progress” with “satisfactory academic progress.”
  • Moves administrative capability criteria to the SAP section.


• High School Diploma:
  • Modifies a question on the FAFSA.
  • Requires institutions to evaluate validity of a high school transcript when there’s a question.


• Return of Title IV Funds:
  • Modifies language to clarify:
    • When a student is considered to be withdrawn.
    • When an institution is required to take attendance.
    • When attendance records are used to determine the withdrawal date.


• Ability to Benefit:
  • Adds/modifies definitions.
  • Modifies test approval procedures.
  • Requires:
    • Application for test approval.
    • Approval of state tests or assessments.


• Verification:
  • Adds:
    • New definitions and general requirements.
    • Description of tax document requirements if an applicant’s FAFSA information was retrieved directly from the IRS.
    • Definitions in misrepresentation allegations, as well as scope and ED’s authority in the matter.
  • Clarifies the signature requirements for tax documents signed by the tax preparer.
  • Requires:
    • Schools to have written verification policies and procedures that include time frames.
    • Dependency status updates after the filing of the FAFSA for all Title IV applicants rather than just those selected for verification.
    • Schools to revise PELL information if changes to the FAFSA affect the applicant’s eligibility.
  • Eliminates several verification exclusions.
  • Advises that:
    • ED will annually publish the data an institution may be required to verify for that aid year in the Federal Register.
    • The ISIR will reflect the items to be verified if an individual is selected for verification by CPS.
    • When any changes to the FAFSA affect the applicant’s eligibility for subsidized student financial assistance, those changes must be submitted to CPS; no tolerances are allowed.


• Disbursement of Title IV Aid:
  • Requires funds to be provided to PELL-eligible students for purchasing books and supplies no later than the 7th day of the payment period.

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New Military Deferment Request Form

On Nov. 26, ED announced the approval of a new deferment request form for Military Service/Post-Active Duty Students for borrowers in the Direct Loan, FFEL and Perkins loan programs. The new Military Deferment Request Form PDF is available on OGSLP.org and guidance on how to use the new form can be found in DCL GEN-10-17/FP-10-07/CB-10-01.

FFELP and Perkins participants are responsible for ensuring the form used is identical to the form approved by the Office of Management and Budget. No changes may be made except those expressly authorized by ED.

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NSLDS Transfer Student Monitoring

New NSLDS process and batch file layouts, dated Oct. 27, describe the new transfer student monitoring and financial aid history files. If you have questions about these newly formatted files, contact NSLDS Customer Support at 800.999.8219 (toll-free) or nslds@ed.gov.

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Direct Loan Transfer Initiative

In 2010, ED assigned Direct Loans to its five federal loan servicers. As a result, some borrowers have more than one servicer for their Direct and/or FFELP loans. To help borrowers understand which servicer s/he must submit a payment to, ED announced an initiative to place all of a borrower’s loans with a single servicer.

This initiative began the last week of November and will continue through December. It will also be repeated in January and every other month thereafter. ED acknowledges that this may not solve every borrower’s multi-servicer issues and is willing to work with individual borrowers on a case-by-case basis.

For more information, see the Q&A provided by ED or contact the servicing centers directly.

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New Address for Submitting Battered Immigrants Forms

ED announced an address change for the submission of the DHS G-845S Form for Battered Immigrants – Qualified Aliens. The new address is:

U.S. Citizenship and Immigration Services
Attn: Immigrant Status Verification Unit
10 Fountain Plaza, 3rd Floor
Buffalo, NY 14202

For more information, see the Nov. 5 e-announcement or the June 4 DCL GEN-10-07.

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Inaccurate Data on NSLDS Report

On Nov. 18, ED announced an inadvertent error in the NSLDS School Repayment Information Loan Detail Report. This report provides the current repayment status of borrowers for a specific school during a specific time period. Information provided in this report can be used by schools to gauge their default rate over time.

Beginning this past April, ED accidentally excluded defaulted FFELP loans they purchased from the numerator calculation of the report. These loans were only in the denominator calculation and were incorrectly flagged as denominator only.

The default rate for 2009, for example, is calculated as “borrowers who entered repayment in 2009 and defaulted in 2009 or 2010” divided by “borrowers who entered repayment in 2009.” (Cohort Default Rate Guide, page 2.1-3). Because of this error, schools’ default rates may have been reported lower than they should. The correct numerator calculation will be available in the December DRC015 report.

For more information, see the Issue with NSLDS School Repayment Information Loan Detail Report e-announcement or contact NSLDS Customer Support at 800.999.8219 (toll-free) or nslds@ed.gov.

If you’d like to know more about the free tools and services we offer to help you boost your school’s default prevention efforts, contact Wayne Sparks at 800.247-0420 (toll-free).

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TPD Discharge Update

ED updated the Aug. 13, 2010 e-announcement on Nov. 15 by replacing two previous attachments with an updated attachment entitled, “Errata Sheet for Perkins TPD Discharge Assignment Documents.” The new document provides a list of attachments that were replaced along with a summary of the changes.

For more information, see the TPD Discharge Information – Updated Perkins Assignment Procedures e-announcement.

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DL Processing Information

ED recently provided guidance that outlines how to make disbursement adjustments and how to reduce Direct Loan (DL) awards to zero. See the Nov. 9 e-announcement for more information.