Lenders
Frequently Asked Questions - School Issues
A new student of ours previously borrowed FFELP loans in 1984-86 that were discharged in 1997 per a Chapter 7 bankruptcy. Does the bankruptcy discharge prevent us from certifying the student for new FFELP loans?
No, per the Bankruptcy Reform Act of 1994 a school or lender is prohibited from denying a federal loan or grant to an applicant solely because he or she has filed a bankruptcy petition or had a debt discharged in bankruptcy.Top
Can a school use current-year funds to satisfy prior award year changes?
A school may pay up to $200 of current-year funds to satisfy prior award year charges for tuition and fees, room, or board ( and with permission) educationally related charges.FSA funds may not be used to repay a student’s loan. Loan payments are not part of the cost of attendance for the period of enrollment.
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A student withdraws from school due to the impact of military mobilization, however, the school is not made aware of the reason for the withdrawal at the time and a Return to Title IV calculation (R2T4) is performed. When the student subsequently returns to the school to reenroll the school learns the reason for the withdrawl. Should the R2T4 calculation be reversed?
No, as specified in Dear Colleague Letter Gen-03-06, even if the school knew the reason for the withdrawal it would still have been required to complete the R2T4 calculation and return any unearned aid to the appropriate program(s) under federal regulation 34 CFR 668.22.In addition, if the refund calculation had resulted in a grant overpayment that the student would otherwise be responsible to repay and was referred to the Department for collection at the time of withdrawal, the Department should be notified to correct the reason for the overpayment to indicate “Military Mobilization”.
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How does loan consolidation affect a school’s cohort default rate (CDR)?
If Stafford loans are repaid as a result of a consolidation, the loans would still be counted in the relevant CDR based on the date they entered repayment (as if they weren’t consolidated). Thus, if a student defaults on a consolidation loan during the cohort period in which the underlying loans entered repayment, the loans are included in the CDR for the school where the loan was received.For example: A student entered repayment on their Stafford loans in Fiscal Year (FY) 2005, and they were repaid by a consolidation loan approved in FY 2006. If the student defaults on the consolidation loan by the end of FY 2007, the underlying Stafford loans would be included in the 2005 CDR.
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A student obtained Stafford loans for attendance at School A. Upon the student's withdrawal, School A conducted exit counseling requirements. The student subsequently transferred to School B, but did not borrow additional loans at School B. Is School B required to conduct exit counseling at the time the student leaves School B.
HESC received guidance from the U. S. Department of Education (ED) regarding this issue. ED responded that "under the statutory and regulatory scheme, the responsibility for the exit interview with a borrower who transfers and does not borrow again rests with the school at which the borrower received the loan." Although School B can perform exit counseling to refresh a student’s knowledge of available repayment options and responsibilities, School B is not required to do so.Top
If a student withdrew and the school returned Title IV funds, can the school certify the student for the amount that was returned if the student returns to finish up 200 hours of a 600 hour program?
If a student withdraws from a clock hour program, but re-enters that same program within 180 days, the school is required to place the student in the same payment period in which the student was originally enrolled when the withdrawal occurred. The student is again eligible to receive any loan funds for which he or she was eligible prior to the withdrawal, including any funds that may have been returned by the school or student as part of the return of the Title IV fund process. If, however, the student returns after 180 days, the school would have to calculate a new payment period based on the number of hours (200) remaining in the payment period.Top
If an independent student is a member of a religious order, can he/she be given additional unsubsidized loans?
Yes. A member of a religious order cannot receive subsidized student loans. If they have received unsubsidized loans, and they are an independent student who shows the need, they can qualify for additional unsubsidized loans.Top
If a student is enrolled half-time in 2 different schools for the same academic year, can the student receive student loans for attendance at both schools?
Yes. However, school officials certifying student loans for that student at each school should work together to ensure that the student is not overawarded or receiving more loan funds for the academic year than they are entitled to receive for attendance cost at each school.Top
Can a borrower in a clock-hour program (e.g. 2100 clock hours) ever be certified as class year 3?
Yes, if an associate degree or higher is required for admission to the program, or if the program is longer than 1800 hours.Top
Is the definition of an "academic year" the same for graduate and undergraduate programs of study?
The definition of an academic year for a graduate program of study is defined as 30 weeks of instructional time. An academic year for an undergraduate program of study is defined as 30 weeks of instructional time and 24 semester or trimester hours, 36 quarter hours, and 900 clock hours fro clock hour schools.Top
Can expenses related to a disability be included in the cost of attendance?
An allowance for reasonable expenses related to the disability may be included in cost of attendance if they are not provided for by another assisting agency.Top
If a school receives a late disbursement, how quickly must the disbursement be delivered to the student’s account?
Delivery of loan proceeds for a late disbursement to a student is the same time frame as a regular disbursement, i.e., 3 business days for proceeds disbursed by EFT or master check, and 30 days for proceeds disbursed by check.Top
Schools must send exit interview information to HESC within 60 days of the exit counseling session if any borrower information has changed. What information is a school required to collect?
Schools are required to collect:- borrower’s expected permanent address
- name and address of borrower’s expected place of employment
- the address of next of kin
Also, the school must verify:
- borrower’s name, address and Social Security number
- driver license number
- references
How should a loan application be certified for a student who is taking a combination of undergraduate and graduate courses, which are part of a program leading to a graduate degree? For loan purposes, is the student considered a graduate or undergraduate?
Generally, if the student has been admitted by the Registrar’s Office as a graduate student, then the loan application may be certified at the graduate level. Federal regulations define a graduate or professional student as a student who:- is enrolled above the baccalaureate level
- has completed the equivalent of at least three academic years of full-time study either before entrance into the program or as part of the program, and
- is not receiving Title IV aid as an undergraduate for the same period of enrollment
If a student in a semester-based program has dropped to less than half-time midway through the semester, can the school certify an application for only the portion of the semester for which the student was enrolled at least half- time?
At the time of certification, the school may not certify a loan for a student who is attending less than half-time.Top