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MICROCOPY Pi SOI unor4 rk 0010

DOCUMENT RESUME

ED 168 388 HE 011 018

TITLE Student Financial Aid 1978-79 Handbook.INSTITUTION Bureau of Student Financial Assistance (DREW/j;,

Washington, D.C.PUB DATE [79] .

NOTE 208p. ; Some parts marginally legible due to printquality

EDRS :'.(ICE MF01/PC09 Plus Postage.DESCRIPTORS, Access to Education; college Students; *Eligiuility;

*Federal Aid; *Federal Prcgrams; Grants; HealthOccupations Education; Higher Education; *IncentiveGrants; Student Application; *Student Financial*Student Loan Programs *Work Study Pfograms

IDENTIFIERS Basic Educational Opportunity grants; College WorkStudy; Guaranteed Student Loans; Health EducationAssistance Loans; National Direct Student 'Loans;State Student Incentive Grants; SupplementalEducational Opportunity Grants

ABSTRACTThis handbook is intended primarily to help

postsecondary institutions administer the major federal studentfinancial aid programs: Basic Educational Opportunity Grants (BLOG),,Supplemental Educational Opportunity Grants (SEOG), CollegeWork-B,tudy (CWS) , National Direct Student Loans (NDSL) , GuaranteedStudent Loans (GSL) , Health Education Assistance Loans, and tatStudent Incentive Grants OSIG) . It may ,also be used as a reierencadoCument by other persons and organizations working to expandpostsecondary opportunities for students. It should be used as anadjunct to the requirements pro.vided in the authorizing statutbs'andthe .applicable program regulations. (A list cf all current programregulations is appended.) General provisions of the programs aredescribed and common elements of campus-based programs are' discussed.Also included are: Determination of Eligibility Index,'1978.L79-and1979-80 (reserved) ; Validation, 1978-79 and 1979-80 (reserved).;-administrative standards (reserved) ; institutional eligibility(reserved); terms of agreement; A student affidavit;:a progressreport; Student Validation Roster; explanation of figures on paiment°schedule; a list of regional adMinistrators for Student-financial'assistance; a direCtory of SSIG officials; sources of information onGSL; a Self-Evaluation Worksheet Checklist; Necessary Documents'

.

(reserved); special terms. andconditions for SSIG; a sampleSSIGroster; and I'ISL Application' (OE Form 1154) . (LBH)

********************************************C******* 4****************** Reproductions supplied by EDRS are the best thqt can be made. ** from the original document. t)

- *******************************************************************i***

, ,'

2 .

ccLo'' STUDENT FINANCIAL AIDre,co 1978-79 HandbobkUJ

U S DEPARTMENTOF HEALTH,EDUCATION

6 WELFARENATIONAL INSTITUTE OFEDUCATIONTHIS DOCUMENT

HAS BEEN REPRO-DUCED EXACTLYAS RECE ,E1? FROMTHE Pi:RSON

OR ORGANIZATIONORIGIN-ATING IT POINTS

OF VIEW OR OPINIONSSTATED DO NOT NECESSARILYREPRE-SENT OFFICIAL

NATIONAL INSTITUTEOF

EDUCATIONPOSITION

OR POLICY

`7,

# U. S. DEPARTMENT OF HEALTH, EDLJCATON, AND WELFAREOffice of Education Bureau of Student Financial Assistance

DISCRIMINATION. PROHIBITED N person _inthe United States shall. on the izround of race, color ornational origin, be excluded from participation in, hecie...nied the benefits of, or he subjec(ed to discrimina-,tiun under any proupin or activity receiving Federalfinancial assistance. or he so treated on the basis of sexunder most education programs or activities receiving.Federal assistance.

STUDENT

FINANCIAL AID

1978-79'

Handbook

Basic Educational Opportunity GrantsSuppleiyiental.Educational

Opportunity GiantsNational Direct Student LoansCollege Work-Study'Guaranteed Student LoansHealth Education Assistance LoansState Stu -dent Incentive Grants

U.S. DEPARtMENT OF HEALTH,EDUCATION, AND WELFAREOffice pf EducationBuread of Student Financial Assistance,

-Contents

Chapter Page Page1. Introduction 1-1 Appendix A r Current Regulations A-1 -2. Genera! Provisions 2-1 Appendix B-1 Terms of Agreement B -13. Basic Grants 3-1 Appendix B-II Student Affidavit B-74. Campus-based Programs: Common'Elet Appendix B-III Progress Report B-9ments 4-1 Appendix B-IV 'Student Validation Roster5: Supplemental Education Opportunity. Appendix C Explanation of figures on

Grants 5-1 Payment Schedule . '> C-1 .

6. College Work-Study 6-1 Appendix D Regional Administrators,7. National Direct.Student Loans 7-1 Student Financial Assis-

' 8. Guaranteed Student Loans 8-1 tance -' D-19.. HealthEducation Assistance Loans 9-1' Appendix E Directory of SSIG officials

:10. State Student Incentive Grants 10-1 E-111. Determination of Eligibility Index Appendix F Sources of Information on

1978-79 (Reserved) GSL F-1'12. Determination of Eligibility Index Appendix G Self-EvaluationtWorksheet

1979-80 (Reserved) 12-1 Checklist G-113. 'ilidation 1978-79 (Reserved) 131 Appendix I Necessary Dobuments14. Validation 1979-80 (Reserved) 14-1

-(Reserved) H-1

"15. Administrative Standards (Reserved) .. 15-1 Appendix J Special Terms and Condi-16. Institutional Eligibility (Reserved) 16-1 tions for SSTa

Appenck K Sample SSIG Rostei J-1Appendix L FISL, Application (OE

Form 1154) K-1

ro

Ukt .,

Chapter 1

(ntroduction

Purpose of Handbook.

II. Scope Of Programs

III. BSFA Organization

4

M.

1

Page

1-3.

1 -3

,,

Chapter 1

IntrOduction

I. PurPose-ofthe Hapdbook

This hindboOli is intended priMarily to helpPo' stsecondary institutions administIr the six Federalstudent finahcial aid programs.. Basic educational Op-portunity Grants (BEOG), Supplemenial EducationalOpportunity- Grants (SE001,71dollege IWork-Study(CWS), National Direct Stitaent Loins (NDSL),Guaranteed 'Student Loans (QSL); and State Student/Incentive Grants (SSIG). It may also be used as greference., document by other persons and organiza-tions working to exiiand- postsecondary edu.cat' 'nalopportunities for studenii.

The handbook should' be used As an adjunct t therequirements provided in the authoriiMg statutes andthe applicable program reitilations. (A list of all cur-rent program regulations appears in Apr, mdix A). The-,statutes and the regulations are the definitive andauthoritative statement of an institution's respon-4sibilities in administering ihese'programs. Any regulaltions which beconie effective after the publication datewill supersede the handbook when there is a conflict-ing statement. The handbook is intended to illustrateand' ex_plain 'the regulatory' requirements in order tohelp the institutional aid administrators implementthem. We hope that you will find it a useful referencethat will improve your administration of the programs.

II, Scope of Programs

The Office of Ed'ucatiOn Administers the six majorstudent financial aid' programs which are authorized'under. Title IV of the, Higher Education Act of 1965and its amendments: the Basic Educational Oppor-tunity Grant (B 2,0G), Supplemental Educational Op-portunity Grant (SEOG), College Work-Study (CWS),National Direct Student Loan (NDSL), State StudentIncenfwe Grant (SSIG), and Guaranteed StudentLoan/(6SL), programs. During the 1978-79 awardperiod these programs will assist an estimated 3million students at more than-9,000 participating in-titutions of postsecondary,education. The total com-

pensation* to students, including State or institutionalmatching shares and NDSL collections, will' be about$4.2 billion. A chart of the estimated program activityin 4 978-79 follows:

ProgramEstimated Number Estimated Totalqfketaents Compensation

Basic Educational .

Opportunity Grant2,398,000, $2,140,000,000

State 4tudent 255,000 563,750.000Incentive Grant

Supplemental Educational 464,000 S270,000,000Opportunity Grant .

College Work-Study 796,000 $435,000,000

National pirect 853,000 $310,500,000*Student'Loan

Guaranteed Student Loan 984,6C0 $1,648,000,000

Federal Capital Contribution

III. BSFA Organization

In his March 8, 1977 announcement of HE' W'sreorganization, Secretary Joseph Califano establishedthe new Bureau of Student Fmancial Assistance (BSFA).This reorganization established two new bureaus: TheBureau of Student Financial Assistance (BSFA) andthe Bureau of Higher and Continuing Education(BHCE). The Bureau of Postsecondary Education`wasabolisbtd.

Under the reorganization, the,three campus-basedprograms (Supplemental Education OpportunityGrant [SEOG], National Direct Stud,ent Loan[NDSL], and the College Work-Study [CWS]), theBasib Educational Qpportunity Grant 1 BEOG]pro am, and the State Student Incentive Grant[ SG] program were transferred from the old Bureauof Postsecondary Education to BSFA.

The Guaranteed Student Loan Program (GSL), for-merly under the Offer of Management, was also madea part of the new Bureau.

A new program of insured loans for students in themedical professions, Health Education Assicanc:.Loans (HEAL),- has. been added' to BSFA. thisProgram was established under the Health Professions'Education Assistance Act. of 1976:

Under the new organizational structure, there areseven divisions .organized by function rather than byprogram, although the Division of Policy and ProgramDevelopment and The Division of Program Pperations.

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have branches relating to specific programs ad-ministered by the Burau. In addition to the sevendivisions, there are taree executive assistants, anOffice of Regional Liar.on, the Executive Staff, andthe ten regional offices. The seven divisions and theirfunctions are listed below:

Division of Policy and Program Development isresponsible for planning short- and long-term issues,coordinating and planning legislative initiatives,'anddirecting 'the development of funding requirements.7 his division directs the development of programpolicy.

Division of Certification and' Program Reviewdevelops and disseminates standards for institu-tional certification and operating procedures for in-ternal program reviews. This division resolves auditexceptions and initiates the use of limit, suspend,and terminate actions: It also develo'ps proceduresand monitors, activity related to the validation of stu-dent-reported data and provides direction to theregional offices on certification and program reviewactivities"

Division of Program Operations- processes institu=tional fundlrequests, issues award documents andauthorizations to institutions, reconciles fund ex-penditures and, under, the GSI , pays interesfbillingr,and insurance premiums, pays death and disabilityclaims and teacher; cancellations, and providesregional office direction on program operation ac-tivities.

Division of Quality Assurance prepares reports formanagement and planning purposes. This divisiondetermines the impact of Bureau programs by

analyzing statistical trends and 'program charac-teristics and, based on these analyses, recommendsappropriate ,changes in policy or operating pro-cedures. It also determines the types of studies, tests,and-other measurements to assess the effectivenessof BSFA programs.

Division of Systems Design -and Developmentdesigns and develops automated systems forBSFA programs and directs systems implementa-tion' aad monitors systems'contracts.

Division of Training and Dissemination determinesand provides training for, institutional financial aidstaffg and Federal regional and central office staffs.This division also develops, and disseminatesprogrammaterials such as brochures and programmanuals, and provides direction to the regionaloffice staff on training and dissemination efforts.

Division of Compliance develops standards andprocedures for and conducts compliance and in-vestigat;ve reviews with field staff. It is the Bureau'slink with NEW's Inspector General and the Depart-ment of Justice. It also provides direction to theregional offices on compliance and investigative

.tiers.'

The Bureau's regional offices are responsible for allfield activities within the respective region includinginstitution progiam reviews, certification and com-pliance, examination of loan claims and collections,review of institutional funding requests, operation ofregional data systems, and dissemination of informa-tion to institutions, students, and the general public.The Regional Administrator reports directly to theDeputy Commissioner for BSFA.

V

1

Chapter 2

General Provisions

Pug e

I. CitizenshipII. Half-time Status

III. Eligible InstitutionIV. Student AffidavitV-. Satisfactory Progress

2-3 I-2-32-4A2-42 -4

VI. Defaults and Refunds 2 -4VII. Student Information Requirements .2-4

VIII. Disclosure of Student Information 2-5IX. Certification Process 2-6X."Terms of Agreement 2-6

XI. LST Proceedings 2-6.XII. Standards for Audits, Records, etc 2-7

XIII. Determination of .Student-Owed Re-funds '2-8

Chapter 2

AO General Provisions

The eligibility requirements for the five U.S. Officeof Education programs (BEOG, SEOG, NDSL, CWS,and,GSL) are essentially.the same: A student must be aU.S. Citizen or permanent resident, enrolled at leasthafftim : in an eligible program at an eligible institu-Lion, Requirements unique to each program will befound in the appropriate chapter.

1. Citizenship

Since these programs are considered domestic, assis--tance programs, they are available only to citizens,-na-tionals or permanent residents of the United States,citizens of the Northern Mariana Islands, permanentresidents oftheTrust Territory of the Pacific Islands,'or those wr.o are in this country for other than a tem-porary purpose. Students who are in this country,on'Flor. F2 student visas are, by definition, in tltis.countryfor a temporary purpose, and therefore are not eligi-ble. The definitions of other "than a temporary yur-pose" are given below.

Non-citizens with permanent resident Status in theU.S. will hold either form 1-151 or form 1-531, whichare "A'Ami Registration Receipt Cards." These stu-dents re eligible.

According to the Immigration and NaturalizationService, (INS) an alien who wishes to apply for perma-nent resident status must meet one of four require-ments:

1) He or she must be married to a citizen.2) He or she must be married to a lawful permanent

resident.?) He or she must be a close relative of a citizen or

permanent resident.4) He or she Must have a definite job offer.

Approximately three months after a non-immigrantapplies for permanent resident .status, an approvalnotice is sent from the Immigration and NaturalizationService stating whether or not he or she has been fundto meet one of the four requirements. Non-immigrantsare considered to be in the U.S. forrmore than a tem-porary purpose a-.1d intending to become a permanentresident only if(they can furnish an approval noticestatinkthat they theet one of the above four conditions.

proval 'notice to apply for permaneni\ esidence. Be-. Either the I-171 or the 1-464A is an ppropriate ap-

9

cause of new INS procedures, the I-171 or I-464A maynot be provided. In these cases, the,applicant shouldhave INS endorse his or her 1-94 (Arrival-DepartureForm), indicating -reinPloyment authorized" and "ad-justment applicanr This endorsement fulfills thesame requirement as an approval notice.

Refrgees or inimigrants who are admitted to theUnited States forhumanitarian reasons-are eligible forFederal studeritfinancial aid. In these cases, the appli-cant's 1-94 must be endorsed "Conditional Entrant-Status".or "Indefinite Parole." Southeast Asian refugeeswho were admitted to the United States since 1975 areeligible. In addition, applicants who have been grantedasylum and have been riven voluntary departure for aperiod of one year ate eligible.

Half-Time Status

For students at schools with standard academicterms, the minimum Federal requirement for half-timestatus is 6 credit hours per semesterr quarter,

For otudents at schools which measure progress interms of clock hours, the minimum Federal require-ment is 12 clock hours per neek,

it should be noted, ho e'er, that according toregulations, the half-time determination is based pri-marily upon the number of hours the school requires,as long as the Federal minimum is met.

Thus, if a school requites at-least 18 clock hours perweek for half-time status, a student attending only. 12hours per week would not be considered half-time atthat school.

It should also be noted that correspondence studentscan only be considered as half-time, and to qualify ashalf-time their course work must require a minimum of1'2 hours per week.

III. , Eligible InstitutiOns

The general requirements for institutional eligibility.Are the same for all. Office of Education financial aidprograms. The institution must be legally authorizedwithin a State or jurisdiction to provide a programbeyond secondary school. For purposes of participa-

2-3

tion in the Basic Grant. campus based, and Guaran-teed Student Loan programs, the eligible jurisdictionsare the 50 States, the District of Columbia, Guam,Puerto Rice. the U.S. Virgin Islands, AmericanSamoa, the Trust Territory of the Pacific Islands and theNorthern Mariana Islands (as - used in thishandbook', the term "State,' includes all jurisdictionsunless otherwise indicated). Foreign schools that are

'comparable to U.S. schools can be eligible only for,GSL. and only with respect to U.S. Nationals.

A. Public and no,: -profit private schools must eitherbe accredited by a recognized accrediting organiza-tion, determined by the Commissioner as attemptingto meet accreditation standards, or be aole to pro-vide letters from three accredited, institutions statingthey will accept credits from the applicant school.B. Proprietary:schools must be accredited by a'na-tionally recogiltized accrediting agents, and musthave been in existence for at least two years.

. .

In addition to these general and specific require-ments, there are several other conditions which must beMet before a student can receive funds from anyFederal student financial aid program. All studentswho received Federal financial aid must have on filean affidavit of educational purpose, must be makingsatisfactory progress in an eligible course of study. andmust not be in default on an NDSL or GSL or owe arefund on Title IV grants at the institution \which theyattend. Each of these-requirements-is described below.

IV. ,Student Affidav!t

Every student who receives funds through file ormore of the five Federal student aid programs must fileAn affidavit stating that all fUnds received throughthese programs will be used solelyor educational oreducationally related purposes. The affidavit alsoaffirms that the student does.not owe a repayment on aBasic Grant, a Supplemental Grant, or a State Stu-dent Incentive Grant received at the school he/she is at-,tending, and that he/she is not in default on a NationalDirect Student Loan or a Guaranteed Student Loanreceived for study at the school he/she is attending.

Finally, the affidavit states that the student is awarethat to continue receiving assistance he/she must main,tain satisfactory progreis. Complete information onfiling the official student affidavit is contained on theform itself, a facsimile of which can be found in Ap-pendix B-II of this handbook.

V. Satisfactory Progress

Section 132 of the Education Amendments of 1976states that a student shall,be entitled to receive Federal

2-4

student assistance only if "that student is maintainingsatisfactory progress in the course-of study he is pursu-Mg, according to the standards and practices of the in-

Because each school has its own philosophy regard-ing evaluation and continuation of students: the Officeof Education does not dictate precise standards for"satisfactory progress." However, the statute requiresthat the institution have some standards. An institutionlacking any standards would be precluded from mak-ing any payments to students under Title IV programssince it would have no means of measurement forMaking the determination required by the statute.

Each institution must therefore establish standardsfor academIc progress. Standards and practices regard-ing satisfactory academic progress must be in writing

' and must be applied consistently to al, Federal finan-cial aid recipients. These aid recipients must be madeaware of the policy.

VI. Student Defaults and Student-Owed Refunds

Payment of Title IV funds (BEOG, SEOG, NDSL,CWS, GSL, SSIG) may not be made to a studentwho has defaulted on a GSL or NDSI.2at his or herschool, unless he/she has made satisfactory repaymentareangements. If the student has defaulted on a GSL orNDSL ai a different school, he/she would remain eligibleat the current school.

If a student has received a Basic Grant overaward, heor she would mt be eligible to receive further Title IVfund's until the overaward' is repaid in full unless theoveraward, can be eliminated by adjusting subsequentBasic Grant payments within the award period. If anoveraward was due to institutional error, the student maycontinue to receive payments if he/she agrees in writingto repay the overaward.

If an SEOG overAid is made, the student can .

receive further payments if the overaward can be elimi-.nated by adjusting subsequent 'financial aid payments(other than Basic Grants) within the award period.

VII. Student InformationRequirements

The law now authorizes an administrative costallowance for all of the five Federal financial aidprograms. However; funds for this allowance for par-ticipation in the BEOG and GSL programs'will not beavailable unless they are appropriated by Congress.

Provisions of the Education Amendments of 1976 re-quire that each postsecondary institution whichreceives an administrative cost allowance because ofparticipaticn in any of the five Federal financial aidprograms must make the following student aid informa-tion available to any enrolled or prospective-student whorequests such information:

1) what student financial aid programs- are.-available through the institution;

2) how student aid is distributed among students at .

that institution;3) how to apply for the student assistance

programs and what standards are used to deter-mine eligibility;

4) the criteria used at the institutiOn to 'determinewhether a student' is maintaining satisfactoryacademic progress and the procedures by whicha student who has failed to maintain suchprogress may re-establish eligibility for Federalstudent financial-aid;

5) the rights and responsibilities of studt.its receiv-ing fina' ,ial assistance;

6) the r...,ans by which financial aid will be dis-bursed and the .frequency of disbursments;

7) terms of and schedules for repayment of stu-,dent loans;

8) the terms and conditions of any employmentwhich is part of the financial aid package;

9) the cost of atOding the institution;10) the refund policy of the institution;11) the academic programs available at the institu-

tion and, the faculty and facilities available forthose programs;

12) data regarding retention of students at the in-. stitution;

..13) the number or percentage of students complzt-.. ing each program if such data,is available; and

14) where and from whom information on studentassistance at the institution may be obtained.

The law also requires that someone be available at,the school on a full-time basis to assist students in ob-

- staining information on financial aid. This may be onefull-time employee-ar_several people assigned so thatone of them is always available to students. Existingpersonnel may satisfy this requirement which may bewaived if the school can show that there is insufficient de-mand to warrant a full-time employee.

Any administrative allowance from a Title IV programwhich is received by the institution must be used first tocarry out these student information requirements. Anyremaining fund,' must be used for other costs of ad-ministering the Title IV programs.

VIII. Disclosure of StudentInformation to Federal'Officials

The purpose of the General Education ProvisionsAct of 1974, as amended by the Family EducationalRights,and Privacy Act of 1974 (the "Buckley Amen&ment "), is to provide privacy safeguards to students andfamilies by setting up guidelines for the disclosure ofeducation records and personally identifiable infor-"mation.

On June 17, 1976, the Department o Health.Education and Welfare issued.regulations inplernent-ing the provisions of this Act. Althoug:i aid office'sand other school officials should be familiar withnarts of these important regulations, two sections areespecially important to the conduct oft business be-tween schools and the Bureau of Student FinancialAssistance.

Paragraph 99:31 specifies that no written consent isrequited from a student or parent for the disclosure ofinformation to a. party which is the source of or ad-ministers the financial aid for which a student has ap-plied or has received.

Paragraph 99.35 covers the disclosure of student in-formation to Federal and State officials for Federalprogram purpose, and states That nothing in the;General Education Provisiohs Act itself or in its imple-,menting regulations "shall preclude authorized repre-sentatives of officials listed in paragraph 99.31 (a)(-3)[among the listed officials are the Secretary of Health,Education and Welfare, the Commissidner of Educa-tion and the Assistant St cretary for. Education') fromhaving access to student and other records which maybe necessary in connection with the audit and evalua-.tion of Federally supported education programs;or incompliance with the Federal legal requirements whichrelate to these programs."

The next paragraph goes on to say that the Federalofficial who collects the information is responsible forsafeguarding its privacy and is reeiSonsible for destrojr.-ing personally identifiable data when it is no longerneeded.

Ori occasion, financial aid officers and other schoolofficials conscious of 'their responsibilities forsafeguarding student information have been reluctantto provide USOE progam officials with personallyidentifiable information' on a student or students, onthe as "sumption thatederal regulations did not permitthem to release that information.

However, the sections quoted above make it clearthat supplying such information is permissible, andthat responsibility for safeguarding the privacy. of theinformation then passes to the requesting official.

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IX.' Certifiction Process

The Education Amendments of 1976 substantiallychanged the authority for granting institutions participat-ing in the Basic EducatIon Opportunity. Grant(BEOG), College' Work-Study (CWS), SupplementalEducational Opportunity Grant (SEOG), and NationalDirect Student Loan (NDSL) programs. Inthe past,administrative and fiscal standards relating to initialparticipatiOn have been prescribed only for institutionsparticipating in the Guaranteed Student Loan (GSI. 'program. Eligibility to participate in theprograms came automatically from the basic eligfdet,erminations by the Office of Education's Divisic.,Eligibility and Agency Evaluation (DEAE).

Under the new certification process, the granting /ofbasic eligibility by DEAE will permit an institutiOn toapply_for: participation under a Title IV.prograni ad-niinistered by. the Bureau of Student Financial' Assis-tance (BSFA). Institutions wishing tparticipate in -theGSL prograrn submit data relevant 40 their fi-nancial stability and administrative capability toBS FA's Institutional and Lender Certification Branch,ROB-3, 400 Maryland. Avenue, S.W., Washington,D.C. 20202, for analysis and approval. This procedurewill apply to existing participants as ttrell as new in-stitutions.

In each of the next three years, approximately one-third of the participating schools will be requested tosubmit financial statements and other data relevant toa determination about their fiscal and administrativecapability to administer Title IV student assistanceprograms. Upon certification, an vistitution will beissued a new Agreement. The certificaiinn will be re-peated every three years for each participating institu-tion, The certification review of currently participatinginstitutions will begin in the fall of 1978.

X. New Combined Termsof Agreement

- -The Bureau of Stud nt Financial Assistance (BSFA)

ilhas sent a new Combi ed Terms of Agreement to eachinstitution participati g in the Basic Educational Op-portunity Grant (BEOG), Supplemental Educational`Opportunity Grant (SEOG), Guaranteed StudentLoan (GSL), National Direct Student Loan (NDSL),and College Work-Study (CWS) programs. The newAgreement ,replaces, the individual program agree-vents Which are now required and will be effective un-til the institution (I) is recertified, (2) undergoe3Nachange of control or (3) until the Commissioner or theinstitution terminates the Agreement under a program

'regulation or under the Limitation, Suspcnsion, orTermination regulations.

The new Combined Terms of Agreement is designed

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to fulfill the following objectives:Limit the content of the Agreement to those itemseither required by statute or essential in an agree-ment between the Commissioner and a participatinginstitution.

. Combine as many items as possible under commonheadings applicable to all programs.,,

. Limit the length of the Agreement, where feasible, bygeneral references to regulations rather than includ-; OP lengthy statements of program requirements.

strative burden on institutions andEducation (OE) by simplifying the

cess for those institutions particip:1,nan one BSFA program.

s une I, 1978, the Institution and Lendertitication Branch will be responsible for all generalagreements for participation in programs administeredby BSFA.

Institutions wishing to continue participation in theprograms covered by the Agreement will be requestedto `return signed- copies of tne new Agreiment to theBureau. of Student Financial Assistance, Division ofCertification and Prpgram Review, Institution andLender Certification Branch, R0)3-3, 400 MarylandAvenue, S.W., Washington, D.C. 20202.

The Agreements become effective when receivedand signed by the Chief of the Institution and LenderCertification Branch. Any school which did not receivea new Agreement on or before June 15, 1978 shouldcontact that Branch.

Appendix B-I contains a facsimile of the new Termsof Agreement.

XI. Limitation, Suspension orTermination (LST) Proceedings

Institutions are responsible for administeringFederal student aid programs in accordance with thelaw and applicable regulations. Those institutionswhich fail to comply with the lawor regulations may besubject to limitation, suspension, or termination ofeligibility (LST). The basis for an LST action is afailure to comply with any provision of Title IV of theHigher Education Act of 1965, or any regulations,special arrangements, agreements, or limitationsprescribed under that title.

It is the desire of the Office of Education to reso vequestions of an institution's compliance with the law byinformal means whenever possible. The LST p o-cedures are therefor' intended to reinforce, not toreplace, informal efforts to obtain conipliance. enthere is reason to believe that an institution is in vi la-tion of the law, the Office'of Education will first b ingthe matter to the attention of the institution. The in-stitution will in given an opportunity to respond to thecomplaint or to prevent its recurrence. It should be

noted that the Commissioner may begin LST pro-cedures during this "informal compliance period" ifhe/she. believes it is necessary.

A formal LST procedure begins when a notice Of in-tent to limit, suspend, or terminate is sent to the in-stitution by certified mail. The institution is given acertain amount of time to respond, usually fifteendays. If there is no response, a second notice is sent bycertified mail. This notice 'is final and there are nofurther administrative appeals possible. If the institu-tiop does respond, it must either submit additionalmaterial, ask for a meeting, or ask for a hearing. Afterthe evidence, presented is considered, the final riccisionwill be mailed promptly.

Limitation of an institution's eligibilitythe U.S. Office of Education has set specialwhich the institution must meet in order to be eligiblefor any or all Title IV programs. The limitation cannotbe removed for at least one syear. After a year haselapsed, the institution may request in writing the

-removal-of lim itation.-The-request Must-also show that --the violations on which the limitation was based havebeen corrected. The Commissioner of Education must,within 60 days, either grant the request, deny it, or.grant it subject to other limitations.

Suspension is the removal of an institution'seligibility for any or all Title-IV programs for a periodof time which may not exceed 60 days unless a formallimitation or termination proceeding is begun, orunless the institution and the Office of Education agreeto an extension. Suspension actions are used only toinduce an institution to correct a program violationwithin a short period of time.

Termination is the unqualified removal of an in-stitution's eligibility for any or all Title IV programs.The termination cannot be removed for at least 18months. After 18.months have elapsed, the institutionmay apply for reinstatement in essentially the samemanner as described above for removal of limitation.

As part of any LST action, the Office of Educationmay require an institution to remedy a violation. Thecorrective action may involve payment of funds to OEor other recipients, for example, or making refunds tostudents under Title IV regulations.

Emergency Action is an immediate suspension ofeligibility' for any or all Title IV programs. The suspen-sion may not last more than 30 days, unless a formalLST procedure is started. If the formal procedure isstarted, the emergency action may then be extendeduntil the effective date of the LST action. If an LST ac-tion is begun,, the institution may request an oppor-tunity to show that the emergency action is unwar-ranted,

The due process requirements for an emergency ac-tion are minimal in order to allow OE to move quicklyin order to protect itself from the imminent risk ofsubstantial loss of Federal funds. The designated OEofficial begins the emergency action by notifying theoffending institution by certified mail of the action

and the basis on which it is taken. The suspension be-,comes effective on the date the institution receives thenotice. The OE official who authorizes the emergencyaction must:

1) Receive information which he/she believes to be re-liable. It must show that an institution is in viola-tion of applicable laws, regulations, special ar-rangements, agreements, or limitations. This in-formation should be documented.

2) Determine that such action is necessary to pre-vent the likelihood of substantial loss of funds tothe Federal government or to the students at theinstitution.

hat the likelihood of loss outweighslance of following the normal LST pro-

_Standards for I.rstitutio.nalAudits, Records, FinancialResponsibility, Administrative .

Capability, Regunds to Students,and Misrepresentation

Section 497A of the Higher Education Act of 1965,as amended by Section 133 of the Education Amend-ments of 1976, authorizes the Commissioner ofEducation to prescribe such regulations as may benecessary to provide for:

A. A fiscal audit of an eligible institution withregard to any funds obtained by it under Title IVprograms or obtained from a student who has a loanguaranteed or insured under Title IV.B. the establishment of reasonable standards of fi-nancial responsibility and apPropriate institutionalcapability for the proper administration of Title IVstudent financial aid programs.C. The establishment of policies and procedures byeligible institutions under the Guaranteed StudentLoan program for notifying the lender of the lastknown address of the borrower no later than 60 daysafter he/she has terminated enrollment at that in-stitution.D. limitation, suspension, or termination of theeligibility of an otherwise eligible institution to par-ticipate in Title IV programs, because of failure tocarry/ out any statutory or regulatory provisionuncle?, Title IV.

The statute also provides that the Commissionermay limit, suspend, or terminate an institution's par-ticipation in Title IV programs upon a determinationthat that institution has engaged in substantialmisrepresentation of the nature of its educationalprogram, its financial charges, or the employability of.its graduates.

1,

2-7

The statute directs the Commissioner to issue a"comprehensive revision of the regulations previouslyprescribed for Section 438 of the Act - which dealt withmany of the matters covered in the new Section 497A,but only with respect to the Guaranteed Student Loanprogram in Section 438 - in order to make such regula-tions applicable to all Title IV programs, to the extentpossible. Until the publication of the new regulations,those regulations previously issued under Section 438with respect to the Guaranteed Student Loam program

,remain in force.The Office of Education has developed replatiOns

on all the above topics ,(except for the limitation,suspensiOn, and termination procedures, which 'werepublished as a final regulation on Decemlior 23,1977), and published them. as a Notice . 1

Rule Making (NP,RM) on August "'tunny for public comment was pro%The Notice of Proposed Rulemaking , ..deproposed regulations on institutional retund pk,ticies.Rather, the Commissioner solicited public commenton the subject in the Preamble of the NPRM.

4

2-8

O

Determination of Student-Owed Refunds andAppoftionment ofStudent-Owed Refunds AmongOriginal Funding

A different type of refund is the repayment that a stu-'dent owes to an institution of a portion of financial aidfunds disbursed to the student for educational pur-poses, when the student does not complete the periodof study for which funds were advanced. Institutiorialpolicies for the determination of such refunds vary sig-nificantly, but no matter how a student-ov;ved refund iscalculated, when a refund is made by the student to theinstitution, the refund must be apportioned,among theoriginal funding sources. The fiscal and administrativestandards regulations published, on August 10, 1978 in-clude a formula for making such apportionments. Atpoint we want to alert all handbook users that finalregulans are being developed.

Prther-information regarding refunds -and. repay-.ments under the Basic Grant program may be found inChapter III, Section B.

Chapter 3

Basic' Grant Program

Section. A: Highlights OfNew Regulations

Section B: Calculation OfBasic Grant Awards

Page

II. Recomputation of Awards Dueto Change In Enrollment Status

A. Beginning ofa Payment PeriodB. Within a Payment Period

C: Payment OfOd61U Grant Awards

A: Determine the Student's Enroll-ment Status

B. Calculate the Cost of Attendance1. Tuition and Fees2. Room and Board Expenses3. Miscellaneous Expenses

C. Special Circumstances

3-4

3-43-53-53-5

I.

1. Study by:Correspondence 3-52. Incarcerated Students3. Fraternity mid Sorority Houses

3-53-6 II.

4. Foreign- Study 3-6" 5. Consortium Arrangements 3-6

6. Co-op-Prdgrarns 3-67. Variable Tuition Rates 3-68. Student Enrolled in Military IV.Academy 3-69. Student Attends More ThanOne Academic Year During anAward Period 3-6

D. Determine the Scheduled Award . 3-6E. Compute the Expected Disburse-

ment1. Clock hour schooli 3-72: Student Enrolled on Less thanFull-time Basis 3-83. Student Enrolled for Less thanan Academic Year.. 3-94. Student's Course of Study ismss than an Academic Year 3-95: A Summer Term Spans AwardPeriods 4 3-96. Student Transfers from a

School with a Low Cost of At-tendance to a School with aHigh Cost of Attendance

. _

-Page

3-103-10

Conditions For Payment

A. Eligible Student 3-21B. Valid Student Eligibility Report 3-21C. Enrollment in atr Eligible Program

on at Least a Half-Time Basis 3-22

Regular And Alternate Disburse-ment Systems

Methods of Payment

Special Payment Circum-stances

'A. Transfer Students 3 -23B. Consortium Arrangements 3-23C. Visiting Students '3-24D. Payment of Students Who Have

Completed a Program 3-24E, Fotir-Year Limitation on Basic

Grant Eligibility 3-24Ft Refund and Repayment 3=24

1. Refund 3-242. Repayment 3-25 '-

G. Responsibility of the Institution, inMakifig Payments of Basic GrantAwards 3-251. Packaging of Basic Grant with

other Financial Aid'Resources 3-252. Overpayment of Basic Grant

Award 3-25H. Collection of Overpayments 3-25

3-1

Section Validation

A. No Validation of Non-Taxable In-come or Veteran's Befits

B. Optional Institutional AwardCalculations

C. Certification of Independent Status

tiPage

3-27

Page

III. Reporting Process 3-30

IV. Student Validation Roster 3-32

V. Maintenance And Reten -,

3 -27 tion Of Records 3-34

VI. Fund Accounting . Pro-cedures

y 3 -34

VII. .

Audit And Examination 3-34

3 -28

Section E: InstitutionalReporting And Fikal Opera-tions

I. Overview

11. Funding Process

3-28B. Terms of Agreement 3-29C. Authorization Ceiling 3-29D. NIH /DFAFS Payment Procedures

I. Overview s 3-292. Letter of Credit Method 3-293. Cash Request System 3-294. Effective Operation of DFAFS 3-30

3-2

Chapter

Basic Giant Program

Section A,- Highlight oftheNew Basic GrantRegulations

The Bas- ic Grant regulations to be issued in the .fallof 1978 contain a number- of new procedures anddefinitions, as well as elaborations of existing regulat

. tions,-Thasection-belowbriefly-mentiOns-the-mostsig-nificant changers. Note that schools .may follow currentprocedures until the new regulations are issued in finalform.. The term "award period" replaces "academic year"

to describe the period of time from July-1 to June 30of the next year.,

. "Academic year" replaces "school year." It refers tothe amount of academic work for which a studentmust enroll in order to receive a full Basic Grant

. award.. "Payment period" has been redefined in its applica-

tion to ,clock hour schools. It refers to half the num-ber of hours a student can be expeqed to complete

.° during the academic !Jew- andt--within the awardperiod:Thus, payment of Basic Grant awards' atclock hour schools will now be keyed. to work ac-tually completed, not to time passed.

. The definition of "Institution of Higher Education"nowAllows eligible public and nom-profit schools toadmit as regular students not only high school grad-uates-but also persons who are beyond the age bfcompulsory attendance in the ,State in which theschool is kicated, and who have the ability to benefitfrom the institution's training.

. Minimum length for program eligibility at proprie-tary schools,;is 600 clock hours, 16 semester or tri-mester .hours, or quarters hours.

. Minimum length for program eligibility at public ornon-profit schools is 24 semester or trimester hours,36'quarter hours, of 900 clock hours.

. If a school becomes eligible, it may pay a studentonly for the payment; periothin which it becomeseligible, and not retroactively for the whole year, aswas permitted .under the old ,pOlicy.Ifa school becomes ineligible, it may pay the studentonly to the end of the payment period in which itloses its eligibility.

If an .incarcerated student lives in a halfway houseand receives less than half his/her room and boardfrom the incarceration facility, the student receivesthe same. Cost of education allowance as a studentwho. is not incarcerated. The financial aid officermakes the determination of whether the incarcera-tion facility 'provides more than half the student'sroom and board expenses.

. A student who re-establishes satisfactory., progressbefore the end of a paymeid period may be paid

_retroactively for the payment period. However, if there-establishment does not occur until after the end ofthe payment period, no, retroactive paymeht can bemade.

. The definition of "satisfactoryprogress" is left to theschool. However,. the school must have a definitionof some kind, since otherwise it would have nomeans of measurement for making the determina-tion required by the statute.Students who receive overpayments as a result of "nerror. in completing' an application or changing anSER,cannot receive, any further Title' IV money untilthe overpayment is returned.' Students who receiveoverpayments as a result of institutional error _maycontinue to receive Basic Grant payments, if theyacknowledge the overpayment in writing and agreeto repay it in a reasonable time. "Reasonable time"is determined by the financial aid officer,

. The Office of Education' has discarded. the- formulaproposed last year for calculating the portion of agrant disbursement considered an overpaymentwhich should be repaid by the student who termi-nates hit or her education before the end of a pay-ment period. Instead, a procedure is proposed whichgives the school discretion in determining the por-tion of a cash disbursement it considers " unused" asof the student'S withdrawal data. The "unused"amount would then be returned to the Basic Grantaccount; or proportionately distributed back intoeach Title IV program involved.

. If a student has defaulted on an NDSL or GSL forstudy at a school, the school may still pay that stu-dent a Basic, Grant award if it determines that thestudent has made satisfactory repayment arrange-ments. ,'

. If a student does not pick up his or her Basic Grantcheck at the assigned time, the school must hold it 15days beyond the last day of the student's enrollment

ei3-3

for that award period. If the student still has notpicked it up, he or she fo'rfeits it anet.the school maycredit the student's account for any amounts th.e stu-dent owes for that aware'If a school pays a striaCti directly, it may pay noearlier than ten days beforc q\--.t day of classes.

. If a school credits a stude ac,:ount, it may do sono earlier than three weeks before. the first day ofclasses.

. Following submission of a final_ report of expen-diture of funds, schools must keep records -fof fiveyears rather then the previously required three years.

. ADS schools must sign a written agreement in orderto participate in the program.

. RDS schools must have their Basic Grant accountsand transactions audited at least once every}woyears. (This is consistent -viith campus-bastra re -

quirements).

Section B Calculation ofBasic Grarr! Awards

I. ComputationAn institution must follow four separate steps' in

computing awards for both full and part-time students:,. Determine the Student's Enrollment Status. Calculate the Cost of Attendance. Determine the Scheduled Award. Compute the Expected Disburseinent

A. Determine the Student's EnrollnientStatus

In the Basic Grant program,_a student's enrollmentstatue defined as either full-time, three-quarter time,or half-time. A full-time student is defined as one tak-ing a minimum of 12 semester or quarter hours at in-stitutions with standard academic terms or a minimum, -of 24 clock, hours per week at institutions whichmeasure progress in terms of clock hours. Similarly,the minimum requirements for three-quarter timestatus are 9 semester or quarter hours or 18 clockhours per week. For half-time students, the minimumsare 6 semester or quarter hours Or 12 clock hours perweek. A student must be at least half-time to receive anaward, and must be classified in one of these threeenrollment categories.

-A correspondence student's course of study must re-ciuire at least 12 hours of preparation per week inorder for him or her to qualify as a half-time student.Regulations also state that correspondence studentscannot be considered more than half-time, no matter

3-4

how many hours of preparation their course work're-....

quires,. ff

It should also be noted that the full-, half-, or three-;quarter time determination is pri-marily based upon the number of }Tours required by theinstitution, as long as the institutional requirementsmeet the minimums above. Thic means that if, for ex-ample, an institution requires at least 36 clock hoursper week for full7time enrollment status, a student atthat institution who is attending only 24 clock hoursper week would not be considered full-time. Further-more, the institution must determine the definitions ofthree - quarter and half-time status based on the full-time requirements.

B. Calculate the Coo of ,,k; cild:i

-The-cost-of 'attendance .used to determine BasicGrant awards is alwitys the cost for a full academicyear. ...

The Basic Grant .regulations specifically state thatthe following items are to be included in determining a,student's cost of attendance for purposes of calculatingthe amount of the Basic Gt ant award. The institutionmay not consider a ny other costs for purposes of BasicGrants.

The items which are included in costs of attendanceare:,1) tuition and fees;2), living expenses;3) miscellaneous expenses.

1. Tuition and Fees

The actual amount of tuition and fees the studeni ischarged by the institution will be included with the

. following provisions:a. For three-quarter or half-time students, the tui-tion and fees, normally charged to full-time std-dents for a full school year should be used. At in-stitutions which charge on ,a per-hour basis, thecosts for fult-time students must be computedbased'on the actual number of hours taken, butthe,costs_for part-time students may be a standardfigure based on the typical hours taken by full-

time students at.that school. Note that tuition costsareralways based on the standard number of termsduring the academic year, regardless of whetherthe student enrolls in a summer session.b. The tuition charge may include any additional

'amount charged to "out-of-State" and/or "out-of-district" student's.c. The tuition charge may include any costs offield trips (within the United,Siates) which ,are re-quired for all students taking a particular courseof study ifthese costs are normaly included in tui-tion charges.

d. ;Any costs associated with student travel to andfrom his or her residence and the 'institution arenot permitted to be included in tuition charges normay institutions include in tuition charges costsassociated with student travel to and/or fromhig/her residence and the institution. .

. e. Fees which are included in cost of attendancemust be those charged to all students (i.e., activityfees); all students within a certain class of study(i.e.; laboratory fees); or those fees required of acertain class of students (i.e., out-of-State fees).f. All students are to be given the appropriateallowance for. books, supplies and miscellaneousexpenses as described below,, regardless of the ac-tual amount paid for the itenis. "Tuition and feec"shINI11.1 I, ill. -amount the in-

i4,1 rit,',a, supplies, or specialized equip-ment such as hair dressing`kits or musical instru-ments, even if they are required by the institution.g. The amount of tuition and fees may never bereduced because the student is receiving otherforms of student financial aid which help coverthese costs.h. Tuition and fees used in the cost of attendancemay not exceed the tuition and fees charged for anacademic year.. In cases' where a student ischarged an amount of tuition and fees to cover aperiod of study greater than an academic year, theamount must be prorated as Jollows:

A

tuitiorr and fees X clock or credit hours inacademic yearclock or credit hours inprogram

2. Room and Board Expenses

The cost of attendance for all students except thosewho are incarcerated and those enrolled in correspon-dence study (see below) includes an allowance forroom and board expenses. The amount used must be:

a. For students who contract for room and board'with the institution, the actual amount charged bythe institution; orb. For students who contract for room facilitieswith the institution but who pay their own foodcosts, the actual amount charged by the institutionfor room plus an allowance of $625 for board; orc. For students who contract for board costs withthe institution but who pay their own room ex-penses or live at home, the actual amount chargedby the institution forboard plus an allowance of$475 for room; ord. For students who do not contract for room orboard with the institution, an allowance of $1 100for living expenses; ore. For students who contract for room and/orboard with the institution for less than seven days

per week, a daily rate can be calculated, bastd onthe standard alloVances, for those days notco.vered by the contract and added to that cost"already covered.

3. NI iscel Ian eo us Expenses

The cost of attendance for all students, exceptincar-cerated students and studentS enrolled in correspon-den6e study (see below), must include a $400allowance for books, supplies and miscellaneous ex-penses.

With a few specific exceptions, all ciiidenic will '-a minimum cost of titteml,w ot kroe se s is to , 000ks, supplies, andmiscellaneous allowance). Students who are attendingtuition-free institutions with no on-campus livingfacilities are still provided ths, $1500 minimumallowance.'These allowances are the same for both fulland part-time students.

C. Special Circumstances

Since iSasic Grants is an entitlement program, it isinwortant that all students' costs are determined in thesame manner. White the rules listed above cover themajority of students and institutions, there are a fewinstances where it is necessary to make furtherclarifications. Listed below are some situations whichrequire special treatment and/or interpretation:

1. Study by correspondence

Students who. are -taking courses by correspon-dence caritonly have the actual tuition and feescharged by the institution .for an academic year con-sidered in determining their cost of ,attendance.Unless thecourse of study, includes a reqUired resi-dential segment, no room and board alloWanceswould be included.

If there is a required period of residential training,.the cost of attendance foi such training would bebased on the. actual cost. IfIlie student is noL con-tracting with the institution for room and board,the allowable room and board expenses described inSection B-2 would apply. These costs would then be'pro-rated in the same ratio as the period of residen-tial training is to 8 months'.

2. Incarcerated Students.

In determining the costs of attendance for incar-cerated students, the only items which can be con-sidered are the full-time-tuilion and fees charged bythe institution for an academic year plus anallowance of $150 for books and supplies. No room

3-5

i..74 1

and board allowance yi.provided for incarceratedstudents.

New regulations allo,w, a room and boardallowance 'to be used in dqerrnining the costs of at-tendance of those incarcerated students for whomless than one-half of room and board expenses areprovided. In most cases, theseLStudents will be livingin halfway houses or participating ;:1 work-releaseprograms.

3. Fraternity and Sorority Douses

Student' N.4111) i" ,. k _1 ,,Institution for riorn and boat (.1(such as

SUllIC students living in fraternity or sorority houses)*are given the $1100 off-campus living allowance.

For students who live in fraternities or sororitiesand do contract with the institution for this room andboard, the actual cost charged by the institutionwould be used in determining the cost of attendance.

4. Fureign St ud y

The cost of attendance for students whO are study-ing abroad while remaining an eligible student at theeligible institution may not exceed the'costs of atten-dance at the eligible institution.

5. Consortium Arrangementse

The home 4pstitution uses the actual amountcharged to the ,student at the other institution(s)when determining a student's cost of attendancewhen he/she is enrolled at a consortium insticution.

6. Co-op Programs

If a student is in a term of co-op employment, thecost of attendance to be used for determining theamount of his or her Basic Grant for that termshould be the tuition and fees for a co-op term pro-jected over a school year plus room, board andmiscellaneous expenses. For example, if a studentwill spend one quarter on co-op where. he or she ischarged S50 fees and no tuition, that $50 is prb-

° jected over 3 quarters (an academic year) and addedto room, board and miscellaneous expenseallowances, i.e., $150 + $1100 + $400 = $1650.

7. Variable Tuition Rates

Full-time students enrolled at institutions whichhave a per-credit hour tuition charge Will have theirtutition and fees determined based upcin a projec-tion of their current enrollment over an entireacademic year.

For example, if a student enroll fall semester for12 credits and is charged $10 per credit hcr.r, thetuition cost for the semester is $120. Projected over

3-6

2 semesters (an_ academic year) the tuition and feesequal $240."That amount is added to room, boarand miscellaneous expense allowances to determineThe udent's award for fall semester. If in springsemes r, the same student enrolls for 15 credits at$10 per credit how, his or her tuition' and fees forspring semester would be $150. Projected over 2setnesters"the tuition 1,,,1 fees equal 1;1;00 Th.Basic Grant payiu. iri iiesto1-1se. d n att7()t y,

,.. , i1-ot pats -true :,tridents the cost of tuition and fees

would be:based upon the cost for a typical full-timestudent at that institution., i.. a typical full-time stu-dent takes 15 credits per semester. A part-time stu-dent's cost of attendance at that school is $300 plusroom, board and miscellaneous expense allowance.

8. Student Enrolled in a 11ilitary Academy

Students enrolled in one of the four U.S. militaryservice academies are not considered to haVe anycosts of attendance, and therefpre may not receiveBasic Grant awards.

9. The Student Will Attend More Than OneAcademic Year During an Award Period

An institution may define its own academic year.For schools using standard academic terms, anacademic year is the period of time in which a full-time student is expected to complete the equivalentof.two semesters, two trimesters or thwquarters.

For clock hour schools, a full academic year mustbe at least 900 hours long. Eligible programs be-tween 600 and 899 hours long are considered lessthan a full academic year long.

In some cases, a student may attend more than anacademic year within an award period. Since thestudent may not receive more than one academicyear's entitlement during an award period, theremay be a portion of the student's attendance forwhich no Basic Grant can be paid.

Determine the Scheduled Award

The Scheduled Award is the amount that a full-timestudent enrolled for a, full academic year is entitled toreceive for a given year, It is determined by takingthree elements into account: the eligibility index takenfrom the 1,978-79 Student Eligibility Report, the totalallowable cost of attendance derived in Section Babove, and the 1978-79 Payment Schedule. Thescheduled award can be locatecron the full-time P4-ment Schedule and should be entered in Box 4, Sec-tion 4 ef the SER.

This step must be included in the computation of all

21

Students' awards.The Scheduled Award,,is ar

in the processing of institutiin keeping track of the to itdent.

t element usedLzr- is and

stu-

The Payment - Schedule and the two part-time Dis-bursement Schedules are they charts' which listEligibility Index numbers across the top and' costs ofattendance dOwn the side, By folloWing the correctlineand coluoin on the appropriate schedule the institutioncan deterrrline the appropriate scheduled award or exmpected dtsbutkement. In ,'dreloPing the annual Pay-ment Schedule, the Office ofiEducation estilates thetotal' der-,and for Basic Grants for the approprit.te.,award pdriod, tole into accouri such factors as,stu-

, dent enrollment by income, instttitional charges, andthe appropriate formula for determining thestu,dent'seligibility index, . ..

The result of analyzing thiS data: permits the Office.of Education to develop n estimate of the total .de;

amand which can then be compare/I to the amount ofavailable fur3ds. Once the award levels for the full-timePayment Schedule aredeveloped, the DisbursementSchedules for .half-time three - quarter -time stu-dents are derived by taking.half and three quarters. ofthe awards at each level of-cost aqd eligibility index.

41,When using/the Payment and Disbursement

Schedules, - it is impt5rtant to remember that theSchedules show .bOth,' the cost of attendance and theeligibility index in intervals of 50. The, award is basedon the mid-point, and some students' awards may ex-ceed one-half cost by a femidollars. This -is acceptable,and no 'adjustment should be made from the amount

\ .

For clock hour' schools, the method of computingthe e . -cted distrursement is different from the one

) ' 78. The tl w met od eliminates the use ofis Disbur Jules as well as the

;mow Ii u enrollment -status..)t?gh 4.he ,ne Disbursement

ScheoL.,1- wiii dot be used, Lilt, student must still be atleast half-time during the payment period 'in order forpayment to 'be' rnade.6Awards are calctilartd using asimplified formula which embodies two important

, revisions iv the New Basic Grant regulations. iThe first is that a school now will define the length of

its academic year td:be the number of 'clock hours thestudent musrpomplete to receive a, Scheduled Award,that is, an equivalent of 2 semesters, 2 trimesters or 3'quarters of full-time attendance. The definition of"ad.idemie -yeat no loner has ty be the same as thearadunt of work the student will be expected it° corn-pieta in a 12 month period, as was the former defini-tion of .!`school year,"4However, an- academic yearmint be a minimum of 900 Clock hours.

The second revision' is that "payment period" isdefined as half the number of hours the student can beexpected to complete within an award periqd (Tliesingle exception to This definition occurs when the stu-dent will complete, more than an academic year's worthof hours within kn. award period. Computation pro-cedures for tgis situation are discussed at the end ofthis section).

Disbursement is now keyed to' work to be com-pleted, rather than to time passed. To calculate te dis-bursement for a payment period, use the following fc:4-mula:

X clock hours = Disburse entS ells du led in payment for pa y

. periode n t .

shown o' n.the Payment, OrDisbursement Schedule to Basic Grant period/2 clttek hours in

7, academic year '( 9 0 0 kminimum')

account for the one-half cost provision,Payment and Disbursement,Schedules to be used for

the 19;8-79 academic year ha e been distributed tothe financial aid offices at-all nstitutions which areparticipating in the 'Basic Gran Program. For an ex-planation of the method used to arrive at the figures onthe Payment Schedule, see Appendix C.

E. Compute the Expected Disbursemen,t

For full-time students enrolled for a full academicyear, the expected disbursement will be the same as theScheduled Award. That amount should therefore beentered in Box_4, Section 4 of the SER,

1: Clock hour schools

Note that schools will not have to use the clock hourcomputation' method described below until the NewBasic` -Grant regulations are issued in final form.

Thus, if a student enrolls in a program for which the -academic year is defined 'as 1000 hotirs, and he/she,can be expected to complete 480 hours before the July1 dividing line betwen award periods, \he /she wouldreceive one disbursement upon 'enrollinent, and a se-cond disbursement upon completion of the 240th hour.

Assuming a "6" eligibility index and an over-$3200cost of education, his/her first disbursement'wOuld becalculated as follows: $1600 x. 240 .=$,384

, 1000At the,,240th hour,ia second calculation would be

made for the:second disbursement. If the student hasprogressed on schedule, that calculation would beidentical to the one 'above.

However, if the student has fallen behind, andreachesthe 240th hour later than 'originally expected,the numerator in the formula would change to, reflect

3-7

the reduced n -ter of hours the student could now beexpected to c 'lets -'y the end of the award period. Ifthat number ge( ) 200, for example, the disburse:merit for the nu ,,ayment period would be com-puted as f011owi, SI600 x 200 = $320

1000If after he/she receives the second disbursement, the

student falls behind by another 40 hours before the endoftthe award period, no recalculatiOn is.necessary. In-stead, the student would receive no further disburse-ments until he/she reached the 2Q0th hour. At that point,the 'first disbursement for the 1979-80 award periodwould be made. The student would havpthen completed480 hours, and would have 520 more to gorTherefore,each payment period would be 260 hOurs long, and thecalculation would be made exactly as before.

) .after receiving the second disbursement, the stu-dent in th example increases his /her 'attendance andreaches fhe 200th hour before ale end of the awardperiod, a third disbursement can be made.

Nothat if less than 3 months of an academic yearoccur wain, an award period, only one disbursementneed be made.

vote also that .the denominator inane forma motalways be at least 900. Thus, if a zero-index studentenrolls in a 600 hour program wit4n over-$3200 costof attendance, the award for the first payment periodwould be calculated as follows:

$;600 x 300 = $533900

If the second payment period falls within the sameaward\period, the second calculation' would be identi-cal to the first. The student in this, exam$!e wouldreceive a total award of $1066 (or 600/900,or $1600).

If a student expects to coinplets more than anacademic year's worth of hour's Within an awardperiod, aPayment period would beconsidered half thehours in an academic year, not half the hours the stu-dei1 expects to complete.

. For example, a School defines its academic year as900 clock hours, but student expects to*.conwlete1200urs,belween July°1 and June 30. Assuming a"0" eligibility index and an over - $3200 post of atten-dance, the first disbursennent, is-calculated as follows:

$1600 x,450 as 0Q

900 v"

When the student completes the 450th hour, the se-cond disbursement is made. if the student is' on'schedule and will complete another 450 hours beforethe end of the 'award period, the second calculationwill be identical,-to the first.

Ats the curnpletiorcof the 900th hour; the Studentwould have received his or her ,full entitlement, andweld' receive no further payments for hours com-.

f

pleted? in the 1978-79 award period. The studentwould resume teceiVing payments for work donebeginning 'July I.'

.

In computing diSbursements, there-are a number ofcases where the student's expected disbursement willbe different from the Scheduled Award. Thesedifferences will occur when:

( I) The student is enrolled on less than a full-time- basis.

(2) The student is enrolled for less than a fullacademic year (e.g., second semester only).

(3) 'The 'student's course of study is less then anacademic year inl length.

(4) A surnmer'school term spans award periods.(5) The student transfers from a school with a low

cost of attendance to a school with a high cost of'attendance.

The following sections discuss each of these condi-tions in detail.

2: The student is enrolled on less than a full -time basis.

. ,

As described in Section B orthis chapter, a full-timestudent is one who is enrolled for a min,imumjof 12semester or quarter hours or 24 hours per week; athree-quarter time student is one who is enrolled for,9semester or quarter hours or 18 clock hours per week,and a half-time student is one who is enrolled for 6semester or quarter hours or 12 clock hours per week.

The normal computation procedure for students inclock hour schools covers both full and part-time stu-dents. The material in thissection,,,therefore, applies onlyto schools which mea4up progress by standard academicterms.

To determine the expected disbursement for three-quarter or half-time students, the institution follows aprocedure similar to the one used to determine theScheduled Award: Using the eligibility jndex,from the 1978-79 SER and the full-tilde cost of-atten-dance calculated in Section B, look up the student'saward on the Three- Quarter Time 'Or Half-Time Dis-bursement Schedule, whichever is appropriate, It is im-portant that the correc\ schedule be used, since institu-tions ate responsible for errors' in awards which result..from using the wrong schedule.

lithe student is expected to be enrolled at the samestatus fox, a ftill academic year, and the academic yeardoes not overlap aware periods,, the amount takenfrom the Disbur.tement Schedule will alsb be the ex-

pected disbursement, and should be entered'on Box 4,Section 4, of the SER. Please note that this is the max-imum a student may receive during a normal academicyear if he or 'she does not change enrollment status:.,However, if the student.continues attendance at thatstatus for more than an academic year within an award

period, his or her award will exceed the expected dis-bursement.

A student who has received a full-time Basic Grantaward for both semesters or all three quarters duringan.acadcmic year has used up his entitlement for thatacademic year. However, .if the student was not full-time, for one or all of the terms, heor she has not used afull year's entitlement.

3. The student is enrolled for less than a fullacademic year.

If a student is enrolled for. a portion of an academicyear during an award period, One semester, theBasic Grant will be calculated on the basis of the sni-c.dent's attendance for,a.full academic year, but will be'reduced in the same proportion as the length of timewhich he or she enrolled in the award period bears tothe length of time of the academic year.

For example, a student who enrolls for the secondsemester- of -a-two-semester Thcaderhii- year- WO tild"receive one-half of the award he or shit would havereceived had he or she enrolled for bop semesters.

Another example of this mould be a student whotransfers into a 900 clock hour program after 250hours of the program have elapsed. This student wouldreceive only 650/900 of the award from the payment or If'Disbursement Schedule.

4. The student's course 'of study is less thanfull academic year in length.

Most of these cases will involve students who enrollat clock hour schools foricoUrse of study which is lessthan the 900.4tour minimum length for an academicyear. No extra steps are nepessary when computing theaward, since proration is,built into the standard com-

' putation procedure.If a student enrolls in a course of study less than a

full academic year long at a School with standard termsand credits, the expected disbursement would bereduced as follows:

Expected, Dis--No. of terms in =.Reduced Expectedbursement x Program Disbursement

No. of terms inAcademicYear

5. The Term Spans Award Periods-

Since the procedure for computing awards at clock-hour schools routinely takes into account eJuly 1Zdividing line between award, periods, no sp ial steps .

are necessary. The following inform atien applies only . ' .

to schools with standard, academic 'terms using creditbours. ...

The new -Basle Grant regulations cotin guidelines. .

which give 'schools greater flexibility in disbursingsummer term awards. In general, if a student's enroll-ment in the summer term overlaps two award periods,the school may disburse the award from the student'sentitlement for 1978-79 or for 1979-80, providing .thestudent does not exceed his or her entitlement in eitheraward period. (See Basic Grant to be regulationspublished in the-fall of 1978 for Maher 'discussion).

6. The student transfers from a school with alow cost of attendance to a school with a highcost of attendance.

If a studelit with a. zero eligibility. index attend'sschool A and receives $406 for the first semester (halfof the $812 Scheduled Award for a $1600 - $1649 cost,of attendance), he o: she has received half the entitle-ment for year.

If the student then transfers to school B for the se-..cond._semestei_and_receives..'a -$706-award (half the.- -----

Scheduled Award for a cost of attendance from$2800-$2849) he or she has used the second half of en-titlement for the year and is not eligible for' any furtherpayments until July 1 even though he or she has notreceived the highest Scheduled Award,

It should also be pointed out that Basic Gram regula-tions do not require the aid officer tocheck on the amount of Basic Grant awards studentsmay have received at schools they transferred'from.However, if the aid officer has documentation thatpayment of the Expected Disbursement woad cause astudent to exceed his or her entitlement, the officermust adjust the award accordingly.

Rqmple CasesCASE 1: A student with an index of 300

enrolls full-time in a -university with atwo-semester academic year. Fbr the year,his tuition and fees are $718, his room is$699, and his board is $760.

2: A student With an eligibility index of 300enrolls three-quarter time (10 credits) in.acollege where all students taking over 9credits are charged full-time tuition. Theacademic year consists' of three quarters,but the student has enrolled for only thelast two. For a full academic year, the

, charges are $850 for tuition and fees, $625for room, and $750 for board.A student with an eligibility index of 300

CASE

CASEenrolls half-time (7 credits) in a schoolwhere the normal full-time course load is14 credits. The academic year is two.-semesters, andcthe charge per credit'is $31.The tuition allowance mould therefor& be$31 x 14 credit x 2 semesters x $868. Thestudent lives off- campus, so the standard

3-9

allowances for roop board, books, sup-plies, and miscellaneous expenses wouldbe used.

, CASE 4: A student with an eligibility index of 125. enrolls in a 900 hour program at a business'

coMge. The tuition and fees far, theprogram le $2100. All students live offcampus, so the standard allowances fcr.room and kard be used. ThesOool wit make two disbursements, soeach payment period is 450 hours long..

CASE 5: A student with an eligibility iiidex4of 0enrolls in an 1800 hour course at a schoolof beauty culttire. The school defines itsacademic year as 900 hours. The tuitionand fees fdr this course are $2200. There isalso a charge for a beauty kit, fo'r uniformsand for beauty supplies._ Note_ that_ these_charges may not be considered paryf the

itok tuition and fees. These charges are pro-videdfo-by----th-e-- standard --alloi;warite of$400 for books, supplies, andmiscellaneous expenses.Note .than when using the worksheet, thetuition and fees are for one academic year,not for the entire course. In this example,the tuition and fees would be 900/1800 of$2200,. or 1100.If the school wishes to pay more than twiceper academic year, it may further sub-divide payments within each paymentperiod as willbestIneet the needs of its stu-dent,

CASE 5A: The student in Case 5, after receiving thefirst disbursement of $656, missed a few

a weeks of school. When she reaches the.450th hours, she can now be expected tofinish only 350 more hours before the endof the award. period.

CASE 6: A student with an eligibility index of 400enrolls in a 600 hour program at a com-puter programming school. Tlik tuition' andfees for tift prdgram are $1000. The studentwill complete only 200 hours of theprogram in the 1978-79 award period, andit will take him less than three months to doso. Since less than 3 months of this stu-dent's academic year occurs in the 1978-79award period, only one disbursement needbe made.

II. Recomputation of Awards DueTo Change In Enrollment Status

At clock hour schools, recomputation is noe necess-ary..Students would not receive further payments until)

3-10

they have completed the number of hours for whidithey have already been paid. The following informa-tion on recomputation refers only to schools.owithacademic .t.t.irms and credit hOurs.

A. Beginning of a paynierit period.

The financial aid officer must recalculate a student'saward at the beginning of a payment period if the stu-dent's enrollment status has changed from that of theprevious payment period. _The student's award for thepayment period would be calcUlated according io stan-dard procedures.

A tpiyment period is a semester, trineter, quarter,cr other academic term.

B. Within a Payment Period

An institution may, but is not required to, establish apolicy under which a student's award may be recalcu-lated if his or her enrollment status changes within apayment period. If such a policy is established, it mustapply to all students. If a student's award is recalcu-lated, the institution determines the total amount thestudent is entitled to for the entire payment period bytaking into account:

(1) The portion of the payment period at theoriginal enrollment status;

(2) The portion of the payment period at the newenrollment status; and

(3) Any change inntie student's cost of attendance,

If the recalCulation shoivs that the student has beenoverpaid, the overpaynient must be recovered. Theschool may collect it directly from the student, or mayadjustjtAre Basic Grant payments within the sameaward period. The student would not be eligible toreceive a Basic Grant in any future award period untilth-. overpayment is recovered.

Note that a change from one part-time status toanother in the same program would not require arecalculation of cost of education because the typicalfull-time cost is used in both cases. However, if a stu-dent changes from part-time to, full-time and his or her'actual full-time cost i's different from that used forcalculating part-time awards, the full-time awardshould be based on the actual full-time costs. In thiscontext, when the costs are recalculated the tuitionamount for a full school year at the new enrollmentstatus should be used.

Worksheet A

COMPUTATION OF FULL-TIME AWARDS ,

AT SCHOOLS WITHACADEMIC TERMS AND CREDIT HOURS

Npme: ,Student Eligibility Index

Date.

1. Cost of attendance:a. Tuition and feel for academic year a.b: Room b.c. Board c.d. Books, supplies, and miscellaneous

expenses d.

TOTAL

Enter total on line 1 and in Box 1, Section 4 Of the SER 1.

2. Look up full-time scheduled award, using the Student EligibilityIndex and Cost of Attendance, Enter on line 2 and in Box 3 ,

Section 4 of the SER. 2

3. Expe,cted Disbursement. If the student plans to attend for a fullacademic year, enter amount from line 2.on line 3.

If the student expects-to enrdll for less than a full academic year,the expected disbursement must be prorated as follows:

a. Divide number of terms student expects to enroll by number ofthe terms in academic year. (For a student enteringsecond semester, this fraction = 1/2 ). a

b. Multiply line 2 by fraction established in (a) of this step.Enter on I ine 3 as Expected Disbursement. Alsoenter in Box 4, Section 4 of the SER. 3.

4. Determine amount per payment. Divide line 3 by number of paymentsscheduled for the academic year. 4

Worksheet 13

COMPUTATION OF PART TIME AWARDSAT SCHOOLS WITH

ACADEMIC TERMS AND CREDIT HOURS

Name: Student Eligibility Index:

Date.

1. Cost of Attendance:a. Tuition and fees for

academic year a.

b. Room b.

c. Board c.

d. Books, supplies,and miscellaneousexpenses d.

TOTAL

Enter total on line 1 and in Box 1, Section 4 of,the SER. 1.

2. Look up full-time scheduled award using the Student EligibilityIndex and Cost of Attendance. Enter on line 2 and Box 3, Section 4of the SER. 2.

3. Look.up expected disbursement from appropriate part-timeDisbursement Schedule, using the Student Eligibility Index and Costof Attendance.

If student expects to attend for a full academic year, enter thisamount on line 3 and in Box 4, Section 4 of the SER.

If the student expects to enroll for less than a full academicyear, the expected disbursement must be prorated as follows:

a. Divide number of terms student expects to enroll by numberof terms in academic year. (For a student entering secondsemester, this fraction = 1/2.)

b. Multiply expected disbursement by fraction established in (a)of this step. Enter on line 3. Also enter in Box4 , Section4 of the SER. 3.

4. Determine amount per payment. Divide line 3 by number of paymentsscheduled for the academic year. . 4.

27

Worksheet C

COMPUTATION OF AWARDS AT CLOCK HOUR SCHOOLS

Name. Student Eligibility Index:

Date:

Total Length of Program in hours:

Length of academic Aar in hours:

1. Cost of Attendance:a. Tuition and fees for academic year a.b. Room b.c. Board .c.d. Books, supplies, and miscellaneous

expenses. d.VOTAL

Enter total on line 1 and in Box 1, Section 4 of the SER.

2. Full-time scheduled award. (Enter on line 2 and BQX 3,Section 4 of the SER).

1

2

A

3. DisPursement for bayment period:line 2. x clock hours in payment period = Disbursement for

clock hours in academic year payment period(900 minimum)

r '

Enter disbursement for payment period in line 3 . 3.

4. Expected disbursement = line 3 x number of payment perio4 inaward period: Enter expected disbursement in Box4, Section4 of the SER. 4.

3-.13

Worksheet A

COMPUTATION OF FULL-TIME AWARDSAT SCHOOLS WITH

ACADEMIC TERMS AND CREDIT HOURS

Name. C S I

Date. q- 7°78Student Eligibility Ihdex

1. Cost of attendance:a. Tuition and fees for academic year a. an gb. Room . b. 699c. Board c. 760d. Books, supplies, and miscellaneous

expenses d. 400TOTAL 25 7 7

Enter total on line 1 and in Box 1, Section 4 of the SER.' 1 26'77

300

2. Look up full-time scheduled award, using the Student EligibilityIndex ar. Cost of Attendance. Enter on line 2 and in Box 3Section 4 of the SER. 2. /28e

3. Expected Disbursement. If the student plans to attend for a fullacademic year, enter amount from line 2 on line 3.

If the student expects to enroll for less than a full academic year,the expected disbursement must be prorated as follows:

a. Divide number of terms student expects to enroll by number ofthe terms in academic year. (For a student enteringsecond semester, this fraction = 1/2 ). a

b. Multiply line 2 by fraction established in (a) of this step.Enter.on line 3 as Expected Disbursement. Alsoenter in Box 4, Section 4 of the SER. 3.

4. Determine amount per payment. Divide line 3 by number of paymentioscheduled for the academic year. 4.

29

3-14

444

Worksheet B

COMPUTATION OF PART TIME AWARDSAT SCHOOLS WITH

ACADEMIC TERMS AND CREDIT HOURS

Name: CASE 2 Student Eligibility Index: 300Date: 1-7- 7t1. Cost of Attendance:

a. Tuition and fees foracademic year a

b. Room b.c. Boardd. Books, supplies,

and miscellaneousexpenses d.

TOTAL

850625750

4-00.2625Enter total on line 1 and in Box 1, Section 4 of the SER.

4

1, a 6252. Look up fulltime scheduled award using the Student Eligibility

Index and Cost of Attendance. Enter on line 2 and Box 3, Section 4of theSER. '2 /312-

3. Look up expected disbursement from appropriate part-timeDisbursement Schedule, using the Student Eligibility Index and Cost,of Attendance.

If student expects to attend for a full academic year, enter thisamount on line 3 .,nd in Box 4, Section 4 of the SER.

If the student expects to enroll for less than a full academicyear,.the expected disbursement must be prorated as follows:

a. Divide number of terms student expects to enroll by numberof terms in academic year. (For a student entering secondsemester, this fraction = 1 /2.)

b. Multiply expected disbursement by fraction established in (a)of this step. Enter on line 3. Aiso enter in Box 4, Section 8754 tyf the SER. 3.

Determine an-v.7unt per payment. Divide line 3 by number of paymentsscheduled for d';e.acadernic'year. 4.

o.

3-15

Worksheet B

COMPUTATION OF PART TIME AWARDSAT SCHOOLS WITH

ACADEMIC TERMS AND CREDIT HOURS

Name: CASE 3 Student Eligibility Index: 3 00Date: 84' 30'7t1. Cost of Attendance:

a. Tuition and fees foracademic year a. 8'68

b. Room b b25c. Board c *75.d. Books, supplies,

and miscellaneousexpenses .d *00

TOTAL .23 4rft 8Enter total on line 1 and in Box 1, Section 4 of the SER. 1. 236

2. Look up full-time scheduled award using the Student EligibilityIndex and Cost of Attendance. Enter on line 2 and Box 3 Section 4of the SER. 2. //int

3. Look up expected disbursement from appropriate part-timeDisbursement Schedule, using the Student Eligibility Index and Costof Attendance.

If student expects to attend for a full academic year, enter thisamount on line 3 and in Box 4, Section 4 of the SER.

If the student expects to enroll for less than a full academicyear, the'expected diibursement must be prorated as follows:

a. Divide number of terms student expects to enroll by numberof,terms in academic year. (For a student entering secondsemester, this fraction = 1/2.)

Multiply expected disbu /sement by fraction established in (a)of this step. Enter on line 3. Also enter in Box 4, SectiOn4 of the SER. { 3. 9

b.

4. Determine amount per payment. Divide line 3 by number of payments es.scheduled for the academic year. 4. 7,

31

3 -16

Worksheet C

COMPUTATION OF AWARDS AT _CLOCK HOUR SCHOOLS

Name. CASE Student Eligibility Index:

Date: 78' 12.5Total Length of Program in hours:

900Length of academic year in hours:

9001. Cost of Attendance:

a. Tuition and fees for academic year a. 2./00b. Roomc. Board c.d. Books, supplies, and miscellaneous

expenses. d.TOTAL

440036 3 0 o

Enter total on line 1 and,in Box 1, Section 4 of the SER.

2. Full-time scheduled award. (Enter on line 2 and Box 3,Section 4 of the SER). PH°

3. Disbursement for payment period:line 2 x clock hours in payment period = Disbursement for

clock hours in academic year payment period(900.minimum)

/moo x MAT- = 7fz..6"900

Enter disbursement for payment period in !ine 3. 3. 764,54. Expected disbursement = line 3 x number of payment periods in

award period: Enter expected disbursement in Box 4, Section4 of the SER. 4 14.90

Worksheet C

COMPUTATION OF AWARDS AT CLOCK HOUR SCHOOLS

Name. CASE 5 Student Eligibility Index:

Date. /0 78 0Total Length of Program in hours:

/8'00Length of academic year in hours:

9001. Cost of Attendance:

a. Tuition and fees for academic year a. //CS()b. Rooml b.. *75c. Boardd. Books, supplies, and miscellaneous

expenses. d. *0 0TOTAL .Z64"1 2600

Enter total on line 1 and in Box 1, Section 4 of the SER.

2. Full-time scheduled award. (Enter on line 2 and Box 3,Section 4 of the SER). 2. /3/2.

3. Disbursement for payment,period:line 2 x clock hours in payment period = Disbursement for

clock hours in, academic year payment period(900 minimum)

$13/2"X *50 = $65.6900

Enter disbursement for payment period in line 3 . 3. 65;64. Expected disbursement = line 3 x number of payment periods in

award period: Enter expected disbursement in Box 4, Section4 of the SER.. 4 /3/2.

fr

3-18

Name:

NWorksheet C

COMPUTATION OF AWARDS AT CLOCK HOUR SCHOOLS

GA SE

Date: _ 3°/5-79Student Eligibility Index:

Total Length of Program in hours:

Length of academic year in hours:

"900,

1. Cost of Attendance:a. Tuition and fees for academic year a 00b. Roomc. Boardd. Books, slypplies, and miscellaneous

expenses. *00TOTAL

::.

1 a6o6Enter total on line 1 and in Box 1, Section 4 of the SER.

2. Full-time scheduled award. (Enter on line 2 and Box 3, ,

Section 4 of the SER). 2. /3/2.3. Disbursement for payment period:

line 2 x clock hours in payMent period = Disbursement forclock hours in academic year payment period

(900 minimum)

/312. X -350 = 5/0too

Enter disbursement for payment period in line 3. 3.

4. Expected disbursemen = line 3 x number of payment periods inaward period: Enter expected disbursement in Box 4, SeCtion4 ofihe SER. 4.

as.Y

3 -1.9

Name;

Date:

Worksheet C

COMPUTATION OF AWARDS AT CLOCK HOUR SCHOOLS

cASE5-15-7e

Student Eligibility Index:

0. -

Total Length of Program in hours:.

600600Length of academic year in hours:

60e)

1. Cost of Attendance:a. Tuition and fees for academic year a /01;.06.,kl. Room b,' 4A-7.c. Board c. *---Ale5d. Books, supplies, and miscellaneous

expenses. d. 400TOTAL ___L_42.500 00

Enter total on line 1 anal in Box 1, SeC.ion 4 of the SER. .

2. Fulltime scheduled award. (Enter or line 2 and BOx 3,Section 4 of the SER). 2. / 2; 6

3. Disburs ment for payment per(od:line 2 x clock hours in p inent period = Disbursement for

clock hours in a ademic year payment period(900 mi 'mum)

, 2.001262. )1( --- 249D

9 ©Q

Enter disbursement for payment period in line 3.4

I

4. EXpecteoll disbur'sement = line 3 x number of payment periods inaward pejod: Enter expected disbursement in Box 4, Section Ago4 of the . _ 4.

3 to

*0

Section C: *Payment of-Basic Grant Awards

r.

I. Eligibility for. Payment

A. Eligible Student

A student is eligible to receive a Basic Grant if he orshe:

1. Is accepted for enrollment or is enrolled in goodstanding as at least' a half-time undergraduatestudent at an eligible institution of higher educa-tion;

2. Is enroll in .an" eligible program as a regularstudent4a regular student is one who enrolls forthe purpose of obtaining a degree or certificate);'

3. Is maintaining satisfactory progress in his/hercourse of study;Is not in default on any National Direct StudentLoan made by that institution or oft any Guaran-teed Student Loan received for attendanceat thatinstitution;

5. Does not owe a refund on. a Basic Grant, a Sup-, pleniental Grant or a State Student IncentiveGrant received, for attendance at that institution;and

6. Is a U.S. citizen, national of permanent residentof the United States; a citizen of the NorthernMariana Islands, a permanent resident of; the`Trust Territory of the Pacific Islands, or is in thiscountry for other than a temporary purpose.dents who are in this country on Fl or F2 udentvisas' are, by definition, in this countrY f r a tem-porary purpose, and therefore are 'not eligible.The definitions of "other than a temporary' pupose" are given below:-

Non;citizens with permanent resident status inthe U.S. will hold either form 1-151 or form1-551, which are "Alien Registration ReceiptCards." These students

According to the Iminigrhtiontind Naturaliza-tion Service, (IRS) an alien who wishes to applyfor Permanent Resident Status must meet one Offour, requirements:1) He or she must.be married to a citizen,2) He or she must be married to a Lawful Permanent

Resident. '

3) He or she must be a close relative of a citizen orpermanent resident.

4) He or she must have a definite job,Offer

Approximately three monthsafter a non-immigrantapplies fot permanent resident status, an approvalnotice is sent from the Immigration and Naturalization

Service hig ether or not he or she has been fOundto meet one of the four requirements. Non-immigrantsare, considered to be in the U.S. for more than a tem-porary purpose and intending to become a permar\entresident only if they can furnish an approval noticestating that they meet one of the above four.conditions.

Either the 1-171 or the 1-464 is an apprnPriate ap-proval notice to apply for permanent residence. Be,cause of new INS procedures; the I-1,1 or/1,464 maynot be provided. In these cases, the applicant shouldhave INS erdorse his or her 1-94 (Arrival-DepartureForM), indicating "employment authorized" and "ad-justment applicant." This endorsement fulfills thesame requirement as an approval notice.

Refugees or immigrants who are admitted to theUnited States for humanitarian reasons are eligible forFederal student financial aid. In these cases, the appli-cant's 1-94 must be endorsed "Conditional entrantstatus" or `'indefinite parole." Southeast Asianrefugees who were admitted to the United States since'1975 are therefore eligible. In addition, applicantswho haveteen granted asylum and have been givenvoluntary departure for a period of one year are eligi-ble.

B. Valid Studenf Eligibility

A valid SER is a complete set of 3 copies on whichan eligibility index is calculated, based on data whichis correct. Therefore, if a student submits an SER tothe school which is based on erroneous information or.incorrect assumpticins, that SER is not a valid one.

A student may be paid retroactively for any portionof enrollment at an institution during theaward period if he or she submits an SER to that in-stitution no later than May 31 and is eligible for pay-ment at the time the SER is submitted.

Deadline Dates'

Any student whose first enrollment at an institutionduring an award period is on or after May 1 may sub-mit the SER no later than June 30 and receive paymentfor that enrollment. However, if the student wasenrolled at the institution any time before May 1 of theaward period, the May 31 deadline must be met.

Please note, however, that the student must subinitthe valid SER while he/she is still enrolled and eligiblefor payments. A student yvho withdraws during theyear is not entitled tei any payment unless a valid SERwas submitted to the financial aid office prior to with-drawal. .

Institutions can 'assist students in meeting this re-quirement in a number of ways.

The first is, of course, to encourage all potentiallyeligible students to apply for a Basic Grant. Many in-stitutions require all applicants for financial Aid to sub-

°

9 3-21

mit an SER prior to making any,awards for other kindsof aid. Also, regulations governing the three campus-based Federal programs require that the student'seligibility for a Basic Grant be taken into considerationin awarding aid under those programs, whether or notthe (student has applied for the.grant.

Another way schools can assist students is throughthe effective use of the monthly applicant roster. Theserosters are automatically generated by the applicationprocessing contractor and sent to all eligible post-se-condary schools.. Included on the rosters are the namesof all applicants who indicated that they were expect-ing to attend a particular school, the applicants' birth-dates, social security numbers, addresses and thestatus.of their most recent application records.

qnstitutional financial aid officers should carefullyreview these rosters to determine that SER's have beensub ted by those students who are eligible and are

rongly encouraged, to advise those students whoseapplications are incomplete that they must make thenecessary corrections or provide the information re--quired to calculate their eligibility index. While it is thestudent's responsibility to make sure a valid SER issubmitted to the institution, financial aid officers areencouraged to do all they-can t.) help students fulfillthis requirefnent.

A facsimile of the monthly applicant roster is in-cluded in Appendix.13-(2nd Appendix).

C. Enrollment in an Eligible Program onat Least a Half-Time Basis

A student is considered to be "enrolled" when (s)hehas completed all formal registration requirements.

An Eligible program is one -which:I. Admits as regular students only persons who -

i. Have a certificate of graduation from a se-condary school, or who

ii. Have the recognized equivalent of a highschool diploma such as a General Educatic,-Development (GED) Certificate, or

iii. Are :beyond the age of cornitlsory school at-tendance in the State in which the institution islocated, and may benefit from the: educationor training offered.

2. Leads to a bachelor, associate or undergradu-, ate professional degree,

3. Is acceptable for full credit toward a bachelordegree, or

'4. Is at least a 1-year program leading to a certifi-cate or degree, which prepares students forgainful employment and leads to a certificateor degree in a recognized ocupation.

At proprietary schools, six month programs are eligibleif they meet conditions 1 above, and if they:

3-22

s

I. Lead to a cre-gree or certificate,2. Prepare students'for gainful employment in a recog-

nized occupation, and are3. At least 16 semester or trimester hours, or 24 quarter

hours long. of 600 clock hours long.

II. Regular and AlternateDisbursement Systems'

There are two disbursement systems through whicha student can be paid a Basic Grant award: the Regu,;.lar Disbursement System (RDS) and the rAlternateDisbursement System (ADS).

The majority of students are paid their Basic Grantawards diiectly by the schools which participate rri theRDS. For those institutions, this Halidbook, serves asthe primary tool for understanding theNperation of theBasic Grant program. The Handbook ifs supplementedby perioeic letters sent to institutions throughout theyear, and by notices in the BSFA Bulletin.

If an eligible institution decides not to act as a. dis-bursing agent for the Basic Grant Program, it is usLallybecause the school has no financial aid office or such a.small enrollment that it cannot or does not wish to actas a disbursing agent. Eligible students enrolled inthose institutions receive their awards directly fromOE under the ADS. During the 1977-78 academic yearapproximately 13,500 students at 890 institutions werepaid their awards in this way. TO receive direct pay-ment,-the 'student, with the assistance of his or her in-stituti in, must submit a special form. This form, "Re-ques.: for Payment ofBEOG Awards" (OE Form 304),collects information on the student's enrollment statusand cost of attendance. Once this form is received, thestudent's 'award is calcUlated using the same processutilized by institutions participating in the RDS andpayment is made directly to the student. Under no cir-cumstances can payment of a student at an ADSschool be sent directly to the school.

Although the ADS provides an alter 'five for manymotive

schools which might otherwise be unab to pay Basic,-Grants to their students, there are disadva rages to thissystem. First of all, the ADS contains an extra step fo'rthe, student and payment rough this Vstem takeslonger than payment through t Regular Disburse:ment System.

Also, the fact that payment is sent direCtly to the stu-dent makes it difficult for the school to coordinate theBasic Grant with other sources of financial aid.

All ADS schools annually receive a special manualthal provides them with complete information on howthis system works. Any questforis regarding ADSshould be directly to the ADS unit in the Program

,Operations Division of the Bureau of Student Finan-cial Assistance.

I_II. . Methods of Payment

In order to facilitate the institutional role in the dis-bursement of Basic Grant awards to students, the in-stitution is free to use its own system for making.stu-dent assistance payments with the following provi-sions:

A) Those institutions which have academic termssuch as semesters, trimesters, quarters or other similardefinable breaks in then- academic year, must makeequal- payments at least once avhe beginning of eachterm. It should to noted that "equal payments" may berounded in order to avoid making awards of odd

'amounts. For instance, a student whose "Expected Dis-bursement" is $435 may receive payments of $218 and$217. Further, if an institution makes rpultiple disbur-sements during an academic 'term or payment period,the individual payments within the term do notnecessariI'y have to be in equal amounts. However, thetotal disbursements for each academic term or pay-ment period must be equally divided.

.

B) Institutions which do not use such academicterms must have not less than two payment-periods peraward period. ,c,

As noted,in,the "Highlights" section on p. 4-1, theterm "payment period" has been redefined:for clockhour schools. The new definition keys it to work done,not to time which has passed. Thus, the school- woulddeterminei,the number of ck hours the studs at canbe expected to compl during the academic year.The second payment period would not begin until thestudent finished the stipulated number of hours in thefirst payment period. Students who finish early gettheir second diibursement early; students who finishlate get their second disbursement late. A student maybe paid eithel by check or by crediting the accounthe/she has at the school. ..

-

For..each payment period, an institution may pay astudent at such times and in such installments as itdetermines will besmeet the student's needs.

Only. one payment is required if a. portion of 'anacademic year occurring within one award period isless than three months. , r,

Fiinds due a studen f9r any completed period maybe paid in one lump um.

The student's enr llment status will be-determinedaccording to work a ready completed.

IV.. Spacial Panent Circumstances

A. Transfer Students

Students who transfer to an eligible institution dur-ing ari 'award period will need to 'submit a 'duplicate

t

icER to the new school. Upon receipt of the SER, theinstitution will calculate the amount of the student'saward in the same manner as for any other Basic Grantrecipient. This award may have to be adjusted if theaid officer knows that by receiving the full amount, thestudent would exceed his or her entitlement.

It is important to note that it is not required for thesecond school to obtain any information or documen-tation from the first school with regard to any disburse-ments of funds made to transfer students. However,students must repay any amount they receive which ex-ceeds their entitlement for an award period.

B. Consortium Agreements

A student may not receive Basic Grant paymentsconcurrently from more than one institution. This istrue even if the student is part-time at each institution.The only situation in which a student can receive pay-ment for courses taken concurrently at more than oneinstitution is where the institutions have a written con-sortium agreement. A consortium agreement, can be ablanket agreement between two scho'ols, or it can bewritten for a specific case involving a specific stgdent.

Students would receive payment for the total num-ber of hours taken at the parent school and the consor-tium school(s). The total award must be disbursedthrough the institution from. which the student isreceiving a degree. .

The definition of an eligible program specifies thatsuch a program must be offered by an eligible institu-tion of postsecondary education.eThere are some in-stitutions of higher education and, on occasion, non-eligible institutions such as State agencies, which spon-sor educational programs to be offered by another in-stitution under contractual arrangenient.

Generally, for the Basic Grant Program, all schoolsinvolved in such an arrangement would have to beeligible. However, if no more than 25% of a- student'stotal course load is taken at an ineligible school, andthe major and substantive portion is taken at the eligi-ble institution, the student may still receive a Basic

.Grant.For example: If a student who is enrolled in an

eligible institution takes a course in art appreciation ata museum (an ineligible institution), he or she is con-sidered to take the major part of his course at the eligi-ble school and would therefore be eligible to receiveBasic Grant assistance. If on the other hand, studentsreceive most of their credits at the ineligible schoolthey would not be considered eligible to receive BasicGrant assistance.

36 3-23.

C. Visiting Students

In order to be eligible to receive a Basic-Grant, astudent must be enrolled in a program leading to adegree or certificate. Therefore, a student who is ac-tually enrolled in a degree-granting program at one in-stitution but is taking a semester at,,another institutioncannot be paid a Basic Grant award by the i:'istituticnwhich he/she is "visiting". Only the institution at whichthe student is enrolled toward a degree or certificatemay disburse the Basic Grant award.

If there is a consortium agreement between the in-stitutions, the degree granting institution may pay astudent taking a term at another eligible institution.

It should be noted, however that when the parent in-stitution calculates the student's cost of attendance, thetuition, fees, room and board costs at the consortiumschool would be used. The only exception to this oc-curs when the consortium -Ichool is a foreign institu-tion. Then the parent school uses itS own tuition, fees,room and board costs in calculating the cost of atten-dance.

D. Payment to Students Who HaveCompleted a Program

. If an institutiod experiences a delay in the receipt offunds, it is possible that some students may completetheir program and/or academic year prior to theirreceiving' final Basic Grant awards. All eligible stu-dents who have submitted valid Student EligibilityReports to the financial aid office prior to the comple-tion of their program must be paid, even if theacademic year ended prior to receipt of funds. Therewould be no violativ of regulations, inasmuch as thestudent met all the requirements for payment.

E. Four-Year Limitation on Basic GrantEligibility

The legislation for the Basic Grant Program statesthat students are generally limited to receiving fouryears of Basic Grant awards. However, students maybe eligible to apply for a fifth year of Basic Grant assis-tance if they meet either of the following two condi-tions: (a) the student's ptogram of study was designedby the institution to lead to a first undergraduatedegree and to be five year,s in length; or (b) the institu-tion required enrollment in a remedial course of studywhich meant the student was not able to complete theregular program in four academic years. If a studenthas not received a full year's Basic Grant award ineach of four academic years or meets either of theabove conditions, he or she is still eligible to apply forand receive Basic Grant assistance in the 1978-79academic year.

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If, as a result of taking remedial courses. the studentmust take from one to twelve credits in the fifth year,heor ;he has a term's worth of fifth-year eligibility. If thestnaent must take more than twelve credits, he or shehas two terms worth of eligibility.

Of course, the half-time rule still, applies. Thus, astudent with three credits to complete Oould have totake al least a three-credit elective in order to be eligi-ble to receive payment.

F. Refund and Repayment

If a student receives a sic Grant (either directly orby credit to the account)' and terminates his or hereducation, the Basic ctrant may be subject to the re-fund policy. When a Federal financial aid recipiem\ter-minates his or her education and is due a refund fipmthe institution, a portion of the refund must bereturned to the account of appropriate Federal financialaid programs. The purpose of -Basic Grants policyregarding refunds is to determine what portion of theinstitutional refund is to be restored to the Basic Grantaccount when a student withdraws from the school.

When the student has received an overpayment dueeither to institutional error or to errors irrinformationshown on the SER, the student must repay the entireamount of the overpayment. The, same procedures areused to collect all types of repayments. Procedures forcollecting repayments are discussed in Section H.

I1. Refund

All institutions ar, required to reduce to writingtheir policy regardirig refunds to 'students who with-draw or fail to pursue their course of study. When theinstitution determines that the student is due a refund,the amount of that refund Which is to be restored to theBasic Grant account must be computed.

Since every institution's refund policy is different andsince the result of any refund formula may dependupon the institution's financial aid disbursement pro-cedures and the composition of the student's financialaid package, there has been some controversy regardingthe development of a concise formula for attribution ofrefunds to various aid sources which can be appliedconsistently to all students. Regulations regarding re-funds are currently being.developed which will takeinto account the relationship among the various ele-ments in the student's financial aid package and willensure that students whose total institutional chargesare met through financial aid,are not given cash refunds.(See FEDERAL REGISTER, August 10, 1978)

However, in the interim, the Basic Grant policy isthat if a Basic Grant recipient is due a refund, a por-tion of that refund must be restored to the Basic Grantaccount. That portion should be in the same ratio tothe total amount of the refund as the disbursed BasicGrant is to the cost of education for the remainder of

the payment period. The amount to be restored to thePasic Grant account can be obtained by using thefollowing formula:

Student refund x Disbursed BEOG = Refundto BEOG account Cost of Atten- t o

dance BEOGAc-count

For example: A student with a zero index enrollsfull-time at a school wheje the tuition and fees are$1,300 per year (5650 per semester). The studentlives at home, so the standard room, board, book, sup-ply and miscellaneous ' :xpense allowances of $1,500per year ($750 pet semester) would be used to arrive ata cost of attendance of $2,800 per year ($1,400 persemester). He is thereforq entitled to a Basic Grantaward of $706 per semeset.

beAt the beginning of th irst semester, $650 is cred-ited to his account at the school, and he receives acheck for a balance of $56. Shortly afterward, he with-draws and is entitled to a 40% refund of his $650 tui-tion, or $206.

Using these figures in the formula above, the amountto be restored to the Basic Grant account would becomputed as follows:x 1400

260 x 706 = 131.11

Bear in mind that the student has signed an affidavitstating that all Basic Grant funds will be used fc:reducation?1 expenses. so no additional cash paymentsshould be made to student who withdraws.

2. Repayment

Because Basic Grant funds must be used solely foreducational purposes, if the student receives a cashdisbursement and then withdraws from school after therefund period he or she may have to repay some of thecash disbursement. The school must determine whatportion of the Basic Grant disbursement can be at-tributed to the student's cost of attendance and returnthe rest to the Basic Grant account.

If student has received financial aid from severalFederal 'sources, the amounts to be returned to eachaccount should be proportionately equal. (SeeFEDERAL REGISTER, August 10, 1978)

G. Responsibility of the Institution inMakirig Payments of Basic Grant Awards

. r1. Packaging of Basic Grants with Other.

Financial Aid Resources

The amount of a student's Basic Grant may never beadjusted to take other financial aid into account. Weare aware that there are some circumstances in which

4 Li

students may receive Basic Grants in addition toscholarships or grants over which the financial aidoffice has no control. Although the student may beoverawarded in this situation, the entitlement conceptbehind the Basic Grant program prohibits adjustingthe Basic Grant award.

Where the financial aid is administered and con-trolled by the school, it is the financial aid officer'sresponsibility to make any necessary adjustments inthe other aid awarded to the student to avoid over-awarding.

In making these adjustments there are a number ofpoints to be considered.

Generally. the only time when such adjustments inother financial aid awards are necessary is when thetotal financial aid resources exceed the students totalneed as computed by the school.

If the student's aid package includes a loan, and thepackage must be adjusted to avoid an overaward, hisor her Basic Grant may not be used to pay back theloan since the use of Basi'.. Grant funds for that pur-pos does not constitute an educational expense.Therefore, even if a student is willing to authorize theapplication of his or her Basic Grant to repay the loan,it is not permissible. Rather, the amount of the loan it-self should be reduced.

Further information on overawarding can be foundin Chapter 4 of this Handbook.

2. Overpayment of a Basic Grant Award

' An overpayment is any amount paid to a. studentwhich is in excess of what that student is entitled toreceive. A payment of a Basic Grant award to an in-eligible student is one type of overpayment. Anothertype of overpayment is a Basic Grant award which istaken incorrectly from the Payment Schedule.

Unless the institution has direct knowledge to thecontrary, it is entitled to rely on information providedby the student in making a finding on studenteligibility. If the institution does have knowledge thatthe student has submitted incorrect information tothem and may have received an overpayment, it shouldfollow the validation procedures outlined in Section Cof this Chapter.

While it is expected that the institution will make ev-ery reasonable effort assist the. Commissioner inrecovering any overpayment which may occur, the in-stitution will assume no responsibility for any non -recovered funds unless the overpayment was made in amanner cona..1.ictory to the regulations and. other in-structions issued by the Commissioner.

H. Collection of Overpayments

The procedures for the collection of overpaymentsare designed to complement the validation pro-

3-25

cedures. Any case involving the overpayment of BasicGrant funds, with the exception of cases in which over-payments were made as a result of institutional error,will be handled under this collection effort.

Under current regulations, institutions may but arenot required to recover overpayments of Basic Grantawards. The regulations state that an institution is notliable for any overpayments which are not recovered,unless the overpayments were made as a result of in-stitutional error. For purposes of this collection effort,if the institution has established that an overpaymenthas been made, it is strongly encouraged to contact thestudent and request repayment. If an institution (-1n

,collect, it is urged to do so. It is suggested that areasonable payment plan, be established with the stu-dent, or, if appropriate, award adjustments be madefor awards that are within the award period. If, as aresult of institutional effort, the overpayment isrestored, no further action is necessary other thanreporting this as a recovery on the Progress Report.

However, in cases where the institution hasestablished a repayment plan and the student does notmake payments or discontinues payments before theamount due is paid in full, the case must be referred tothe. Office of Education for follow-up and resolution.If the institution,- after establishing that an overpay-ment has been made, is unable to contact the studentor the student is uncooperative, the institution mustreport the case to the Office of Education for follow-upand resolution. Upon referral of the case the institutionis no longer liable for the overpayment.

In reporting these cases to the Office of Education,the institution should provide the following informa-tion:

I. Applicant- InformationNameAddressSocial Security NumberTelephone Number

2. Parent/Spouse InformationNameAddresiSocial Security NumberTelephone Number

3. Student's Expected Disbursement Based onValid*SERAmount DisbursedAny Repayments to dateAmount Still Owed

4. Student Eligibility IndexStudent Educational CostInstitutional ContactInstitutional Telephone Number

All cases requiring recovery of overpayments shouldbe reported to the following address:

Basic Grant ProgramU.S. Office of EducationP.O. Box 34927Washington, D.C. 20034

3-26

In all cases where overpayments other than thosedue to institutional error have been established, the in-situation must withhold payment until the student's fi-nancial obligations ha4 been met as described below.

Upon receipt of the above requested information,the following actions will be taken by the Office ofEducation:

1. All reports will be screened to determine if suffi-cient information has been provided to initiate collec-tion activity by this office. In certain cases this may in-volve a follow-up phone call to the financial aid office.

2. Once sufficient information has been obtained, aletter indicating that recovery activities have been initi-ated 1.'y the Office of Education will be sent to the in-stitution.

3. Simultaneously, a letter requesting repayment ofall Basic Grant funds to which he/she was not entitledwill be sent to the student.

4. Upon final resolution of the case, a letter indicat-ing final resolution and, where appropriate, releasingpayment for the remaining payment period(s) will besent to the institution.

A sample letter identifying an overpayment recoverycase follows:

Basic Grant ProgramU.S. Office of EducationP.O. Box 34927Washington, D.C. 20034

Dear Sirs:

,In accordance with your recent Dear Colleague let-

ter, which described procpdures for the recovery ofoverpayments, we are submitting relevant informationabout the following student for follow-up by the Officeof Education. We have attempted to contact him/herconcerning repayment of Basic Grant money for whichhe/she was ineligible, but have received no (further)payments.

I. Student: Ms. Robin Robinson123 -B College StreetUniversity City, U.S. 00101SSN 987-65-4321Telephone: (999) 000-9999

2. Parents: Mr. and Mrs. Robert Robinson245 Miscellaneous AvenueBig Apple, U.S. 00110SSN 001-00-0100Telephone: (888) 111-7777

3. Student Expected Disbursement Based on ValidSER - $1,029Amount Disbursed - $765Total of Repayments to Date - $0Amount Still Owed - $765

4. Student Eligibility Index - 45Student Educational Cost - $2,875Institutional Contact - John Jones,

Financial Aid OfficerInstitutional Telephone Numttgr (555) 222-2222

If you have any question about this case or requirefurther information, I will be of assistance.Sincerely,

Section D: ValidationThe effectiveness of the Federal student financial

aid programs depends, in large part, on the accuracy ofdata reported by applicants.

For the past three academic years, OE has beencentrally validating a small sample of BEOG appliea-tiofis. A number of studies were conducted using thedata collected from this effort. A Corrections AnalysisStudy was also performed to determine the extent towhich corrections impact on the students' eligibilityand the characteristics of the applicants who submitcorrections. Based on the results of these studies, itwas determined that the validation procedures neededto be changed.

Therefore, for the 1978-79 academic year thevalidation effort will be conducted on the institutionallevel. Approicimately 200,000. students. (less than 10%of a projected 2.7 million 1978-79 eligible applicants)will be selected for verification of the informationreported on their BEOG applications.

Procedures for the validation activity were an-nounced in the Validatid'n Procedures Handbookdated March 15, 1978. Since that time we havereceived comments on these procedures from the fi-nancial aid community and have significantlymodified the procedures. The following changesshould be recorded in the Validation ProceduresHandbook.

A. No Validation of Non-Taxable Income orVeteran's Benefits

The first revision is that students will not be requiredto supply documents to verify non = taxable income andveteran's benefits as part of the OE validation pro-cedures. The validation of these items will be optional.Institutions are, of course, encouraged to request thesedocuments when appropriate, and may, as with all op-tional data eleinents, withhold payment until thevalidation is completed. However, this procedure mustbe applied consistently that is, if an institutionchooses to validate any optional data item on an SER,and withhold payment from the student, payment mustbe,withheld from all students for whom they choose tovalidate optional data items. Of course, any time theinstitution has discovered a discrepancy betwedn theSER and other financial aid documents, the institution

must withhold payment until the discrepancy isresolved.

The validation form as printed in the Handbook willbe revised to delete these data elements and will bedistributed as soon as printed. This form does not haveto be used if similar documentation is available whichverifies the information on the SER on which paymentwas disbursed. All documents must be maintained inthe student's file for audit and program review pur-poses. The required and optional data elements arelisted below:

Required Data Eleme'ift

Adjusted Gross Income

Federal Income Taxes Paid

Household SizeNo. in Post-HighDependency Status

Optional Data Element

Non-taxable Income

Verteran's Benefits

MedicailDental ExpensesCasualty/Theft Losses

Applicant's/Parent'sSavings

Document to Verify

Federal Income Tax ReturnForm 1040 or 1040A orPuerto Rican Tax Form

Federal Income Tax ReturnForm 1040 or 1040A-orPuerto Rican Tax Return

Validation Form or othersimilar document

Document to Verify

Statements from the administer-ing agency

Statement from Veteran's Ad-ministration or VA Cycle Report,

Federal Income Tax ReturnForm 1040 or 1040A orPuerto Rican Tax Return

Bank Statements

2. Optional Institutional Award Calculations.

The second revision ,involves the tolerance levels,and is outlined in detail below.

A. Discrepancy of $50 or less:If.there is a discrepancy of $50 or less between the

documentation and the SER, the institution will dis-burse payment-based on that Eligibility Index and thestudent will not be required to correct the SER.

B. Discrepancy of more than $50 and award-willnot differ by more than $1Q0:

If there is a discrepancy of more than $50 betweenthe documentation and the SER, the student must cor-rect, the SER. However, the institution may at its op-tion, perform the following steps and disburse paymentto the student.. recalculate preliminary Eligibility Index based on

the verified information,. determine award amounts from payment schedule

based on Eligibility Index.

3-27 .

If award amounts differ by $100 or less, and the stu-dent is otherwise eligible:

disburse first payment based on preliminaryEligibility Index.

. instruct student (and parent) to correct SER to Nall-dated amounts, Toward to Basic Grant processor inIowa City, receive reprocessed SER, and submit tofinancial aid officer.

. receive reprocessed SER and recalculate award.adjust second award, if necessary.If the student does not present a reprocessed SER

within the academic year or 90 days thereafter, the in-stitution will not be liable if (1) the second paymentwas not disbursed, and (2) the preliminary EligibilityIndex was calculated correctly. (If the Eligibility Indexwas calcualted incorrectly but the correct calculation iswithin $100 of the old award amount, no institutionalliability will be assessed.) The student who does notpresent a reprocessed SER within the academic year or90 days thereafter, will be liable, to the Government fo'rthe full amount disbursed. In this case, if the institutionerred in its calculation then the institution will be liablefor only the amount of the disbursement which wasover - awarded to the student because the eligibility in-dex was miscalculated. The student will then be heldliable for the difference. If the student who receivedpayment based on a preliminary Eligibility Indexdrops out of school] he/she must present the processedSER no later than 90 days after the end of that term, orrepay the entire amount he/she received.

C. Discrepancy of more than $50 and award willdiffer by more than $100 -

If the award amounts differ by more than $100, nopayment may be disbursed until the applicant presentsa processed SER (which agrees with the validatedamounts).

tInstitutions may do a prelim inary Eligibility Index

recalculation to determine whether they may disbursepayment to students who fall into Category B.However, in order to ensure consistency of treatment,if an institution chooses to exercise this option theymust exercise it for all students being validated.

If the institution does not choose to exercise the$100 award tolerance and there is a discrepancygreater than $50, the applicant must present a pro-cesGed SER (which agrees with the validated amounts)before any payment for 1978-79 may be disbursed.

3. Certification of Independent Status

We are all concerned about the potential for stu-dents misreporting their dependency status on theirBasic Grant applications. Obvioqly, we would like therequest for parental certification\ to be as strong aspossible to foster heightened awarenbss by applicantsof the need to accurately report their status and to cor-rect cases of misreporting. Of course, any time that anindependent applicant requests information regarding

3-28

parental certification, or is not able to obtain a paren-tal signature, you should notify the applicant that theaward cannot be withheld if all other validation re-quirements have been met.

Section E: InstitutionalReporting and FiscalOperations

I. Overview

(1-1I rfolowing table represents the major steps in thetotal 'System for allodating Basic Grant funds to par-ticipating institutions, monitoring their disbursementsto students, and providing reporting information forthe program. The first two steps will generally occuronly once for each institution, while the steps thatfollow will occur during each year of the program,

Steps

1. Establish Eligibility2. Sign and return terms of Agreement3. Receive Initial Authorization4! Request funds from DFAFS5. Submit October Progress Report6. Receive revised Authorization Ceil-

ing7. Request funds from DFAFS8, Submit February Progress Report9. Receive revised Authorization Ceil-

ing10. Request funds from DFAFS11, Submit June Progress Report12. Receive Final Authorizationk5. Receive Student Validation Roster141 Submit Validated Student Roster

II. Funding Process

A. Eligibility

Flow °frig/One time onlyOne time onlyAnnually.Monthly, or as NeededAnnually

AnnuallyMonthly or as NeededAnnually

AnnuallyMonthly or as NeededAnnuallyAnnuallyAnnuallyAnnually

Eligibility for the Basic Grant Program is based onlegislatively prescribed criteria. The determination ofthe eligibility of individual institutions for Basic grantsis established through the Division of Eligibility andAgency Evaluation (DEAE) in the Bureau of Higher

`and Continuing Education, U.S. Office of Education.If an institution becomes eligible during an awardperiod, an eligible student enrolled and attending thatinstitution will be eligible to receive a Basic Grant forthe payment Period during which the institution be-came eligible and for any subsequent payment period.

If an institution loses its eligibility fo any reasonwhile in the program, eligibility must be reestablished

'13

through that Division.If an institution becomes ineligible during an award

acteperiod, an eligible s nt who is enrolled and attend-ing that institutio will be paid a Basic Grant for onlythe payment peridd in which the institution became in-ligible. In addition, an eligible student, who hasreceived a Basic Grant or to whom a commitment hasbeen made before the effective date of termination ofthe 1 Istitution!s eligibility, will be paid a Basic Grantfor the payment period in which the institution becameineligible. ,

.

A commitment of a Basic Grant to a student is madewhen a student, who is enrolled in and attending an in-stitution, submits a valid Student Eligibility Report tothe institution, or to the Commissioner if the institutionparticipates in the program under the Alternate Dis-bursement System. ,

B. Terms of Agreement

The Terms of Agreement between the institution andthe Office of Education establishes the institution'sparticipation in the Basic Grant Program. Once theAgreement has been signed and a copy returned toBasic Grants, an authorization ceiling will beestablished and that institution will be authorized todisburse funds to its Basic Grant recipients. The in-stitution is required to operate under the conditions ofthe Terms of Agreement as established and signed. Ifany change in the terms is necessary, the previousagreement is void and a new Agreement, with concur-rence of all relevant branches or institutions, must besigned.

When the institution changes 'ownership, the pre-vious terms of agreement is void and the institution'seligibility must .be reconfirmed by the Division ofEligibility and Agency Evaluation (DEAE) and nofurther Basic Grant Awards may be made by the in-stitution until:

1. The institution's eligibility has been reconfirmed byDEAE, based upon a statement from the new ownerassuming responsibility for all Basic Grant funds previously awarded to the institution.

2. A.Terms of Agreement has been signed by thenew owner.3. An audit of the institution's Basic Grant accountshas been performed.After all of these steps have been taken and the

results have been approved the new owner will receivewritten authorization to make Basic Grant awards.

C. Authorization Ceiling

-- At the beginning of each award period, each institu-tion that has a valid signed Agreement on file with theOffice of Education will receive an initial authorization

ceiling against which that institution can draw fundsfor the award period. The initial ceiling level will be anestimate of the funds required to make payments tostudents for the first scheduled student payment and isautomatically generated by Basic Grants by means of aformula. The authorization ceiling will be revised bymeans of the Progress Report, which iE scheduled to besubmitted to the Office of Education by the institutionthree times during the award period. The ProgressReport will make possible the required adjustments inthe institution's ceiling by reporting information con-cerning actual expenditures to date and estimated ex-penditures for the remainder of the year. It is impor;cant to note that participating institutions will receiveall of the funds necessary to make awards to the eligi-ble students enrolled in their school who have submit-ted valid Student Eligibility Reports.

D. NIH/DFAFS Payment Procedures

1. Overview

The payment of funds to individual institutions willbe accomplished by. means of the DepartmentalFederal Assistance Financing System (DFAFS) of theNational Institutes of Health (NIH). Procedures andrequirenients of the DFAFS will be provided to. institu-tions by NIH.

The first step in receiving funds is the institutionalreceipt of an official Authorization Letter from theOffice of Education. This letter will provide anauthorization- ceiling for purposes of the Basic Educa-tional Opportunity Grant Program. A copy of the trans-action' will be sent to the Office of Financial Manage:,ment, DFAFS, to serve as the final ceiling againstwhich the institution will be able' to draw funds.DFAFS will utilize one of two methods for providingBasic Grant funds to an institution: the.Lettefof Creditor Cash Request System.

2. Letter of Credit System

The Letter of Credit method allows the i, stitution todraw funds, up to the ceiling amount, from the FederalReserve System through a local commercial or FederalReserve Bank. This procedure is established through aspecial arrangement with DFAFS.

3. Cash Request System

The Cash Request System, which is the procedurenormally used, permits the institution to draw funds,up to thetceiling amount; on a monthly basis. Institu-tions using this procedure submit a Grantee's MonthlyCash Request form ttcr DFAFS for funds to cover esti-mated cash expenditures. Upon receipt of this form,DFAFS will schedule a _pa_yment4U.S.TreasuryCheck) to reach the institution during the first week of

4 4, 3-29

the month for which cash is requested. Each calendarquarter, the institution submits a Grantee Quarterly

port of Expenditures and a Cash ReconciliationStatement to DFAFS indicating total funds expendedduring the quarter and the cash balance on hand.

affective Operation of DFAFS

In order for DFAFS to effectively meet institutionalrequests for funds, several points should be made:

a. Funds may be requested only after the institutionhas received an Official Authorization Letter, andthen only to meet current disbursements.b. Institutions must request funds ,heeded for pay-ments to students; DFAFS will not make advances offunds automatically.c., Monthly requests for cash will be for the sumtotal of cash deeded for the month for all grants andprograms that are administered under the DFAFS,and not only for the Basic Grant Program.d. The amount of each cash request must not ex-ceed the net. amount of the combined grantauthorization remaining after deduction of all pre-vious monthly checks received by the institution.If these procedures are not followed, the institu-

tion's request for funds will be significantly delayed.Any questions regarding payment of funds throughDFAFS should be directed to:

Federal Assistance Financ; 1 Branch5600 Fisher Lanec/o Rockikall Bldg.Room 833Rockville, Maryland 20857

Tel: (301) 443-1200

NOTE: Additional copies of the Monthly Cash Re-quest forth should be requested directly fromDFAFS

Ill. Reporting Process

A.1 Progress Report

The Progress Report is the mechanism throughwhich the initial Basic Grant Ceiling authorizationmay be adjusted during the year. It will allow for ad-justments that would reflect the actual as well as ex-pected demand for funds at a particular institution.The Progress Report is scheduled `to be subinitted

'three times during:the year, reflecting activity as of Oc-tober 3l, February 28, and e.lune 30. The Reports arscheduled to be submitted within l'days after the end,of each reporting period.

There may be times when an institution will,need toadjust its authOrization amount between scheduledreporting dates. This would occur when the institution

3-30

does not have s fficient monies to meet the demandsfor Basic Gr funds and cannot wait until the nextscheduled sporting date for an authorization adjust-ment. In these situations, the institution may submit anAd Hoc Progress ,Report. Before submitting an AdHoc Report, there are several things which should bekept in mind.

First, if it is within 30 days of the next scheduledreporting date, the regular Progress Report shouldsimply be submitted early. If it is more than 30, daysbefore the next reporting date, the institution shouldbe sure to indicate that it is an Ad Hoc Report. Se-condly, unless an Ad Hoc Report is submitted prior toOctober 31, it should reflect actual expenditures todate and estimated demand to October 31. Finally, insubmitting an Ad Hoc Report, the institution mustcomply with all of the procedures outlined below forsubmission of Progress Report.

Each Progress Report should reflect the best esti-mate of additional funds needed for current and addi-tional recipients for the remainder of the academicyear, as well as actual expenditures to date for currentrecipients. An' over-estimate could be found to be anunreasonable ,request based on information availableto Basic Grants. Unreasonable requests will signifi-cantly delay. authorizing ceiling adjustments. Witheach Progress Report, the Student Eligibility Reports(SER's) received to that date must be submitted.Reporting errors will cause the entire Progress Reportto be in error or generate an assumption on the part ofthe. Office of Education based on information availa-ble to the Basic Grant Program. Either condition willsignificantly delay the institution's request for an ad-justment in the authorization ceiling.

- While there are comprehensive instructions accom-panying the Progress Report forms, there are severalitems which may require special attention. We haVeexplained each of these special items below. We alsohave'indicated those items which are considered errorcondition items, assumption condition items orunreasonable condition items. An error condition itemis one which must be correct, or the Report cannot beprocessed. Reports with an error in these items will beput on an error file, and the institution will be con-tacted to correct the item. Processing will be delayeduntil the error is corrected. An assumption conditionitem is one about which an assumption will be made inprocessing. For example, if an error in addition orsubtraction is made, the correct sum will be assumed,rather than the incorrect amount entered on theReport. This type of error results in a slight delay inprocessing the Progress Report. An unreasonable con-dition is one where entries which are not within certain,limits cannot be accepted. Processing will not continueuntil discrepancies in amounts reported in unreason-able condition items are resolved.

Many of the assumption condition items are ones forwhich information is already available in our data

.1L;

bank. Therefore, we are preprinting some of the itemson the Progress Report before the forms are mailed tothe schools. Some of the items which may be pre-printed include the BEOG ID Number, the EIN num-ber, the institution's name and address, all informat(onin Section II (this will not be preprinted on the firstProgress Report for each academic year), the currentOE authorization and the number of SER's submittedto date. If any of the pre-printed information is incor-rect, the institution should simply make correctionswhen the next Report is submitted by drawing a linethrough the incorrect information and writing the cor-rect information above it.

Section IItems I and 2, BEOG ID No. and EIN No., are

preprinted and should be changed only if the institu-.tion.believes them to be incorrect. Correct by pencilinga lirie through the incorrect item and inserting the newnumber near it (error condition. item).

Item 3: REPORT FOR: Check only one bctx (er-ror condition item).

Item 4: INSTITUTION NAME AND AD-DRESS: Institutions should be sure to check the boxand insertthe correct name and address if it differsfrom the pre-printed name and address. (An institutionwhich has moved or changed its name must reconfirmits eligibility through DEAE).

Items 5, 6, and 7: OFFICIAL RESPONSIBLEFOR THIS PROGRESS REPORT: If these itemsare illegible, the Report will be returned.

Item 10: SIGNATURE: If the report is notsigned, it will not be processed.

Section 11

The institution should check and correct the infor-mation in this section, if necessary, by penciling a linethrough the incorrect information and inserting -..thecorrect information near it.

Section IIIItem 19: GROSS El=".PENDITURES: Enter the

cumulative amount of Basic Grant Funds paid out orcredited to stUdent.accounts for the current acaderrticyear. If the initial authorization is not Sufficient to paystudents who have already submitted SER's, the in-stitution should. contact the Disbursement unit of theFunding and Disbursement Branch of the Branch ofthe. Basic Grant Office of Washington (error conditionitem).

NOTE: Enter dollars only. DO NOT show cents.

Item 20: LESS RECOVERIES: Enter, the totalamount of funds recovered from Basic Grant reci-pients to the date of the Report. Such recoveries wouldinclude funds restored to the Basic Grant account atthe institution for (1) student withdrawals or termina-tions which result in creditLto_thei3asic_Grant_accountor (2) overpay ents restored by the institution (error

condition item).NOTE: Enter dollars only.. DO NOT show cents.

Item 22: AMOUNT FOR 'PRESENT RECI-PIENTS: Enter total funds necessary, less thosealready expended, to make additional payments tostudent recipients currently enrolled and receiving .

Basic Grant funds at the institution for remainder ofthe academic year (Unreasonable condition item).

Item 23: AMOUNT FOR ADDITIONAL RECI-PIENTS: This estimate should reflect as accuratelyas possible the number of additional students, not ac-counted for in item 19, expected to qualify for Basic-Grant assistance for the academic year, and theamount of funds necessary to cover these students. Itshould be kept in mind in making this estimate th y izmany cases these students may not be enrolled for afull academic year (unreasonable conditon item).NOTE: Enter dollars only. DO NOT show cents.

Item 24: TOTAL ESTIMATED EXPEN-DITURES: Enter the total of 21A + 22A + 23AA(assumption condition item.) Enter,' total, recipients.This will be one of the key items in determining the in-stitution's need for additional Basic Grant Funds.NOTE: Enter dollars only. DO NOT show cents.

Item 25: CURRENT OE APPROVEDAUTHORIZATION If the preprinted informationdiffers from the institution's information, place a pen-ciled line through the incorrect figure and put the cor-rect information just to the left of the item.NOTE: Enter dollars only . DO NOT show cents.

Item 26: AUTHORIZATION ADJUST-1MENT: Subtract information on line 25 from line 24and enter the result. Circle + or - to indicate whetherthis amount is an increase or decrease in the currentauthorization amount..

Item 27: dNUMBER OF STUDENTELIGIBILITY REPORTS PREVIOUSLY SCBMIT-TED: Enter the total number SER'ssubmitted priorto this Report.

Item 28; NUMBER OF STUDENTELIGIBILITY REPORTS SUBMITTED WITHTHIS REPORT: Enter the number of SER's submit-ted with this Report.

Item 29: TOTAL NUMBER OF STUDENT.ELIGIBILITY REPORTS SUBMITTED: Enter theTotal number of SER's submitted (previous plus cur :.rent). This number cannot be less than indicated forGross Recipients. This number may exceed the num-ber reported for Gross Recipients if corrected SER'shave been brought in by students. (error conditionitem.)For further information, see the copy of the ProgressReport and instructions in Appendix B-III.NOTE: AT THE BEGINNING OF EACH FISCALYEAR, ALL INSTITUTIONS WILL RECEIVEONE COPY OF THE PROGRESS REPORT (OEForm 255-3). AN ADDITIONAL COPY OF THEPROGRESS REPORT WILL BE INCLUDED WITH

3-31

EACH SUBSEQUENT ADJUSTED A UTHORIZA-.TION.

IV. Student Validation Roster

In addition to the Progress Reports, the Office ofEducation will prepare a Student Validation Fosterbased on the SER's received from the institutions. Thisdocument will be genel-ated after the end of each fiscalyear and mailed to each °institution that made BasicGrant awards during thatfdcal year. Institutions areexpected to verify each student recipient's status andthe actual amount paid to the student, and to retuxtthe roster to the Office of Education. This informatiorT,when compared with Progress Report data and ac-tual institutional accountinvlata, will serve to recon-cile each school's Basic Grant account at the end of theyear. Both the June 30 Progress Report (BEOG finalreport of expenditures), which is reconcilable with theStudent Validation Roster, and the Final Report ofExpenditures to NIH/DFAFS must include the samedollar amount expended for Basic Grants. The RosterAi) serves-to monitor the status of individual studentaward recipients, including the amount of individualstudent award recipients, and the amount of the"eligibility" that has been used.

The following instructions should assist the, institu-tion in completing the Validation Roster. A sampleValidation Roster can be found in Appendix B-II.

Section 1In Section I, one or three lines have been printed for

each BEOG award recipient. For purposes of iden-tification, the student name, s'oci2 I security number,date of birth, and-transaction number as indicated onthe Student Eligibility Report (SER) have been pro-vided. The Roster is prepared ascending studentname order for convenience of file rdference. Prior tocompleting Section I, the Roster ReconciliationWorksheet (Section III) should be reviewed so that allrequired totals can be accumulated in conjunction withentering the Section I data. A sample worksheet to ac-cumulate theie figures is shown in the instruction forSection III.

Single Line Entry

The primary purpose of a single line entry on hisreport is to obtain the total disbursement of the BEOGfunds to each student. To accomplish this, space isprovided on the right side of each line for entry of oneof the three types of validation information. Thevalidation is accomplished by the following:

"I) Determine whether the student was enrolled atyour institution (i.e., a SER was submitted to USOEby your inititution for this student). If you have Narecord of the student enrolling at your institution,

3-32

enter "NR" under "Status". Enter the "ExpectedDisbursement" shown in (A) on your PreliminaryReconciliation Worksheet. No further action is re-quired.2) 15,you.kl......,ibmitted a SER to USOE for the student,compare the 'Expected Disbursement" printed onthe Roster to the amount of BEOG funds disbursed.

a) If these two figures are equal, enter a checkmark in the small box under the heading "TotalDisbursement".b) If these two figures are not equal, enter theamount of BEOG funds disbursed in the largerbox under the "Total Disbursement". Enter theExpected Disbursement, shown in (c) and theTOtai Disbursement entered on your PreliminaryReconciliation Worksheet in (d).c) If the student withdrew prior to payment of anyBEOG funds or refunded all BEOG fundsreceived, enter 'zero in the larger box under theheading "Total Disbursement".

3) Determine if deletions are required for any in-dividual students who appear more than once on theRoster.

a) If the social security number, name transactionnumber, scheduled BEOG award and institutionattended are identical, enter "Delete" beside, theentry (ies) you wish to have removed from yourRoster. Enter the "Expected Disbursement"shown in (B) on the Preliminary ReconciliationWorksheet. Do not use the "Delete" designationfor students who you have No Record since thesestudenti require special processing by USOE andmust not be deleted.b) If funds were paid to. .the student under morethan one SER Transaction number or EligibilityIndex, validate each entry on the Rosterdaccord-

. ing to the instructions in (2) above. The sum of theTotal Disbursement amount for all entries for onestudent should not exceed the highest EhectedDisbuisement. Include the number oesuch multi-ple entries in the non-duplicate extra record count(F) on the Preliminary Reconciliation Worksheet.

Please exercise one of the options described aboveto confirm the validation status of each student listedon the Roster.

For each award recipient, we have also provided- someOf the key data fields from the SER. If, in the pro-cess of reviewing that section of t1A report, you shoulddiscover an error in one or more these fields, pleasemake corrections by crossing out the field in error andentering the correct information above the erroneousdata. This is parti'cularly important for students whoseExpected' Disbursement was recalculated -after sub-mission of the SER due to a change in the factorsaffecting this field. This will assist us in maintainingand reporting accurate intbrmation regarding BEOG

award recipients.

7

Three Line Entry .

A three line entry on theValidation Roster for an in-dividual student designatesqhose BEOG award reci-pients for whom discrepancies were detected in thedata supplied on the Student Eligibility Report (SER).Because of these inconsistencies, we have made cer-tain'assuMptions about the data elements found to bein error. These assumptions have been made in aneffort to facilitate the correction process.

We realize that-some of the assumptions may be dueto processing errors as well as errors made in thereporting of data on the SER's. In addition, theassumptions may lead to further erroneous conditions.,For this reason, we would appreciate a careful reviewof each assumption made and submission of correc-tions when necessary.

The first function to be performed is to validate thetotal disbursement of BEOG funds to each student.Please follow the validation instructions providedabove for the single line entry. When completing theTotal Disbursement field, use the Expected Disburse-ment shown on the second line to determine the ap -'propriate entry. Please be certain to take one of the acztions described for each student listed on the Report.

Careful review of each of the assumptions made on. the data reported to USOE on the Student Eligibility

Report is important. 7/Section II

Check the appropriate box if you doldo not have anyadditional SER's to submit with the ValidatitmRoster.If you do, enter the number of SER's you are submit-ting and the sum of the Total Disburseinent from these,SER's in the space provided in (E) on your PreliminaryReconcilatiOn Worksheet. After_sampleting SectionIII, and IV if needed, according to the instructionsbelow, sign the Validation Roster, enter your title, andmail to OE. If the Validation Roster is unsigned, it willbe returned to the institution.

-Section 111The Roster Reconciliation Worksheet has been

designed to assist you in recOnciling disbursements toindividual students, as reported in Section I, to thesummary expeediture and recipient count datareported on your latest Progress Report.

As Section I is completed, the figures indicated onthe Preliminary Reconciliation Worksheet should beaccumulated: These totals should then be posted to

'Section III as follows:1. Add dollar total for (A), (B), (C), and enter sumin III-A line 2.2. Enter (D) in III-A Line 4.3. Enter (E) in III-A Line 5.4. Enter student count in (A) in III-B Line -2A.5. Enter student count in (B) III-B, Line 2B.6. Enter student count in (E) in III-B, Line 5s7. Enter (F) in III-B, Line 7.Important: If (D) includes a disbursement to any,

student in excess of the Expected Disbursement as

show4-or as corrected, on the ROster, attach a, letterexplaining how' the overpayment(s) occurred anddeperibing any steps being taken to recover the excessawards.

After posting the figures above, follow the instrus- r,,tions on the Roster Reconciliation Worksheet. Tofacilitate completion of this Section, the ciculationsfor the Total Expected Disbursement and the numberof students shown on the Roster are computer-printedfor -your convenience.

The results of Section III will determine if you needto file a revised June 30 Progress Report to reconcileyour account.' Should you need assistance in complet-ing the Preliminary Reconciliation worksheet or Sec-tion III, contact your area representative. Yourcooperation in this important part of the fiscal controlrequirements of the Basic Grant Program will expeditecompletion of the 'processing cycle for this academicyear for your institution and perinit prompt prepara-tion of your final Authorization Letter and Roster.Preliminary Recdnciliation Worksheet

(A) (B) (C)

Expected Disburse-ment Shown. onRoster for N12. Stu-dents

TotalS=

5.tyf NR's

(D)

Total Disbursemekfor StudentsReceiving Amt.Other than ED showon RosterTotal$=

Expected Disburse- Expected Disburse-ment ShOwn on ment Shown onRosfer DupTi- --Roster for Studentscates Being Dented Receilling Amounts

Other than EDShown

Total$=

# of Deletes=

. (E)

Total Disbursementfor Students NotA;ppealing onRoster

Total$=# of Adds=

Total$=

(F)

Count of. Extra(Non-Duplicate)SER's on Roster

SECTION IV INSTRUCTIONSIn the event that a revised June 30 Progress Report

is'needed in order to reconcile your account, SectionIV provides a Progress Report facsimile to allow youto make any changes that were not made when filingyour original June 30 Progress Report. Please use thesame instructions that were used when completingyour progrev Reports.NOTE: If you have not filed a June 30 Progress,Report, you should use Section IV to do so at thistime,Progress Report FaciimileLine 19: Gross' Expenditures

keport the total amount disbursed to BEOG reci-pients in (A); report the total number of recipientsreceiving BEOG funds in (B). Tate recipient countmust be the same, as Section III B-Line 8, i.e., the nuns -.

3-33

4

ber of un-duplicated students on the ,Roster.Line 20: Less Recoveries

Report the Cot I amount of BEOG funds recoveredfrom. recipients i (A).Any.student from whom a totalrecovery (i.e., a ro disbuFsement in Section I) wasreceived should,,be included. in this count.Line 21A: MI Expenditures

Report the, 'total amount expended for BEOGawards (line 19 minus Line 20). This amount musfbethe same as the amount in Section IIIA-Line 6 as ac-cumulated from the individual student entries. Showwhole dollars only; do not report,cents.Lines 22 and 23: Estimated Expenditures

Report zero (0) for all items (22A, 23A and 23B).Line 24: Total Estimated Expeciditui-es.

Report the same amount as line 21A fOr 24A; reportthe satne recipient count as Line 19B for 24B.Line 25: Current OE Approved Authorization

Re,port the USOE approved BEOG authorizedamou indicated on your most recent USOEAuthorization Letter for.the appropriate award period.Line 26: Institution's Estimated Authorization Ad-

justmentReport the difference between Lines 24 and 25, cir-

cling the_plus for increase or the minus for decrease.Lines 27, 28, 29: SER's Submitted

Report.as indicated. The number reported on Line29 must be the same as the SER count in Section LIB,Line 6.

V. Maintenance And Retention OfRecords

Each institution under the Regular DisbursementSystem must maintain adequate records which in-clude:

(1) The eligibility of all enrolled students who haveapplied :for Basic Grants;

(2) The name, social security number and amountpaid to each recipient;

(3) The. amount and date of each payment;(4) The amount and date of any overpayment that

has been restored to the prOgram account;(5) The "Student Eligibility Report" for each stu-

dent;(6) The student's cost of attendance;(7) How the student's full or part-time

status was 'determined; and(8) The student's enrollment period.These records must be available for inspection by

the Commissioner's authorized representative at anyreasonable time in the institution's offices. Recordsmust be kept for five years after the institution submits anaccounting of each award period's funds to the Commis-sioner.

enrollment.

The records involved in any claim or expenditurequestioned by Federal audit will be retained untilresolution of any audit questiRtis.

An institution may substitute microfilm copies inlieu of original records in meeting the requirements ofthis section.

An institution under,-the Alternate DisbursementSystem must establish and maintain

(1) Records relating to each Basic Grant recipient'senrollment status, and attendance costs at -the institu-tion; and

(2) Records showing when each recipient wasenrolled. These records must be, available at thegeographic location where the student Will receivehis/her degree or certificate of course completion, andmust be kept for five years following a recipient's lastdate of enrollment.

The institution will make available to the Commis-sioner, the Secretary of the Department of Health,Education and Welfare, the Comptroller General ofthe United States, and their authorized representatives,pertinent books, documents, papers and records foraudit and examination during the five year retentionperiod.

An institution may substitute microfilm copies inlieu of original records in meeting the requirement ofthis section.

VI. Fund Accounting Procedures

An institution must deposit all Federal funds it

receives under the Basic Grant, Supplemental Grant,College Work-Study and National Direct StudentLllan programs in an account which includes onlythine funds. This account is subject to audit by theCommissioner. Funds received by an institution underthis part, are held in trust for the intended studentbeneficiaries and may not be used'or hypothecated forany other purposes.

The detailed manual on accounting, recordkeepingand reporting which is published in conjunction 'withthe Office of Education is "Accounting, Recordkeep-ing, and Reporting by Colleges and UniVersities forFederally Funded Student Financial Aid Programs(the 'Blue Book')". Copies may be obtained by writingtd:Student Financial AssistanceTraining Program918 I 6th Street, N.W.MezzanineWashington, D.C. 20006

3-.34

VII. Audit and Examination

(a) Federal audits. The Secretary, the ComptrollerGeneral of the United States or their duly authorizedrepresentatives will have access to the recordsspecified in Section VIII and to any other pertinentbooks, documents, papers and records.

(b) Non-Federal audits. All Basic Grant Programtransactions will be audited by the institution or at theinstitution's direction to determine at ,a minimum

(1) The fiscal integrity of financial transactions andreports; and

tl

S.;

(2) If such transactions are in cornpliancewith theapplicable laws and regulations. Such audits will beperformed in accordance with HEW's "Auditfor student financial aid programs, The audit will be

; scheduled annually or, a4 least once every two years,depending on the size and complexity of the program.

(c) Audit reports will be submitted for review to theinstitution's local regional office of HEW's AuditAgency. The Audit Agency and the Commissioner willalso be giver) access to records or other documentsnecessary to the audits' review.

O

O

3-.15

Chapter 4

Campus-Based Programs(Common Elements)

b

1 Introduction.

I. Administrative Respon-,sibility

Fb

Page'A. Federal Resporicibilities 4-3

1. Central Office 4-32. Regional Office 4-3

B. Institutional Responsibilities 4-31. In General 4 32. Institittional Agreement 4-4

Application Process

Allotment of Funds

A. Supplemental Educational Oppor-tunity Giant Program1. Initial Year Awards2. Continuing Year Awards

B. College Work-Study ProgramC. National Direct Student... Loan

Program

VI. 'Student E ibility

A. Regular SessionsB. Special SessionsC. Correspondence StudyD. Domestic Exchange Programs

Need Analysis

A. General DefinitionB. BudgetsC. Family ContributionD. Exceptions

1

4-44-4 VIII.4-44-4

Page

4-64-64-6

4-6

VII.

4-64-64-7

Coordination.of Air Programs

A. Coordinating Official4 -5 B. Maximum Awards

C. Resources13:. Coordination with BIAIV. Allocation of Funds to Eligible .

Institutions

V. Reallocation of Funds

A. College Work7Study ProgtamB. Supplemental Educational Oppor-

tunity GrantsC. National Direct Student Loan

Program

IX. Administrative ExpenseAllowances

A

4-84-84-84-9

4-9

4-5 X. General Fical Respon-. sibilities 4-9

4-5XI. Records and Reporting

4-6 A. Progran4 Records 4-10B. Fiscal Records.. 4-10C. Audits 4-10D. Fiscal Operations Reports 4-10

Chapter 4

Campus-Based ProgramsSupplemental Educational Opportunity GrantsCollege Work-StudyNational Direct Student Loans

This Chapter will discuss items common to the cam-pus-based programs. More detailed discussion of eachof the programs follows in' Chapter 5, SupplementalEducational Opportunity Grants; Chapter 6, CollegeWork-Study; and Chapter 7, National Direct StudentLoans.

Administrative Responsibility

Responsibilities for administration of the campus-based programs are shared by various units of theFederal government and by participating institutions.

A. Federal Responsibilities

I. Central Office

The -Bureau of Student Financial Assistance, U.S.Office of Education, Washington, D 20202 isresponsible for general administration of the programsat the national level. An organizational chart of theBureau appears on page 1-5.

The Bureau's responsibilities relative to the campus-based-programs include developing regulations, policyand program materials; answering questions that re-quire new polk decisions; recommending legislative

, actions; pteparing and distributing institutional ap-plication materials; preparing and mailing fundingallocation notices; and reviewing fiscal operationsreports and audits.

.2. -Regional Office, USOE

The Regional Office serving the State in which theinstitution is located is the 'first contact for informa-tion and answers to questions concerning programo,peradoh. A list of Regional Offices with addresses,phone numbers and areas served appears in AppendixD

The Regional Office Staff not only hssists,the institu-tion with a variety of developmental and operationalproblems, but also conchicts on-site visits, conductsapplication and regulatidn dissemination workshops;and conducts program reviews at institutions. In addi-tion, the Regional Audit Staff, Department of Health,Education and Welfare. arrang-Qs_for_periodic_programaudits.

B. Institutionalliesponsibilities

1. In General

Each participating institution is responsible for theongoing operation of the programs on its own campus.It is_theimancial aid administrator's duty to ensure thateligible students receive the proceeds of theseprograms in accordance with the provisions of the law,the Agreement signed by the Commissioner of Educa-tion and the institution's chief administrative officer,and other criteria as pay be established by the Com-missioner. The financial aid administrator must ac;complish the above with sensitivity to the overall mis-sion of the institution helshe represents.

Additional general responsibilities of the institutioninclUde: submission of applications for Federal fundsand fiscal operations reports to 'the Office of Educa-tion; adequate dissemination of accurate informationrelative to types of aid programs, comprehensiveeducational costs,(direct and indirect), afid applicationprocedures for individual students; evaluation of stu-dent applications and determination of need; packag-ing of aid to meet each student's need to the extentpossible; notification to all applicants of action takenon their applications; counseling of students regardingfinancial aid matters; disbursement of funds to reci-pients; revision of aid packages to respond to unantici-pated situations; maintenance of adequate records;scheduling of exit interviews for NDSL borrowers; andadministration of the post-enrollment activities of theNDSL program.

After an NDSL borrower leaves the institution, theloan program administration involves not only the nor-maroollection function but also includes the process-ing of student requests for deferments, extensions, andcancellations of repayment.

_Laterchapters of this handbook will discuss in detailresponsibilities which are specific to each program.

4-35

2. Institutional Akreement

An institution that wishes to participate in Title IV stu-dent aid programs must enter into an Agreement with theCommissioner. The Agieement must be signed by anofficial' of the institutioh who is legally authorized toassume, on behalf of the institution, the obligations im-poqcd thereby.

A single Agreement covers all Title IV programs. Theagreement must be in effect for each year of continuedparticipation. A copy of this agreement is in Appendix B.

II. Application Process

To participate in one or more of the campus-basedprograms, an institution must submit an application foreach award period (July 1-June 30) at a time and in amanner prescribed by the Commissioner. The specificrequirements of the application are published annuallyin the FEDERAL REGISTER. This announcement'specifies submission dates and includes other pertinentinformation about the application process. The Divisionof Program Operations, BSFA, mails application forms toall participating institutions.. Other institutions shouldcontact the Regional Office serving their state for applica-tion forms and information on appication procedures.

In the summer of 1977, the Commissioner appointed'a panel of experts on student financial aid to reviewthe process by which funds for the campus basedprograms are distributed to institutions. This assign-'ment, obviously; is very complex and time consuming.Work completeu to date points to a conclusion thatany changes in the present method of distributingfunds will be "phased in" over several.years.

The first phase of the new application process wil beinstituted with the application for funds for the awardperiod July 1, 1979 to June 30, 1980. The detailed pro-cedures will be published in a Notice of ;ProposedRulemaking which will appear in' the FEDERALREGISTER in September 1978. The procedures are,with some modification, those that the panel of expertsrecommended. A summary of the recommendationswas published in the June BSFA Bulletin.

III. Allotment of Funds--P

The formula for allotment of funds for campus-based student aid programs is unique for each of thethree programs and is described in detail in the follow-ing sections of the Higher Education Act of 1965, asamended:

SectionSupplemental Educational Opportunity Grant 413DCollege Work-Study program 442National Direct Student Loan program 462

4-4

Section 493C of the Act describes a slight, modifica-tion of these allotment procedures which becameeffective for the 1977-78 award,period. There is also aprocess for reallotment of funds for each of the threeprograms provided for in the Act. A simplified ex-planation of the allotment formula follows.

A. Supplemental EducationalOpportunity Grant Program

1. Initial Year (I ) Awards

The statute specifies that 90 percent of the funds ap-propriated for initial year awards shall be allottedamong the States and other eligible jurisdictions ac-cording to their proportionate share of the nationalfull-time and full-time equivalent enrollment in institu-tions of higher education. The remaining- 10 percentshall be allotted among the States according to.criteriaestablished by thd Comntissioner of Education, exceptthat the 10 percent portion shall first be used to raise.each. State to at least the level of its original_ allotmentfor Fiscal Year 1972, if'any State's allotment from the90 percent portion is less than that amount., Theregulatory procedure established by the Commissioner.for allotment of the remaining funds has been to dis-tribute these funds to the States in which the, allotm. entsmade thus far constitute the lowest percentages funda-ble of, the aggregate funding recommendation, thusestablishing a uniform minimum State percentage funrdable. However, this procedure may be changed inresponse to the recommendations of the panel of experts.

2.. Continuing Year Awards

The statute specifies that the funds available forcontinuing year, awards shall be allotted among theStates in such a manner as the Commissioner deter-.mines will best achieve the purposes of the program.The regulatory procedure established by the Commis-sioner for allotment of continuing year funds is todivide the total amount available for continuing yearawards by the 'aggregate continuing year fundingrecommendation, to determine a uniform national per-centage for funding all States.

B. College Work -Study Program

The statute specifies that portions of the appropria-tion for any fiscal year be reserved-(1) in an amountnot to exceed 2 percent of the total for institutlo-4 inthe jurisdictions of Guam, Puerto Rico, the Virgin Is-lands,American Samoa, and the Trust Territory of thePacific Islands and (2) an additional amount for stu-dents who live in the latter two jurisdictions but attendeligible institutions outside those jurisdictions, Afterthose amounts are reserved, 90 percent of the remain-

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ing funds are allotted among the fifty States and theDistrict of Columbia, according to a tripartite formulawhich takes into account (1) each State's proportionateshare of the full-time enrollment in institutions of high-er education, (2) each State's proportionate share ofthe total number.of high SC11001 graduates, and (3)each State's proportionate share of the total number ofrelated children under eighteen in families with annualincomes under $3,000.

,NOTE: For purposes of these allotments, the term'State" includes the Digtext of Columbia and theNorthern Mariana Islands but does not include PuertoRico, Guam, American Samoa, the Trust Territory ofthe Pacific Islands, and the Virgin Islags.

The statute specifies that the remaining 10 percentshall be allotted among the States according to criteriaestablished by the Commissioner of Education, exceptthat the 10 percent portiOn shall first be used to raiseeach State to at least the level of its original. allotmentfor Fiscal Year 1972, if any State's allotment from the90 percent portion is less than that amount.

In the past, the regulatory procedure established bythe Commissioner for allotment of the remaining fundshas been to distribute the remaining funds to the Statesin which the allotments made thus far constitute thelowest percentage fundable of the aggregate fundingrecommendation, thus establishing a uniformminimum State percentage fundable. However, thisprocedure will be changed in response to the recom-mendations of the panel of experts.

C. National Direct Student LoanProgram

The statute specifies that 90 percent of the funds ap-propriated for Federal capital contributions shall beallotted among the States and other eligible jurisdic-tions such that each State's proportionate share of theamount so allotted is equal to its proportionate sitareof the national full-time enrollment in institutions ofhigher education. The remaining 10 percent shall beallotted among the States according to criteriaestablished by the Commissioner of Education, exceptthe 10 percent portion shall first De used to raise eachStat.:. to 'at least the level of its original allotment for

_Fiscal Year 1972. The regulatory procedureestablished by the Comrhissioner for allotment of theremaining funds has been to distribute these. funds tothe States in which the allotments made thus far con-stitute the lowest percentages fundable of the aggreg-ate funding recommendation, thus establishing auniform minimum State, percentage fundable.However, this procedure will be changed in responseto the recommendations of the panei.of experts.'-

IV. .Allocation of Funds to EligibleInstitutions

From the State allotments the SEOG IY allocationfor the institutions in each State has been determinedby multiplying each institution's recommendedamount for SEOG IY funds by the final SEOG IY per-centage fundable for that,State, so that all institutionswithin a State receive the same pro-rata share of theirSEOG IY recommended amount. The same procedurehas been followed for CWS .and NDSL funds. TheSEOG continuing year allocations for the institutions'in each State have been determined. by multiplyingeach institution's recommended amount fors ntinuingyear funds by the national percentage fundable, so thatall institutions in the nation have received the same.pro-rata share of their recommended amount.

V. Reallocation of Funds

A. College Work-Study Progr m

ach year, the Bureau of Student Financial Assis-tance conducts a. reallocation of CWS funds. Thesource of funds for this reallocation is the unexpendedauthorizations remaining within each state .which arereported on the institutional fiscal operations report asof the prior June 30.

The recaptured funds from institutions projecting anunderutilization'are reallocated to institutions request-ing additional dollars within a given state.

If an institution needs additional Federal funds tooperate the College Work-Study program during the1978-79 award period, it should submit a letter re-questing the additional amount to the Office of theRegional Administrator, Student Financial Assistance,which serves that institution's area. To be assured ofconsideration for a supplementalbaward:a school's.re-quest must be received in the Regional Office no laterthan November 14, 1978. -

B. Supplemental EducationalOpportunity Grant Program

The _Bureau of Student Financial Assistance dis-tributei allocation adjustment letters during the awardperiod to all participating institutions, requesting themto forecast any unneeded SEOG funds and to releasethem, or to state the anticipated need for /additionalfunds. The recapyred funds from institutions project-

,

ing an underutilization of funds are reallocated to in-stitutions requesting additional dollars within the sameState.

It is extremely important for the institution to re-.spond accurately and quickly to this request. Failure todeobligate funds projected as not being needed at agiven institution will result in needy students beingdenied assistance at the other institutions needing ad-ditional dollars and will have an adverse effect on theinstitutional application for the subsequent awardperiod.

C. Slational Direct Student LoanProgram

There is currently no reallocation of NDSL funds.

VI. Student Eligibility

A. Regular Sessions

Students receiving campus-based financial assis-tance must meet the general provisions described inChapter 2 of this handbook. Each recipient must:

1. be a national of the United States or be in theUnited States for other than a temporary purposeand intend to become a permanent resident thereof;or be a permanent resident of the Trust Territoryof the Pacific Islands. (This regulatory requirementis identical to that of the Basic Grant program. Afuller discussion of the implementation of this provi-sion appears in Chapter 3.)

'2. be accepted anal eligible for enrollment as at leasta half-time student in good standing;3. demonstrate financial need according to eachprogram's criteria; and4. not be a member of a religious community,society, or order, who by direction of his/her com-munity, society or order is pursuing a course. ofstudy in an institution or who receives support andmaintenance from the community, society or order.Individuals in these groups shall be deemed not tohave financial need.Further comments on eligibility appear in Chapters

5, 6, and 7.

B. Special Sessions

To receive aid during a period of non-regular enroll-ment (special session) such as a summer or equivalentvacation period, a student will be eligible for campus-based assistance if he/she meets all eligibility require-ments for the regular session cited above, and

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1. is enrolled and in attendance as at least a half-time student during the regular term immediatelypreceding such session; or2. will be enrolled or has been accepted for enroll-ment as at least a half-time student during the subse-quent regular term at the institution providing theassistance.Further information related to CWS employment

during a special session appears in Chapter 6.

C. Correspondence Study

A student is considered as enrolled in a program ofstudy by correspondence only after the student com-pletes and submits the first lesson.

D. Domestic Exchange Programs

A domestic exchange program is a program in whichtwo institutions in the United States permit studentspursuing a baccalaureate degree' at one of those in-stitutions to complete as much as one year of thatprogram at the other institution. For purposes of deter-mining eligibility for assistance under the campus-based programs, a student in a domestic exchangeprogram is considered to be enrolled in his or her"home" institution while studying at the "host" institu-tion.

VII. Need Analysis

A. General Definition

Need analysis, the process of establishing theamount of eligibility for financial assistance for a stu-dent, has two major components: (1) a budget(reasonable, comprehensive costs for an enrollmentperiod); and (2) an expected fainily contribution (ex-pected resources from the student and his or her familyduring the enrollment period).

If the student's budget exceeds the expected familycontribution, that student has need.

B. Budgets

1. Conventional Domestic Programs

The amount required to enable a student to pursuehis/her education at an institution (budget) includesamounts charged for tuition and fees, the amountscharged by the institution or the expenses reasonablyincurred for room and board, books, supplies and

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transportation, and miscellaneous personal expenses,as well as expenses related to maintenance of a stu-dent's dependents.

2. Correspondence Programs

In the case of a,student engaged in a program ofstudy by correspondence, only the costs of tuition andfees may be recognized as a cost of education.However, travel, room and board costs incurredspecifically in fulfillment of a required period of resi-dential training may be included.

3. Foreign Study Programs

Students enrolled in programs of study outside theUnited States which have been determined to be eligi-ble programs may receive financial aid; however, thebudget used to determine eligibility may not exceedthe budget which would have been used on the honecampus: An eligible program is one in which (1)enrollment is arranged or approved in advance by thehome institution; and (2) the student's academic per-formance abroad becomes a part of his/her academicrecord at the home institution, with credit or without(i.e., even failing grades and incompletes arerecorded).

If an student has reasonable additional costs, thestudent may obtain a Guaranteed Student Loan orsome other source of funding to pay them. In such acase the Guaranteed Student Loan or other funds arenot considered as resources for the purpose of deter-mining a potential overaward.

4. Budgets - 9.Months vs. 12 Months

Financial aid officials in institutions that use tradi-tional 9-month academic years have considerablelatitude in determining whether a budget for 9 monthsor for 12 months should be used for a given student.For students attending both regular and summer ses-sions (going to school year-around) and for certain in-dependent students, a I 2-month budget may be themost accurate representation of the student's actualcost.

Special provisions apply to the treatment of earningsof students employed under the CWS program duringsummer vacations or other periods of non-enrollment.These are discussed on page 6-10.

Budgets for students in institutions with uniqueenrollment periods should realistically reflect allowa-ble educational costs asihey relate to the length of theenrollment period.

Officials in--institutionsusing theBasicGrant--method of calculating an expected family contributionshould be aware that this method is not a completeneed analysis system. Thus,,adjustments must be madewhen determining eligibility for aid through the cam-pus-based programs.

C. Family Contribution

In order to comply with published regulationsgoverning campus-based programs, an institution mustuse a need analysis system or method of calculationapproved by the Commissioner of Education. All needanalysis systems generate expected contributions fromincome and from assets with appropriate deductionsand allowances to retain a reasonable amount of fi-nancial resources to sustain a family.

The calculation of an expected family contributionis relatively complex. Financial aid officers ad-ministering campus-based programs must becomethoroughly familiar with the components of the ap-proved need analysis system utilized by their institu-tion.

1. Major Items

Some of the items which are considered in determin-ing the amount of an expected contribution from in-come and net assets of the individual filing the finan-cial document include:

(a) the number of dependent children;(b) the number of dependent children in post-secon-dary education;(c) ,tuition incurred by 'dependent children who areattending elementary and secondary schools;(d) any serious illness in the family (family mem-bers include the student, the student's spouse,parents of dependent applicants as well as other in-dividuals claimed for Federal income tzx purposesby the individual submitting the financial docu-ment); and(e) such other circumstances as may affect theability of the individual filing the financial form, thestudent or his spouse to contribute toward the cost ofeducation.In addition, most methods of calculating the

amount of an expected family contribution will havean assumption of self-help through employment duringperiods of non-enrollment (summer earnings).

2. Approved Systems

Annually, the Commissioner approv s andpublishes in the Federal Register a list of a rovedneed analysis systems for depen nt students.

Systems for independent udents are approvedwithout a definite expiratio date, but the. Commis-sioner may reqtfeSt ;_eriodic confirmation that thesystem remains in compliance with the criteria. Officialsshould note that some systems may be approved for usewith both dependent and independent students, whileother systems may be used for only one of the twogroups.

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3. Independent Student

The various systems of financial need analysis havebeen developed under the assumption that parents arethe primary source of support for dependent students,

There are several situations where an expectedparental contribution cannot or will not be available toa student. To assist institutions in determining thestatus of a financial aid applicant who is applying foraid as an independent student, the Office of Educationhas published the following regulation.

A self- supporting or independent student is a stu-dent who:

(a) has not and will not be c. aimed as an exemptionfor Federal income tax purposes by any person ex-cept a spouse for the calendar year(s) in which theaid is received or the calendar year prior to theacademic year for which aid is requested;(b) has not received and will not receive financialassistance of more than $600 from a parent(s) inthe calendar year (s) in which aid is received or thecalendar year prior to the academic year for which aidis requested; or(c) has not lived and will not live for more than twoconsecutive weeks in the home of a parent during thecalendar year(s) in which aid is received or thecalendar year prior to the academic year for whichaid'is requested. (Note: for the NDSL program only,a veteran is considered self-supporting).If both parents are deceased prior to the time of sub-

mission of an applic'ation for aid, the aid applicant willbe considered as an independent student even thoughone or more of the above conditions may not be met.

For purposes of determining a student's financialneed for the campus-based programs, the financial aidofficer, upon the request of a student, may waive the re-quirement of a parental contribution from a studentwho cannot qualify as an independent student underthe above definition, if the student meets certain cri-teria. The precise regulatory requirement, identical forthe three programs, appears in Sections' 176,12(c),175.12(c), and 144.12(c) of the SEOG, CWS, andNDSL program regulations, respectively. The financialaid officer must make a written record of the reasonsfor such a determination. Because of the entitlementnature of the Basic Grant program and the necessity totreat all applicants uniformly, such exceptions are notpermitted for that program.

D. Exceptions for Need Determinationfor Indian and Native American Families

In calculating the expected fam"y contribution foreligible Indian or Native American students, the

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following are excluded from consideration as incomeor assets:

1. funds received in an award under the Distribu-tion of Judgment Funds Act or the Alaska NativeClaims Settlement Act,2. property which may not be sold or encumberewithout the consent of the Secretary of Interior, and3. any other property held in trust for the student orhis/her family by the United States Government.

VIII. Coordination Of Aid Programs

A. Coordinating Official

The institution is required to appoint an official whowill be responsible for coordinating the campus-basedprograms with all other programs of student assis-tance, both Federal and non-Federal, at the institution.

B. Maximum Awards and Overawards

An institution may not award aid to a studentthrough the campus-based programs in an amountwhich, when combined with all other resources, ex-ceeds the student's financial need. :n no case may astudent's financial need exceed his/her cost of educe)tion.

There are certain exceptions to the award limitstated above. These exceptions re explained in Sec-tions 144.14, 175.14, and 176.14 of the programregulations and relate to resources which the studentreceives after the institution has made an award of aid.Officials should note in particular the proceduresprescribed for handling "surplus earnings" fromemployment to prevent an overaward.

C. Resources

The resources mentioned in paragraph B include butare not limited to:

1. the amount of money a student is entitled toreceive under.. BEOG program even though thestudent may not have applied for the grant;2. any waiver of tuition and fees;3. any scholarship or grant-in-aid including Stategrants, athletic scholarships and grants;4. any fellowships or assistantships;5 a_loan (or a portion_a_ a loan _as_appropriate)made under the Guaranteed. Student Loan programas explained in Sections 144.14,175.14, and 176.1of the program regulations;6. any long term loan made by the institution otherthan a GSL; and

5

7. any expected net earnings from employment dur-ing periods for which the student is receiving cam-pus-based aid. "Net earnings" means gross earningsminus required taxes and costs incidental to obtainingthe earnings.By letter of April 6, 1978, Sam Brown, Director of

ACTION, has confirmed the Office of Education'sposition that the "stipend received by UYA volunteerswill be considered as a resource element in the stu-dent's total financial aid package." It should be notedthat if students incur additional expenses such as in-creased living expenses in the neighborhood in whichthey serve, as a result of participating in UYA, theseincreased costs are considered to be a cost of educa-tion.

D. Coordination with Bureau of IndianAffairs Educational Grants-in-Aid

In preparing a financial aid package for a studentwho is or may be eligible for educational grants ad-ministered by the Bureau of Indian Affairs (BIA), theinstitutional financial aid officer will initially developan assistance package without considering any poten-tial or awarded funds from the BIA.

Then, if the total financial assistance package, afterthe addition of BIA funds;- does not exceed the stu-dent's need, no adjustment of campus-based aid isnecessary.

If the total package plus BIA grants does exceed theneed, the reduction of campus-based aid will be com-pleted in the following sequence:

I. first, the reduction of aw ards or proposed awardsin the form of National Direct Student Loans will becompleted:.2. If an excess still remains after the loan adjust-ments, reductions will next be made from anyawards or proposed awards in the form of CollegeWork-Study.3. If an excess still remains after work -study adjust-ments, reductions will be made from any award orproposed award in the form of a SupplementalEducational Opportunity Grant. However, under nocircumstances is a ,grant under the Basic Educa-tional Opportunity Grant program to be reduced.The sequence of reductions may be altered if re-

quested by the student; and if such an alteration moreadequately meets the need of the student.

In determining the amount of financial need of stu-dents eligible for BIA grants-in-aid, the institution's fi-nancial aid officer is encouraged to consult with BIAarea officials responsible for administering BIApostseconclary-fmaticial assistance pxgrainTheseofficials are generally familiar with the individual fi-nancial circumstances of the students concerned.

IX. Administrative ExpenseAllowances

An institution is entitled, for each award period dur-ing which it provides financial aid from campus-basedprograms to eligible students, to an administrative costallowance for its expenses in administering the cam-pus-based programs during the award period. 'l he ad-ministrative expense allowance is payable from thefunds established for each of the three programs and isin an amount equal ,to 4 percent of:

A. the amount of National Direct Student Loansadvanced during the award period minus certain re-funds and prepayments as explained in Section144.32(d) of the NDSL regulations;B. the gross compensation earned by college,work-study students under the CWSP, including theFederal share from its allocation for that period andthe institutional share for both on and off-campusprograms; andC. Supplemental Educational Opportunity Grantspaid to students from its allocation during the awardperiod.The aggregate amount drawn by an institution from

the campus-based programs to pay its expenses foradministration for all Federal programs of student fi-nancial aid may not exceed $325,000 for any awardperiod.

Any institution which receives an administrative costallowance for any award period must first use thefunds to adequately provide Student Consumer Infor-mation Services as described in Chapter 2 of thisHandbook.

If funds remain, the institution will use those fundsfor other costs of administering the campus-basedprograms as it 'determines necessary.

X. General Fiscal Responsibilities

Fiscal responsibilities for administering campus-based programs are discussed in detail in Sections.144.19, 175.19, and 1 76.19 of the program regulationsand in the "Blue Book". Although these respon,sibilities are assigned to the chief fiscal officer of theinstitution, it is essential that financial eid administra-tors become familiar with the fiscal office proceduresat their institutions to ensure that financial aid officeactiyities are conducted so as to comply with the ap-propriate fiscal office procedures.

Conversely, it is important that fiscal office_person-nel at the institution have a general understanding offinancial aid program philosophy and program ac-tivity. This can be accomplished only through a con-

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.tinuous dialogue between individuals responsible for-the program (Financial Aid'Admini3trator) and fiscaloperations (Chief Fiscal Officer) at the.institution.

The program/fiscal functional responsibilitiesmust be divided so that a single indiVidual does notbear soj responsibility for the entire administration ofThe programs.

XI. Records and Reporting-

Each institution must establish and maintain on acurrent basis adequate records which reflect all trans-actions with respecpto program and fiscal activity asthey relate to the administration of campus-basedprograms. The records must be maintained in such amanner as to identify all program and fiscal transac-tions separately from other institutional activities andfunds. .,

The records for any award period must be retainedfor a period of five years following the date of submis-sion of the Institutional Fiscal operations Report,unless a longer retention peri d is necessitated be-cause of, audit resolution problems.

A. Prcigram Records

Form(s) must be used to gather data in a uniformmanner from each applicant containing informationrelative to all eligibility criteria. The individual appli-cant's file should also reflect the student's budget,available resources; identity of the institutional officialwho made the determination on each application;amount and type of aid awarded, if any; a record of thenotification of action taken (award or reject letter); acopy of-a statement by the student accepting or declining the award (or cancellation by the institution in theevent of no response by a recipient); Affidavit ofEducational Purpose; andother forms required by thevarious programs. It should also be noted that docu-ments of rejection, cancellation, and declination mustbe retained even though no funds were disbursed.

The institution may wish to contact its RegionalOffice for assistance in developing institutional formsand other records required to ensure adequate ad-ministration of the programs.

C. Audits

1. Federal

The Secretary of Health, Education and Welfireand the Comptroller General of the United States, orar4 of their duly authorized representatives, will haveaccess, for the purpose of audit and examination, tocampus-based student financial assistance records andsupporting documents maintained by the institution.

The records involved in any claim or expenditurewhich has been questiohed by Federal audit must beretained until resolution of ariy such audit questions;however, records of questioned transactions which in-volve attempts to reco'.er funds to the Federal Trea-sury need not be retained following expiration of thestatute of limitations.

2. Non- Federal

The institution will conduct audits or direct audits tobe conducted to determine, at a minimum, the fiscalintegrity of financial transactions and reports, andwhether such transactions are in compliance with ap-plicable laws and regulations. The audits will be per-formed in accordance with the Department of Health,Education and Welfare "Audit Guide" for student fi-nancial aid programs, and will be scheduled not lessfrequently than once every two years. Each audit mustcover the entire time that has elapsed since the lastaudit.

D. Fiscal Operations Reports

An- institution- will submit --an annual -InstitutionalFiscal Operations Report and other reports and infor-Mation as the Commissioner may require in connec-tion with the administration of campus-based studentaid program5.

-The fiscal operations report is mailed each summerto all institutions which participated in one or more ofthe campus-based programs during the twelve-monthaward peliod ending June 30, and is usually due in theCampus and. State Grant Branch, DPO about Septem-ber 1 of each year. The exact due date for each reportis contained in the cover letter accompanying the

, report.B. Fiscal Records The fiscal operations reports provide an excellent 11-

. lustration for the needed cooperation between the fis-The fiscal records at the institution must be main- cal office and the *financial ei office: The report is

tained-irra-nranner-whicirprovides--a-,clear-audit trail developed -with-Mformatio maintained-in- both -o -ff ces

Suggested format for fiscal records and procedures is and is jointly signed by the Chief Fiscal Officer and the,

included in the Blue. Bdok. Director of Financial Aid.

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Chapter 5

Supplemental EducationalOpportunity Grant Program

Statutory Authority and Purpose

PageA. Statutory Authority 5-3B. Purpose 5-3

II. Student Eligibility

A. Undergraduate Student 5-.3B. Financial Need 5-3C. Academic Promise 5-.3

Program Requirements

A. puration of Eligibility 5-3B. Limitations on Awards 5"-4

1. Maximum Award 5-42. Minimum Award 5-43. One-Half of Package 5-44. Less than Academic Year Enroll-

mentC. MatchingD.Recruitment of StudentsE. Designation of Funds

5-45-45-55-5

IV. Transfer Of Funds To The Col-lege Work-Study Program

V. Maintenance Of Level Of Stu-dent Scholarship And StudentAid Expenditures

A. PurposeW Definition of Institutional Scholar-

ship and Student Financial AidC.Types of. EApenditures to be

-Cdtinted as Institutkmal Scholarshipand Student Financial Aid

D.Types of. Expenditures not to beCounted as Institutional Scholarshipand Student Financial Aid

E. Reporting Maintenance of Level ofEffort

F. Waiver of the Maintenance of Levelof Effort

Page5-6

5-6

5-7

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5-8

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Go

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Chapter 5

Supplemental EducationalOpportunity Grant Program

I. Statutory Authority and Purpose

A. Statutory Authority

The Supplemental Educational Opportunity Grant(SEOG) program is authorized under Subpart 2, PartA oi Title IV of the Higher Education Act of 1965, asamended by the Education Amendments of 1968,1972 and 1976.

B. Purpose

The SEOG program was established to assist inmaking the benefits of postsecondary education avail-able to qualified students who, for lack of financialmeans of their own or of their families, would be un-able to obtain such benefits without the grant.

H. Student Eligibility

Supplemental Educational Opportunity Grant reci-pients must meet the criteria described in Chapter 2(General Provisions) and Chapter 4 (Campus-basedPrograms). In addition, the following eligibility factorsapply 'to SEOG recipients.

A. Undergraduate Student

All SEOG recipients must be undergraduates. Anundergraduate student is one who is in attendance atan institution of higher education and who has notearned a first.baccalaureate or professional degree.

A student who has pot earned hiS first baccalaureateor professional degree and who is enrolled in aprogram of study at the postsecondary levc1 which isdesigned to extend for more than four academic years,is not considered asan under aduate student inportion of the program that involves study beyond thefourth academic year unless that program leads to afirst degree and is designed to exttnd fOr a period offive years.

An undergraduate course of study means a regularly

1t

prescribed curriculum for an undergraduate student atan institution of higher education.

B. Financial Need

The SEOG recipient mt.. t demonstrate exceptionalfinancial need. The current regulatory definition statesthat if the expected family contribution' as calculatedusing an approved need analysis system does not ex-ceed 50 percent of the cost of education for aliven stu-dent, that student has established exceptional financialneed.

TO award an SEOG; the :istitution must determinethat the recipient would be financially incapable ofpursuing a course of study at the institution without theSEOG.

C. Academic Promise

SEOG recipients must demonstrate evidence ofacademic or creative promise and capability of main-taining good standing in their course of study.

III. Program Requirements

A. Duration of Eligibility

The number of years for which a Student mayreceive an SEOG is the period required for the comple-tion of the undergraduate course of study being pur;sued by the, student. The period may not exceed a totalof four academic years, with the following exceptions:

1. the student's program of study is designed by theinstitution offering it to extend, over five academicyears; or2. because of individual particular circumstances,the student is determined by the institution to need

mpleteaeourse of study -normally requiring four academic years, in which

' case such a period,may not be for more than one ad-ditional yearFor campus-based programs an academic year is a

period of time generally of not less than eight months

61

.

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in which a full-time student would normally be ex-pected to complete the equivalent of two semesters,two trimesters, three quarters or 900 clock hours of in-struction.

Eligibility is based on disbursed grants, not enrolledterms. A student enrolled as a half-time, student in anormal four-year program could receive awards for upto 8 years calculated to relate to the half-time enroll-ment status. A student receivin^ a grant while enrolledin a special session (see Chapter 4) will be con=sidered to have expended at least one-half of asemester, trimester or quarter, as the case may be, ofgrant eligibility.

B. Limitations on Awards

1. Maximum Awards

The maximum academic year award is $1,500. Themaximum 4-year aggregate award is $4,001;. For stu-dents eligible to receive an SEOG for five years (seeparagraph A above) the maximum aggregate award is$5,000.

NOTE: The duration of eligibility and the maximumaggregate aviard apply to all students pursuing an un-dergraduate course of study atone or more institu-tions. This necessitates maintaining cumulativerecords on all SEOG recipients at a given institutionand obtaining a financial aid disbursement history,such as a Financial Aid Transcript, from all institu-tions of prior attendance for students transferring to aninstitution who make application for an SEOG.

2. Minimum Award

The minimum SEOG award permitted for anacademic ,year is $200. If after application of alleligibility criteria, a given student's eligibility for anSEOG is less than $200, no payment may be made tothat student for that year.

3. Additional Limitation

One-half of package - An SEOG cannot exceed 50percent of the financial aid awarded to a student by theinstitution for an award period.

4. Less Than Academic Year Enrollment

The amount of a grant awarded to a student for any

C. Matching

The enabling legislation for the SEOG program in-cludes a matching requirement which specifies that aidequal in amount to the SEOG must be provided to thestudent during the award period. Eligible matchingfunds are identified in two major classifications:

1. Any aid which is made available through, i.e. con-trolled by, the institution itself including Federal fi-nancial aid funds. (NOTE: Although Basic Grantsare not controlled by the institution, they are eligiblefunds for matching SEOG's).2. Gift aid (scholarships, grants) which the studentreceives from a State agency, a private organization,or a private institution."Aid made available through the institution" means

gift aid (scholarships,,and grants), loans, and employ-ment programs which are administered by the institu-tion regardless of the source of funds. At a minimumthe following criteria must apply for any aid programto be considered under the control of the institution:

1. the institution m 1st accept and review applica-tions for the financial aid program;2. the institution must select the recipient of suchaid; and3. the institution must determine the amount of suchaid and receive assurances that students, selectedwill receive such aid.It is the institution's responsibility to see that the

SEOG is matched with eligible matching funds. Allawards involving SEOG funds must have the matchingfunds clearly documented in the student's folder andthe award letter must explain the SEOG matchingrequirement. If the student declines a portion of thematching aid. additional eligible matching funds mustbe substituted in the aid package or the SEOG must'bereduced. Similarly, if any matching source is with-drawn or changed after the disbursement of the SEOG,the institution must supply new matching funds.

Guaranteed Student Loans (GS) are generally notacceptable for matching SEOG funds since the 'ap-plication is received by the lending institution and thedecision to lend the money made by the bank, sav-ings and loan association, cred it' union, etc. There arehowever, three situations in which Guaranteed StudentLoans are eligible as SEOG matching:

1., when the institution participates as a lender inthe GSL program, loans from the institution's GSLFund are eligible for matching an SEOG;2. when the institution provides guarantee funds toa State or private loan program or to United StudentAid Funds, Inc., for their. College Reserve program,GSL's provided by a non-institutional lender would

period which is less than an academic year in length islimited by a maximum and a minimum which near thesame proportion to $1,500 and $200 respectively, asthe length of that period bears to the length of anacademic year.

5-4

be eligible for matching an SEOG; or3. when institutional action commits GSL funds,regardless of the provision for guarantee funds.The following is a list of appropriate sources of

matching funds for the SEOG program: '

62-

1. Institutional Grant-in-Aid2. Institutional Scholarships3. Institutional Waiver of Fees4. Institutional Waiver of Tuition5. State Scholarships6. State Grants7. Basic Educational Opportunity Grants8. Scholarships provided by a group outside the in-

stitution9. Grants provided by a group outside the institu-

tion10. Nursing Scholarships11. Bureau of Indian Affairs Grants to Students, if

the institution reviews the application for suchgrants, selects the- recipients, and determines theamount of such grants

12. Law Enforcement Education Program Grants13. Institutional Loans, including Insured Loans, if

the institution is a lender14. National Direct Student Loans15. Nursing Loans16. Health Prgfession Loans17. Guarantied Student Loans for programs where

the guarantee funds are provided by the institu-tion or if the institution is responsible for com-mitting the loan

18. Law Enforcement Education Program Loans19. Institutional employment20. Income from employment contracted by an in-

stitution with a private concern, with a provisionthat , given number of students' jobs (not paidfrom College Work-Study funds) are in the con-tract, e.g., food service

21. Gross, earnings, from the College Work-Studyprogram. (This includes summer earnings ap-plied to the student's aid package for the nextregular academic year 1

Funds Not Eligible for Matching SEOG Awards1. Guaranteed Student Loan program in which the

institution does not provide any funds or ap-proval

2. Any loan contracted independent of the institu-tion

3. Employment not made availabI' through the in-stitution

4. Social Security Educational Allowances5. Vocational Rehabilitation Benefits6. Veterans.Administration Benefitsa. G.I. Billb. War Orphans

7. Student Savings8. ROTC, NROTC, AFROTC Scholar-ships or pay:

mentsQ. Federal go-yernmeat-ineemeTei., researclrimder

a `Federal grantIf a financial -aid administrator is uncertain about

any type of aidbeing eligible"or ineligible as an SEOGmatch, a request for clarification by the Regional,Office of Education would be appropriate.

D. Recruitment of Students

The SEOG legislation states that' institutions, incooperation with other eligible institutions where ap-propriate, should make efforts to identify qualifiedyouth of exceptional financial need and encouragethem to continue their education beyond secondaryschool, This can be accomplished by establishing orstrengthening close working relationships with second-ary school personnel and making, to the extent possi-ble, conditional commitments to students in the groupidentified as meeting SEOG eligibility criterids.

E. Designation of Funds

Fwids representing the SEOG program are iden-tified as two distinct types, (1) Initial Year (IY) grantsand (2) Continuing Year (CY) grants,and are authorizedby the Office of Education in specify; amounts for eachprogram. The funds may not be transferred directlyfrom Initial to Continuing or vice versa at the institu-tion.

An initial grant is the grant awarded to a student forthe first academic year in which he or She, receives aSupplemental Grant. All other Supplemental Grantsawarded to that student are to be continuing grants.

The initial grant is applicable to periods of enroll-ment of up to -tine academic year as defined byprogram regulations. For the majority of college anduniversity students, this will probably be the regularacademic year beginning in the fall and consisting oftwo semesters or trimesters or. three quarters.

,However, a number of exceptions can be expected-,such as the student who begins at mid - year.Historically, the Office of Education has allowed twointerpretations of such a case. In- one, the academicyear ends at the completion of the spring term and theinitial granf_also ends then. If the student re-enrolls inthe summer, any Supplemental Grant that he or shereceives is a continuing grant. In the second interpreta-tion, the initial grant extends through the summer ses-sion, in effect, covering- the second semester of theregular academic year plus the summer Session.

As related to proprietary institutions, Section 176.2of the SEOG Regulations defines "academic year" as"not less than . . . 900 clock hours of instruction."Thus, if a student enrolls in a proprietary institutionfor a continuous program of 900 clock hours (or 9months) or less and receives a Supplemental Grant forthe first time, that grant would be an initial grant forthe entire 900 clock hours.

ryprograms longer than 900 hours (or 9 months),1.given student might receive either an initial grant alomor both initial and continuing grants depending uponcircumstances. The factors contributing to the decisioninclude the-nature of the program and the number of

rpoicrrations or other logical base for dividing the

5-5

program into two or more segments. For example, ifthere is a single registration for a program of 9 or 10months, it would be appropriate to consider this asingle academic year and to award a beginning student(who hadnot previously recei.ed an SEOG) an initialgrant for the entire period. However, if the programextends beyond 10 months, it seems reasonable toaward an initial grant for the first 9 months and one ormore continuing grants for the remainder of theprogram. A 15 month program, for example, wouldprobably be divided into 9 month and 6 month por-tions. A grant for the first 9 months would be an initialgrant, while that for the final 6 months would be a con-tinuing grant. It is important to note that each grantaward must be at least 5200.

Payments to Supplemental Grant recipients are madefrom funds for the award period in effect at the time ofdisbursement. Students enrolled in a program whichspans June 30, then may receive disbursements fromfunds from two award periods even though a singlegrant (either initial or continuing) may be involved. Asan example, a stirdent enrolls in an 8-month programbeginning on April 1, and two payments are to bemade, the first upon enrollment in April and the sec-ond at the mid-point in August. The first paymentwould be made from award period one and the secondfrom award period two. If the grant is an initial grant,both payments would be from IY funds. If it is a con-tinuing grant, both payments would be from CY funds.

IV. Transfer of Funds to the CollegeWork-Study Program

An institution is permitted to transfer up to 10 per-cent Of itS allocation for an award period under SEOGto its allocation of funds for that same award period toits College Work-Study program. It is not necessary torequest permission from Office of Education to effectsuch a transfer. Similarly, an institution may transferfrom CWS up to 10 percent of its allocation to SEOG.This provision gives an institution flexibility in the useof its funds once they have been allocated to the in-stitution.

If the institution finds that it needs additional fundsin the Supplemental Educational Opportunity Grantprogram and is unable to 'fully utilize its Colleg-Work-Study program allocation, it may then want tctransfer up to 10 percent of the CWS funds to SEOG inorder to utilize all of the funds allocated. These fundsmay be used either in the initial year SEOG account orcontihViirSEOG accountdrpirbetweer-Fthe two in

the continuing year account or split between the two,provided that the total amount transferred does not ex-ceed 10 percent of the combined initial year,and con-tinuing SEuG allocation for that year.

This transfer of funds be reported on the in-stitution's fiscal operations report. When making atransfer from one account to another, an institutionmust expend all of the funds transferred prior to the'end of the fiscal year or return the unexpendedbalance to the original account. For example, an in-stitution is short in initial year SEOG funds and hasextra funds in CWS. It decides to transfer $5,000 fromCWS to initial year SEOG. At the end of the year, itfinds that it has only expended $4,000 of the fundstransferred into the initial year SEOG account. In sucha case, the other $1,000 transferred must be returnedto the original CWS account. In this example, the in-stitution would report $4,000 as the amount of thetransfer from CWS to initial year SEOG.

V. Maintenance of Level of StudentScholarship and Student AidExpenditures

A. Purpose

The purpose of the maintenance of effort require-ment, historically and currently, is to ensure that in-stitutions participating in the College Work-Studyand/or Supplemental Educational Opportunity Grantprograms do not use Federal funds in place of institu-tional funds for student financial aid. Each institutionparticipating in. either- of the two- programs is requiredto continue to spend during each Federal award periodin its own graduate and undergraduate scholarshipand student aid programs (including student employ-ment)an amount'not less than the average expenditureper year made for that purpose during the most recentthree fiscal years immediately preceding the effectivedate of its agreement with the Office of Education.

Once established, this average is permanent anddoes not change from one year to the nextunless oneof the following situations occur: (1) an institution isparticipating in only one of the- two programs (i.e.,SEOG or CWS) and subsequently enters the otherprogram; (2) an institution drcips out of one or both ofthe programs and re-enters at a later date; or (3) newlegislation requires the institution to recalculate its ie-quiresLexue_nditures

whatever proportion is desired. Similarly, if an institu-tion is short of funds in CWS but has extra funds inSEOG, it may transfer up to 10 percent from the initialand/or continuing year accounts to CWS. The amountsmay come all from the initial year account or all from

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B. Definition of InstitutionalScholarship and Student Financial Aid

The term "institutional scholarship and student finan-

ci cl

cial aid" encompasses any expenditure of institutionalfunds for scholarships, grants, loans, and employment atboth the graduate and undergraduate levels. This in-cludes any funds which are given to the institution froman organization outside the institution but which are con-trolled and administered by by the institution and areawarded to student as scholarships or son,: other form ofstudent financial aid.

An institution must include as part of its maintenanceof effort those expenditures for scholarship or studentaid given to students who are not eligible toparticipate in the College Work-Study or Supplemen-tal Educational Opportunity Grant programs as well asinstitutional financial assistance given to those stu-dents who are eligible for these programs. The Officeof Education recognizes that there may be somedifficulty in determining the degree to which certaincategories of institutional expenditures can beclassified as student aid and therefore permits someflexibility so long as each institution follows a consis-tent procedure from .4year to year.

The level for a particular institution is determinedby calculating the average of the expenditures madeduring each of the three fiscal years immediately pre-ceding the latest of the following dates:

1. the effective date of any agreement under theCollege Work-Study program or the EducationalOpportunity Grants program which was in effect onJune 30, 1973;2. the fiscal year for which the institution receives orreceived its first allocation of funds under the Col-lege Work-Study program;3: the fiscal year for which the institution receivedits first allocation of funds under the EducationalOpportunity Grants program; or4. the fiscal year for which the institution receives orreceived its first allocation of funds under the Sup -pleitiehtal Educational Opportunity Grant programif the institution did not participate in the Educa-tional Opportunity Grants program during the1972-73 fiscal year.

C. Types of Expenditures to be Countedas Institutional Scholarships and StudentFinancial Aid

The main typet of expenditures which are to be in-cluded in the maintenance of effort computations areas follows:

1. institutional grants-in-aid;2. institutional scholarships, including state

scholarships if they are controlled and administered bythe institution;3. institutional waivers of tuition or fees;4. institutional student loans;5. institutional share of National Direct Student

Loans;

6. loans made under the Guaranteed/Federally In-sured Student Loan program if the institution is thelender;7. institutional share of ,United Student Aid Funds,Inc., College Reserve *gram;8. institutional share of Nursing and Health Profes-

sions financial aid programs;9. institutional employment (exclusive of Federal

share of College Work-tudy program);10. institutional share of College Work-Studyprogram (limited to on-campus institutional shareunless the institution has provided off-campusmatching share from its own funds);11. student wages from employment contracted by

'an institution with a private concern, with a provi-sion that a given number of student job's (not paidfrom College Work-Study funds) are in the contract(e.g., food service, maintenance, etc.).In the area of student employment, all work per-

formed by students for the institution is to be included,regardless of its purpose and whether such work is full:-time, part-time, seasonal, temporary, sporadic, etc.The institution should count actual cash payments forthe fair cash value of payments made in services inreturn for work performed by students. It is immaterialhow the institution records such employment in itsbooks. For example, some institutions may refer totheir student employment program as a "work scholar-ship" or "work grant" program. This is particularlytrue at institutions which provide work opportunitiesfor all students.

D. Types of Expenditures not to beCounted as Institutional Scholarship andStudent Financial Aid

The following are examples of sources of financialassistance that cannot he counted as scholarships orstudent financial aid for purposes of computing themaintenance of effort figure:

1. scholarships, grants or gifts which are not ad-ministered or controlled by the -institution and aregiven directly to students by groups or organizationsoutside the institution;2. State scholarships, which are not administered

and controlled by the institution;3. loans from outside sources which are not subject

to Control by the institution;4. loans under the Guaranteed /Federally, Insured

Student Loan program unless the institution is thelender;5. student employment not managed and -con-

trolled by the institution;6. income from jobs financed by the Federalgovernment through research under a Federalgrant;7. Federal share of National Direct Student Loans,

Cr-

5-.7

College Work-Study, or Nursing and Health Profes-sions financial aid programs;8. governinent benefits such as Social Security, G.I.

Bill, war orphans, vocational rehabilitation, etc.; .

9. ROTC and NROTC scholarships;10. specialized programs of various Federal agen-cies such as Bureau of Indian Affairs and Law En-forcement Assistance Administration.

E. Reporting Maintenance of Effort

An institution is generally requested to furnish itsmaintenance of effort data in a special section of theinstitutional application to participate in Federal stu-dent financial aid programs. When first establishing anaverage, the institution will report the pertinent figuresconcerning irmitutional expenditures for scholarshipsand student aid for the, previous three fiscal years.Each year thereafter the institution will report only itsexpenditures for the previous fiscal year.

5 -8

F.)Waiver

of the Maintenance ofLevel of Effort

The Commissioner is authorized to waive the main-tenance of effort for a fiscal year under special andIn:usual circumstances. These circumstances would in-clude such conditions as an institution's inability to ex-pend the amount required due to a withdrawal offunds from outside sources or a decline in enrollmentwhere the institution continued to expend in its ownscholarship and student aid programs on a pre-enrolled student basis an amount at least equal to theaverage amount expended for enrolled students duringthe three year base period.

Waivers may also be granted in special circum-stances if an institution withdraws as a lender under theGuaranteed/Federally Insured Student Loan program.An institution which is having difficulty maintaining itslevel of effort should contact its Regional Office ofEdUcation for advice and assistance on this problem.If a waiver is in order, the Regional Office can assistthe institution in submitting to the Bureau of StudentFinancial Assistance the appropriate information anda description of the circumstances which would justify awaiver.

Chapter 6

e College Work-StudyFrograrn

I. Statutory Authority And Purpose

PageA. Statutory Authority 6-3B. Program Purpose 6-3

Eligibility

A. Institu n a' EligibilityB. Are.. 1,m..itional SchoolsC. Special CWS for Students Who

. Reside in American Samoa or theTrust Terrority of the Pacific Islands

D.Mutti-Instittitional Arrangements ,.

Eligibility and Selection OfRedipients

I

6-36-3

6-46-4

CWS

A. Student 'Eligibility CriteriaB. PreferEnce to Students with the

Greater Financial needC. AmOunt of Award

IV. Development Of Jobs

A. Conditions for Employer Participa-tion

6-4

a. Federal, State or Local PublicAgencies

b. Private Non-Profit Organiza-tions

2. Work Performed in the Public In-terest

3. Execution of Off-Campus Agree-ments

4. Supervision and Evaluation ofOffCampus Employment

D.Jo b DescriptionE. Wage Rates

1. Establishing Wage Rates2. Wage Rates as Relat'd to Need3. Minimum Wage Rate4. Maximum Wage RageHours of Employment1. Meaning of Hourly Employment2. Maximum Hours of Employment

Page

6-7,

6-7

6-7'

6-8

6-36-86-96-96-96-96-96-96-96-10

6-4 V. Employment During Periods of6-5 Non-Enrollment

6-51. Displacement of Regular

Workers 6-52. Religious Involvement - 6-53. Political Involvement 6-54. Dues and Fees Prohibited 6-55., Voluntary Services' : 6-6

B mplpyment On:Camput 6-6''General, 6-6

2. Limitation of Employment inProfit-Makin Activities 6-6

3. -Employment inFOod Service Qe,

Other Coractual Operations 646:4. Employment in a Foreign Coun-

try5. Prohibition Against On-Camptis

Employment at Proprietary In-.- stitutions,of Higher Education., . 6=6

6, Academic:Credit for lfork-Study. C. Employment bff-Campus .6-7

1. Qqalified Off - Campus Otianiza,=%dons ti 6-7

A.

; A. Eligible Periods of Non-Enrollment. B. Student Eligibility

C. Types of Employment Permitted4. D.Savings from Jobs

Financial Management

6-106-106-106-10

A.Federal Share of CompensationPaid to Students 6-111. Limitation of Amount 6-112. Waiver of the Limitation on the

Federal ShareB. Institutional Share of Student Com-

pengationt 6-111. Minimum Amount.. t 6-112. Source of Institutional Share .. 6-123. Non -Cash ;Institutional Share of

Student Compensation 6-12C Other Uses of Funds 6-12

1. Administrative'Expense's 6-122. Transfer of Funds to the Supple-

mental Educational OpportunityGrant Program 6-13

3. Job Location and Developmentp.- Program 6-13Payment of Wages to Students 6-13

6-11

6-1

Page VII. Job Location and Development1. Accounting, Recordkeeping and Program

Reporting 6032. Pajtro 11 Period 6-13 Page

3. Time Record Form 6-i34. Payroll Vouchers 6-13 A:General Requirements 6-155. Non-Cash Contribution Record. 6-14 B. Institutional Eligibility. 6.156. Disbursement ProCess 6-14 C. Financial Management 6-15

a. Payment by Checkb. Proof of Payment

6-146-14

1. Federal Share2. Institutional Share'

6-156-15

c. Payroll -DisbuPserpertis I-Pand- 3. Allowable Cost 6-16led by an Off:Caniptfs Agency 6-14 4. Maintenance of Effort for Job

7. Student Wages Not Exempt from Locaiion. and DevelopmentGarnishment 6-14 Program 6-16

E. Maintenance of Level of Student 5. Records and Fiscal Procedures 6-16Scholarship and Student Aid Expen-ditures 6-14

6-2

Fr a

8

r

Y

Chapter 6

, College Work-StudyProgram

Stautory'Authority and Purpose

A. Statutory Authority

The College Work -Study program was originallyauthorized by the Economic Opportunity Act of 1964.The Higher Education Amendments of 1968 (Piz.90-575) transferred the statutory authority for theprogram to the Higher Education Act of 1965 (P.L.89-329), as amended. CWS is currently, authorizedunder part C of Title IV of the Higher Education Actof 1965 as amended b the Education Amendments of1968, 1972 and 19'76, inter alia.

B. Program Purpose

The primary purptse of the College Work-Studyprogram (CWS) is to stimulate and promote the part-time employment of students. The program is designedfor those studenti who have, great financial need andwho are in need of the earnings to pursue a course ofstudy at an institution of postsecondary education.CWS is oftentimes awarded to students with otherforms of financial assistance. This enables studentswith the greatest need to meet their educational ex-penses without the necessity of incurring an undulyheavy burden of indebtedness. The program is also in-tended to broaden the range of worthwhile job oppor-tunities for qualified students. Federal grants are madeto eligible institutions which desire to participate inCWS.

II. :Institutional and ProgramEligibility

A. Institutional Eligibility

In oreerto pirticipate in CWS an eligible institutionmust be located in 'one of the 50 states of the Union,the District of Columbia, the Commonwealth of PuertoRico, Guam, American Samoa, the Trust Territory ofthe PaeifielIslands, the U. S. Virgin Islands or the

Northern "'Mariana Islands. Eligible institutions in-clude institutions of higher education and proprietaryinstitutions of higher education as explained inChapter 2. Area vocational schools may also be eligi-ble as explained in the following section.

B. Area Vocational Schools

"Area vocational school" includes specialized highschools, a department of a high school, technical orvocational schools, and department or divisions of ajunior college or community college or universityoperating under the policies of the State Board (seeSection 175.2 of the CWS Regulations). These schoolsmust provide vocational education to persons who areavailable for study in preparation for entering thelabor market.

Area vocational schools may use College Work-Study only for students who are enrolled in eligibleprograms. To be eligible, a student enrolled inan area vocational school must have a certificate ofgraduation from a school providing secondary educa-tion or the recognized equivalent of such a certificate.In addition, the student must be pursuing a program ofeducation or training which requires at least Sixmonths to complete and which is designed to preparethe student for gainful employment in a recognized oc-cupation. This means that students enrolled in one partof the institution may be found to be eligible for CWSwhile students enrolled in another part may be ineligi-ble.

It is important to note that the above restrictions ap-ply only to those institutions which do not meet the re-quirements of the definition of an institution of highereducation. A vocational technical school which meetsthe eligibility criteria of an institution of higher educa-tion is not an area vocational school as defined in Sec-tion 17.2 of the CWS Regulations. Institutions withquestions regarding their status should contact the

'Regional Office of Education.Area vocational schools may also qualify for funds

from the Vocational Work-Study program,Rules and regulations for this program are differentfrom the College Work-Study program. An institutionwhich receives funds from both programs must ad-minister them separately and according to the applica-ble regulations for each program,

6-3

C. Special CWS for Students Who Residein American Samoa or the Trust Territoryof the Pacific Islands

The Office of Education is required to set aside eachyear a sum of money from the CWS appropriation tobe used for the employment of eligible students whoreside in, but who attend eligible institutions outsideof, Americin Samoa or the Trust Territory of thePacific /.lands. Any eligile institution may submit anapplication for ti,ese specrSal funds. An award madeunder this provision must be used only for the employ-ment of eligible students from American Samoa or the

Trust Territory of the Pacific Islands. The Trust Ter-ritory consists of the following groups of islands: theSouthern Marianas, the Carolinas, and the Marshalls.Students from Guam, the Virgin Islands, the NorthernMariana Islands, and Puerto Rico are not eligible forthese special funds.

An institution requesting the special funds should beaware that the CWS grant to employ students fromAmerican Samoa or the Trust Territory is separatefrom the institution's regular CWS award. It carries adifferent document number and requires separate ac-counts and reports. A separate application form is re-quired for each year an institution participates in thisprogram. An application for these special funds ismailed to each institution in the spring.

'Eligible students from American Samoa or the TrustTerritory may also receive assistance under the regularCWS, Supplemental Educational Opportunity Grantor National Direct Student Loan programs. An institu-tion which has a small number of such students shouldconsider this option.

D. Multi-institutional Arrangements

Several off-campus programs have been developedusing a consortium concept. This means that two ormore participating institutions have joined together orhave cooperated with a non-profit agency to coordi-nate their off - campus programs. The consortium ornon-profit agency provides job identification, place-ment, administrative services and supervision of CWSfor participating member institutions and admitistra-five support for the off-campus employers.

Examples of statewide programs are the NorthCatotina PACE, Virginia program, Montana Com-pact, Massachusetts Interns and Arkansas Plan. MajorUrban Corps projects are located in NeW York City,Chicago, Atlanta, Minneapolis, St. Paul, Cincinnati,Dayton and Detroit.

All 'institutions participating in a cooperative ar-rangement-must have a written agreement with the con-sortium or non-profit agency. This agreement must'contain the terms, conditions and 'assignment ofresrmsibilitics between each party to tite agreement.

6-4

The procedure for applying for CWS funds for an in-stitution that participates in a cooperative arrangementdepends on whether or not it also participates in theNational Direct Student Loan and/or Supple-,entalEducational Opportunity Grant programs. An institu-tion that does participate in NDSL and/or SEOG mustsubmit its own application for Federal funds.

If a cooperative arrangement is made between twoor more institutions which do not participate in the Na-tional Direct Student Loan or Supplemental Educa-tional Opportunity Grant programs, the designatedgrantee for this arrangement may enter into an agree-ment with the Commissioner on behalf of all of the in-stitutions. The grantee may file a single application forfunds under this program provided tha:. all of the in-stitutions participating in such an arrangement are lo-cated in a single state. If these institutions are fromdifferent states, a separate application for funds mustbe filed for the group of institutions located withineach state. The funds allocated to institutions par-ticipating in a cooperative arrangement in one statemay only be used for students enrolled in one of theparticipating institutions in that same state.

Because of the complexities involved, institutionsdesiring to participate in such an arrangement are en-couraged to work with their Regional Office of Educa-tion Staff. By doing so, the institution can avoidnumerous difficulties and create an arrangementwhich can be most satisfactory to all parties concerned.

Ill. Eligibility and Selection of CWSRecipients

A. Student Eligibility Criteria

To be eligible for a CWS award, a student must meetall of the general provisions listed in Chapter 2. In ad-dition, the student must meet all of the studenteligibility requirements which are common to CollegeWork-Study, Supplemental Educational OpportunityGrant and the National Direct Student Loan programsas outlined in'Chapter 4.

Additionally, students must show evidence ofacademic or creative promise and the capability ofmaintaining good standing in their course of studywhile employed under CWS.

B. Preference to Students with theGreatest Financial Need

Each institution participating in CWS is responsiblefor determining the eligibility of students participatingin its program. An institution must make employment

under CWS reasonably available (to the extent ofavailable funds) to all eligible studegts in the institu-tion who are in need of such funds. In the event thatmore students are eligible for CWS awards than fundsavailable, the institution must give preference to thosestudents who demonstrate the greatest financial need.In determining who has the greatest financial need, theinstitution must take into consideration grant assis-tance that has been provided to the student by anypublic or private source and funds to which the studentis entitled under the Basic Educational OpportunityGrant program whether or not that student has appliedfor the Basic Grant. The procedures used by the in-stitution must be ( I) uniformly applied to all students,(2) set forth in writing, and (3) maintained as part ofthe institution's files.

C. Amount of Award

The institution should determine an appropriateaward amount for each student offered employmentunder CWS. In setting this amount, the institutionshould consider the individual student's financialneed, number of hours per week the student can work,length of the academic program or period of eviploy-ment, anticipated wage rate,' and amount of otherassistance available to that student. In no case shouldthe CWS award in combination with other sources offinancial assistance exceed the student's need. Whilethere is no minimum or maximum award amount astudent may receive under this program, the institutionshould determine the amount for each individual stu-dent based on the above factors. See Section 175.14 ofthe CWS Regulations for additional information onawards and overawards.

IV. Development Of Jobs

One of the major aspects of CWS is to develop jobsfor students awarded funds under this program. Thesejobs may be developed on-campus (except in proprie-tary institutions) and off-campus in private, non-profitorganizations or Federal, state or local public agen-cies.

A. Conditions for EmployerParticipation

The restrictions discussed below are applicable toall work under CWS whether for the institution or aqualified off-campus agency.

1. Displacement of Regular Workers

Employment under CWS must not result in the dis-placement of employed workers or impair existingcontracts for services. Employers are cautionedagainst the use of students in jobs which traditionallyand customa.ily have been filled by full-time person-nel from outside the institution. It is the intent of theprogram to create new job opportunities. institutionsare advised to keep this thought foremost in mind asthey develop their program.

2. Religious Involvement

CWS positions must not involve the construction,operation, or maintenance of any portion of a facilitywhich is used or is to be used for sectarian instructionor as a place for religious worship. In determiningwhether or not employment will violate this restriction,it is the purpose of the work which must be mostcarefully considered rather than the nature of theemploying organization. The institution must insurethat the particular position to which the student isassigned does not involve sectarian instruction or thereligious activities of a church (or of a chur0-affiii-ated organization or institution) if it is to be supportedunder CWS.

3. Political Involvement

Positions under CWS must be free of political in-volvement: Under this prohibition, a student could notbe assigned to work for an individual member of Con-gress, an individual member of a State legislature, orfor any of the various committees of the U.S. Congress.However, a student could be assigned to the staff of astanding committee of a State legislature if the selec-tion of a staff for that committee and the work per-formed by the staff is conducted in a nor -partisanfashion. Further, the political support or affiliation ofthe student may not be taken into consideration. Posi-tions that involve lobbying at the Federal level, oremployment for USOE are also prohibited.

4. Dues and Fees Prohibited

Employers may not solicit, accept or permit to besolicited from a student or a student's parents orspouse, any fee, commission or compensation of anykind, or the granting of a gift or gratuity as condition orprerequisite for the student's CWS employment.However, if a student is required to belong to a unionand pay dues as a condition of employment, andfurther the dues are assessed against non-CWSemployees, then the dues may be paid by the studentsfrom their compensation while employed under the

6-5

program. Generally, CWS employees should not betreated differently than non-CWS employees perform-ing a similar function.

5. Vol ontary Services

The Fair Labor Standards Act of 1938; az amended,prohibits a covered employer (including educationalinstitutions) from accepting voluntary services fromany paid employee. Therefore, any student who isemployed under CWS must be paid for all -hoursworked. (Contact the nearest Office of the Wage andHour Division, Employment Standards Administra-tion, U.S. Department of Labor, for informationregarding voluntary services of institution employees).

B. Employment On-Campus

1. General ,

On-campus employment is, of course, mutuallybeneficial to the student and the institution. It expandsemployment opportunities for needy students and, atthe same time, provides needed services for the institu-tion. While there are often a number of essential jobsin the clerical and/maintenance areas, an effort shouldbe made to deve)op a variety of positions suitable to .awide range of s Udent skills and interests. Placement ofstudents in jo related to their academic area of studyis certainly orthwhile in terms of job satisfaction andconsequenyproductivity. A biology major, for examplemay be ost valuable in the biology laboratory. Thepossibil. of using student personnel majors in the stu-dent fi ancial aids office should not be overlooked.

Ge erally, a student may be. employed in anydep rtment, division, office or other unit of the institu-tio CWS students may also be assigned to assist anin ividtial professor, if 'the work involved is the type

O'10 the institution would normally support under itswn employment program. The assignment of a stu-

dent to serve as a research assistant to a professor, isone example. This is appropriate as long as the workperformed by the student is in line with the professor'sofficial duties and is considered work for the institu-tion itself. If the work meets this test, the fact that someincidental personal financial benefit may ultimatelyaccrue to the professor is of no concern.

2. < Limitation of Employment in Profit-Making.Activities

If an institution is engaged in profit-making ac-tivities, work on such activities is not permissibleunder CWS. Profit-making activities may include theoperation or rental of athletic fields, auditoriums,theaters, parking lots, etc. For example, if the institu-tion leases a facility to a private sports club or

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organization, any jobs created as a result would notqualify as CWS positionis.

This limitation does not apply to events which areconducted as part of the educational, cultural orathletic programs of the institution itself. The fact thata fee may be charged for entrance to such an eventdoes not, in itself, disqualify any jobs related to theevent from being CWS positions.

3. Emphlyment in Food Service or OtherContractual Operations

An institution may assign CWS students to work inits food service (or other operations such as security orcleaning) under the supervision of a private contractorif the contract betweep the institution and the profes-sional service company specifically provides for theemployment of acertain number of students. In, orderto employ College Work-Study students with a privatecontractor, the contract must speCify that the institutionretains final responsibility for the selection of CWSstudents-for these-positions and for the determinationof each student's wage rate. CWS employment undersuch a contractual arrangement is considered employ-ment for the institution itself and is classified asemployment on-campus. In effect, the institutionsimply reserves the' right to'reduce the cost of its foodservice or other contractual operations through theprovision of student labor.

4. Employment in a Foreign Country

Normally, employment in a foreign country is notpossible under the i. An institution of higher educa-tion which has a branch campus located in a foreigncountry, howe:ver, may employ its own students underCWS at that branch campus if the overseas extension isa separate branch with its own facilities, administrativestaff, and faculty. These students may also beemployed by a U.S.Government facility such as anEmbassy or military base.

The employment of a student as an assistant to anindividual professor on a field trip abroad or employ-ment fot a non-profit organization in a foreign countryis not permissible.

S. Prohibition Against On- CampusEmployment at Proprietary Institutions of HigherEducation

No work for a proprietary institution of highereducation is eligible for Federal financial participationunder CWS. Therefore, students enrolled in participat-ing proprietary institutions may be employed under theCo lleg - to program only in work fororganizations other t n the institution itself. In thiscontext, any entity which controls or is controlled bythe governing board or proprietors of the institution is

considered part of the institution. Any work off -cam-pus mustbe in the publicnterest and be for a qualifiedoff-campus agency.

6. Academic Credit for Work-Study

Orli area Of concern has been the earning ofacademic credit while performing a College Work-Study job. The opportunity to receive academic creditwhile employed in a CWS job exists,'but is consideredsecondary to meeting a student's financial need.Where possible, the institution should strive to relate ajob to the student's educational program and careerobjectives.

There are limitations to the granting of academiccredit to a student on CWS. Generally, an internship orpracticum which s requirement of a degree or cbrtifi-cate and which is usually performed withoutremuneratiort4oes not qualify under CWS. For exam-ple, student teachers and nurses often must complete apracticum or internship to fulfill their degree require-_menTs.Tf this requirement-isgenerally completed with-out remuneration, the practicum or internship wouldnot qualify under CWS. On the other hand, if most stu-dents complete this requirement in a position wherethe student receives remuneration, the student beemployed under CWS. In no case may a student bepaid for receiving instruction in a classroom, laborato-ry or other academic setting.

C. Employment Off-Campus

Off-campus CWS is a benefit to the student, the in-stitution and the employer. It affords students a valua-ble experience which helps in making better careerchoices. Often it helps to integrate one's educationalprogram and career objectives through clinical job ex-periences. The off-campus employer benefits by beingable to expand its, activities with minimal costs. Institu-tions are encouraged to develop off-campus employ-ment opportunities for their students.

1. Qualified OffrCampus Organizations

The institution is responsible for ensuring that anyqualified, off -campus organization with which it entersinto an agreement is a responsible agency with profes-sional direction and staff, and that the work to be per-formed by the students is adequately supervised andconsistent with the purpose of CWS. The off-campusagency must meet all of the conditions for employerparticipation discussed in Section IV-A, above.

a. Federal, State or Local Public AgenciesInstitutions may negotiate off-campus agreements

with Federal agencies, as well as with State and localpublic agencies. The statutory requirement that theFederal share of student compensation may not ex-

ceed 80 percent refers only to Federal funds ap-propriated specifically to operate the College iVork-Study program. Most Federal agencies have theauthority to enter into an agreement with an institu-tion of higher education and to provide ihe.requ iredshare of student compensation normally paid by off-campus agencies, plus any other necessary andallowable employer costs agreed upon.

Because of a potential conflict of interest, employment with the Office of Education or any of ix;;Regional Offices is prohibited.

Local public agencies include such units as city orcounty governmental offices, public schools, com-munity owned hospitals, public libraries, communitycenters, etc. Institutions will want to becomefamiliar with as many local agencies as possible sothat they may enter into agreements with those thatcan provide meaningful employment opportunitiesfor their students.

b. Private Non-Profit OrganizationsNon = profit means-thatno-parrorthe iiet earnings

of an agency may inure to the benefit of any privateshareholder or individual. An organization must beincorporated as such under Federal and/o statelaw. An institution which is classified as a tax-ex-empt organization by either the Federal or State In-ternal Revenue Service meets this requirement.

Examples of private non-profit organizations arehospitals, private schools, day care centers, half-wayhouses, crisis centers, summer camps,

2. Work Performed in the Public Interest

The services to be provided by students in theiremployment with off-campus organizations must be ofbroad benefit to the population at large in order to beconsidered in the public interest. Work will not be con-sidered in the public interest if it is primarily for thebenefit of the members of a limited membershiporganization rather than the public at large. In thisregard, it is necessary to look not only to the overallpurpose and activities of the organization, butspecifically to the work to be performed by the student.For example, a student may be employed by a privatenon-profit civic club. If the student's work involves acommunity drive to aid handicapped children, thiswould, of course, be in the public interest. If the stu-dent's work were confined to the internal interests ofthe club, ch as a campaign for membership, this typeof work ou benefit a particular limited membershipgroup and, the efore, would not be considered in thepublic interes

Questions a iikn2tyi .arisen connection with employ-ment for private non-profit Membership organizations,such as a golf club or swimming pool. Employment forsuch organizations is acceptable only if the use oftheir facilities is open to the public on the same terms

iV r)6-7

as to members of the club. If the use of these facilitiesis limited or is given on a preferential basis to a selectmembership, CWS employment for local organizationsof this rtype is not acceptable.

3. Execution of Off-Campus Agreements

A written agreement between the institution and off-campus agency is required. A model off -campusagreement form which incorporates the pertinent pro-vision's is shown as an appendix to the CWS reguia-tions. This form need not be followed precisely, but isintendd to serve as a guide for the establishment of anacceptable agreement. Additional or substituteparagraphs may be devised which are not inconsistentwith the statute or regulations.

The off -campus agreement establishes the arrange-ment for on-site superVision of students, control of the

. hours of work, the maintenance and submission ofweekly time records, payroll procedures, the promptcontribution of the organization's share of the payroll,and -in- general.- provides- -for-- complete documentationof all responsibilities and financial transactions for theduration of the project.

The off -campus agreement indicate which par-ty (institution or off-campus agency) is considered the.student's employer, a factor-which is important withregard to the Social Security coverage of studentsemployed under the College Work-Study program andwhich may also be highly pertinent in cases of injuryonthe job. A specific provision designating theemployer's responsibility in case of injury on the job isparticularly important since Federal funds may not beused to pay for an injured student's hospital expenses.Whether the institution or the agency would be deter-mined in case of legal test to be the employer for pur-poses of establishing, liability for a student's injury onthe job may vary depending upon the specific details ofany given off-campus agreement. Generally, the legalcriterion for determining who is, in fact, tl)e employerdeliends upon which entity has the right to ultimatedirection and control of employees in the performanceof their duties. The model off -campus agreement formcontains one paragraph to be used if the institutionwishes the student to be considered its employee (andto have the benefits of coverage under its SocialSecurity and workmen's compensation arrangements)and an alternativek aragraph to be used if the institu-tion prefers for t off-campus organization to be thestudent's employer.

The off-campus agreement should also state theshare. of student compensation to be paid by the off-campus agency as well as any other costs to be paid bythe agency.

The prompt contribution of the share to be paid bythe off-campus organization is particularly importantto the institution, since the institution is responsible formaking certain that students receive each pay day the

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full wages which they earned in the preceding payperiod. Failure of the organization to make its con-tribution does not excuse the institution from fulfillingthis obligation.

4. Supervision and Evaluation of Off-CampusEmployment

The specific elements of a system for supervising.off -campus ,..mployment of students are a matter forinstitutional determination. Such a system must pro-vide the required documentary information andshould'be consistent with prudent management of theprogram.

Institutional officials responsible for overall con-duct of the program should arrange periodic visits toeach prganization with which an active arrangementexists. These visits will serve to establish whether thestudent is engaged in appropriate and acceptable workand whether the terms of the off-campus agreement arebeing fulfilled. Visits may be made by faculty or staffniembeTsi)r, if t he organization is located-atsome dis-tance frotn the institution, by other personnel whomthe institution is willing to permit to act as its agent.

An institution may arrange meetings on the campuswith staff-members of the off-campus organization inorder to acquaint them with its financial aid and stu-dent employment programs. These meetings, coupledwith the institution's on-site visits and any written in-formation about the program which it can furnish tothe organizations, can yield many positive benefits tothe institutions, not the least of which is gaining iden-tification on the part of the employing organizationwith the institution's educational aims and objectives.

Many institutions have also found it helpful, indetermining whether to continue an _ofE-campus ar-rangement, to require students to submit a formalevaluation of their work experience at the conclusionof the assignment. The evaluation can also be used bythe institution in helping organizationr to improvetheir work programs.

D. Job Description

Each CWS positidh must have a job descriptionwhich includes the following: name of employer (i.e.,department, public agency, non-profit organization),address, purpose of job, duties and responsibilities,job qualifications, wage rate or range, length ofemployment (beginning and ending dates), and nameof supervisor.

The job description fulfills several significant pur-poses. First, it will assist the institution in determiningwhether or not the job qualifies under the CollegeWork-Study program. Second, it_ provides the informa-tion needed to explain the position to a student. Third,

it helps students select the type of employment whichbest relates to their educational or career objectives.Fourth, it aids the financial aid administrator, student,and supervisor in determining the number of hours ofwork required at the specified wage rate to meet thestudent's financial need. Fifth, it establishes a writtenrecord for both student and employer of the duties andresponsibilities of the job.

E. Wage Rates

1. Establishing Wage Rates

Wage rates should be a function of the duties andresponsibilities of the particular job. The ,duties andresponsibilities determine the skills and abilitiesneeded to per/form the job. These skills and abilitieshave a market value, which may, however, vary fromone geographical area to another.

Tr.f.; criteria to be used in establishing the rate atwhich any particular student is paid are: (a) the par-ticular set of skills and abilities needed to perform thejob; (b) the prevailing rate at which persons with thoseskills and abilities are paid in the local area for doingjobs of a particular kind; and (c) any applicableFederal, state or local legislation which would requirea particular vIge rare.

The practict.. of paying students wage rates base(' ex-clusively on their year in school is permissible onlyunder a given set of circumstances, namely that

:.satisfactory performance of a job at a given level ofskill is dependent upon that student's level ofacademic advancement. As a general rule of thumb,comparable wages should be paid for comparablework, whether the work being compared is that of twostudentsat different class levels or that of a studentand a regular employee.

Varying %spa-cc rates enable institutions to pay stu-dents a wage commensurate with.the skill required fora particular job and, in addition, offer promotional in-centive to the student as (s)he becomes more profi-cient on the job. Wage rate differentials based on race,creed, color, national origin, or sex are not permissi-ble.

2. Wage Rates as Related to Need

It is not acceptable to base a stm..it's wage rate onneed or any other factor not basically related to his/herSkills and abilities. The student's need places an upperlimit on the total earnings under the program, but thistotal is as much a factor of number of hours per weekand number of weeks worked as it is of the hourly rate.

3. Minimum Wage Rate

Regulations require that the minimum rate for a stu-dent employed on campus under CWS be $2.30 an

hour until June 30, 1978 and $2.65 an hour from July1, 1978 through June 30, 1979, or such higherminimum wage as may be required under any applica-'ble Federal, state, or local legislation. Section 175.24of the CWS Regulations presents minimum wage ratesafter June 30, 1979. The minimum wage rate of $2.65an hour became effective for private institutions onJanuary 1, 1978. Future increases for private institu-tions will also become effective on January 1.

Public institutions may request a rate of compensa-tion lower than the minimum if exceptional circums-tances warrant a lower rate and its approval is notprecluded by law and is consistent with and promotiveof the purposes of CWS. To obtain approval, a publicinstitution must submit a separate application to theBureau of Student Financial-Assistance.

Private institutions may request a lower rate by filingan application with the Secretary of Labor, Wage andHour 'Division, Employment Standards Administra-tion, U. S. Department of Labor. The Secretary mayestablish a sub-minimum wage rate under provisionsof the Fair Labor Standards Act for full-time studentsat a private institution. That is the minimum wage rateunder CWS for those students. ki- Institutions needing assistance in applying for a sub-

minimum rate should contact their Regional Office ofEducation, or the State office of the U. S. Departmentof-Labor, as applicable.

4. Maximum Wage Rate

There is no maximum rate under, CWS. However,institutions should set wage rates in accr-dance withthe qualifications required to perform the _particularjob. Wage rates under CWS should be comparable torates normally paid by the institution for similar non-CWS employees.

F. Hours of Employment

1. Meaning of Hourly Employment

As a part-time employment program, CWS providesfor payment on anthourly basis only. Students may notbe compensated under a salary, commission or fee ar-rangement. In addition, fringe benefits such as paidsick leave, vacation pay and holiday pay which areusually part of a salary situation are not part of the pat-iem of compensation under CWS. Simply put, CWSstudents are employed under "an hour's pay for anhour's work" arrangement. However, institutionsshould not deny payment to CWS students for brief in-terruptions in their daily schedules such as rest orcoffee breaks if it is the employer's policy ind practiceto permit those interruptions for its regular hourlyemployees,

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2. Maximum Hours of Employment

The number of hours an enrolled student is allowedto work should be determined by the institution in ac-cordance with its own standards and practices, takinginto consideration the extent of the student's financialneed and the potential harm of a particular combina-tion of work and study hours on a student's healthand/or progress. Institutions should note that there areno statutory or regulatory limitations on the number ofhours per week or per term that a student can work.However, there is a possibility that employmentbeyond the amount anticipated at the time of awardmay result in an overaward. Section 175.14 of theCWS Regulations prescribes procedures to befollowed in such an event.

V. Employment During Periods ofNon-Enrollment

The primary purpose of CWS employment is to ena-ble students to meet their educational expenses. Whenschool is in session, all of a student's net earnings mustgo towards meeting the student's cost of education.During periods of non-enrollment, it is necessary forstudents to maintain themselves and therefore apart ofthe earnings may be used for this purpose,

A. Eligible Periods of*Non-Enrollment

Students may be employed under CWS during aperiod in which they are not enrolled. These periodsmay include the following:

I, A summer or equivalent vacation period for anystudent;2. The full-time work period of a c,00perativ.;education student; or3. The remaining portion of a semester, quarter orother regular enrollment period in which the studentwithdraws if he/she intends to return and the institu-tion considers the student to be making satisfactoryprogress.

B. .Student-Eligibility

To be eligible for employinentt' nderCWS during a

non-enrollment period, the institution must ensure itselfthat the student was enrolled and in attendance as at leasta half-time student during the preceding regu-lar session and will complete his or her course of studyduring the special session or will be enrolled, or hasbeen accepted for enrollment, at the institution as atleast a half-time student for the regular Session im-mediately following the non-enrollment period.

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Students who will be studying abroad under a"Junior Year Abroad" program may be employed dur-ing the summer preceding their study abroad providedthey are continuously enrolled in their American in-stitution while studying abroad and the study abroad ispart of the American institution's own program. Insuch cases, employment is limited to qualified posi-tions in the states, for the American institution'sbranch campus located in a foreign country, or by aU.S. Government facility abroad.

Transfer students are eligible during such periods ifthey have been accepted for enrollment on at least a

half-time basis at the institution for the term im-mediately followini g the period of employment. Newstudents are also eligible providing they intend toenroll during the first regular enrollment periodfollowing their employment.

The institution is obliged to exercise all due care inassuring that any student who accepts employmentduring a period of non-enrollment does so in goodfaith, A student whose eligibility is based on antici-pated enroltrnent- ina---gub-seWeiitterm may fail-16---register or may register at another institution. Whenthis occurs, an institution which employed such a stu-dent must be able to demonstrate that the student waseligible for employment and that the institution hadreason to believe that the student intended to become astudent at that institution in the next term. The docu-mentation to be secured as evidence of the student's in-tention to enroll is at the discretion of the institution.The documentation must, however, demonstrate that itwas reasonable for the institution to believe that thestudent would be enrolled as a student in the succeed-ing term, As a minimum the institution must be able tofurnish a written record which shows that the student didaccept the institution's offer of admittance.

C. Types of Employment Permitted

A job during a period of non-enrollment must meetthe same conditions as those during an enrolledperiod. See Section IV for a full description of jobdevelopment activities.

D. Savings from Jobs

It is recognized that students working under CWSduring a non-enronment period have certain expenses,which they must pay from their earnings These ex-penses include required withholding of taxes andreasonable costs incident to obtaining such earningswithin the limitations set forth below. Costs incident toemployment include commuting costs between the stu-dent's home and place of employment, the cost ofmeals at work and, if the student does not live withparents, any necessary rent and food expenses.

The expenses incurred should he kept to a

minimum. Regulations in effect at the time thishandbook was published set maximum permissible ex-penses. For a student who resides at home, the costsincident to employment may not exceed 20 percent ofthe student's gross earningsor Y00. whichever is less.If a student is only able to obtain a job away fromhome during the period of employment, the costsdent to employment may not exceed 40 percent of thestudent's gross earnings or $600, whichever is less.

The institution 'must determine the amount ofallowable expenses within the applicable limitationsfor each student. For example, students who are ableto reside on campus at a reduced rate during the sum-mer and whose employment is within walking distancemay not need 40 percent of the earnings in order tocover their expenses. In such a case, the institutionshould allow only the amount of expenses reasonablyattributed to the student's cost incident to employment.In another case, a student may be employed in a largeurban area necessitating considerably greater c.,

penses,--In-suGh a case, it wou.ld-le appropriate far theinstitution to allow the full 40 percent or $600,whichever is less, for that individual student.

It is important for the institution to docunient itsdetermination of allowable expenses. The documenta-tion should include a written statement of the institu-tion's procedures for making this determination. In ad-dition, the file for each student should, as a minimum,include the amount of allowable expenses.

The amount that a student is required to save (i.e.,net earnings) will be the difference between the grossearnings less any required withholding of taxes andreasonable costs incident to obtaining such earnings.The net earnings must be considered a resource daringthe next period of regular enrollment. To avoid anymisunderstanding the institution. should include in itsaward letter the expected gross earnings, anticipatedwithholdings, allowable costs incident to employmentand the amount required to be saved (i.e., net earnings).

If a student is .employed under the CWS programduring the summer or other comparable period whilenot attending classes, the institution may includereasonable living costs incurred by the student for thatperiod as part of the cost of education if the expectedfarnily contribution for that student is calculated on aI 2-month basis. If the stui.Lini on a 12.-monthbudget, his or her net c,irilitu;s 11.i or other'vacation period are considered :1 Nit 01 the inancial aidpackage for that twelve months.

VI. Financial Management

A. Federal Share of Compensation Paidto Students

1. Limitation of Amount

The Federal share of compensation paid to studentsemployed under CWS may not exceed 80 percent ex-cept as noted in Section A2 below. The Federalshare will he calculated on the basis of the hourly ratepaid a student. The following may not he included indetermining the Federal share:

a. Fringe benefits such as sick leave, vacation payand holiday pay; andb. Employer's contributions to Social Security,workmen's compensation, retirement, etc.While the law provides that the Federal share cannotexceed 80 percent, the institution is free to set alower percentage for the Federal share, if it sodesires. Forexample, if an institution has a large de-mand for College-Work-Study jobs from its variousdepartments on campus but does not have .,.efficientfunds to award to students, it may stretch thoseFederal dollars by requiring a greater contributionfrom the employing departments and consequently,a reduced Federal share of the wages p i.

2. Waiver of Federal Share

The Commissioner may approve for an institution aFederal share of greater than 80 percent if the institu-tion:

a. Is designated as a developing institution of highereducation in accordance with Title III of the HigherEducation Act of 1965 (Public Law 89-329).,:orb. Can demonstrate that at least 50 percent of itsstudents who are,-enrolled as at least half-time stu-dents have parents whose annual adjusted gross in-come does not exceed $7,500 per year. A waiver isrequested. by completing the appropriate section ofthe annual institutional applicat:on to participate in 'Federal student financial assistance programs.

B. Institutional Share of StudentCompensation

1. Minimum Amount

Except in those cases where a waiver has beengranted by the Commissioner,: ,ho institution's share ofstudent compensation must he eoiii per-cent. If the institution chooses to stretch kyusing a Federal share of less than 80 percent, the in-stitutional share must be proportionally increased. Forexample, if an institution decides to use a 75 percentFederal share, then the institution is obligated to pro-vide the other 25 percent. The institutional share mustbe contributed promptly in conjunction with eachpayroll disbursement.

In cases where students are working under an agree-ment entered into. between the institution and a.'ederal, state or Ideal public agency or private non-

profit organization, the agreement should state theshare of student compensation and any other costs tobe paid by the agency.

2. Source of Institutional Share

The institutional share may be derived from anysource except from Federal funds appropriated forCWS. It may be provided by the institution exclusivelyfrom its own funds, partly from institutional and the re-mainder from other funds, or totally from non-institu-tional funds as those provided by an off-campus agen-cy.

The institutional share of student compensationunder CWS may come from funds available underother Federal programs (such as NSF, NIH, etc.) solong as there is authority under other programs to doso. If in doubt, the institution should contact the ap-propriate Federal agency for a determination as towhether or not there is authority under its own particu-lar program, grant, or contract to use CWS funds for

--employment ,As-a-general rulei howeverTmost Federal-agencies are able to authorize this type of employment.

If an institution has an agreement with an off-cam-pus agency, it may recover from that agency (a) thenon-Federal share of student compensation, (h) anyrequired 'employer contributory costs such as theemployer's share of Social Security, or Workmen'sCompensation insurance to the extent that such costsare paid by the institution on behalf of the agency, and(c) any costs of administration incurred by the institu-tion in administering such an agreement either directlyor through an agent. In determining the costs of ad-ministration, the institution may only charge for thosecosts which exceed the administrative cost allowanceactually received by the institution.

An institution may not profit financially from an off-campui' agreement. If the institution receives funds inexcess of the cost of operating the program for anagency, the institution must use those excess funds to(a) reduce the Federal share of compensation to stu-dents employed by that agency, (b) be held in trust forthe agency for use in a subsequent fiscal year, or (c) berefunded to the agency.

3. Non-Cash Institutional Share of StudentCompensation

The institution may contribute its share of the com-pensation of any student employed under CWS in theform of services and equipment provided by the in-stitution to that student employee in return for servicesrendered. in no case may any such payment consist ofremittal of a charge assessed against the student ex-clusively because of his/her employment under CWS.Examples of permissible, non-cash payments include:tuition or any portion thereof, room and boardcharges, books and supplies which are not normally

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furnished free of charge, or .fees normally charged toall students.

As discussed earlier, the Federal share of CWSwages cannot exceed 80 percent except where the in-stitution has been granted a special waiver. If theamount of the institution's now-cash contribution isless than the difference between 100 percent of the stu-dent's gross earnings and the Federal share, the institu-tion must contribute in cash the difference between theFederal share of the student's gross earnings and theactual non-cash contribution.

If the institution's non-dash contribution to any onestudent in any one pay period exceeds 20 percent ofthat student's earnings in that payroll period, thebalance may be claimed as a non-cash contributiontowards that student's earnings during any subsequentpay period within the same award period. For exam-ple, the institution may defer all the student's tuitionfor one semester, then claim a non -cash. contributionequal to its share of that student's gross compensationfor each pay period which would be applied against the

-amount-of-tuition-de ferred--until-the-total-o f -such--shares of the student's earnings equals the totalamount of the tuition deferred. All amounts claimed asnon-cash contributions must be supported by adequatedocumentation such as a copy of a receipt provided toan amount credited to his/her account.

C. Other Uses of Funds

1. Administrative Expenses

An institution may use a pOrtion of funds awardedeach year for its expenses in administering the CollegeWork-Study program. The law requires that the ad-ministrative funds first be used to carry out studentco!isumer information services and the remainder forexpenses related to the administration of Title IVprograms. See Chapters 2,and 4 for furt'..er details.

The maximum administrative expense allowance forCWS is four percent of the gross compensation earnedby students employed on CWS. An institution maytake the full 4 percent, a smaller amount, or none at all.The allowance is taken directly from the Federal fundsallocated to the institution for the College Work-Studyprogram, thereby reducing the amount available forawards to students.

For planning purposes an institution should deter-mine at the beginning of the year the amounts availablefor awards to students, the institutional matching share,and administrative expense allowance. This will assistthe institution in maintaining fiscal control of thefunds. The. following procedure may be useful forplanning j-rposes.

1. If the institution plans a job locator program,subtract the amount to be set aside for the program

(up to 10 percent of the allocation to a limit of$15,000);2. Divide the remainder by .84 to obtain the grosscompensation to students.3. Multiply the gross compensation by :04 to obtainthe administrative expense allowance.It is important to note that the above formulas apply

only if an institution uses all of its funds allocated forCWS. The institution may only withdraw the ad-ministrative expense allowance based on the, actualearnings paid to students.

2.. 'transfer of Funds to the SupplementalEducational Opportunity Grant Program

An institution is permitted to transfer up to 10 per-cent of its allocation for an award period under CWSto its allocation of funds for that same award period forits Supplemental Educational Opportunity Grantprogram. See Chapter 5 for details.

3. Job Location and Development Program

In each award periok' an institution participates inCWS, it may use up to percent of the Federal fundsallocated to it under CWS or $15,000, whichever isless, to establish and operate a Job Location and ,

Development program. If an institution already hassuch a program, it may use these funds to expand theprogram at the institution. See Section VII below fordetails..

D. Payment of Wages to Students

1. Accoonting, Recordkeeping and Reporting

The accounting,. rccordkeeping, and reportingsystem should be set, up in auch a fashion as todemonstrate readily, on audit, th Federal funds havebeen used properly and only for ;h,,.; purposes in-tended. It should also provide for easy preparation ofrequired reports and for control over the rate of expen-diture. A detailed manual (referred to as the "BlueBook") covering these procedures for all Federal stu-dent aid programs has been developed for the U.S.Office of Education. An institution -TiaOcipating inCWS- should study this manual carefully and set up theappropriate records for CWS. The remaining sectionof this chapter will deal with fiscai procedures uniqueto the College Work-Study program.

2. Pr.yrol I Period

The institution may utilize any payroll period itdesiresyrovicied that a student is paid at least monthly.It is desirable for an institution to have its CWS payrollcorrespond with other similar payrolls at the institu-

tion, A separate time period for CWS is not required.However, a payroll period which terminates on the lastday of.each month is recommended since it facilitatesthe preparation of fiscal reports which normally covera period ending on the last day of a month,

3. ' Time Record Form

Institutions participating in CWS are required tomaintain n individual weekly time record showinghours worked per day. Since this form serves asauthorization for payment, it must contain a certifica-tion by an official that thes.tudent has worked the num-ber of hours' stated and the certification must saywhether the work has been performed in a satisfactory.manner.

The time record also prOvides the institution with ameans of monitoring the number of hours a studentworks each week.

An institution will also want to review these timerecords to see that students are working the approximatenumber of hours needed to ensure that they earn their en-

,

tire award in the term. If the student earns the maximumamount to ;which he/she is entitled before thecompletion Of the job assignment (e.g., before the endof the serneSter), and is suddenly removed from theposition, the removal would be distressing both to thestudent and the supervisor concerned. By periodicallyreviewing the time records and comparing the cumula-tive number of hours actually worked with the cumula-tive total normally expected at any given point in theperiod for which the College Work-Study wasawarded, the financial aid administrator will be able to

° forewarn the student and the employer if it appears thestudent is!going to earn the maximum amount to whichhe/she is entitled before the completion of the job assign-ment. This provides both the student and the employeran oppbrtunity to make. adjustments in thehours worked to ensure that the stucient earns the totalamount of the award, but does not exceed it. The needfor this kind of record keeping is particularly impor-tant in view of the new provisic ns regarding overawardand treatment of surplus earnings in section 175.14 ofthe CWS Regulations.

4. Payroll Vouchers

The. CWS payroll should be readily identifiable anddistinguishable from other institutional expendituresfor reporting and control purposes. College Work-Study compensation should be entered on a separatevoucher or gitouped separately from other expen-ditures if listed on the institution's general payrollvoucher. If payrolls are handled on automatic dataprocessing equipment a special code for CollegeWork-Study payments should be used. Payrollvouchers must support all payroll disbursements andshould provide space fc: all of the following intbroia-tion:

6- I 3

a. Name and address of institutionb. 'Beginning and ending dates of the payroll periodc. Name of studentd. Identification of job in which student is employede. Number of hours worked duiing the pay periodf. Hourly rate of pays. Gross earningsh. Compensation withheld for Federal, state, coun-

ty, or city taxes, and other deductionsi. Non-cash paymentsj. Net earningsk. Check number, duplicate receipt, or other iden-

tification

5. Non-Cash Contribution Record

Any services and equipment provided to a studentby the institution as part payment of the institutionalshare of the student's pay must be supported by ade-quate documentation. The institution may use any pro-cedure for documenting non-cash contributions 'so

______Iong.as.the_records_clearly_demonstrate_that.the-tuitirm,books, etc. have, in fact, been supplie,1 to the student.

6. Disbursement Process

a. Payment by CheckCompensation to a student must be paid at least

monthly and be supported by individual checksorby other similar instrument in lieu of checks (drafts,purchase orders, etc.). In other words, an institutionmay pay College Work - Study students in some formother than individual checks if it does so in its owntudent employment program, and if the method of

payment provides a docuthent that may be cashed byI student on his/her own endorsement withouturther restrictions, and if the method of payment

leaves a clear audit trail. For example, an institutionwhich regularly compensates students in its ownemployment through individual drafts payable at thecashier's office may do the same for College Work-Study students.

Ordinarily, the amount of the check (or other in-strument) will cover the entire amount of the stu-dent's earnings (net after taxes and other requiredwithholdings) during the previous pay period. Theonly exception to the payment of the student's fullnet wages by check (or other instrument) would oc-cur when the institution's matching share 1,.'s beensupplied m the form of a non-cash contribution.

In such cases, the institution must pay the totalFederal share of the student's earnings directly tohim/her by check (or other instrument). A studentemployee should be able to cash the check:; or other-wise receive payment, on his/her own endorsementwithout further restrictions. Accounting devices orprocedures which result in the direct transfer of theFederal share of student compensation to expenses

6 -14

or bills are not permissible.b. Proof of Payment

The institution must have documentation in itsfiles to show that students actually received paymentin the amount charged to the program. When the' in-stitution acts as the paymaster, cancelled checksshould be available at the institution for audit pur-poses.c.. Payroll Disbursements Handled by an Off-Cam-

pus AgencyPayroll disbursements to students under CWS

may be handled by an off-campus agency ratherthan the institution. This procedure is acceptable,but the institution must make sure that it receivescertain records from the off-campus agency forreview and retention. These records include:

(1) Time reports indicating the total hoursworked each week and containing the supervisor'scertification as to the accuracy of the hours reportedand of satisfactory performance on the part of thestudent;- (2)-Payroll -forms identifying the.period of work,the name of each student, rate per hour, the numberof hours worked, gross pay, all deductions and netearnings, and the total Federal share applicable toeach payroll; and

(3) Documentary evidence that students receivedpayment for their work such as photographic copiesof cancelled checks.

The off-campus agreement between the institutionand organization should incorporatethe above pro-,visions.

7. Student Wages Not Exempt frognGarnishment

No provision in the statute exempts; wages earnedunder CWS from state and local lawg, involving thecredit process (garnishment). However, the institutionshould refrain from using Federal financial aid funds,for a student's employment where the student does.notreceive the wages and where, due to the size of the.debt, there is no likelihood that any of the wages willbe received by the student in the foreseeable future.Where state and local law allows garnishment, andwhen a creditor persis,b in attaching a student's wages,the institution should discontinue the CWS employ-ment to the student in order to make th.3 funds availa-ble to another needy student who will benefit from theearnings to pursue an education.

E. Maintenance of Level of StudentScholarship and Student Aid Expenditures

Institutions participating in College Work-Study arerequired to continue to maintain their undergraduateand graduate scholatship and student aid programs.

The requirements for CWS are identical to the Supple -

mental Educational Opportunity Grant Program re-quirements. See Chapter 5 for details.

VII. Job Location and DevelopmentProgram

The Education Amendments of 1976 added a newprovision to the College Work-Study prograin. This ,

addition allows an institution to use part of its CollegeWork-Study funds for developing or expanding off-campuF employment opportunities. These oppor-tunities are to be made availible to all students whodesire to work and without regard to a student's finan-cial need.

At the time this handbook was published, regula-tions for the Job Location and Development Programwere being developed. The information provided hereis based on the statute itself and proposed regulations.Institutions should review carefully and follow theregulations when they are issued.

A. General Requirements

1. An institution which desires to establish or ex-pand a Job Location and Development Programusing funds from its CWS allocation must enter intoan agreement with the Commissioner of,Education.2. An institution must continue to spend the amount

.of funds previously expended on its own job loca-tion and development programs.3. The program is for the location and development Li

of jobs off -campus. These jobs may be with any off-campus employer such as a business .or,industry.The employer may be a profit-making enterprise ora non-profit organization. These jobs may be eitherfull-time or part-time positions.4. This program may .lot be used to develop jobs in-volving work for the institution itself or anothereligible institution.5. Employment positions under this program maybe located or developed for students during and be-tween periods of their attendanc, at the institution.This program may not be used for the placement ofstudents in jobs upon graduation.6. The location and development of jobs under thisprogram must not result in the displacement ofemployed workers or impair existing contracts forservices.7: Participation in this program must realisticallyresult in the generation of student wages exceedingin the aggregate the amount of funds used to operatethe program.

B. In'stit,lional Eligibility/

Any institution which participates in the College-Work-Study program may also participate in the JobLocation and Development Program. The institutionmay participate its the program by itself as a single en-tity or enter into a cooperative arrangement with otherinstitutions to establish and operate a Job Locationand Development program to serve students, enrolledin any institution in the cooperative arrangement. Aninstitution nay also on its own or in combination withother participating ,institutions, enter into an agree-ment with a non-pro fit organization under which thator, anization will establish and operate a Job Locationa,:c1 Development program for students enrolled.at theinstitution(s). This agreement may only be made withreliable organizations with professional direction' andstaff. An institution which enters into an agreementwith other institutions to participate in a cooperativearrangement or with a non-profit organization actingon its behalf must have a signed agreement between allparties concerned. The agreement must:

1. Designate the administrator of the Job Locationand Development program;2. Contain the terms and conditions and perfor-mance standards of the arrangements under whichthe administrator will establish and operate a JobLocation and Development program on the institu-tion's behalf; and3. Provide for the fulfillment of the audit require-ment.Each institution shall retain responsibility for the

proper expenditure of Federal funds which it con-tributes to a cooperative arrangement on its behalf by anon-profit organization.

C. Financial Management

I. Federal Share

For each year an institution participates in the Col-lege Work-Study pror,ram it may use up to 10 percentof the Federal funds allocated to it under CWS or

. $15,000, whichever is less, to establish and operate aJob Location and Development Program. These fundsmay be used to pay up to 80 percent of the 'allowablecost of the prograin.

Institutional Share

The institution is obligated to'contribute a minimumof 20 percent of the cost of operating the Job Locationand Development program. The institutional sharemust come from non -: :VS sources and may be in cashor in kind. Administrative funds received for operatingthe CWS, NDSL or SEOG programs may not be used

6i6-15

as the non-Federal share for the Job Location andDevelopment program. The institution must maintainsupporting records to indicate the amount and sourceof its matching funds.

3. Allowable Costs

Allowable costs are those reasonably related tocarrying cut a Job Location anti Developmentprogram established or expanded under this part.These costs may include costs for personnel, travel,supplies arid expenses, publications, data processingservices, etc. Allowable costs do not include thepurchase, construction, renovation, or alteration ofphysical facilities or indirect administrative cost.

4. Maintenance of Effort fur Job Location andDevelop men Program

For each 'fiscal year in which the institution receivesfunds for a Job Location and Development program,the institution must continue to spend in its own job-location and development programs, 3111 sourcesother than funds received under this part, not less thanthe average expenditures per year made during the;host recent three, fiscal years preceding the effectivedate of its agreement with the Commissioner. For pur-poses of this maintenance of effort requirement, thefiscal year is defined to be a period of time from July 1

6-16

and ending on the following June 30. In most in-stances, this average is permanent. It is not a "rollingaverage". An institution's own Job Location andDevelopment program ine17,.tJes any expenditure of in-stitutional ftinth, the purpcJe of which is to createemployment opportunities Off -campus for enrolledstudents. Such expenditures include, .but are notlimited to, staff salaries, related travel costs, pr,intingand mailing costs, telephone charges, and cost ofequipment furnished by the institution for use in its JobLocation and Development program. The institutionmust provide adequate documentation' to show itsmaintenance of level of effort figure.

This maintenance of efforts for the Job Location andDevelopment program should not be confused with theinstitution's responsibility to maintain its level of stu-dent scholarship and student aid expenditures. Thelatter is required for all institutions participating inCWS or SEOG. The former is an 'added requireMentfor thc4e institutions using part of their CWS funds fora Job Location and Development program.

5. Records and Fiscal Procedures

The general records' and fiscal procedures of thecampus-based programs apply to the Job Location andDevelopment program. See the "Blue Book" for moredetails.

Chapter 7

Nati6nal Direct Student LoanProgram

I. Statutory Authority and PurposePage

A. Statutory Authority 7-3B. Purpose 7-3

II. Application Process

A. Institution's AppiLation to artici-pate in NDSL

B. Application for Federal InstitutionalLoan

Eligibility of Students

Selection of Students

Disbursement Of Loans

IV.

V.

7-3

7-3VOL

7-3

7-3

7-4

VI. Terms Of National Direct LoansA. Aggregate ,a.mounts 7-4B. Interest 7-4C. Repayment Terms 7-5

VII.Advancement And RepaymentOf Loans

A. Pre -Loan CounselingB. Promissory Note ...

1. Evidence of Indebtedness2. Approved ',,ote Form3. Types of Notes

a. The "Open -En;" Noteb. The "Li!:-.!ted" Note

4. Distincto.; jetween Loan and-Advance

5. Provision of the Promissory Notea. Required Provisionsb. Optional Provisions

(1) Cost of CollectionChdrgeable to the Bor-rower

(2) Minimum Repayment(3) Penalty for Late Charges(4) Security and Endorsement

6. Sci,' of Advances

7-57-57-57-57-57-67-6

7. Recording Previous Loans8. Attaching Repayment Schedules

C. Disposition of the Promissory Note1. Assignment of Transfer2. Copies of the Note3. Changes in an Executed Note4. Safeguarding the Note5. Repaid Note

D.Interest1. Rate of Interest2. Computation of Interest

Loan Repayment

Page

7-77-77-77-77-77-77-77-77-87-8

A. General 7-8B. Repayment Period Established by

the Original National DefenseEducation Act of 1958

C. Repayment Period Established byHigher Education Act of 1965 7-9

D.Period of Grace 7-91. Definition 7-92. Non-Accrual of Interest 7-93. Determination of Period of

Grace4. Expiration of Period of Grace

E. Deferments Extending RepaymentPeriod1. Student Status, Military, Peace

Corps, Vista2. Special Extensions

7-8

3. Certificate Procedurea. Responsibility of the Borrowerb. Institutional Responsibility

F. Establishing Payment Dates7-6 a. a. Annual Repayment

b. Monthly Repayment7-6 c. Bi-monthly Repayment7-6 d. Quarterly Repayment

2. Establishment of StandardRepayment Dates

7-6 G.Computation of Payment Involving7-6 Deferment7-6 1. Advantages for Payment Date to7-7 Remain Fixed7-7 2. Deferment Period

7-97-9

7-9

7-97-9

7-107-10

7-107-107-107-107-107-10

7-10

7-11

7-117-11

7-1 '

IX. Repayment Plans

Page

C. Responsibility for Determining Can-

Page

cellation Benefits 7-14A. General 7-11 1. Responsibility of the Institution 7-14B. Loans Subject to Annual Repayment 7-11 2. Forms and Documentation Re -'C. Loans Subject to Quarterly, Bo- quired 7-14

monthly, or Monthly Repayments.. 7-11 a. Teacher Cancellation 7-14D.Minimum Rates of Repayment 7-12 b. Military Service 7-14

I. Defense Loans 7-12 c. Death 7-142. Direct Loans 7-12 d. Disability 7-143. Borrowers Receiving Both e. Bankruptcy 7-14

Defense and Direct Loan 7-12 D.Exclusion of Refunds ... 7-14E. Postponement of Payments 7-14

X. Cancellation of Loans F. Reimbursement by the Commis-sioner of Amounts Cancelled 7-15

A. Defense Loans 7-13 1. Defense Loans 7-15a. Teacher Cancellation 7-13 2. Direct Loans 7-152. Military Cancellation 7-133. Death 7-13 Xl. Collection Procedures4. Permanent and Total Disability 7-135. Bankruptcy 7-13 A.Due Diligence 7-15

B. Direct Loans 7-13 B. Use of Billing Service 7-16I. Teacher Cancellation 7-13 C. Use of a Collection Agency 7 -i62. Military Cancellation 7-13 D Costs of Collection 7-163. Death 7-14 E. Bankruptcy 7-164. Permanent and Total Disability 7-14 F. Overdue Payments and Default 7-165. Head Start 7-146. Bankruptcy 7-14

7-2

Chapter 7

NationalProgra

irect Student Loan

Statutory Auth y and Purpose

A. Statutory Authority

The National. Direct Student Loan Program is a con-tinuation of the National Defense Student LoanProgram authcrized by Title II of the NationalDefense Education Act of 1958. Statutory Authority isfound in Title IV, Part E of the Higher Education Actof 1965, as added by section 137(b) of Public Law92-318, 86 Stat. 273 (20 U.S.C. 1087aa-87ff), and Ti-.tie H of the National Defense Education Act of 1958(20 U.S.C. 421-29). Further amendments have beenmade by the Education Amendments of 1976, Pub.Law 94-482.

B. Purpose

The purpose of the National Direct Student Loanprogram is to assist in the establishment and mainte-nance of low interev long-term, deferred loanprograms at institutions of postsecondary education toprovide loans to students demonstrating need for fi-nancial assistance-in order to pursue their courses ofstudy at such institutions.

II. AppIication Process

A. lAstitution's Application toParticipate in NDSL

Institutions wishing to participate in the, NationalDirect Student Loan program must file an applicationto participate each year in accordance with datesestablished by the Commissioner of Education. Ap-plications are submitted in conjunction' with applica-tiocs to participate in the College Work-Studyprogram and the Supplemental Educational Oppor-tunity Grant program (if the institution chooses to par-ticipate in these programs). A discussion of the ap-pl!,,Ition process for the campus-based programs is in-CiL J in Chapter 4.

B. Application for Federal InstitutionalLoan

Institutions unable to finance the required institu-tional capital contributions (one-ninth of the Federalcapital contribution) may apply to the Commissionerfor a Federal institutional loan to assist the institutionin financing its institutional capital contribution. TheCommissioner may make such a loan to an institutionif he/she determines that the institution is unable tosecure the necessary funds from non-Federal sourcesupon terms and conditions which are reasonable.However, no funds are currently available for this pur-pose.

III. Eligibility of Students

To be eligible for a National Direct Student Loan, astudent must meet all of the general provisions listed inChapter 2. In addition, the student must meet all of thestudent eligibility requirements which are common toCollege Work-Study, Supplemental Educational Op-portunity Grant and the National Direct Student Loanprograms as outlined in Chapter 4.

IV. Selection of Students

A. National Direct Student Loans must be madereasonably available to all eligible student applicants'.

B. No loan may be made to,a student ho indicatesan unwillingness to repay the boar. Delioquency on aprior loan or an established hisbry of non-paymentsof debts may be taken as evidence of an unwillingnessto repay the loan.

C. In the event sufficient funds are not available tomeet the need of all applicants, the order of selectionmust be on the basis of need.

D. Institutional Selection ProceduresThe institution must establish procedures for select-

ing among eligib:e students, in accordance with !liepolicies under A, B and C above. These proceduresmust be:

1. Set forth in writing,

8:7 7-3

2. Available for public inspection; .

3. Maintained in the files of the financial aid office.E. Loans must be available to all levels of students

and without discrimination.

V. Disbursement Of Loans

A. Loans may be disbursed directly to borrowers ormay be credited to the borrowers' accounts at the in-stitution. Payments must be evidenced in the institu-tion's records by cancelled checks or vouchers. If theinstitution uses any other method of disbursement, themethod must be evidenced by a clear audit trail iing an acknowledgement Of receipt by each bo owerindicating the method of payment. Inso:ar as possible,it is desirable to credit students' accounts (tuition,room and board, etc.) rather than disbursing paymentsby check or cash directly to the student. This willassure funds are being used for educational expensesas required and in accordance with the Affidavit ofEducational Purpose. In addition, this facilitatesrecovery of refunds resulting from stue nits' withdraw-ing from the institution.

B. No borrower may receive a loan in excess of theamount he/she reeds during a given academic period. Inthis connection, officials should refer to Section 144.'.4of the NDSL regulations regarding_overawards.

C. An institution making a loan to a student for afull academic year must advance a portion of that loanin each semester, trimester, or quarter if the institutionuses such academic periods.

.For institutions not using those academic periods,advances must be made at least twice pef academicyear with one advance at the beginning and the other atthe midpoint of the academic year.

D. No more than half the loan may be advancedbefore the midpoint.

E. If, however, the total amount awarded to a stu-dent under the campus-based programs is $300 or less,only one advance need be made:

F. Loans for periods shorter than the academic yearmust be advanced to borrowers in installments that aredeemed appropriate to enable borrowers to.meet thecosts reasonably necessary for their attendance duringthe academic period for which the loan was approved.in no event may the loan exceed he borrower's deter-mined nee.

G. If a student incurs uneven costs in a particularterm, or needs additional funds f6r that term, the in-stitution may advance those additional funds withoutregard /to the requirements cited, in section C above,

H. thlo payment may be made unless the borrowersigns ao notarized Affidaviti-of-Educatpnal Purpose asapproVed by the Commissioner. The--affidkirfnuststate that the proceeds of the loan will be usii)solelyfor expenses related:.to attendance or continued atten-

7-4

dance at the institution. (See Appendix B-I I for a sampleapproved Affidavit of Educational Purpose form).

I. At the time of disbursement, the institution mustcomply with the Truth in Lending Requirements ofRegulation Z. If a loan is determined invalid becauseof non-compliance with Regulation Z. that loan willnot be considered to be an NDSL.

J. A loan must be evidenced by a Promissory Noteexecuted.by the student borrower.

K. No advance may be made unless the institutiondetermines that the borrower:

1. Is maintaining satisfactory progress in the courseof study he/she is pursuing, according to the standardsand practices of the institution;2. Is not in default on any loan made from a studentloan fund at that institution or on a loan made, in-sured, or guaranteed under the Guaranteed StudentLoan program for attendance at such institutions;3. D,- . not owe a refund on grants previouslyreceiveu for attendance at such institution under theBasic Educational Opportunity Grant ,.ogram, theSupp'emental Educational Opportunity Grantprogram, or the State Student Inc,ent)ve Grantprogram.L. Generally speaking, if the default on a loan or

the refund due on a grant is corrected during theenrollment period for which the loan is approved, anadvancy may be made.

VI. Terms of National Direct StudentLoans

A. Aggregate Amounts

. The aggregate amounN of loans a student mayreceive from all institutions of higher education maynot exceed:

1. $10,000 in the case of any graduate or prefes-sional student, including an prior amounts received;2. $5,000 in the case -.f a student who has suc-cessfully completed two .,cademic years of aprogram lending to a bachelor's degree includingany such loans made before he/she successfully com-pleted the two years (the maximum of $5,000 appliesto any student until he/she is admitted to a graduate orprofessional program. Upon admission to a graduateor professi6nal degree program, the $10,000 max-imum applies).3. $2,500 in the case of any student who has notcompleted two academic years of a program leadingtc. a bachelor's degree.

B. Interest

National Direct Student Loans bear interest on the

86

unpaid balance at the rate of three percent per annum.No interest accrues until the beginnin the tenthmonth after the date the bon- er ceases to carry atleast one-half the normal academic load at an eligibleinstitution of higher education.

C. Repaymen Terms

1. The loan is to repaid quarterly, bimonthly, ormonthly at the option of the institution.2. The repayment begins nine months after the stu-dent ceases to carry a one-half timc work load andends ten years and nine months after the date thestudent ceases to carry a half-time work load. Theborrower may request that the payment period startat an earlier date.3. Repayment of principal and interest is to be madein equal monthly, bimonthly, of qual,erly install-mdints as determined by the lending institution ex-cept that the borrower may request that ciayments bemade in graduated installments, This .1-epaymentschedule must be approved by the lending institutionand the Commissioner.4. The institution has the option of requiring a

minimum repayment of principal and interest of Sic)per month or the equivalent amounts bimonthly orquarterly.5. All or any part of the principal plus the accruedinterest may be prepaid at any time without penalty.6. At the option of the institution, the entire indeb-tedness plus interest accrued thereon may becomeimmediately due and payable if a borrower fails tomeet a scheduled repayment of any of the install-ments due.

VU. Advancement an aymentof Loans

A. Pre-Loan Counseling

It is essential to the sound administration of the loanprogram that borrowers have as complete an under-standing as possible of their responsibilities and rightsunder the program. It is strongly recommended thateither, individual or group counseling sessions be heldwith the borrowers prior io advancing the loan.

Pre-loan counseling sessions should set forth thenature and. purpose of the program, clearly indicatingthe borrower's obligation to repay. Each borrower mustbe given a copy of the Promissory Note which setsforth the terms of repayment along with the borrov,fT'srights and obligations.' A discussion of the ri Skin'

obligations along with providing each bo:statement of them is desirable. An opportunity

be given to borrowers to raise 'questions concerningtheir rights and obligations, and should atso providedisclosiireof interest rates and general terms of repay-ment.

Pre-loan counseling is a key factor in sound collec-tion procedures. As a part of the pre-loan counselingsession it is most desirabld to have borrowers completean information sheet which would provide useful in-formation in sound collection procedures. This infor-mation should include:

I Borrower's name and current address;'rmanent address of parents;

phone numbers of the rrower and parents;.petted date of graduation;

5. Spouse's name and address;6. Spouse's employer;7. Name and addresses of two or three personal.ae-quaintances;8. Borrower's driver's license number.Effectivo pre-loan counseling sessions will satisfy

the initial requirement of due diligence of providingeach borrot,::-r with full disclosure of rights and obliga-tions. In ad,Ron, it will assist in locating borrowerswho leave the institution without having the exit inter-view.

B. The Promissory Note

The Promissory Note is the legal doe; Tnent whichbinds the borrower to the repayment Wig,' ions, tieterms o,f the act, and the Federal regulations andpolicies which govern the 'program. ,

1. Evidence of Indebtedness

Each loan advanced inust be evidenced by a Pro-missory Note executed by Olt student borrower. TheNote must be executed without security and withoutendorsement unless the borrower is a minor and theNote under the law of the State in which the lending in-stitution is located would not create a binding obliga-tion. In these cases,- either security or endorsementmay be required. (Note: It is imperative that aid ad-ministrators have knowledge of ,the laws governingNotes in their particular states).

2. Approved Note Form

An approved Note form is included in Appendix Bof the NDSL Regulations. Except for the optional pro-visions, any substantive deviations from the provisionsof this form Aug be approved by the Commissioner.

7os of Notes

Ai.. institution may u..t; either an "open-end" Note ora "limited- Note. In either case the conditions and,

7-5

terms of the Note as approved by the Commissionermust be used.

a. I he Open-ILnd" NoteAn advantage of the "open-end" Note is that it is notnecessary to execute a new Note with each approvedloan or disbursement. When the initial loan is ap-proved for the borrower and the Note executed, thesame Note can be used as long as the borrower con-tinues to receive loans from the same institution andas long as the terms of the loan remain the same. (ItMould be noted that amendments to the act whichwould affect repayment termsor rights . Id respon-sibilities of the borrower would necessitate the ex-ecution of a new Note).The "open-end" Note Cioes not contain the specificamount of the approved loan on the face of the Note.A Schedule of Advances is made a part of the Note.At the time of each disbursement of a loan, the bor-rower enters the amount received, the date ofreceipt, and his/her signature in the Schedule of Ad-vances.b. 71u. "Limited" NoteThe "limited" Note must be executed each time aloan is approved or disbursed and would be limitedin its use to no longer than one award period(usually one academic year). The specific amount ofthe approved loan must be entered on the face of theNote. If more than one disbursement is made of theapproved loan, each disbursement must be enteredin the Schedule of Advances accompanied by thebdrrower's signature. This should also be done evenif the entire amount of the loan is made in a singledisbursement as it provides further documentationof the receipt of the loan by the borrowe.

4, Distinction Between loan and Advance

In the preceding discussion of Promissory Nosreference has been made to approved loan-, 4.r.d ad-vances. It is important to clear;; differentia :f weenthese.

a. An approved loan is th am unt which Lie ap-Noving official at the insti ution has approved forthe borrower for the academi clod of study whichmay not exceed an award period.Approved loans may be disbursed in several install-ments with at least one installment each academicterm (quarter, semester, etc.) or in at least two in-stallments if such terms.are not used. The approvedloan may not exceed the borrower's need for theterm for which it is approved.b. The advance is the disbursement of the approvedloan or portion thereof by the institution to theborrower. Advances may be Made directly to theborrower or ,,by credit to the borrower's account atthe institution. The date and amount of each ad-vance must be appropriately voted in the Scheduleof Advances on the Promissory Note and evidencedby the borrower's signature.

7-6

5. l'rm, /,1 the Prwilisson Note

The required inn.' optional provisions of the Noteare enumerated below. A more detailed discussion ofthe .pro visions will follow.

a. Required POWNir»1.1(I) Rate of Interest(2) Repayment terms(3) Pt epayrnent ut Loan(4) Default(5) Defermetit of payments and interest(6) Cancellation provisions for teaching, mili-

tary, death and disability(7) Address change(8) rAssivriment(9) Certification of Prior Loans

( 1 ()) Schedule of Advances(11) Borl'Ower's sign:Are and permanent address

b. Optional ProvicionsThe Act provides the institution with certain provi-

sions the institution may include in the Note if the in-stitution chooses to do so. In determining whether ornot to include these provisions in the Note, the institu-tion 3hould keep in mind that the Promissory Note isthe binding legal instrument setting forth the terms andconditions of the loan. If the optional provisions arenot included in the Note. the provisions cannot be usedin t'ile collection of the loan. Legally the borrower issubject only to the provisions set forth in the executedNote. Inclusion of the optional provisions in the Notedoes not necessarily mean they must be enforced. It istherefore recommended that institutions include theoptional provisions in the Note. The optional provi-sions are:

(1) Cost of Collection Chargeable to the BorrowerThe institution, at its option, may insert after "I pro-,mise to pay to , the sum of such amounts setforth below" 'he following:"together with all attorney's fees and other costs andcharges 'necessary Door the collection of any amountnot paid when due.(2) Minimum RepaymentIf the institution so chooses, it may require aminimum repayment of $30 per month (or theequivalent-amounts in bimonthly or quarterly repay-ment plans) of principal and interest in the eventrepayrnen! over the ten year period would result inmonthly iyments of principal and interest less thana total of $30: (See Repayment Plans for a moredetailed dis.:4ssion of Minimum Rate of Repay-ment),(3) Penalty.' ChargesAn institution may provide for. the assessment of acharge for the failure of a borrower to pay all or anypart of a payment when due or for failure to filetirn,qy requests for deferment or cancellationbet fits.

(a) In the case of monthly payments, $1 for thefirst month or part thereof, and for each subse-quent month.

88

to

(b) :n the case of bimonthly or quarterly pay-ments, S3 and $6 respectively for each installmentinterval or part thereof by which such payment orevidence is late.The institution may add this charge to the out-standing principal of the loan but must so informthe borrower prior to the due date of the nextscheduled payment.

V. Security and Endorsementit :Ale borrower is a minor and under applicable statelaws a Note executed by a minor would not create abinding obligation, the institution may requiresecurity or endorsei.7..ent.

6. Schedule of Advances

Each Promissory Note must contain a Schedule ofAdvances showing the date of the advance, the amountof the advance, and must bear the signature of the bor-rower acknowledging the advance.

7. Recording Previou' Loans

a. Each borrower must certify on the PromissoryNote all Direct or Defense loans received at otherinstitutions. The certification must include amountOf loan, date of loan, and the name of the instituionfrom which the loan was received.b. The institution must maintain a record of allloans made to the borrower by the institution.c. The aggregate amount of loans made. to a bor-rower from all institutions may not exceed $10,000in the case of a graduate or professional student,$5,000 in the case of an undergraduate student whohas completed two years of a baccalaureate degreeprogram, and $2,500 to a student who has not com-pleted two years.

8. Attaching Repayment Schedules

A r,:payment schedule (plan) must be attached tothe Note at the time the borrower leaves the institution.The Office of Education encourages an amortizedrepayment schedule settintforth the principal and in-terest due on each installnUnt for the number of in-stallments required to pay the loan in full._

The amortized repayment schedule is not a require-ment. As a minimum, the repayment schedule shouldset forth:

a, The number of principal repayments or the num-ber of equal repayments;b. The rate of interest;c. The date the first repayment is due; andd. The frequency of repayments.

C. Disposition of the Promissory Note

1. Assignment or Transfer

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a. The Note may not be assigned exc..Tt to theUnited States (or to a party expressly approved bythe Commissioner), or to another instution to whichthe borrower transfers if that institution is participat-ing in the program, or if not participating, is eligibleto do so and is approved by the Commissioner forreceipt of the assignment of such Notes. In makingthe assignment or transfer, the assignoi institutionassigns all rights to monies collected under theassigned Note and the assignee fIstitution acceptsall responsibilities of the Note.b. Under the ins1;tution's Agreement with the Com-missioner, the institutions may assign its rights undera Note evidencing a loan in default for at least twoyears to the United States provided the institutionhas exercised due diligence (as set forth in theregulations) in attempting to collect such,a loan. Theassignment of these rights to the United States willbe without recompense, and any sums subsequentlycollected on the assigned Note will be deposited inthe general fund of the Treasury. In order to makean assignment of such a Note, the institution must beable to satisfactorily demonstrate due diligence in itscollection efforts such as systematic bilt;o,y, use ofskip trace, and use of a collectic or othercomparable institutional collection proc- Ares.c. Except as provided in a and b, the PromissoryNote may not be assigned or transferred.

2. Copies of the Note

At the time the loan is made, two copies of the Pro-missory Note are executed. The original copy is re-tained by the institution, and the other is given to theborrower. When the borrower leaves school, helsheshould receive a copy which shows all advances made.

3. Changes in An Executed Note

If an error should be discovered in an executedNote, the institution should obtain legal advice as tothe appropriate action to be taken. In such instances,the approval of all changes should be indicated by theinitials or signatures of all primary parties to the Note.

4. Safeguarding the Note

Promissory Notes must be maintained in good orderin a locked fireproof container. Only authorized per-sonnel may have access to the Notes.

5. Repaid Notes

An institution must retain all financial and repay-ment records pertaining to any individual loan madefor not less than five years horn dm date on which theentire amount of the loan has been repaid, cancelled,or assigned.

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Microfilm copies may be substituted for originalrecords in meeting this requirement.

When a loan has been repaid, the institution shouldmark the Note "Paid in Full", have it certified by anofficial of the institution, and surrender the Note to theborrower. The institution must retain a photostatic orother reproduced copy of the Note for a period not lessthan five years after the date the loan was repaid infull.

D. Interest

1. Rate of Interest

The loan bears interest on the unpaid balance at therate of three percent per annum except that no interestaccrues until the beginning of the tenth month afterwhich the borrower ceases to pursue at least a half-time course of study at an institution of higher educa-tion. (On loans made prior to November 8, 1965, in-terest does not begin to accrue until one year from thedate the bot rower ceases to pursue a half-time courseof study).

In addition, interest does not accrue on the loan asfollows:

a. During any period in which the borrower is carry-ing at least a one-half time work load at an institu-tion of higher education or a comparable institutionoutside the United States approved by the Commis-sioner;b. Not in excess of three years during which the bor-rower is a member of the Armed Forces of theUnited States; andc. N, n excess of three years during which the bor-rower is in service as a volunteer under the PeaceCorps Act or is a VISTA volunteer under Title I,Part A of the Domestic Service Act of 1973.

2. Computation of Interest

a. Interest is computed at the rate of three percentper annum simple interest on the unpaid principalbalance.b. Interest F ho u la be computed from the date whenthe payment is received rather than from the duedate; however, interest charges may be computed

(I) to the nearest first-of-the-month, or(2) in accordance with the established schedule ofpayments of principal and interest if the borroweris paying on a regular basis in accordance with theschedule.

c. In the case of past due payments, interest shouldbe computed based on the date received. The pay-merits ,.hould first be applied againsl accumulated,

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interest with any remaining amount applied to theprincipal. Ger,erally, if the past due payment isreceived prior ..o the next regularly scheduled pay-ment, the established schedule of principal and in-terest payments may-be applied.

VIII. Loan Payment

A. General

Both the National Defense Education Act of 1958and Higher Education Act of 1965 as amended stipu-late ten year repayment periods; however, they differ intheir provisions which define the starting date of therepayment period. As a result, institutions participat-ing in the program prior to the 1965-66 academic yearwill find it necessary to collect their loans over varyingperiods.

1. Borrowers who completed their study prior toNovember 8, 1965 will repay their loans over aperiod which was determined by the terms of the Na-tional Defense Education Act of 1958 or asamended by P.L. 88-665.2. Some borrowers received loans prior to Novem-ber 8, 1965 and also had new loans committed andadvanced after November 8, 1965. These borrowersare subject to the terms of the original Act for loansprior to November 8, 1965 and to the terms of theHigher Edudation Act of 1965 as amended for loansmade or committed after November 8, 1965.3. Borrowers whose total loans were approved afterNovember 8, 1965 will repay their loans in accor-dance with the terms of the Higher Education Act of1965 as amended.

B. Repayment Period Established by theOriginal National Defense Education Actof 1958

The National Defense Education Act provided thatborro ,.irs must repay their loans, plus interestthereo. in annual installments over a ten year periodbeginning one year after the date on which they ceaseto pursue a full-time course of study (or on or after Oc-tober 16, 1964 cease to pursue at least a half-timecourse of study as set forth in P.L. 8S.65) at an ir-stitution Ligher ,..,di..cation and ending eleven yearsaftet such date.

C. Repayment Period Established byHigher Education Act of 1965

The Higher Education Act of 1965 as amended pro-vides that borrowers must repay their loans, plus in-terest thereon, in quarterly, bimonthly, or monthly in-stallments over a ten year period beginning ninemonths after the date on which they cease to carry, at aninstitution of higher education or at a co parable in-stitution outside the United States appr ved by theCommissioner, at least one-half the norm 1 full-timeacademic work load as determined by the institution,and ending ten years and nine months after that date.The period may begin earlier at the request of the bor-rower.

D. Period of Grace

1. Definition

The interval between termination of at least half-time study and beginning of the repayment period istermed "the period of grace."

2. Non-Accrual of Interest

The Act specifically provides that during this periodrepayment need not be made and that interest doesnot accrue.

3. Determination of Period of (.;race

The period of grace provided an individual bor-rower will be determined in accordance with the termsgoverning the Promissory Note executed at the timethe loan was approved.

a. For Notes subject to annual repayment terms(that is, for loans committed and on which an ad-,vance was made on or before November 8, 1965),the period of grace consists of twelve consecutivemonths from the time the boirower ceases to pursueat least a half-time course of study (or prior to Ocr-ber 16, 1964, a full-time course of study) at an in-stitution of higher education in a state or a compara-ble institution outside the States.b. For Notes subject to monthly, bimonthly, orquarterly repayment terms (that is, for new loansmade after November 8, 1965), the period of graceconsists of nine consecutive months from the timethat the borrower ceases to pursue at least a half-time course of study at an institution of highereducation in a state or a comparable institution out-side the States.c. The grace period (nIne or twelve consecutivemonths, v.'tichever is applicable) is calculated fromthe fest-of-the-Month nearest to the day when theborrower leaves the institution unl(Js the institutionchooses to use the actual date of separation,

4. Expiration of Period et' Grace

The period of grace will expire upon determinationthat the borrower has been -may from eligible studentstatus for a continuous period of nine or tselve-months, whichever is applicable. It is important to notethat the period must be continuous for the full appli-.a.-ble period. Borrowers returning to eligible studentstatus before the expiration of nine or twelve con-tinuous months, whichever is applicable, would

'receive the nine or twelve month period of grace ontheir subsequent departure from eligible studentstatus.

If, after borrowers have been accorded the period ofgrace on one loan, they should later resume at least ahalf-time course of study at the same or another in-stitution and receive additional loans, they would beentitled to another period of grace only for those addi-tional loans.

E. Deferments Extending RepaymentPeriod

1. Student Status, Military, Peace Corps,VISTA

Installments of principal need not be paid and in-terest does not accrue on the loan during any period:(1) in which the borrower is carrying at least a half-time course of study at an,institution of higher educa-tion in a State or at a comparable institution outsidethe States approved by the Commissioner;(2) not in excess of three years during which the borroweris a member of the Armed Forces of the United States, oris in service as a volunteer under the Pease Corps Act, oris a VISTA volunteer under Title I-Part A of theDomestic Service Act of 1973. Any such periods are notincluded in determining the ten year repaymentperiod.

The above-listed deferments are available to bothDefense loan and Direct loan borrowers. Additionally,for Defense loans only, an institution may, at its option,provide that repayment installments may be deferredduring any period or 'periods not in excess of threeyears while the borrower is enrolled at an institution ofhigher education for less than half-time study takingcourses which are creditable toward a degree. The in-stitution may also provide that any period of defer-ment -vill not be included in determining the ten yearperiod in which the repayment must be completed, butinterest continues to accrue during any such period.

2. Special Extensions

In addition, if students who have borrowed from aFund, due to extraordinary circumstances such as ill-ness or unemployment are unable to meet theirscheduled repayments when due, the institution may9

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revise their repayment schedules. Where the revisionwould involve an extension of the repayment periodbeyond the ten year period, the Commissioner must benotified in the case of Defense Loans (loans Madeprior to July 1, 1972). In rte case of Direct Loans(loans made subsequent to ..uly I, 1972), such actionextending-the ten year period must have prior approvalof the Commissioner. Interest continues to accri<eduring these periods of deferment.

3. Certification Procedurea. Responsibility of the BorrowerBorrowers who desire to request deferment must subIllittheir requests to the lending institution on a properlycompleted form, "Request for Deferment of Repay-ment Because of Armed Force, Student, Peace corps,or VISTA status." This certification form, Which theborrower should obtain from the lending instituti..,o,should be submitted when the first repayment install-ment is due following the borrower's entering into eligi-ble status. This certification form must be filed at leastannually for so long as the deferment is claimed. In ad-dition, the borrower should report any change of statusimmediately to the lending institution.b. Institutional ResponsibilityIt is the responsibility of the institution to approve ordisapprove and file the deferment forms after mak,ing appropriate notations on its. records. This is theinstitution's responsibility and cannot be delegatQd.If the request for deferment is based upon enroll-ment in a foreign institution of higher education andthe' is question Whether that institution qualifies asa "comparable institution outside the U.S.", thename and location of the institution should be 54b-mitted to the OE Regional Office for approval.In approving these deferments, theinstituticon !Mistensure that the appropriate form is properly cool,pleted, making certain (1) in the case of studentstatus, the period of at least half-time enrollment ofthe borrower is indicated and. certified by theregistrar of the institution as an eligible institution ofhigher education; and (2) in case of military, PeaceCorps, or VISTA status, that the period of service is

properly indicated and properly certified by anofficial of the respective organization authorized toso certify. Additionally, the institution must furtherensure that no more than three years of such serviceis deferred. A borrower who receives loan cancella,

, .

Lion for a year of military service is deemed to haveused one year of his/her entitlement to deferment k,r

. military service.

F. Establishing Pay. .-4 Dates

1. First Payment Date

Immediately upon completion of the grace period,

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the 10 year repayment period begins. and simple in-terest ca the loan it the rate of ihrce per cent per .an-num starts to accrue. At this point the borrower'srepayment date is established. The dates of first vy-rnent are as follows:

a. Annual RepaymentFirst payment due one year from the date of the e%-piration of the grace period (two years after ceasingto be at least a half-time student).b, Monthly RepaymentOne month from the date of the expiration of thegrace period (10 months from date helshe ceased tobe at least a half-time student).

3imenthly RepaymentJo months from the date of the expiration of the

grace period (11 months after ceasing to be at least ahalf-time studept).d. Quarterly RepaymentThree months from the date of the expiration of thegrace period (one year from the date he/she ceasedto be at least a half-time student).

2. Establishment of Standard Repayment Dates

For purposes of uniformity. administrative e;.se. andeconomy, an institution n establish stantia.d oruniform repayment dates for borrowers under quar-terly repayment schedules. For borrowers subject toquarterly repayment terms, the institution mayestablish the repayment date as the first day of thecalendar quarter following the expiration of the graceperiod plus'three months. Four standard dates wouldbe used: January 1, April 1, July I, and October 1.

BORROWERS' :.RACE"GERMINATION PER 10D

ENDSDATE.

FIRST1N$TALL-MENTDUE

January IfebruarYMarch IApril 1

May Ijv I

w

p,ugust

September 1October INovember IDecember I

September 30 Jarivary I

October 31 April 1

November 30 April I

December 31 April I

January 3! July 1

February 23 July IMarch 31 July 1April 30 October 1May 311? October IJune 30 Oct,:,ber I

July 31 January IAugust 31 January t

In all such instances, the repayment schedule mustbe adjusted so that the total amount scheduled to berepaid will be scheduled for completion within thenormal period required by statute or as prescribed inthe terms of the note. It is recommended that thecorrective adjustment of principal and interest bemade on the first installment.

G. Computation of Payment InvolvingDeferment

1. Advantages for Payment Date to RemainFixed

It is advantageous for collection and bookkeepingpurposes to have a payment date remain fixed once ithas been established If the borrower is entitled to adeferment, problems may arise in the computation ofthe payments due. Once the payment date has beenestablished, the following procedures are recom-mended:

a-. When the period of grace has expired on a loan,interest is charged on the unpaid balance for anyportion of a scheduled installment period for whichthe borrower does not have a deferment.b. The payment date remains fixed and the bor-rower, if he/she has filed a certificate of defermentfor a fraction of a scheduled installment period, isobligated to make payment's of interest and principalfor the fraction of such period which is not coveredby the defernient.c. If, on the due date, the borrower is still in a defer-red status, interest and principal payments need notbe made at that time for any fraction of a scheduledinstallment period for whicli there was no deferment.Such 2 case would be handled as follows:

(1) Interest payment due is carried over and ispaid on the next due date as a part of the total ofall interest accrued by that date.(2) Principal payment due for the fraction of theperiod which is not covered by deferment is addc-1as part of the total payment and is extendedamount of elapsed time for which theredeferment.

2. Deferment Period

a. When borrowers file a certificate of defermentcovering a full academic year or its equivalent, theyare entitled to deferment for the period of twelvemonths from the last repayment date immediat4lypreceding the beginning of their deferred status. Ib. If borrowers file a certificate which covers only aportion of an academic year, their deferred st tusapplies only during the actual period they ar ineligible deferred status and their next paymmt be-,comes due on the next regularlyichedulect repay-ment date.c, A loan in deferred status is not considered delin-quent even if past due at the time deferred status wasgranted.d. Upon completion of borrowers' eligible periodfor deferment, their next payment becomes due onthe next regularly scheduled repayment date.

IX. Repayment Plans

A. General

The institution is required to furnish each borrowerwith a repayment schedule (plan) setting forth as aminimum the number Of principal repayments, or thenumber of equal payments as the case may be, the rateof interest, the date the first repayment is due, and thefrequency of repayments.

The Office of Education: tneourages the use of anamortized repayment schedule setting forth the,amount of principal and interest due on each install-ment-for the number of installments required to pay theloan in full.

B. Loans Subject to Annual Repayment

Borrowers whose loans were made on or beforeNovember 8, 1965 have the right to a full ten yearperiod in which to pay. their loans in equal annual in-stallments or in graduated periodic installments, underofficially approved plans.

C. Loans Subject to Quarterly,Bimonthly, or Monthly Repayments

The Higher Education Act of 1965, as amended,provides that the principal amount of a loan, togetherwith the interest thereon,-is to be repaid in equal in-stallments (or, if the borrower so requests, in gradu-ated periodic installments in accordance withschedules approved by the Commissioner) payablequarterly, bimonthly, or monthly at the option of theinstitution.

The above terms are applicable to all loans madeafter November 8, 1965 with the following exceptions:

1. If a loan commitment was made on or prior toNovember 8, 1965, and an advance was made pur-suant to that commitment before that date, allfurther advances made on that commitment throughthe end of the 1965-66 academic year may roe madeunder the same terms and conditions as the initialadvance (See Annual Repayment).2. Loans made to a borrower on or before Novem-ber 8, 1965 may be made applicable to quarterly, bi-monthly, or monthly repayment terms and consoli-dated with loans subsequent to November 8, 1965provided both the borrowet and the institution givetheir consent. Such consent on the part of borrowerswould be indicated by their agreement to execute anew Note in which their earlier loans would be con-solidated and made repayable under the revised

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terms. (The option of requiring a minimum paymentof $15 a month may not be applied to any loans out-standing or November 8, 1965.)

D. Minimum Rates of Payment

1. Defense Loans

a. The Higher Education Act of 1965 provides theinstitution the option to require me student borrowerto make minimum payments of principal and inte, estat a monthly rate of not more than $15 a month (orthe equivalent thereof on bimonthly and quarterlypayments) provided the required payments of equalinstallments of principal and interest were less than$15 a month over the full ten year repayment period.The $15 minimum repayment option app toloans made between November 8. 1965 and July 1,1972.b. Application of Minimum Repayment Where theBorrower Has Received Loans at More Than OneInstitution

( I) Where one institution exercises the $ i 5minimum repayment option and the other institu-tion does not exercise the option (amortizes theloan over the full ten year period) and the totalmonthly repayments of the borrower are Tess than$15 a month, repayment is made as follows:

(a) The institution not exercising the minimumrepayment option would receive the amountdue under its established 10 year repaymentplan.(b) The institution exercising the minimumrepayment option would receive the differencebetween the payment of principal and interest tothe other institution and $15. If the institution,without applying the option, would be entitledto an amount of principal if.nd interest greaterthan the differential, then the institution wouldbe entitled to that amount. (Amount based on aten year repayment plan of equal monthly in-stallments).

(2) If a borrower has obtained Defense Loansfrom more than one institution and each of the in-stitutions exercises the minimum repayment Op-tion, the $15 minimum repayment is dividedamong the institutions in proportion to the totalamount of principal advanced by each institution.

Z. Direct Loans

a. The Education Amendments of 1972 increasedthe option for, , nimum repayment to $30 providedthe required payments of principal and interestwould result in payments of less than $30/month ifamortized over the full ten-year repayment period.

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The S30 minimum repayment option applies toloans made on or cfter July 1, 1972.b. Application of Minimum Repayment Where theBorrower Has Received Loans at More than One 1n-stitution.

The same application *plies as is outlined forDefense Loans () I b.) except that $30 should be in-serted for $15.

3. Borrowers Receiving Both Dcley.se andDirect Loans

a. If the sum o' the monthly amount of repaymentsof principal and interest that a borrower would berequired to repay on his or her Defense and DirectLoans under the ten year repayment plan is at least$30 monthly, the institution may not exercise the op-tion provided in either Promissory Note to increasethe monthly repayment amount. The effect is that themaximum minimum monthly repayment requiredmay not exceed $30 (or the equivalent amount onbimonthly or quarterly payments).b. If the sum of the me .ithly amounts of repaymentsover the ten year per;_d is less than $30, the institu-tion may not exercise the minimum repayment op-tion to require a monthly repayment greater than$30 (or the equivalent amount for loans paid bi-monthly or quarterly). The effect is that the institu-tion may not invoke both the Defense Loan optionof $15 and the $30 Direct Loan Option. In no casemay the institution exercising-the minimum repay-ment option require a payment of principal and in-terest greater than $30 monthly if the otherwise re-quired payment would be less than $30.c. If the sum of the monthly repayment amounts ofprincipal and interest that borrowers would be other-wise required to repay on Defense and Direct Loansis less than $30, the amount required on the DefenseLoan is less than $15, and. the institution exercisesits opti n for a minimum monthly repayment underone or both loans, no more than $15 may be at-,tributed to the Defense Loan and then only if the in-stitution exercises its option on the Defense Loan.

X. Cancellation Of Loans

The National Defense/Direct Student LoanProgram provides for cancellation of loans in sixcategories. The six categories are teaching, Head Start,military, death, disability, and bankruptcy. Eligibilityfor cancellation benefits will vary with the dates of theloans as several amendments have been made regard-ing cancellations. The Education Amendments of1912 discontinued for Direct Loans certain provisionswhich applied to Defense Loans. Teacher cancellation

is based en duties as presented in an official positiondescription, not on the position title.

A. Defense Loans (Prior to July 1, 1972)

1. Teacher Cancellation

a. A borrower is entitled to have up to fifty percentof any boa:: plus the interest thereon canceled forservice as a full-time teacher in (1) a public or other.. ^n- profit elementary or secondary school in a...;;,4e, (2) an institution of higher education, or (3)a' elementary or secondary school overseas of theArmed Forces of the United States; at the rate of 10percent of the total amount of the loans plus the in-terest thereon for each complete academic year c r itsequivalent of such teaching service.b. A borrower is entitled to have the ,.ntire amouiof any loan plus the interest thereon cancelled forservice as a full-time teacher in a public or othernon-profit elementary or secondary school in whichthere is a high concentration of students from lowincome families as may be designated by the Com-missioner after consultation with the state educa-tional agency of the state (these schools will bedesignited each year in the FEDERALREG; at the rate of fifteen percent of the totalamout of the loans plus the interest thereon foreach complete academic year or its equivalent ofteaching service. Cancellation is available only for

,teaching service beginning sfith the 1966-67academic year.c. A borrower is entitled to have the entire amountof any loan plus the interest thereon cancelled forservice is a full-time teacher of handicappedchildren in a public or other non-profit elementaryor secondary school system at the rate of fifteen per-cent of the total amount of the loans plus the in-terest thereon for each complete academic year or itsequivalent of such teaching service. This benefit isavailable for teaching service beginning with the1967-68 academic year. .

1ilitary Cancellation

A burrower is entitled to have up to 50 percent ofany loan made after April 13, 1970 but before July 1,1972 plus the interest thereon cancelled for servicesafter June 30, 1970 as a of theArmed Forcesof the United States at tb ui 12-1/2 percent of thetotal amount of the loans t ,as the interest thereon foreach year of consecutive service as a member of theArmed Forces.

3. Death

Any loan.madp and the interest thereon may be can-. celled on the death of the borrower.

4. Permanent :Ind Total Disability

Any loan and the interest thereon may be cancelledif the borrower becomes permanently and totally dis-abled after receiving the loan.

5. Kankrup!cy

A loan may he cancelled upon receipt of an officialnotice of discharge in bankruptcy from the bankruptcycourt.

B. )irect Loans (after June 30, 1972)

1. Teacher Cancellation

a. A borrower is entitled to have the entire amountof any loan plus the interest thereon cancelled forservices as a full-time teacher in a public or othernon-profit elementary or secondary school in whichthere is a hilt concentration of students from lowincome families rs may be designated by the Com-missioner after c-msultation with the state educa-tional agenc, of the state (these schools will bedesignated each year in the FET.E.RALREGISTER).b. A borrower is entitled to have his entire loan can-celled for service as a fill! -time teas ha- o, handicap-ped children in a public or other non-profit elemen,tary or secondary school system.c. The rates of cancellatl for teachers in low-in-come schools and for teachers of the handicappedare as follows (rtes apply to percentage of totalamounts of loans plus interest thereon. Each yearmust be a complete academic year or its equivalent):

First Year - 15%Second Year - 15%Third Year - 20%Fourth Year - 20%Fifth Year - 30%

d. There is no provision for cancellation of DirectLoans for teaching seryice in higher education or forteaching in ele'rncntary',or secondary schools otherthan teaching in low income schools or teaching thehandicapped.

2. Military Cancellation

A borrower is entitled to have up to fifty percent.ofany loan made under this part after June 30, 1972 plusthe interest, thereon cancelled for service as a memberof the Armed Forces of the United States, in an areathat qualifies for special pay under section 310 of Title37 of the U.S. Code at the rate of 12-1/2 pe,-c7.t of thetotal amount of the loan plus the interest reon foreach year of qualifying service.

95 7-13

3. Death

Any loan made under- this part and the interestthereon may be cancelled upon the death of the bor-rower. (Note: The Amendments of 1976 apply deathand disability cancellation retroactively to all Defensean4, Direct Loans whenever made.)

4. Permanent and Total Disability

Any loan and the interest t or, may be cancelledif the borrower becomes permanently and totally dis-abled after receiving the roan.

S. Head Start

A be rower whose loan was made after June 30,1972 is entitled to have the entire amount of such loanplus the interest thereon cancelled for services as afull-timd staff member in a pre-school program carriedout under section 222(a)(1) of the Economic. Oppor-tunity Act of 1964 (Head S'iart) if that programis oper-ated for a perioe ,ehich is comparable to a full schoolyear nythe locality. However, the borrower's salary asa full-time staff member may not be more than the sal-ary of a comparable einpleyee of the local educationalagency ire the area eerved by the pre-school program.Loans are cancelled at the rate of i5 percent of thetotal amount of loans plus the interest thereon for eachcompete school year or its equivalent of such service.

6. Bankruptcy

A loan may be cancelled upon receipt of an officialnotice of discharge in bankruptcy from the bankruptcy ecourt.

C Responsibility for DeterminingCancellation Benefits

1. Responsibility of the Institution

The rcponsibility for determining whether bor-rowers are entitled to have any portion of their loanscancelled rests with the institution to whose Fund suchloans are payable upon receipt and approval of an ap-plication for cancellation from such students, to beprovided in a form specified by the instituzion. Thisresponsibility cannot be delegated.

2. Forms and Lecumentat ion Required

a. Teacher Cancellation'(1) Borrower .must file a "Request for PartialCancellation of Loan Due to Teaching Service."(2) Request .form must be signed by anauthorized official in the school system certifying

7-14

Gee teaching service.(3) Before granting teacher cancellation benefitsat an accelerated rate fc,r Defense loans or forDirect loans, the. institution must insure that theschool at which the teaching service was per-formed appears on the list of schools published inthe FEDERAL REGISTER for teaching serviceduring the academic year in which the borrowertaught. Because the statutory conditions govern-ing the compilation of these lists vary betweenDefense loans and Direct loans, it is possible for aparticular school to be an eligible school for ac-celerated cancellations for Defense loans only,Direct loans only, or both. for a particularacademic year.

b. Military Service(I) Borrower must file a "Rqquest for PartialCancellation of Loan for Military Service".(2) The request form must be signed bythe Com-ma:Kling Officer certifying the dates ofservice andwhether or riot the borrower qualifies for specialpay under Section 310 of Title 37, United StatesCode.

c. DeathInstitution nust secure a copy of the death certifi-

cate or other proof as required under state law.d. Disability

(I) Medical evidence supplied by the borrower orhis/her representative including statements fromall doctors, hospitals, or agencies concerned withthe case.(2) Recommendation of the lending institutionsubject to the approval of the Commissioner.

e. BankruptcyOfficial notice of discharge in bankruptcy from

the bankruptcy court.

3. Cancellation Provision Not Retieiactive

No portion of any loan may be cancelled for servicesperformed by borrowers prim- to the date of executionof their loan notes.

L. Exclusion of Refunds

The reful:ling of any repayment of a loan is notauthorized, except a refund will be allowed where anoverpayment is made by a.borrower as a result of aninstitutional error. This implies that an institution willkeep a borrower informed of any new benef...s such asadded cancellation provisions.

E.- Postponement of Payments

I. An institution' \may postpone loan repaymentsfor a twelve month period if the borrower:

a. will be teachi-,, or providing other serviceswhich would enable him to have a portion of hisloan cancelled: andb. has submitted a statement signed by a responsi-ble official of the military agency, school, or in-stitution employing the borrower that the bor.-rower will be so employed. The statement shouldinclude the borrower's job description, the periodof etn7loyment, and the full-time or part-timenature f the employment.

2. If a h,,ri-bwer has received both Defense Loansand Direct. Loans and is eligible for cancellationbenefits on only one of those loans, only the loanrepayments due on the loan for which cancellation isavailable may be postponed.3. Postponements may also be granted for antici-pated deferments in the same manner as describedfor anticipated cancellations.

F. Reimbursement by the Commissionerof Amounts Cancelled

I. Defense Loans

a. With respect to loans made before July 1, 1972,the Commissioner will reimburse each institutioneach award period for loss of principal and interestduring that award period resulting from cancella-tions for teaching service or military service. Thereimbursement is an amount, which bears the sameratio to the interest which has been prevented fromaccruing and the portion of the principalwhich hasbeen cancelled as the total amount of the institu-tion's capital contributions to its Fund bears to thesum of the institution's capital contributions and theFederal capital contributions to such Fund (usuallyten percent)..b. Reimbursements to the institution for, amountscancelled on Defense Loans represent institutionalfunds and may be used at the discretion of the in-stitution.c. No reimbursement will be made to the institutionfor cancellations due to death, disability, orbankruptcy.

2. Direct Loans

a. On loans made after June 30, 1972, the Commis-sioner will pay to each institution for deposit into itsFund, for each award period, the amount of prin-cipal and interest thereon, which has been cancelledfrom its student loan Fund for that year for Teach-ing, Military, or Head Start Service.b. All such reimbursements (payments) to the in-stitution by the Commissioner for cancellationsunder Direct Loans must be deposited to the institu-tion's National Direct Student Loan Fund.

c. No reimbursement will be made to the institutionfor cancellations due to death. disability, orbankruptcy.

XI. Collection Procedures

A, Due Diligence

Each institution must exercise due diligence in thecollection of amounts due and payable to its Fund. Inthe exercise of this responsbility each institution mustconsistently use extensive and forceful collection .pro-cedures. In order to fullfill the requirement of duediligence, an institution Must:

1. Provide to all borrowers, not later than the timewhen they sign their Promissory Notes, full dis-closure of their rights and obligations thereunder.,2. Conduct an exit interview with all borrowersprior to their leaving the institution. The exit inter-

' view may be conducted either on an individual basis(preferred) or in groups. During the exit interview,bocrowers must be:

a. Provided a detailed explanation of theirobligations and rights.b. Provided with a copy of their repayment plan(schedule).c. Advised of their responsibility to inform the in-stitution immediately of any change of address.d. Advised of the full amount of theiroloan includ-3ing the interest rate.

.

e. Advised of the date and amount when the firstpayment becomes due. -

. ,

f. Advised of their responsibilityto contact the inJstitution prior to the due date of any installment ifpayment cannot be made for any reason.g. Advised of rights and Procedures regardingpostponement, deferment; or cancellation.h. Advised of their rights to .accelerate Ibanrepayments without penalty.i. Advised of any optional features of the Note(minimum repayment, penalty charges, collectionchat}ges).'j. The institution must also have the borrower signa copy of the repayment schedule and must placethat copy in the borrowers file.

3: If borrowers leave the institution without notice,thd institution should mail the borrowers a copy oftheir Note and two copies of their repaymentschedule and request the borrowers to sign andreturn one of the copies of the repayment schedule.4. The institution must' maintain contact with bor-rowers after their leaving the institution in order tofacilitate billing and to keep them' informed of all

changes in the program, affecting their rights andobligations.

( 1 -Lo. I

r, 7-15

5. The institution rriust contact the borrower no lessthan tht_,. times before the first payment is due, asfollows

a. 90 into the grace periodb. 180 cays into the grace periodc. no lest than 30 days preceding the'due date ofthe first installment.

6. Regular billing and follow up procedures must beestablished during the period in which any outstand-ing balance remains unpaid.

. 7. An institution unable to locate a borrower in spiteof its established billing and follow up efforts musteither engage the services of a commercial skip-traceorganization or perform equivalent skip-tracing ac-tivities with its own personnel..

B. Use of a Billing Service

1, An institution may use a billing service to carryout its required billing procedures. In so doing, theultimate responsibility for making decisions relativeto the making and collection of loans and cancella-tion and deferment of loans must remain with the in-stitution. IT\lis responsbility cannot be delegated.'2. The costs incurred by the institution for such abilling service cannot be deducted from the Fund,'except to pay for skip-trace activities and telephone.calls to delinquent borrowers.'

C. Use of a Collection Agency

If an institution is still unable to attain payment froma borrower after performing due diligence, it must usethe services of a collection agency, or perform the re-quired collection activities with its own personnel, orresort to litigation. The NACUBO publication, StuderitLoan Collection Procedures, contains helpful infor-mation on the use of a collection agency.

D. Costs of Collection

161. Reasonable costs incurred by the use of a .c m-mercial skip-trace agency or by the use of a ca lee-tion, agency and the costs of telephone calls in locating lost borrowers are considered other collectioncosts and may be charged to the Fund except thatany*collection costs paid by the bcrrower may not becharged to the Fund.'2. If an institution elects to perform its own collec-,tions, rather than to use a collection agency, its ac-tual costs of collection including salaries may beconsidered "other collection costs" and charged tothe Fund so long as the,costs do not exceed the coststhat would have been permitted if the. institution hadused a commercial collection agency.

. 7-16

3. Reasonable litigation costs may be charged tothe Fund.

E. Bankruptcy

I. An institution mu %t refrain 'from collection ac-tivity in the event the borrower is adjudicated abankrupt and the loan has been disdharged.2. No such loan may be written off until an officialnotice of the discharge in bankruptcy hat: beenreceived by the institution.3. Any payments received from a borrower alter hisdischarge in bankruptcy may be deposited to the in-stitution's Fund.

F. Overdue Payments and Default

1: Overdue Payments

If a borrower fails to make a payment or to file anappropriate cancellation or deferment form by the duedate, the institution must fallow the procedures'prescribed in section'144.44 of the NDSL regulations.

Within 15 days of the missed due date, jhe institu-tion must contact the 'borrower by telephone or in writ-ing to demand payment. A second effort, if necessary,must oe made within 45 days of the missed date. If theborrower does not respond satisfactorily to those con-tacts, a third effort must be made by mailgram ortelephone within 15 days of the second contact. If asatisfactory responseis not received, a final demandbetter must be sent withiti fifteen days of the third con-tact (i.e., within 75 days of the missed due date). Thefinal demand letter must give the'borrower 30 days torepay and inform him or her that the Joan will be refer-red for collection or litigation unless a satisfactoryresponse is received within that time. If the institutionihtends to accelerate the loan or has already done so,that fact,must also be stated in the final demand letter.

If a satisfactory response is not received to the finaldemand letter, the institution must contact the bor-rower by telephone before referring the loan for collec-tion or litigation. This telephone, call may be madewithin the 30 days the borrOWer was given to respondto the final demand letter or after tht expiration of the

,30 days. The purpose of the telephone call is to findout whether the borrower's reason for non-response isfinancial hardship such as prolonged illness orunemployment. If it is,_th.o borrower should be given ahardship deferment. This telephone call should' bemade by a person skilled in making-telephone collec-tions.

If the loan is referred for collection and the bor-rower still fails to pay, the institution must decidewhether the borrower has the ability to pay. It must sue.'for payment if the indebtedness is at least $500 and the

. ,C

borr1ower (1) can be located, (2) has assets which maybe used to satisfy the indebtedness, and (3) has noknown defense (e.g., the statute of limitation).

2. Default

If an institution has reason to believe that a bor-.

rdwer does not iniend to honor hid or her commitmentto repay the loan, it may consider the loan defaultedand send the final demand letter. If the borrower does'not respond within 30 days, the institution may referthe note to a collection agency.

9L)

7-17

Chapter 8

a The Guaranteed Studentloan Program

Program Profile page

A, IntroductionB. Legislative Authority,C. Progratn Purpose

II. Program Operations

A.

B.C.

D..E.

F,G.H.I.

8-38-3,8-3

General 8-41. Lending Institutions2. The Federal Insured Student

Loan Program or GuaranteeAgency Programs

3. Basic Functions of the FederalGovernment

4.. Student LoanAssociation

Student EligibilityRights and Responsibilities of theStudffintLoan Limits 8-7 ,

Interest Rate and Eligibility Re- -

quirements for.Interest Benefits 8-8Repayment of Loans 8-8Deferment Provisions 8-8Forbearance 8-9Death, Disability, and BankruptcyProvisiOns, 8-9

Markehing

8-4

C. Functions of Educational Institu-tions

Page

C. Functions of Educational Institu-tions 8-101. Institutional Terms of Agree-

-2. mdendt8-10

itional kpquirementsAdditionalD. Requirements for Schools which

make or,Originate, Loans1. Eligibility ReqUirements 8-11

8-11

8-11

Z. Loan Disbursement Require-.8-4 ments 8-1f

3.. Origination Cgricept 8-12.8-5 4. .Agreement for Schools Which

Make Or Originate Loans : 8-128-6 5. Terminaticn of Lending8-6 ',Eligibility of School Lenders

Based Upon Default Ex-8-6 perience

i 8-13

III. Educational Institutions

A. Eligibility Requirements forSchools 8-9

B. Limitation, Suspension, and Ter-mination of School Eligibility 8-10

ti

IV. Completion Of The Insured LoanApplication

B.

f

CertificationThe FISL Application = OE Form1154I: Introduction2. General Information3. Guarantee Agency Programs .

4. %,,Specific Instructions for Com-p1eting Section II and III, of theFISL Application .8-14

8-13

8-148-14,

.8-148 -14

8-1

Chapter 8

The Guaranteed StudentLoan Program

\

I. yi-ogram Profile,

A. Introduction

Throughout oar, revision.of the Guaranteed StudentLoan-Program (GSLP) chapter of the Student Finan-cial."Aid Handbook, two recurring problems shapedthe development of this document. First, because of

.the considerable variation among the policies, pro-cedures, and regulations of the various guaranteeag.6ncy programs as compared to the Federal InsuredStudent Loan Program (FISIT.13). it has been difficult toprovide concise guidelines which apply uniformly toboth components of the program. While we have madea serious effort,to produce a If:andbook which is bothcomprehensive and useful, the user will notice a morecompr,ensive description of the FISLP in variousrespects.With regard to such routine but essential mat-ters as t* completion of a student loan applicationform, for example, it is practically impossible to pro-vide instructions which would encompass all of theVarious forms being used by all of the guarantee agen-cy programs as well as the FISLP.

The second `source. of difficultils the regulatory andlegislative complexity of the GSLP. The legislativeenactinents.of 1976 and 1.977 had extensive impactupon Ole, program. Upon the effective date ,of any

tslative airiendment,,the. provisions of that amend-ment Supersede. any existing regulation thatsis in con-flict with the legislative change, and must je adheredto by all patcipating schools. Bulletin No.S11, datedJanuary 12, outlineS the effects of the EducationAmendments' of J976 upon schools'.participation inthe GSL:P. Proposed regulations providing implemen-tation and interpretation of the legislative amendmentiof 1976 and 1977 were published in the FederalRegister' on April 5, 1978, and a public. commentperiod ended ein 'May 20, 1978. Until such time thatfinal regulations artpublished and effective, however,schools must use their own interpretation in adheringto the ,provisions Of.tl* new legislation, eXcept whereguidelines have been previously published.

he new regulations, will also incorporate Various.pol \cy changes which do not result specifically fromthe legislative amendments. Until the final regulationsare published and dffektive, participating schools wil\

not need to adhere to these policy changes. However,because the new requirements are expected to becomeeffective sometime during academic year 1978-791 webelieve it would be useful to inform schools in thisHandbook of intended policy or procedural changes.Therefore, we have indicated wherevernecessary when aparticular provision is not yet effective.

B. Legislative Authority

The Guaranteed Student Loan Program (GSLP) isauthorized by Title IV, 'Part B, of the Higher Educa-tion Act of 1965, P.L. 89-329, as amended(,20 U.S.C.1071-1087-4). Other applicable legislation includesthe General ,EducatiOn Provisions /Act (20 O.S.C.1221-33h), and parts of Title IV, Part,,F, of the HigherEducation. Act of 1965 (20 U.S.C. 1088 -88g).

C. Program Purpose'

The primary purpose of-the Guaranteed StudentLoan Program is to make low-interest, long-term loansavailable to students to help them meet their postsec-ondary educational expenses. The program itself pro-videsbenefits undar loan guarantee programs of Stateand private non-profit agencies and, in limited cir-cumstances, under a program of Federal loan in-surance. The :objective of the program is to provide.loans to students attending eligible institutions of high-er education; eligible vocational, technical, business,and trade schools; and eligible foreign institutions.The program is designed to use private loan capitalsupplied primarily by commercial lenders, but also bysome State agencies and educational institutions act-ing as lenders. These loans are guaranteed either byindividual State .or private nonprofit guarantee agen-cies (reinsured by the Federal government) or directlyby the Federal. government, specifically the Office ofEducation. The , goal is to provide students thebroadest possiblo,access to loan capital without theusual constraints of credit-worthiness and provisionsof collateral to,secure loans that are characteristic ofthe commercial loan piocess. Such broad access toloan capital is intended to provide students with freeraccess to postsecondary education and a wider choice

1Oj. 8-3

in selecting the types oil institutions which they wish toattend.

Guaranteed loans are an important supplement toother Federal, State, and private programs of studentfinancial aid. During Fiscal Year 1977 approximately14,100 lenders made about 941,000.loans to studentsattending about 8,100 eligible educational institutions.The averagl loan 'amounthper student during the sameperiod was about 51.560.

11. Progiram Operations4.)

A. General.

The Guaranteed Student Loan Programdepends forits successful operation upon the cooperation and in-

teractipn of several distinct institutions, agencies, andconstituencies. These include lending and educationalinstitutions, State and private nonprofit guaranteeagencies, the Bureau of Student Financial Assistancewithin fhe Office of Education, and the Student LbanMarketing Association (Sallie Mae). Section II brieflyoutlines the functions of each of these essential ele-ments and deScribes in the process the fundamentalaspects of program operation:

Lending Instittitii'ins

TM loan principal for student loans is provided bylenders such as commercial banks, savings and loanassociations, credit unions, insuiance companies, pen-sion funds, eligible educational instpfitions, and Stateagencies.' To participate in the program, an eligiblelender enters into an agreement with the Office ofEducation or with the applicable guarantee agency. Alist of participating lending, institutions for any givengeographical area is available from the nearestitegional Off e-of Education.-The Education Amend-ments of 1976 (P.L. 94'-482) specifically prohibits cor-respondence schools from being lending institutions.

The Federal Eclual Credit Opportunity Act (ECOA)prohibits lenders froni discriminating againit'studentloan applicants on the basis of the applicant's race, col-or, religion, national origin, Sex, marital status, age",'because all or part of the applicant's income isderivedfrom any public assistance prOgraiii o'r because the ap-plicant has in good faith exercised any right under theConsumer Credit Protection Act.

Each financial aid officer should advise students,however that lenders participate in the GuaranteedStudent oan Program entirely on a voluntary basis.Lnade:1 '.-ake loans from their own resources or from

hid in trust and available for such loans, andfrequently establish internal policies which

t%, the number of loans being made at anytime.

8-4,

Such policies may include allocating limited funds totheir student loan portfolio, limiting loans to studentswho have an account with the lending institution priorto submission of the loan application, limiting loansonly to residents of the State or geographic area inwhich the lending institution operates, or imposingvarious other restrictions on the number of loans thatmay be made. Internal policies such as those describedabove are legitimate as long as they do not violate.ECOA restrictions against discrimination.

In order to fulfill its obligation to the program, alender must also use reasonable care and diligence inmaking, servicing, and collecting all loans. Duediligence 'must begin before the loan applications areprocessed and should continue through the nw king, in-school, grace period, and collection process: for eachloan. BasiAlly, the due diligence requirements pro-vide that a lending institution must exercise loan ser-vicing .and collecting procedures comparable to thosegenerally in use for 'other ft) ans of comparableamounts.

Under certain circumstances an educational institu-tion may have delegated to it by a lender substantialfunctions or responsibilities for administering' theGuaranteed Student Loan Program - functions whichare normally performed by lenders prior to making aloan. This delegated ,''origination relationship" be-aki,een a lender and a school confers certain Specific

"StAtutoryresponsibilities in making GSLP loans to stu-dents at that school. These responsibilities will.be dis-cussed in Section III-D ofthis chapter.

2. The Federal Insured Student Loan Programor Guarantee Agency Programs

Each State can generally be classified in terms ofwhether the loans made, by the lending institutions, inthat State are guaranteed by a Syte or private non-

. profit agency (guarantee agency program) or are' in-sured by the Federal government (FISLP). TheGuaranteed Student Loan Program (GSLP), the nameby which the program is commonly known, refers bothto programs administered by guarantee agencies andto the Fedeial Insured Student Loan Pr,ogram(FISLP). Within any. State the two aspects of "theprogram rnay coexist. The FISLP operates in' Stateswhich do not have functioning guarantee . agencyprograms and, to a limited extent, in guarantee agencyStates as well. In-such circumstances, a lending ibstitu-

'tion may haye an agreement .-both with a guaranteeagency and with the Federal government, and maymake loans under both programs.

a) Guarantee Agency Programs: States are -en--couraged to establish adequate loan programsunder either aState-or private nonprofit agency forstudents at eligible institutions. Currently guaranteeagency programs operate in -3I,States, and severalothers are currently being formed. To encourage

.1ti

S tates to establish such agencies', the Federalgovernment,provides funds to these agencies to helpthem establish or strengthen theirDreserve.funds as a'basis for guaranteeing ,the loara,wiirch-are-rnaeTyparticipatingfenders. Los which are made under aguarantee: agency program ditalify the holder ofthose loans to payment of Federal interest benefitsand special allowances. On loans that are madeunder a: guarantee agency program, the. Office ofEducation will reinsure 80 to 100,percent of theamount of losses on default claim;s paid by the agen-cy to its lenders, depending upon'the characteristicsof the guarantee agency prograth and its. default ex-peri .nce.

Guarantee agency programs vary :considerablyfrom -State to State, and .thee. are numerousdifferences among agencies on,siich matqrs as the

'percentage of loans guaranteed;.annual mid aggreg-ate loan maximums allowed for individual students,student eligibility criteria. and criteria for lender andschsiol participation. These °unique provisions canbe eery important in deverOping the best possible

.nancial aid package for each student, and should eknown by each financial aid officer. The Connec-ticut guarantee agency prog.ram, for elainple, has aforgiveness feature which provides a 10 perdentrebate on a loan, under certain circumstances, fOrstudents who successfully complete the academicprogram for which the loan was made. For detailed

, information about, the unique 'provisions of theseprograms,-"financial aid officers should contact theappropriate agency. Complete addresses are pro-vided in Appendix F dethis haudbook. At the timeof public - anion of this Handbook guarantee agencyprograms were operating' in the following states:

Alaska Administered by United States StudentAid Funds (USAF)

2. Arkansas3. Connecticut4. 'Delaware Administered by USAF5. Florida

"6. Georgia7. Illinois8 Indiana9 Kansas Admin iStercA by Higher Education

Assistance Foundation10. Louisiana

' 11. Maine12. Maryland

13. Msstichusetts,14. MichiganIS. Minneg to

J6. Nevada17. New Hampshire

. 18. New Jersey19. pew York20. North Carolina21. Ohio22. Oklahomaa Oregon

u, 24. Pennsylvania

Adricinistered by USAFAdministered by USAF and State Agen:CS'

Administered by Higher EducationAssistance FoundationAdministered by USAF

25. Rhode island26. South Carolina27. Tennessee'28. Utah29. Vermont,30. Virginia31. Wisconsin

(

Administered by USAF

Since the characteristics of a guarantee agencyprogram may change(from time to time, financial aidofficers should contact The individual agencies for 4p:to-date information.

b) The Federul Insured Stritnt Loan Progrgm(FISLP):The Federal Insured Student Loan Program is avail-able in certain circumstances specified by statute for.those students or lenders in guarantee agency Stateswho 'do net have reasonable access to a guaranteeagency program, is follows: (1) In a State Vhherethere is 110 guarantee agency.pcogram, the FISLP isavailable .to all. eligible lenders in that State forloans t6 all eligible students whom such lenders arewilling to 'assist, regardless of the residence of thestudent. (.2) In a State where there is a guaranteeagency program, the FISLP is, in general, availableto lenders in the State only forioans to students at-tending schools not having access to the guaranteeagency program or to students who, on account oftheir residence, do not have access to that program.'(3) A lender may obtain Federal insurance for allthe loans that lender will make if it can, assure theOffice of Education that, because of the residenceof its loan applicants, no single guarantee agencywill guarantee-substantially all of the loans that thelender intends to make-..(4) Finally, a lender may ob-tain Federal insurance, under circumstances ap-proved by the appropriate guarantee agency, for aloan to a borpwer who has previously received aFISL and has not completely repaid the FISL:

3. Basic Functions of the Federal Government

The Federal Government, specifically the .Bureau ofStudent Financial Assistance (BSFA), is responsiblefor several important coordinating and administrativefunctiops concerning the Guaranteed Student LoanProgr*. These, functions include:

a) To pay interest benefits to lenders on behalf ofqualified students receiving both FISLP andguarantee agency loa7s;b) To pay lenders a special allowance on all loansmade and still outstanding on both FISLP andguarantee agency loans; . 0c) To repay'lenders for losses resulting fromdelaults,,bankruptcy, death and disability;d) To peovide preclairn assistance to FISLP lendersand to effect recovery of those defaulted FISLPloans which cannot be recovered by lending institu-tions; t '

e) To reinsure 80 to ,100 percent of the principal

'875

7

I

a:noUnt of default claims and pay 100 percent ofdeath, disability, and bankruptcy claims paid byguaretee agencies an !pans insured by them;f) To encourage tEe Creation and expansion ofguarantee. agency p..6'grams, to make advances tostrengthen their reserve funds, and to pay rein-surance claims and adininistrative allowance's;g) To encourage the participation of lending andeducational institutions;h) To determine the eligibility and monitor the participation of lenders, educational. institutions, andstudents;i) To issue regulations and guidelines to implementthose functions outlined above and to assure com-pliance by all participants;j) To propose legislative, regulatory, and ati-ministrative changes as required; andk) To disseminate information about the GSLP andits relationship to other Federal student aid

.

Programs.

4. The Student Loan Markiting ..ssociation(Sallie Mae)

Sallie Mae is a Government-sponsored, privateprofit-making financial corporation created in 1972 byamendment to the /Higher Educ'ation Act of 1965. It isdesigned to Provide a secondary market facility forsupport to lending institutions which make studentloans insured under the Guars steed Student Loan .

Program. Sallie Mae per'forrhs this support functionprimarily by providing a,piirchasing and warehousingfacility for insure student loans made by eligible len-ders. For more information about Sallie Mae write to:Student Loan Marketing Association, 1055 ThomasJefferson Street, N.W., Suite .500, Washington, D,C.20007.

. Student Eligibility

Students are the priMary beneficiaries' of theGuaranteed Student Loan Program. As such they mustmeet certain ibility criteria. To be eligible for aloan, a studht m st be either accepted for enrollmentor enrolled good standing and making satisfac-tory academic progress on at least a half-time basis inan eligible course of study at,an eligible institution. Aninstitutional official, usually the student financial Al-administrator, must sign a certification to this effect aspart of the student's loan application. The school

,,official mint usually report other information oneapplication as well, including:

1. The student's estimated educational costs for theperiod of enrollment wvered by the loan; and

.2. Any other financial aid awarded for that period.The student must be a United States citizen or na-

tional, a perrinarient resident of the United States, a

8-6

permanent resident of the Trust Territory of the PacificIslands or of the Northern .M'ariana Islands, or be inthe Upited States for other than a temporary purposeand intend to become a permanent resident of theUnited States. The statute provides, however, that onlyUnited States nationals can borrow to attend foreignschools. The student must sign an affidavit on a formwhich is approved by the Commissioner of Education,stating that the loan will be used Solely for educationalexpenses related to attendance at the eligible institu-tion which the student-plans to attend or is currently at-tending. Thit affidavit must be signed in the presenceof a notary or other person who is legally authorized toadminister such an oath and who does not take part inthe.-recruiting of students at the eligible institutionwhich the student plans to attend or is attending. In ad-dition, to be eligible for a loan, a student must not be indefault on a National Direct Student Loan or aGuaranteed Student Loan received for attendance atthat institution or owe a refund on.a Basic EducationalOpportuuity Grant, Supplemental Educational'Oppor-tunity Grant, or State Student Incentive Grant receivedfor attendance at that institution. Further, under. the

-April 5, 1978, proposed GSLP' regulations, a studentmay not receive a Guaranteed Student Loan if he orshe'is in default on a Guaranteed Student Loan pre-vic .sly received for attendance at any eligible educa-tional institution; however, this last requirement wouldnot become effective until it is included in final regula-tions. The school official who completes the school'sportion ofthe loan application has responsibility forassuring that all of these requirements are met(

C. StudeaRights and Responsibi!ities

Student Rights:

1. The loan must he disbursed 13: a check madepayable to the borrower nor joi itly to the borrowerand the school if authorized in writing by the bor-rower) and requiri4 his or her personal endorse-mehtz,2. If i lender transfers (i.e., sails) the' loan and theright tb receive payments on the loan, the borrowermust be sent a ckar notification of his or her obliga-tion to the new holder of the loan note.3. If qualified, eachborrower is,entitiled to receive

Federal interest benefits. Student. eligibility for in-terest benefits _is discussed in Section II-E of thisHandbook.4. The lender must provide each borrower with a

cqpy of the promissory note.5.. Each borrower is entidg to a "gi'ace period" Of

9 to 12 months before repayment begins, after thestudent leaves school or is attending school less thanhalf-time. The exact length of this period is indi-cated by the lender on the promissory note or.specified by guarantee agency regulations.

1i

4,

6. Ea'ch borrower has a right to a repayment periodof not less than five years, unless such a repaymentperiod would result in pay,ments.pf less than theminimal arihual amount of $360. *payment is dis-

Fussed in Section II-F of this Handbpok.7. Each borrower has a right to prepay the loan withoutpenalty: The bori-ower may pay the limn balance andany interest due at any. time, without an additionalcharge by the lentler.8. Each borrower has a right to deferment of repay-

ment under certain statutorily authorized circum-stances. The conditions that qualify a borrower' fordeferment are' discussed in Sectio'n II-G of thisHandbook: Under deferment a borrower is not re--quired to make payments on the principal for laprescribed period of time: Additionally, if the bor-rower qualified for Federal interest benefits at thetime the loan was made; he or she is also entitled toreceive Federal interest benefits on the loan duringany authorized period of deferritent.9. Each borrower may request forbearance. If a'borrower cannot meet his or her repaymentschedule, he or she may request forbearance fromthe lender, under which the payments may be stop-ped or reduced for a specified period of time if it willassist the borrower.in avoiding default.'10. The Federal government will pay. a borrower'sobligation in the event of death or permanent and totaldisability of the borrower. Any part of an obligation onwhichva borrower is adjudicated a bankrupt willpaid by the Federal government. However, the bor-

R .rower is still liable,for repayment unleis and until thevloan is discharged in bankruptcy.

.

Student Responsibilities:

While students are entitled by law to certain rightsunder the Guaranteed Student Loan Program, theyshould also be aware of the seriousness of their-obligatiOns and the responsibilities that they assumewhen they obtain Guaranteed. loans. These respon-sibilities include:I. Each borrower must use care in choosing -aschool. All schools must provide-prospective stu-dents with information about the school's programs.A student borrower should consider this informa-tion carefully before deciding to attend a school.While the Office of Education periodically publishesa list of eligible educational institutions, the Officeof Educa1tion does not accredit educational instityctiotlsThe listing of a cVrticular 4chool as beiirgeligible for the GSLP indicates only that the schoolhas met the statutory and regulatory requirementsfor sctlftol eligibility and has executed an agreementwith SFA. The list of eligible schools should not be

construed as relating to the quality/or to thesuitability of the education to be offered. For thisreason it is the responsibility of the studehtto usecare in selecting. a school and to carefully evaluatethe benefits: to be derived from the educationalprogram being considerei.2. Each borrower must personally endorse his orher guaranteed loan check, and may not authbrizeanyone else to endorse it on his or, her behalf.e. Each borrower must arrange with the lender topay the interest on the loan if he or she does notquality for Federal interest benefits.,4. Each borrower must notify the lender when he orshe graduates, withdraws frost-1 school or from less ??

than half-time attendance, or changes his or her ad-dress. In addition, the student 'should notify thelender of any change in his or her name (e.g.;maiden' name to married name) or of his or hertransfer to another school.5. Each boirower must repay the loan in accor-dance with.the repayment schedule. All borrowersshould be aware that the loan cannot be cancelled or"torgiven" for duty in the-military ,service or forteaching in shortage areas. ,(The National DirectStudent Loan Pr6gram does have provisions forcancellation fog certain types of teaching and mili-tary service. See Chapter 7 of this Handbook.)6. EaCh borrower must notify the lender oranYoc-curence which may affect his or her eligibility for adeferment if the cborrower'c repayment obligation'iscurrently being deferred.

el31. Loan Limits1

d The academic year loan limit under the EISLP is$2,500 for undergraduate and vocational study and$5,000 for graduate or professional study. The total ag-gregate amount that a borrower may have outstandingin the FISLP may not exceed $7,500 for undergradu-ate and vocational study or $15,000 for graduate or .

professional study (including loans received for un-dergraduatg study). Some guarantee agencies;however, have established lower annual or aggregateloan limits.

Additionally, two provisions created by the Educa-tion Amendments of 1976 affect the maximum annualloan limit:

1. A' loan to a student in his or her first year ofpostsecondary education that is made by a Stateagency lender, a school lender, or a lenclekhzving an"origination" relationship With a school,'rna'y not ex:reed the lesser of $2,500 or one-half the borrowen;s'cost of attendance.

105 8-7

'2. A loan to a student in' his or her first year ofpostsecondary education that is made by a school orby a lender having an -"origination" relationship witha sehoth may exceed $1,500 only if the loan is dis-bursed in two or more,installments, none of whichexceeds halfthe loan, with the interval between thefirst and second installment being not less than one-third the period of enrollment for which the loan wasmade.

E. Interest Elate and EligibilityRequirements for Federal_ InterestBenefits

The annual interest rate on Guaranteed SttidentLOaris may not exceed 7%. (In.addition, lenders mayreceive a "special allowance" from the Federalgovernment, in an amount up to 5% annual interestrate, but the stud ?nt is never liable for payment of thespecial allowance).

All students eligible for Federal interest benefits.The Federal government will pay to the lender the totalinterest due 'prior to the beginning cf the repaymentperiod and during authorized deferment periods. Allstudent are eligible for Federal interest benefits

Repayment of Loans

Prior to the end of the grace period the lenderestablishes the repayment schedule in cooperationwith ';.ie borrower, on the basis of the borrower'sability to make .payment.

Repayment of principal arid interest is usually madeby the borrower in monthly instaHments. The repay-ment period begins not earlier than nine months norlater than one year after the date on which the studentceases to carry;at an eligible institution, at least onehalf the normal full-time academic workload as dete:-

,mined by that institution. By statute, the repaymentperiod may range from five to ten yens excerk whgethe required annual payment of $360 does not permitthis. The total life of the loan may not exceed 15 yearsfrom the original date of disbursement. Both the 10and 15-year maximum periods are exclusive of anyauthorized deferment periods.

A borrower niay, at any time, repay the whole orany part of the loan without penalty and may, during

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the 9-12 month grace period, request a loan repaymentperiod of less than five .years or beginning earlier thannine months following the date the borrower leavesschool or is in less than half-time study. When a bor-rower elects to begin repayment earlier than the 9 to12 month grace period, this decision is irreversible.The borrower may not further use any remaining por-tion of the grace period. However, even if a borrower.--chooses a term of less than five years. he or she m iy re-quest a schedule which lasts at least five years at anytime during the repayment period.

Generally, a borrower must pay at least $360 peryear on his or her loan during the repayment period. Ifthe; lender and the borroWer agree, however,an annualpaYireq. of less than $360 is permitted. Also, whenboth a husband and wife have guaranteed loans, then,ininium annual' payment for the couple is $360'peryear. It must be emphasized}hut the $360 refers tominimum annual payments. Students often have to paylarger montilly amounts in order to repay their loanWithin the 16-year period required by law.

G. Deferment Provisions

Deferment means that the loan principal neecknot bepaid under certain circumstances for specified periodsof time. During all deferment periods, the principal ofthe loan need not be repaid by the borrower but in-terest on the loan shall accrue, and shall be paid eitherby the borrower or, for,those students originally-eligi-ble for Federal interest benefits, by the Federalgovernment. Also, proposed regulations would pro-vide that if the lender agrees,,the interest accruing on anon - subsidized loan may also be deferied and thenadded to the principal amount of the96an at the timethat repayment resumes.

Deferment of repayment of principal is authorizedduring any period in which the borrower is pursuing afull-time course of study at a participating institutionand for any, period of up to three years during whichthe boreower is a member of the Armed Forces of theUnited States on active duty, a. volunteer under thePeace Corps Act, or in service as a full-time volunteerunder Title I of the Domestic Volunteer Services Actof 1973 (VISTA).

Two new deferment provisions were created by theEducation Amendments of 1976. First,'deferment ofrepayment' is authorized for a student who is pursuinga full-time cburse of study under a graduate felloWshipprogram- which has been ,appri.ved by the Commis-sioner of Education. The intuit of this, proviSion is totake into consideration those studen0 who. are notenrolled in an "educational institution' but who are

pursuing certain apprgved programs of independentgraduate study.

. Second, a single deferment for a period of not morethan one Year is provided for a student who is seekingand unable to rind full-time employment. The April 5proposed regulations would provide procedures anddefinitions with regard to these new provisions fordeferment. Until final regulations are effective, lenderswill be required to rely upon their own best judgmentin approving requests for deferment for unemploymentin accordance with Bulletin No. L22 dated January 12,1977.

The time period involved in a deferment is not to beinclud,:d in the maximum repa met t periods specifiedin Section II-F, above.

H. Forloparance

When unanticipated personal problems affect theborrower's ability to make payment on his or her loan,forbearance of repayment may be granted by thelender. Forbearance means allowing, repayment at .alesser rate than originally sCheduled, or allowingrepayment to lapse entirely for a specific period. For-bearance is authorized specifically for the benefit ofthe borrower. It must he approved' bylthe guarantor(i.e. either the CifEee c. f Education or the guaranteeagency), and it must be agreed upon in writing betweenthe borrower and the lender. The prcnosed GSLPregulations would provide that forbearance that wouldnot extend the statutory repayment period require-ments may& granted without advance approval fromthe Office of Education. Lenders are encouraged toconsider the use of forbearance in cases where becauseof temporary hardship a borrower is willidg but unableto pray in accordance with the repayment schedule.Forbearance should norbe used when a borrower isunwilling to pay. Forbearance is often granted insituations where the borrower is for a limited time una-1:le to meet his or her obligation because of unemploy-ment, hospitalization, attendance at an ineligibleschool, full-time volunteer service in an organizationnot specifically recognized for. the purpose of defer-ment, or some other unusual circumstance. Interestwould normally be raid by the borrower during aperiod of forbearance. However, if the borrower isunable to pay the interest, the proposed regulationswould allow the lender to accrue the interest, and addit to the loan principal at the time repayment is ex-pected to resume. The Federal government does notpay interest benefits on subsidized loans duringperiods of forbearance.

I. Death< Disability, and BankruptcyProvisions

In the event that a borrower dies or becomes totallyand permanently disabled, the Federal governmentwill pay the borrower's obligation for principal and in-terest, and the holder of the loan will not be alldwed toattempt' to collect the loan from an endorser of theborrower's estate. The Federal government will alsopay any part .of a borrower's obligation on which theborrower is adjudicated a bankrupt. If a borroWer whois adjudicated a bankrupt does not receive a dischargt:in bankruptcy, then the borrower's obligation is notremoved .

It should be noted that the Higher Education Act of1965,( as amended, provides that a Guaranteed Stu-dent Loan cannot be discharged in bankruptcy for fiveyears following the commencement of the repaymentperiod, with respect to bankruptcy proceedings beginningon or after September 30, 1977, unless the bankruptcycourt permits discharge on a hardship basis.

III. Educational Institutions

The basic function of educational'institutions par-ticipating in the Guaranteed Student Loan Program is,of course, to provide educational opportunities for stu-dents. Educational institutions also play an importantrole in the loan application process, as they must corr.'plete a significant portion of the student loan applica-tion. In addition, once a loan is made, each schoolmust periodically confirm to the Office of Educationthe StuFlent's continued enrollment. When the studentwithdraws or graduates, a school must report that factto the lender. A detailed description of the'-specifictasks required of participating educational institutionsis provided in Section III-C: "Functions of Educa-tional Institutions." In addition, Section III-D of thisHandbook discusses requirements for schools whithare lenders or which originate loans under theprogram.

A. Eligibility Requirements for Schools

Schools establish their eligibility under GSLPthrough filing an application with the Division ofEligibility anc Agency Evaluation (DEAE), Burau ofHigher and Continuing Education, U.S. Office ofEducation, Washington, D.C. 20202. Once DEAE has

I

8-9

determined that a school meets the statutory criteriafor institutional eligibility, the school must execute anagreement with the Institution and Lender Certifica-tion Branch, Division of Certification and ProgramReview, Bureau of Student Financial Assistance,before it can participate in the GSLP. Usually alleducational programs offered by a school are eligiblefor attendance by students receiving a loan under theGSLP. However, in some instances, only specificprograms or courses at a particular school may beeligible for attendance by GSLP loan recipients. Inthat case the school should not complete its portion ofa GSLP application for a student enrolled in an ineligi-ble course of study.

Eligible educational institutions may include:-Colleges and universities-Correspondence schools-Graduate and professional schools-Junior and community colleges .

:Nursing,-business, trade, and vocational schools-Technical institutions-Foreign schools comparable to U.S. schools

However, no educa'onal institution which employscommissioned sale- arsons to promote the availabilityof the GSLP is eligible to participAte in the' GSLP. Thisstatutory provision is discussed in Section III-C.2.b.

If a school becomes eligible to participate in theGSLP after an acaderriic year has begun, loans to covereducational costs incurred by a student for that yearprior to such eligibility may be,insured after BSFA hasapproved that school's participation in the GSLP. Aloan will not be approved until the school has obtainedeligibility.

When it is determined that a school is ro longereligible to participate in the program, further loans willnot be approved from the date of less of eligibility. In-surance on loans outstanding will normally not beaffected by the loss of eligibility.

The Office of Education periodically publishes acomposite listing "Eligible Institutions - GuaranteedStudent Loan Program," which is available from theOffice of Education Regional Offices. OE RegionalOffices will also answer any questions about theeligibility of particular schools and/or programs.

B. Limitation, Suspension, andTermination of School Eligibility

Schools which fail to comply with applicable laws,regulations, limitations, or agreements of the GSLPmay have their eligibility to-participate in the GSLPlimited, suspended, or terminated by the Office ofEducation. These actions by OE/BSFA must complywith various due process procedures designed to

8-10

safeguard the rights of schools. Final regulationSspecifying procedures for' the limitation, suspension,or termination of the eligibility of a schoorto partici-pate in any BSFA program were published sin theFederal Register an December 23, 1977, as 45 CFRPart 168, Subpart H. These procedures supersede_thecurrent GSLP regulations Part 177, Subpart G = withrespect to schoo/s. Part 177, Subpart G; remains ineffect with respect to lenders (including a school in itsrole as a lender), and will continue to be in effect untilthe new GSLP regulations are published as finalregulations.

C. Functions of Educational Institutions

Educational institutions which have establishedtheir eligibility with the Office of Education may par-ticipate in the GSLP only after they have signed r nagreement to comply with all applicable laws andregulations of the GSL Program (45 CFR Part 177)and with the regulations issued under 45 CFR, Part 168,Subparts A-C, when final.

1. Institutional Terms of Agreement

Initially, an eligible educational institution is re-quired to complete and submit to-the Institution-andLender Certification Branch, Division of Certificationand Program Review, BSFA, an "-Agreement Regard-ing Institutional Participation in GSLP" (OE Form413, dated 5/75). For academic year 1978-79 thisdocumen't was supers,Aled by a combined 'Institu-tional Agreement covering all BSFA programs. By ,

completing and signing the Agreement, an educationalinstitution agrees to comply with the following statu-tory and regulatqry requirements relating to the ad-ministration of the GSLP:

a. Each school must establish and maintain a fiscaland administrative record keeping system whichal'ows it to maintain records pertaining to GSLPstudents for a designated. period after ,khe studenthas left the school. Such records may be maintainedin computer or microfilm format (except that if aschool is a lender and the holder' of a promissorynote, it must retain the actual note, to be returned tothe borrower upon completion of repayment). Aschool must so agree to allow BSFA to auditschool records periodically, to determine, com-pliance with GSLP regulations. (Additionally, theproposed regulations would provide that eachschool must obtain a non-tederal audit at least onceevery two years.) Finally, each school must agree tocomply with various reporting requirements asdefined by the Commissioner. This includes thetimely completion ,of the Student Status Confirma-tion Report (OE Form 10720).b. Currently effective GSLP regulations Provide

1

that each school.must establish a fair and equitablerefund policy and must publish that policy in writing.However, this regulatory requirement is currentlybeing reviewed and may be amended in the upcom-ing regulations tinder Part 168.The refund policy must cover tuition, fees, and, ifpaid to the institution, room and board charges. Ad-ditionally, when a. refund is due the student, the por-tion of The refund attributable to the GuaranteedStudent Loan must be at least equal to the proshare that the Guaranteed Loan' is of thecost of education for' the enrollmentwhich the loan was, made.c. Each school must present prospectwith complete, accurate, and recent intoiniau, ,1about the institution, its current academicor train-ing programs, and its faculties and facilities, withparticular emphasis on those programs in which theprospective student has expressed an interest.Unlike the provisions of the Student Consumer In-

-formation -- Requirements of Part -1-78, discUssed in 1,

Chapter 2 of this handbook, a school does not havediscretionary authority with regard to this provision.Eacn school participating in the GSLP must providethis information. Section 177.64 of the currentGSLP regulations describes the requirement forparticipating schools in this regard.d. Any school which offers a course of study to pre-pare students for a 'particular vocation or careerfield trade must establish reasonable criteria andprocedures for determining that a prospective stu-dent has the ability to benefit from the instruction ortraining to be provided. r;! addition to the general in-formation provided to all pruzpective students, sucha school must provide prospective students with in-formation regarding placement and average startingsalaries, as described in current GSLP regulations.

2. Additional Requirements

Beyond tflose tasks and responsibilities describedabove, the statute and regulations prescribe severaladditional responsibilities for all participating educa-tional institutions. hese include:cIT

a. Representati n made by a school or its agentsmust accurately reflect the school and its programs,and be consiste t with the purposes and regulationsof GSLP. Reference to GSLP in advertisementsshould be limited to the phrase "Eligible Institution

Guaranteed Student Loan Program." Schoolswill be held accountable kr any misrepresentations,whether made .by0 their officials or employees or bypersons hired to advertise or to solicit student.b. An eligible school may not employ or useNcom-missioned salespersons to promote the availabilityof the GSLP. The April 5 proposed regulationswould define a "commissioned salesperson" as anyperson Who receives a compensation in any form oramount which is related to, or calculated on the

basis of, student applications for enrollment, studentenrollments, or student acceptances for enrollment.To "promote the availability" of the GSLP wouldmean to provide prospective or enrolled studentswith program information, application forms, ornames of eligible lenders.C. The April 5 proposed reguhons would providethat an eligible institution shah audit its transactionsrelating to its participation in the GSLP to deter;

the fiscal integrity of financial transactions andand compliance with applicable

itions aot less frequently than every tv ,audit report must be submitted to rxl

wee of the HEW Audit Agency in in

which the school is located.d. Loan-disbursement responsibilities: The April 5proposed regulations would specify the loan disburse-ment re's-pbpsibilities of schools. These regulationswould provide that when a school receives a disburse-ment check payable to a borrower matriculated atthat school, it must deliver the check promptly to thestudent. If the student has not yet matriculated, theschdol would be required to hold the check anddeliver it to the student at the time he or shematriculates. If the student fails to matriculate with-in a reasonable time, the school would notify thelender and return the check to the lender within 30days of the conclusion of that reasonable time.

The proposed regulations would further providethat if a loan check is payable jointly to a studentand a school, the school would either endorse thecheck on its own behalf and deliver it to the student,or obtain the student's endorsement prior to endors-ing the check on its own behalf. In the latter case, aschool may app:y the loan proceeds directly to anyof the student's costs that are payable to the school,but it must then promptly disburse to the student anyremaining portion of the loan. The above provisionswould apply to the disbursement of all loan checksby a school which is not a lender. School lendershave similar loan disbursement requirements.e. Notification to lender of change in studentenrollment status: The Education Amendments of1976 added to the Higher Education Act a provi-sion authorizing the Commissioner to issue regula-tions requiring each participating school to establishprocedures to inform the holder of a guaranteedloan within 60 days of a borrower's graduation, for-mal withdrawal, or failure to register on at least ahalf-time basis.

D. Requirements for Schools WhicMake or Originate Loans

1. Eligibility Requirenients

In order to be eligible to be a GSLP lender, an eligi-

Ui 8-11

ble educational institution must employ at least onefull-time person whose responsibilities are limited tothe administration of programs of financial aid for stu-dents attending that school. However, correspondenceschools are not eligible to be CSLP lenders.

2. Loan Disbursement Requirements

Loans disbursed by school lenders must adhere tothe following prOgram requirements:

a. Loans may not be disbursed to a' student earlierthan is reasonably necessary to meet the purpose ofthe loan.h. Loans may not be disbursed prior to the issuarof insurance by the Commissioner.c. Each disbursement must be made by a cliec-1,

payable to the student (or, if authorized by the stu-dent in writing, jointly to the student and the educa-tional institution which he or she is to attend).d. For the purpo °ses of paying subsequent claims onloans disbursed by school lenders for students who

lail.to matriculate, the-Commissioner will pay onlythe amount necessary to enable the student to travelfrom his or her residence to the school.

3. Origination Concept

Section 433 of the Higher Education Act imposesadditional requirements on schools which are eligiblelenders under the GSLP or which originate loansunder the program. "Origination" in this context is acritical concept. It refers to a special relationship be-tween a school and a lender in which the lender dele-gates to the school a substantial portion of the functionsand responsibilities normally performed by lendersbefore loans are made. If-the relationship between alender and a school meets this criterion, the school willbe considered to have originated a loan made by thelender. "Substantial loan making functions andresponsibilities", as defined in the April 5 proposed

4' regulations, should include:a. interviewing the applicant for a loan,b. explaining the applicant's responsibilities underthe loan,c. obtaining completion of necessary forms beyondr-that portion normally required of schools,d. obtaining necessary documentation that a lenderusually requires of a particular applicant,e. verifying that the student is eligible for a loan orfor Federal interest benefits,f. completing portions of the student loan applica-tion normally completed by the lender, org. deciding whether or not a particular student willreceive a loan.Under proposed regulations, the performance of

either the last two functions indicated above may beconsidered by the Office of Education to be a defini-tive indication of an origination relationship.

I2

4. Agreement for Schools Which Make orOriginate Loans

A school which makes or originates loans under theGSLP, as defined previously, must have on recordwith the Commissioner an agreement under which theschool agrees to adhere to several conditions andprogram requirements. Any school which makes ororiginates loans on the effective date of the GSLPrevised regulations, when published in final, must sub-mit the origination agreement within 90 days of thateffective date in order to be eligible to continue toni.ike or originate GSLP loans. In accordance with thes?:' u1 , -nts the Agreement shall provide11,

ill not make or originate studentloans uncle, , 1)1 gam to more than 50 percent ofthe students who are not graduate or professionalstudents in attendance at the school on at least ahalf-time basis. Under certain circumstances, aschool may request and receive a waiver by theCommissioner of these provisions.b. The school may not make or originate a loan to astudent who is not a graduate or 'professional stu-dent who has not previously received`a loan made ororiginated by the school, unless the student providesthe school with a written statement from an eligiblelender (other than the educational, institution, aState agency, or a private nonprofit agency desig-nated by the State) indicating that the student soughtand was denied a loan by the lender. Alternatively, aschool may obtain a sworn statement by the studentindicating that he or she was refused a loan by such alender for the academic period for which the loanwas sought and that the lender refused or declined toprovide a written statement of denial. A school mustinform any student seeking a loan that he or shemust make a good faith effort to obtain a loan froman eligible lender.c, The school must not make or originate a loan to astudent who is in his or her first academic year of aprogram of postsecondary education who was notenrolled previously in such a program in excess of$2,500 or one half of the estimated cost of atten-dance, whichever is less.d. A school must not make or originate a loan dur-ing any academic year of more than $1,500 to a-firstyear student as described in (c) above unless theproceeds are disbursed in multiple installments inaccordance with the statutory requirements.Should school violate the statutory and regulatory

provisions ncerning the making or the origination ofloans, the institution's eligibility to participate in theGSLP may be limited, suspended, or terminated inconformance with the procedures established in Sub-part H of 45 CFR Part 168, and described briefly inChapter 2 of this handbook.

1 Iv

5. Termination of Lending Eligibility of Sch601Lenders Based Upon Default Experience.

Section 435 (g)(3) of the Higher Education Act of1965, as amended, provides that the lending eligibilityof any school will be terminated if it is determined thatfor each of two consecutive 12 month periods,cent or more of the original loan principal loaned bythe school to students attending that school which wasin repayment during each such period, was in default.Under proposed regulations, the termination wouldbegin on the first day of October following the' Com-missioner's determination that such a default situationexists. Termination must last for at least one fiscalyear, and may be extended if the default situation con-tinues to exist. This provision applic I lendersunder both the FISLP and agencyprograms. It may also apply .1 schoolwhich makes !dans to student , _; at otherschools under the same ownership.

However, the statute also provides that the Commis-sioner may not terminate the lending eligibility of such'a school if:

a. the termination would be a substantial hardshipto the school and there is a reasonable possibilitythat the school 'will appreciably improve its collec-

r tion of loans within the next year, andb. the termination would be a substantial hardshipto current or prospective students. In determiningwhether a termination would be a substantial hard-ship to students, the Commissioner will consider theextent to which the school is pro vidiog opportunitiesto economically disadvantaged students which arenot a,,ailable elsewhere, the extent to which theacademic programs are unique in the geographicalarea, and any improvements expected in themanagement of its student financial assistanceprograms.

6

No termination of lending eligibility of a school mayoccur without appropriate notice and opportunity for ahearing. Procedures for the hearing are specified in the

4GSLP proposed regulations.'School record-keeping and 'reporting requirements

relating to the enforcement of this new statutory provi-sion will be set forth in the near future;

IV. CorpPletion Of The Insured LoanApplication

O

A. Certification

The primary task of each educational institution inconnection with the processing of a student's applica-tion for a loan under the GSLP is to make a number of

statements and certifications concerning the student'seligibility'fnr a loan.

For the FISL program this task is accomplishedwhen the financial aid officer or other authorizedschool official completes sect.on II and, when applica-pie, section III of the FISL application (OE Form 1154

----dated 7/77). The certification process is described inSection 177.78, "Certification by a participatingschool in connection with a student loan application,"in the proposed regulations. Section 1V - B of thischapter providesdetailed instructions on the comple-tion of Sections II and III of the FISL. application.

For guarantee agency programs the certification oc-curs When the authorized school official completes theappropriate sections of the guarantee agency's applica-tion. The application forms for various guaranteeagencies vary somewhat but must, in general, adhereto identical certification requirements,

By completing the appropriate section of the FISL.A1 guarantee agency program application, the financialai'd officer is certifying that:

1. The student is enrolled and in good standing andmaintaining satisfactory progress or is accepted forenrollment in a program determined to be eligibleunder GSLP. Determinations of "good standing"and "satisfactory progress" are to be made accord-ing to the school's own established policies.2. A student is carrying or plans to carry during the_period for which the loan is intended at least onehalf of the normal full-time workload as determinedby the school.3. The student does not owe a refund on a grant nre-viously received under the Basic Educational Op-.portunity Grant Program, the Supplemental Educa-tional Opportunity Grant Program, or the State Stu-dent Incentive Grant Program for attendance at thatschool. Proposed regulations would provideguidelines for implementing the above rule,however, and would allow the following interpreta-tions;

a) If a student owes a refund on a grant becauseof an error by the school, he or she is not ineligiblefor a loan if he or she acknowledges in writing theamount of the overpayment and agrees to repaythe refund within a reasonable period of time.b) If the student owes a refund on a BEOG orSEOG, he or she will not be ineligible for a loan ifthe school can recoup the overpayment within thesame academic year for vvhi'ch the loan is intendedby adjusting the subsequent BEOG or SEOG pay-ments due the student.

4. The student is not in default on any loan pre-viously received upder the NPSL Program or theGSLP made for attendance at that school, unless thestudent has made satisfactory arrangements to repaythe defaulted loan to theopproptlate guarantor orholder. (Additionally., the proposed regulationswould provide that a student who is in default on a

8-13

GSLP loan made.for study at any school may notreceive a GSLP loan unless he or she has made

'satisfactory arrangements to repay the lo all, but thispolicy is not yet effective.)Further, a school is obligated to provide:I a statement of the academic period for which theloan k sought;2. an estimate of the student's cost of attendance atthe school;3. an estimate of other financial assistance awardedtti- the student for the period for which the loan issought; and4. if the student is applying for Federal interestbenefits ..nd the adjusted family income is $25,000or more, a statement containing a determination ofneed and recommendation of loan amount to besubsidized.For a student attend Ind apply-

ing for Federal inter.. ."1:,,psis andrecommendation of amount that will be subsidized isthe responsibility of the Office of Education d -the ap-propriate guarantee agency.

Each of thes,e functions is accomplished when the fi-pancial aid officer or other authorized school officialcompletes Section II and, when applicable, Section IIIof the FISL application. Section IV-B of thishandbook provides detailed instructions on the com-pletion of Sections II and of the FISL application.

B. The FISL Application - OE Form11,54

I. Introduction

A complete copy of the FISL application form alongwith the instructions which accompany that documentis included in Appendix L of this Handbook.This section of the. Handbook deals with those por-.tions of Sections II and III of the FISL applicationwhich need further 'clarification:, or, which experience,indicates have frequently been completed incorrectly.

Reproduced on page 8-15 is .a reduced facsimile-ofSections II and III of the FISL application. There arelatge numbers written.by those items in the applicationwhich are explained in further detail below. Instruc-

-dons for completion of those items in the applicationwhich are not disc,u4sed below appear in Appendix L.

2. General Information

It is the responsibility of the financial aid officer or.1tlier authorized school official to complete Section IIand, when applicable, Section III of the FISL applica-tion, and to return all copies of the application with theattached promissory notes to the student for transmit-tal to the lender.

4

As an initial 'procedure the school official shouldcarefully review all of those pprtions of the applicationalready completed by the student. Obvious errorsshould be brought to the attention of the student sothat he or she may correct the error prior to transmittalof the form to the lending institution.

For a FISL application; the following general con-siderations should be kept in mind:

a) In no case may a loan, with or without Federalinterest benefits, exceed the total cost of educationless other financial aid awarded or'committed (ex-chisive of family. support). The most commonreason that applications are rejected by the StudentLoan Processing Center is that the loan amount re-t,uested exceeds the cost of education.b) If a student does not wish to apply for Federal in-terest benefit, or if he or she-cannot do so becausefarnii itatiod is not available, there isnon it,:rns 8, 9. and 10 in Section Iino section Ill of J Form 1154. In od

dition, the student should type or print "Not Apply-ing For Federal Interest Benefits'" over items 8, 9,and 10 of the application.

3. Guarantee Agency Programs

It the application forth. being completed is from aguarantee agency, the following general considera-tions should be kept in mind:

a) Some guarantee agency programs may incorpor-ate (with some modtiications) matly of the elementsof OE Form 1154 as part of their loan application.The concepts outlined in these instructions are stillapplicable 'althdugh lenders and schools .shouldfollow, specific instructions accompanying thoseforms:b) All students must complete a basic loan,applica-tion. In the case of loans guaranteed by State or pri-vate agencies, the applicatiqn may or may not incor-porate OE Form 1070 "Lenders Report of Guaran-.teed Student Loan," or OE Form 1260, "StudentLoan Application SupplenTent." If further clarifica-tion..is required for guarantee agency forms, consultwith the guarantee agency.

4. Specific Instructions for C.,mpletingSections II and 111 of the FISL Application

The following instructions relate specifically to, thenumbered items on the application form: as reproduCedin IV-B 1., above.

a. Item No. 23 School Code Number: Er!er the six--digit number, assigned to the educational institutionby the Office of Education. Information regardingthe eligibility status and code numbers of institutionsmay be obtained from the OE Regional Offices. Anapplication without a school code number will notbe processed for approval of insurance.

11r-a. 4,

SECTION II AND P..- TO BE COMPLETED BY THE EDUCATIONAL INSTITUTION (SEE INSTRUCTIIIV)N leEliq111: TH001,1'01'1)NkMF OF E1111 .1TIONAI INS1 1:11"111IN

110, V

4

ciTY sTilF, ZII)c111)1.:

2: h II FEY NI 1111E115111(4)1,C1111h:.

1 I LL LI, I IAl , 51:ATES C.:01 SIUDENTC1,111,11:11:1115

11 FC1,1,-TISIE 1'1:5111.:11 111M).(111 1:111,1TIoNAI,

IL MEE '14111 ' 121 illtAOCATS; 010,1f0S'ENNI0SAI,

24 AltFA 11111 'TEVIIMNENIIMBER

I. (NI!' 111NMOM

.2m ACADEMIC YEAR

MONTH/ 1h:1 II

III 1:141111 I

121.11

ITitino Ill I IAN I

MoNTivDAy;YEAII

1111.110m

I

.0 INDICA:1E1.01411 IN Al. DENOrYEARS011:11:111tENT 1111111111.1M OF."71'111' .1 .11, '4)

tr,

.11 THIS 1.01N 151014111111 AC.111E1111'.f1 1111(1 1:1111 ACMIEN111 1)111101)V1:{finFlipf.:c!)HitENTITIE11.14

. . . C(iVElfEll IV '11115 1.015)411.111`i''

$2. INDICA:1E1'1W NUMMI IIF ArADEMIC11111111fS IN AN ArMIEMIr 11111

DISIII'li

IIATE

A MOCNT

4:NIENT .clin)(11,E(sEF.INsTurrunly:1

A. . B.

1

1.1: 21,1' '

10,1 IF 011

I).

I f 1E10).111 I EIVFIFI"S.11.a Illr: r, I

...) roiATEDrosTsoE EntIs AI 14:11 1:(111 F:Slill1,INIP.1l'ATMSFIIH

1101.1.ED IN t ;OW sTANDIN1. AND Is 1C 'N1,III(06111.,: IN UMW) 11 I IF

'1E11 MINED 1'1) IIF. h:1,161111.F. Follulla ut N TUITION ANTI FEES

'EKED '41CUNT 1,11AS UO4.10 11 1511 'CI1AT

T141 slTIIENT .1 i015 NOT (11111 A IIEFUNli 1111100(1 AN!) 11011111'1111.1NTs PliK1 III SI.V UK) 111E11 Al THIS

sT11.11105 CNI)E11 I'll1.1; IV F Tilt,. 1111111).11

EDI:CATION ACE of 11.41, As ANIENUE11, (Ill I 110IIKS iNI1S11111'1.1ES $Ai(4T IN 1)1411:11' 115 151' 1.01N 1,10111 .1

511111NT 1.1115 F1'S11 11 Tlils INS'ITEI 'SI(lN111«)1.111ED 11111 IN 11111T E of' '1111 1111111 PKI(INAI)EXI'EN14.): S

NAMED MI, 01( A I (IAN 11M(1 151111

OCAIIAN'tEi.li STUDENT 101N 111i0i111111 11111

$ATTENUANCE: Al' Tlil, sql 111.11)N

FrICI IIER CEICEIFV1111T TME 51') 111151115

A,1115 111(111 151'111:F 11111111.h: 151) 1111)

111,11"111 111E ISENT III 111 1511111$1101 1511 .0 TOTAL S1111 1E1.

ToTAI,

FINANCI 11.111)111

.

SECTION III

IASI( El/RATIONAL(11.1)0111INITY IUlAS

l'OliFC11): WORKS:1'111)Y 1

frEklE11Se1101.1115111115

11,11/GRAN'f;1

kATIONALOIIIECT

IfIlENT LOAN

OTHER 1)11)1VhIONK MANN $

NEEDS AN 11.15K ISlE INSTIOVEIONSi

1115E11 ON A 1'51E011 MIS .411111.1ED 111.1TERMINAT111N OF 51111

.1511 IA '1'111 111FF .111JGEMENT DI, THY FINANCIAL AID111111 1111SF 1511) AnDusT All, FAC11)11);, 11 HAT cAN THE

A 111111,1' 11E11.151.11.11.1,1CONEltwrp

NF11),`. ANAI.Y1+ (11. 1,

III IIISINIENT REASON collh:

11 INT ERESICIENEFITi ELIG11111.ITY

III

; $

SIGNATIIIE OF AI 71101t11.1)!DSCI11101, OFFICI 11. (II HUNT OR TAPE NAME ANWITNE 11 DATE

.14 NET COST 11 11/111 ATION ,!firm .0 1o,a lAin

SECTION IV - TO BE COMPLETED BY THE LENDING INSTITUTION(SEE INISTRUCTIONS ON REVEICA OF LENDER COPV1 ,NA1114 1.0115U INsTrITTIoN

ENTITY. NINIti.:11.- it I. NllFIU0I'

1 1 1 1111111fEN,

f

STNIE All

IL 111(1VxT 11511111 A 111111OVEF)

111 Alo:«1111I,

/ 1

E1.11111M,EF011 eEDERAI.ISTIAIES;r1IENEFI'N

II Nat Et t(;IM.E Full t ST Eng 11ENE1I15 $1

I .)ifyr ),,mi ICNIA111111oVE1( 111 1.151)111 $

1tiFultMAI'10 0 THE IIEVEINE SIDE OF '111E 11,ENDEli llllVl FOP COMPLETIONliE1,01tE SUM11.1"l'ING1,01(111tid;SSINi;1)) 5105111'4,11$ 1111101(11,ED I F.1104,(11F1C111, F 1)1If5 nlf T1'f)1.N 1))1; ANIciTi IIIi .

113

1. LENDER COPY

114

fit.

b. Item Nci: 25 Student Status: Enter 'an-,:;X" in theappropriate block. The institution determineswhet.ler the applicant is considered a half-time or afull time student, in accoi.,..ta.ice '.,,fith the regulatorydefinitions. of those terms, eficept that all eligiblecorrespondence school s ,cier- are consideredhalf-time students and all s.udents who are less thanfull-time but more than half-time are consideredhalf-time.c. Item No. 26 Student Classification: Enter,an "xyin the appropriate block. This information is 1e-quested in order to determine theapplicant's annualand aggregate maximum loan-limits. GSLPS, No. 15IL No. 32, dated September 14, 1977, con-tains guidelines for determining whether a student isto be considered a graduate or professional stugre'lit.The suggested definition is:

"Graduate or .,.tent means a htudentwho is pursuing a program leading to a professional or"

.graduate degree or certificate at an institution of high-er education after successfully completing theequivalent of at least three years of full-time study 41/'an instution of higher education, -either prior toentrance into the program or as part of the program it-self."

Until final regulations containing ..a prescribeddefinition of "graduate or professional student" areeffectiye, financial aid officers are urgedto use theabove definition in determining the entry for Item No.26.

d. Item No. 27 Anticipated Date of Vraduation:Enter the anticipated date of graduation. This mustreflect the date the student expects-Jo graduate orcomp iv. his or her present program at the-school inwhich rt or she is. currently enrolled. The-date is notintended to reflect the time a student plans to con-'plete an education at another institution. For corre-spondence schools, the date should coincide with thenormal ending date of the course to which the stu-dent sPillscribed.

This date is important in calculating the Insurancepremium. Lenders, however, should not attempt torely on this date for determining the beginning of thegrace period since students frequently change theireducational plans.e. Item No. 35 The Estimated Cost of Education:Enter the itemized figures for each category of ex!.

_pence indicated on the form and the totak The totaleducational costs to be incurred by the student dur-ing the period of the loan means the tuitio' and feesapplicable to a student together with the institution'sestimate of other expenses reasonably related to at-

,. tendance, including, but not limited to, room andboard, reasonable transportation and, commuting

"costs, and costs for books and supplies. The school'saverage costs for all students may be used in lieu ofindividual estimates in determining the cost ofeducation,

8-16

f. Item No. 36 Financial Aid for Lditti Period: Listonly financial aid and other resources that are firmcommitments and which apply to the period of theloan. Do not include assistance which may have

. been applied for but .not yet approved: Included'should be all grants; scholarships, educationalloans, and school-awarded jobs including assistanceunder all federally sponsored programs of studentfinancial aid. Veterans' educational benefits, educa=tional benefits under Social Security, and resourcesor financial support from the student or htis or herfamily are not considered financial assistance forthis purpose.g. Iteni No. 38 Net Cost of Education: The figureentered in Item No. 38 is the result of a simplemathematic,-.1 calculation (Item Nn 15 le': Ttou,

36). In no case may a loar , ;lint;

results from the subtraction of Iteti, No, 36 (Finan-cial Aid) from Item No. 35 (Estimated Cost ofEducation).h. Items No. 39, 40, 41 Signature and Title of Fi-nancial Aid Officer or Authorized Official: Thecomplete signature of the school official authorizedby that institution to complete the form is required.Stamped, facsimile, or substitute signatures are notacceptable. The typed or printed name and title ofthe official must also be entered. If ,any of theseitems are not competed properly, the applicationwill be rejected.

By signing the form a school official is certifyingto those conditions and requirements Iliscussed indetail in IV-A of this Handbook, If any portion ofthe certification is not correct, the school officialmust not sign the form.

i. Section III Need Analysis General Instructions:Adjusted family income is calculated by the student

in Section I (Items No. 8, 9, and 10) of the FISL ap-plication. This figure is computed by subtracting fromthe adjusted gross income of the persons whose in-comes must be considered (as declared on Federal In-come Tax Returns for the preceeding year) an amountrepresenting 10 percent of ?he adjusted gross income,and an amount representing, the total dollar amountclaimed for personal 'exemptions on the tax returns ofthoseversons. The incomes of the parents or spouse ofthe student must or must not be included in this com-putation depending on 'prescribed conditions dis-cussed under No. 10 below.

Financial aid officers should be aware, however,that some lending institutions have developed an inter-nal policy of not granting a FISL in excess of theassessed financial need, and such lenders may requestthat a school complete the need analysis section of theapplication regardless of the eligibility of the student.It should be made clear to students that, a needanalysis in such circumstances is not a requirement ofthe Federal government.

115t.)

j. Item No: 37A-I-3 Compute Support: In deter-, mining the expected family contribution, a school

may use a need analysis method approved by theCommissioner of Education for the other BSFAprograms, EXCEPT THAT DEVELOPED FORTHE BASIC EDUC.4TIONAL OPPORTUNITYGRANT PROGRAM, which is excluded by statuteas an 'acceptable system for GSL.

The methods most frequently used are the AmericanCollege Testing Program System (ACT), the CollegeScholarship Service System (CSS)," and the IncomeTax System (ITS). Other methbds may be used if theyproduce results which on the whole, are similar tothose 'which would he produced by the systems my ntinned

wiiose i comes are reported in ItemNo. 10, Section I, of SL application must be con--sidered iri t ed analysis. This information may beobtaine rom the FISL application as follows:

If e student- answers-"yesr- to the first question(Section I, Item No. 8), the income and assets of theparents are-to be considered. If the answer is "no,"the income and assets of the6parents are not takeninto account.

If the student is married and answers "no" to thesecond question,(Section I, Item No. 9), the incomeand asse of the spouse are to,be considered. If theanswer is " ", e spouse's income and assets arenot taken into account.

Indicate both the amount of the computed supportfrom the family and the method of need analysis usedin making this deterniination in Section III, Items No.37A-1 and 37A-2. The amount indicated should relateto the period of the loan.

The amount indicated in Item No. 37A -1 is the 'ex-pected family contribution towards the cost of the stu-dent's 'education. The amount indicated in Item No.37A-1 is more meaningful when adjustments for theindiVidual" eircumstances of the student are con-siaereani the financial aid officer is expected to exer-cise his or her professional judgment in each case andto indicate the amount that can realistically be ex-pected to be contributed for educational costs over theperiod of the loan. The financial aid officer shouldtake into account geographic differences in cost of liv-ing, actual summer earnings, family circumstances,and other factors not always equitably treated in a na-.tionally standardized computation. Indicate in thespace proirided in Item No. 37A-3 the fallowing num-ber codes for reasons'used in reducing the amount ofcomputed family supports

a. reduction in income,b. death or disability of wage earner,"c. loss of job,d. unanticipated medical or other extraordinary ex-

penses,

e. non- liquid assets (e.g.home equity),f. cannot meet expected contribution from income,g. other.

If code "g" is used, oriefly indicate the basis-for thisreason in the "Additional Information" or (Ai thereverse side of the lender copy of the application.

k. Item No. 3713Interest Benefit Eligibility: Theamount indicated in Item No. 3713`, Interest BenefitEligibility (Item No. 35 less Item N 36 and ItemNe., 37A-1), represents te amount /oat the schoolrecommends to be subsidized undef the Feder'sured Student Loan Pr0p'ram

!whit aid be aware that a lendermay make a subsidized loan in excess of the amountrecommended by a school if the lender has reason tobelieve that the school was not realistic inits_estimate____of the family contribution as 'computed in Item No.37A. Lenders are encouraged tb:exercise this optionby -carefully -evaluating-the information -avail ai5le-Tothem in order that the most equitable judgment be ex-ercised in pr6ceSsing a student's application. Should alender decide to exercise this option, it should indicatein its t::es the basis for exceeding the amount indicatedby the school. 2

Aid officers should also be aware that a "split" loanconsisting of some portion which is subsidized andsome portion which is not subsidized is both possibleand legal. IfAhe ,lender agrees with `the school'scalculation of family contribution but is willing toagree with the Student's request for a loan in excess ofthat amount recommended by a school, then thelendermay make a subsidized loan in the amount recommended by the school and a nonsubsidized loan in anamount tp the difference between Item No. 38 andItem No.

Schools should be aware that lending institutionsmay not adjust the -figures inItem No. 35 oi*No. 36.They may adjust Item No. 37A; Family Contribution,if they have good reason to do so. Under cums-tan&s, however, can a subsidized loan a unt exceedItem No. 35 less Item No. 36, minus the,a usted ItemNo. 37.

8-17

\.?

1;I

Chapter 9.

IX. Health 'Professions Educational.Assist: (H FAL) Prograt-,

r suthk 7 lay 9-3B.. Purpose 9-3C.' Eligibility 9-3

1. Borrower , . 9-32. Institution 9-33. Lender ' 9-34. Limitations- 9-3

D. Interest/Insurance 9-3E. Repayment- 9-3 'F. Federal Payment for Service 9-4

E

L.

9-1

,

. Charter 9

Heat Prbfessiom3Assistai,ice (HEAL) Program

A. Authority

nal

The Hean Professions /Educational Assistance,(HEAL) Program'is authorized by section 401(b) ofthe- Health Profession Educational Assistance get of1976 (P.L. '94084), October 12,1976. (Subpart 1, PartC of Title VII of the Public Health Service Act, asamehded.Scticiu 727.- 739, (42 U.S.C. 294 - 294L)) '4

=7-which-la s-been-amended-bk P ..9543,-%gult 1,1977 and P.L. 95-2f5,-December. 19, 1977.

amended) to be eligible. There is an exception fortmedical schools which dornameet the requirements ofthe capitation grant prognam'thatseach school increase .

its third year cuss by 5 percent in' the 1978-79academic year only. Foreign,schools are not eligibleundertiv HEAL program,even though they are eligi-Isle --for they Guaranteed Studay-Loapiprogram..

3. ,Lender

Heafffi professions schools are eligible to mikeloans under HEAL. Others are'commercial lenders

Aincluding credit unions), .State agencies, insurance.

B. .41"urpose l companies, and pension funds.,

The HEAL prograhi was established tO provide afederally insured student loan program for graduatestudents in the health profesSions attending schools ofmedicine, osteopathy4 dentistry, veterinary medicine,optometry, podiarryipublic health, and pharmacy,

C. Eligibility-

.. To qualify for a HEAL loan, aivrrower must:1. porrower

. in general, be a citizen 6r.permanent resident Oft the-United ,States; .

. have not...received any ether gual-anteed orfederallyinsured student loan for the same)icademic year tobe'covered by'the HEAL loan;

. be accepted for enrollment as a full-time student;oralready in full-timc.attendande and in good standingin an eligible school; or

.. participating in an accredited internship or residency, program or eligible for deferment of repayment on

account of service -in the Armed Forces, VISTA,ACTION,' or the National' Health Service Corps.(This is limited to previous HEAL borrowers):

. A father requirement must be metby pharmacy stu-dents. They must have satisfactorily completed threeyears. of training:to be eligible,

2: Institution

Schools must be accredited and must have receivedor have met the requirements for receipt of a Capitationgrant (as outlined in the Public Health Service Act, as

1=

4. Limitations

An eligible student may borrow up to $10,000 peracademic year to an outstanding total of $50,000. Thesingle exception is one wl4h limits pharmacy studentst817,500 Per academic year to an,outstanding total of$37,500. Loans may be used only for educational ek:-

0 tuition, f.p nc 1 di ng t u on, ee ,, room an d boardboas, equipment, and-inkrest on prier loans). In ad7

1 dition, students who horrowed while in school ina...1/y'also bVw during periods of internship, residency,and authorized riods of defermeict, but only to pay

. ,

interest accruing prio4-IEAL loans _ 4.,. \D. 'InterestansuranCe

There ls no :Federal interest subsidy under this =program. Interest may no[ exceed 12 percent per year(ANNUAL PERCENTAgE` RATE) of 'tltif unpaidbalance of the loan., Inrerest'inty be paid on an ongo-ing basis or accrued until repayment begins. If interest is ,

accrued, it will be calf unded seirsii:annually and addedto the loan principal. An insurance premium, not to ex-ceed 2 percent per' ear, will be charged at the time an in-dividual loan is- processed.

E. Repayment

Repayment begins 9 to 12 months after all formaltraining is completed, including that provided in ac-credited internship and residency-prosrams. A defer-

, ment.of up to three years will be granted to borrow'ers

9-3

who retutn to -'L:11-time study at an institution of highereducation, tr .n a-. internship or residency program,or serve iv .e -med Forces, Peace Corps, orspecified pr .rrv, rider' ACTION or the NationalHealth Servic, carps after the repayment perior' hasbegun..- Borrowers' may take from 10 to 15 years torepay the loan once repayment begins.

F. Federal Payment For-Service

Borrowers may apply for Federal, paythent of bothprincipal and interest up to a maximum of $10,000 ayear through service in the._ National Health ServiceCorps or practice in a health manpower shortage area.This Federal payment for service will be at the optionof the(Federal government and available only to theextent that vacancies exist in the Nationald-lealth Ser- _

,

,4

9-4

fO

S

vice Corps or if there Late shortage areas . in theacademic disciplinR for'.whih the borrower obtainedhis or her tra,kiiing.

G. Penalties

Repayment will be carefully monitored. Under law-,there will be no discharge of loans by bapkruptcy dur-ing the first five years of the designated r0-, to 15-ye'arrepayment period. Persons in professional practicewho default on their loans may have payments for anyfederally- supported health care service, such asMedicaretand Medicaickl reduced by the amount of theloan default. If a bortt6wer breaches obligations en-tered into under a 'Federal payment for service con-tract, the United States Government will be entitled torecover_damages,

N

Chapter 10

A State Stifdent IncentiveIF Grant Prograrn

I. Program Profile

Pagc.A. Statutory AuthorityB. Program Purpose 10-2

II., Program Operations

A, Available Funds 10-2B. Administrative Patterns 10-(3G -Student Applications and Awards 10-3D. State Criteria for Determining

Substantial Need .. -103--C. State and Institutional Records of

Student Recipients 10-4

.

lil. Student/Institutional Eligibility

PageA. Institutional Participation 10-4B. Student Participation 10-4C. Certifying Student Acade.mic

,Progress and Fiscal Responsibility 10-5

IV. Fiscal. and Reporting Relation-ships with the State Agency

A. Financial Accounts 10-5B. Reports 10-6

-C-.--Student and Institutional Inquiries 10-6

V. Stats Student Incentive GrantProgram Regt.ilations 10:6

1

c.

5

10-1

Chapter 10

State Student IncentiveGrant PrOgram

Program Profile

A. Statutory Authority

4

The State Students Incentive Grant program isauthorized by Section 415 of Title IV, Part A (Subpart3) of The Higher Education 'Act of 1965, as added byP.L. 92-318 in 1972 and amended by P.L. 94-482 in1976 an P.L. 05-43 in 1977. The -first SSIG ap-

----pro.priawas-FY-1974-funds to be used by-the Statesfor studeht awards in the 1974 -75 academic year.

Program Purpose

Through incentive grants to States, this program hasencouraged establishment and expansion of Statescholarship assistance to undergraduate postsecond-ary students with substantial financial need, thusstimulating development and operation of a nation-wide delivery system of Statf programs of studentassistance. By 1978, the SSIG network included all 50states, the District of Columbia, Puerto Rico, Guam,American Samoa, the Virgin Islands, the Trust Ter-;itory, and the Commonwealth of the NorthernMariana Islands. Of these jurisdictions, 27 representedexpansions of scholarship programs in existencebefore SSIG was authorized in FY 1972 and the re-maining 29 represent entirely. new State scholarshipprograms.

In 1977, the State, scholarship network 'was further,'strengthened by establishment of authorized State Stu-dent Financial Assistance Training Programs (Sec.493C of ride IV, Part F, HEA), to be administered bydesignated SSIG agencies, in consultation withStatewide financial aid administrator organizations, toimprove the proficiency of State and institutional fi-nancial aid administrators.

IL Program Operations

SSIG operations vary from State to State accordingto the size and maturity of scholarship programs

10-2

managed by the individual States.In the 1977-78 academic year; the SSIG nationwide

appropriation equalled 8 percent of the Nation'sState funded need-based undergraduate scholar-ship/grant programs ($60 million for SSIG, comparedto $746.0 million in State funds; hccording to the NinthAnnual Survey of the National Association of StateScholarthip and Grant Programs). kr the variousStates, the ratio of SSIG to State funds ranged, fromless than 5 percent in New York, Pennsylvania, Il-linois, and_Vermont_to _morethan 40 -percent -in 21States.

In States with large and mature student aidprograms, where records showing the source of in-dividual student grants are maintained entirely in thecentral §tate agency, thee institutional financial aidofficer may not always be able to distinguish whetherspecific student awards include. any SSIG funds.However, in some of the States with smaller or newerState grant ,programs, all State- scholarships may

- routinely consist of equal parts of State' and FederalSSIG funds, and the institutional financial aid officermay share some of the record-keeping functions withthe State agency.

Because of the wide. variations in State programs,student and institutional inquiries about SSIG andother State scholarships should generally be directedto the State scholarship agency, not to the Office pf

.Education.To help.; institutional financial aid officers under-

stand the variety of -State practices, this sectiondescribes some of the conditions and regulationswhich affect State program operations.

A. Available Funds

States receive annual SSIG allotments (formulagrants), based on their higher education enrollments.Allotments must be matched equally he funds fromState resources, for making initial and continuationawards to students for attendance at eligible post-secondary institutions.

The maintenance of effort provision requires thatState matching represent an increase in the State'sgrant expenditure, over the amount spent during an

established base year (defined as the second year piiorto the State's entrance into the SSIG network).,

Tuition waivers or remissions do not qualify asmatching State dollars. However, if actual money istransferred, it is possible that the matching require-ment is satisfactorily met through a tuition grunt ratherthan a tuition. wciiver. The fundamental question to beanswered is: Does real money actuallychange handsfrom State to institution tb student; and is sucli transferthorough!), documented as a cash transaction in theappropriate records at each level?

The usual practice is for the State to appropriatefunds to match its SSIG allotment. However inunusual circumstances where appropriated funds can-not'be used, the State may, as an interim measure, re-quest approval to match SSIG funds with other con-tributions from non-Federal sources (undei provisionspf 45 CFR 100b.90-94). ,

Basic. allotments not used.. by one-State may bereallotted to other qualified States, Within the con-.straints of Federal appropriations,

forare free to

safe-du-1i their own funding cycles for students in in-, stitutions, but funds may not be carried over from one

fiscal, year toitlie next. However, they.may be used forsummer terms provided they are obligated before June30.

B. Admidistrative Patterns

#.1- States pay their own administrative costs; hence, allSSIG funds are used for awards to qualified students.Administrative organization of State programs fallsinto either a centralized or decentralized pattern, or acombination of these.

Most States, par;cularly those with mature Statescholarship programs, use the centralized adniinistra-tive pattern. The State agency receives and processesStudent applications, notifies students of awards,verifies attendance and makes disbursements, andkeeps complete records on all student awards.

A few States, particularly those. with relatively newState scholarship programs, use an administrative pat-tern in which the designated State agency de-,centralizes certain functions to participating institu-tions. In these cases, funds available through the. Stateagency are generally suballocated to eligible institu-tions on the basis of enrollment andlor need formulas,and the institutions recommend SSIG grant recipientsto the State agency for approval of individual awardsout of these fund allotments,

in the centrally administered State grant program,actual student files are located in the State agency. Inthe decentralized form of State administration, wheremuch of the student information is processed by the in-stitutions, the institutional financial aid officer givesthe State agency the types of information and docu-mentation needed for formal approval of individual

,t.student awards. In either case, program oversight ac-

.

nvities may include examination of student files at theinstitutions to verify attendance, levels of student aid,-

other information which is part of the audit trailshowing use of SSIG funds.

C..", Student Applications and Awards

Students apply to the State agency either direetly orthrough the institution. Every award (requites theofficial State agency's formal approva-1115ased on anexamination of need.

SSIG awards go to undergraduates Only. No studentwill be considered an undergraduate beyond 4academic years except for the fifth year of a 5-year

,program leading to a first degree.-The maximum SSIG award is' $1.500 per academic

year, reduced for less than full-time but at least half-time attendance. Half of each SSIG student awardmust be from State ,(non-Federal) resources. _-

Under current legislation, initial and continuationawards to students must be separately accounted for,

the needs of continuation students have priority.However, this priority can be met out of all-State fundsinstead of State plus Federal SSIG funds...

States have considerable freedom iii determiningwhether to make a variety of differential SSIG awardsin terms of relative student need or to level fund theirSSIG awards to give a set amount to. all students whomeet the State's established need criteria.

D. State Criteria for DeterminingSubstantiall.Need

Student recipients are selected annually on the basisof substantial need, under Criteria established by theState and approved by the Commissioner: The SSIGRegulations provide flexibility for States to facilitatechoice as well as access to postsecondary educationfor both middle-income and low-income studentS. Tosuggest reasonable outside limits in' determining sub-stantial financial need. Reg.' S192.7 indicates studenteligibility limits of (1) no more than $2,800 in expectedfamily contribution; or (2) no less than a $90difference between educational costs and expectedfamily contribution; or (3) no more than a $20,000 netfamily income, or (4) other reasonably comparableneed eligibility standards. Regardless:Of which of theabove criteria the State selects, th designated Stateagency is responsible for final approval of individualstudent recipients, thus providing consistent patternsof dealing with candidates from throughout the State.

In practice, the State's selected set of standardsdetermines the pool of applicants qualified by reasonof need to compete for individual student awards.

+) +')

10-3

Once the State has selected its standards for determin-ing which students meet the need criteria, the next stepis to establish procedures for selecting individual stu-dent recipients from among the eligible pool of stu-dents with substantial need and to determine the sizeof individual awards. Most States measure need by asingle need analysis sytem (e.g., ACT, CSS, BEOG) forall applicants in order to be consistent.However, in decentralized programs, where institu-tions recommend student candidates for awards, sub-ject to approval by the designated State agency, someStates, at their own discretion, protess student applica-tions based on different USOE-approved needanalysis systems used by the various institutions. Inany event, the designated state agency has finalauthority for selection of recipients who meet the needcriteria under standards established for the State-wideprogram.

E. State and Institutional Records ofStudent Recipients

State agencies responsible foradministering SS1Gfunds must be able to document their decisions anddisbursements, either from their uwn central records orfrom institutional records or both. Variations of stu-dent/institutional rosters are often sent back and forthbetween the State agency and the institutions to verifyattendance, provide information related to studentneed, document disbursement of funds to students orstudent accounts, , guard against overawards, andgeneially simplify communication and facilitate theprovision of required records and reports.

To comply with the existing authorization, State stu-dent records and accounts must identify each in-dividual student award as "initial" or "continuation"to permit aggregation of information by type of award.Furthermore, State agencies approve individualawards as initial or continuation. In making day-to-day award adjustments to maximize use of funds, Staterecords must leave a clear audit trail to distinguish in-itial and continuation award recipients and to con& mthat each award payment is received by or credited tothe student. However, with State approval and withinoverall' limits established by USOE, reclaimed con-tinuation funds may be reissued as new (initial)awards, and vice versa, so long as the records areclear.

Student/Institutional Eligibility

Within the broad parameters of Federal financialaid regulations, States determine eligibility standardsin terms of their own fiscal and constitutional

10-4

restraints. Financial aid officer; should be familiarwith these restraints in order to advise their studentsand to facilitate their packaging of av'ailable aid tomeet student needs.

A. Institutional Participation

A June 1977 amendment to the SSIG authorization,provides that, "effective with respect to any academicyear beginning on or after October 1, 1978, all non-profit institutions of higher education in the State areeligible to participate in the State program." Becausethis provision ha., raised certain questions based, on,

aapparent conflicts between Federal legislation andState constitutional or statutory limitations, theEduAtion Commission of the States has suggested theneed for a technical amendment which would clarifythe provision for those States which need to resolveconstitutional luestions about aid to private schoolsand respond to court decisions forbidding assistanceto bibliocentric colleges.

States are now preparing to follow procedures ap-plicable to Federal student aid programs. In some in-stitutions, eligibility may be limited to students in cer-tain courses of study (for example, those which meetthe definition of higher education) or to certain kindsof students (for example, tchecular students as dis-tinguished from those training for religious vocations).Some States find distinctions such as the above par-ticulart relevant in determining eligibility of studentsin vocational/technical schools or in schools .of religion.

Also, institutional participation may be affected bythe fact. that some States suballocate available SSIGfunds among the various kinds of institutions on thebasis of enrollment, need, or other criteria, includingthe availability of other (nun-SSIG, State aid. In suchinstances, money not claimed for scholarships in oneschool may be reclaimed by the State and reassignedto other schools,

The non-profit institution amendment does not re-quire States to include proprietary schools as eligiblefor State grants (although almost half the States makeSSIG awards available to students attending proprie-tary institutions). However, some States now are ex-periencing' questions about eligibility of students inschools which change their charters from proprietaryto nonprofit without changing their programs or theirstaffs,

B. Student Participation

Student eligibility for State rants differs from Stateto State according to constitutional, statutory, orpolicy restrictions. (Some States have legislated for-mulas for determining assistance to individual stu-dents.)

tiv

Factors which may determine, whether an individtialstudent is eligible for an SSIG award include theState's definition of substantial' need, the method ofdetermining size of an award (including any specialrestrictions on maximums), and what costs can becovered. Some States limit awards tolhe costs for tui-tion and fees. Some include allowances for room andboard and other costs. Soine have alloWances for com-muters. Many State scholarship programs have restric-tions which exclude part-time students and those whoattend schools outside the State.

A few States have reciprocal arrangements to facili-tate student exchanges with neighboring States,especially in unique program areas.

C. Certifying Student Academic Progressand Fiscal Responsibility

State student aid agencies should be familiar withinstitutional policy regarding the Federally requiredcertification of student academic progress and fiscalresponsibility; and State and institutional student aidofficials should coordinate their certification activitiesto minimize overlap of records and avoid unnecessaryduplication of effort. To provide appropriate over-sight, State agencies may ask institutions to assist incertifying student eligibility by procedures such as oneof the following:

1. Certification or affidavit by individual student:a. submitted with the student's application forassistance; orb. signed when the student accepts the assistanceaward.

2. Certification by institutions (e.g., on rosters of stu-dent'awards):

a. in centralized systems-at any time bef8re stu-dents receive their award money; orb. in decentralized systems-when the institutionrecommends students for SSIG awards; orc. through agreements that the institution willnotify the State agency whenever students becomeineligible.

Simple certificatio'n concerns the applicant's eligibilityto receive an award. It does not extend to ex-Nptional cases or to subsequent refunds or defaults.States may, at their option and with appropriate docu-mentation, if necessary, consider the following to beacceptable practices as a basis for certification of stu-dent eligibility in terms of academic progress, grant re-funds, and loan defaults:. The State may assume satisfactory academic

progress if the student is accepted for admiision orfor continued enrollment in the institution.

. In cases where only State and Federal SSIG fundsare involved, the State policies concerning satisfac-tory progress or refunds apply.

. In cases where BEOG, SEOG, NDSL, or GSL funds

are involved with SSIG funds in a student's financialaid package, the appropriate program regulationsconcerning satisfactory progress, refunds, ordefaults apply.

. With regard to a student owing a refund on a studentgrant, a State may consider the student eligible forSSIG payments if, during the current year, thefund -can be eliminated through repayment by thestudent or through the institution's adjustment of fi-nancial aid payments to the student for that year.

. With regard to a student in default on a student loan,a State may consider the student eligible for SSIGpayments if the student acknowledges the loandefault in writing and pr6,0es acceptable writtenassurances that the default will be remedied within areasonable time.

IV. Fiscal and ReportingRelationships With Thettate Agency

In general, fiscal and reporting relationships be-tween participating institutions and the State scholar-ship 'agency vary according to whether the Statescholarship programs are administered under acentralized or decentralized pattern. In any case, theState agency must maintain sufficient oversight to beaccountable fos disbursement of Federal funds and tomake the required reports to the Commissioner ofEducation.

A. Financial Accounts

As a minimum, even in the most centralized ad-ministrative pattern, institutions must verify studentassistance; supply assurances regarding studentacademic progress, status of grant refunds, and statusof loan defaults; cooperate in packaging aid to avoidoverawards; and document student acknowledgmentof awards if funds are paid to the institution on behalfof the recipient.

In decentralized systems, where the State agency de-pends upon the institution to help screen applicantsthe institutional records must also supply need-analysis "documentation justify formal approval of

,indiviclua'l awards by the official State agency.Auditable, records for SSIG must show actual

'-transfer of funds. Waivers are not acceptable.Generally, each student award payment consists of ex-actly, equal amounts of Federal and State funds.However, some States make first-term awards out ofState funds and provide the Federal matching duringthe second term. (The reverse is not acceptable be-cause there would be no way to provide the Statematching fofstudents who drop out before the secondterm.)

110-5

49-

Individual student awards are subject to approval bythe designated State agency; institutions may nottransfer awards from one student to another withoutthe approval of the designated State agency. However,institutions and State agencies should maintain regularcommunication links which will facilitate, the fullutilization of any scholarship funds which becomeavailable later in the year.

.Whenever possible, State agencies encourage (andrequest evidence of) institutional adjustments in dis-cretionary awards to bring student aid packages withinthe lirrtits of measured financial need. Where institu-tional adjustments are not possible,-or where an over-award is identified "after the tact" and -must be cor-rected, the overaward limitations follow the pro-cedures applicable to other Federal student aid - e.g.,request a refund of any amount by which the student'stotal student aid package is more than $100 aboveneed, when aid does not include CWS; and of anyamount by which the package is more than $200 aboveneed, when CWS is involved.

All SSIG funds (Federal plus State) recovered fromoverawards should reissued to other qualified stu-dents for the rele;ant award period, unless records forthe period have been closed.

If such funds are not reissued to qualified students,the State must return the recovered Federal portion tothe Office of Education. (To provide for maximumutilization of funds, States are encouraged to maintaincareful liaison with institutions and, where funds arenot claimed by students of where funds are recoveredfrom students, to take steps to award those funds toother qualified stud4nts at the same institution or at otherinstitutions where there are qualified students.

B. Reports

The State ,agency requires certain institutionalreports, to document disbursement of Federal funds tostudent recipients In compliance with regulations, to getinformation needed to improve efficiency in the opera-tion.of State scholarship programs, and to provide datafor Statebudgets and for annual reports to the U.S. Com-missioner of Education.

The actual form and content of institutional reportswill vary from State to State, depending upon the sizeand maturity of the State scholarship programs andother factors. There are no standard formats or chan-nels for these institutional reports. For example, infor-mation about recipients by income level may comeeither from the,central office records or from the in-stitutions. Communication may follow establishedprocedures and forms or may be developed anewthrough cooperative efforts of State and institutionalrepresentatives.

10-6

C. Student and Institutional Inquiries

Specific and detailed information on State scholar-ship policy and practices, on .student and institutioneligibility, and on provisions for grants to students at-tending out-of-State institutions is available from Stateagency official contacts, as listed on the directory inAppendix E.

V. State Student Incentive GrantProgram RegulatiOns

The program regulations are codified as CFR Title45, Part 192. They were first published as final regula-tions on May 31, 1974, and were amended on April 23,1975. Special allotment procedures were publishedannually and later incorporated in Regulation 192.3(f)to cover distribution of lump sum appropriationsunder the separate authorizations for initial and con-tinuation awards. Updated and consolidated-regula-tions were published in final form September 14, 1977.

4. The non-Federal portion of all of the grantsawarded under the SSIG Program shall come fromresources provided by the State (which may include,but are not limited to, contributions to the State fromnon-Federal third-party sources, under Regulationscontained in 45 FR 100b.91). In addition, Statefunds for making awards to students under the SSIG,Program shall represent an increase over the funds ex-pended by the State for all student scholarships/grants(whether or not based on financial need, and includingboth undergraduate and graduate-level awards) in theState's base year, which is the second fiscal year priorto the fiscal year in which the State first receivedFederal funds under the SSIG Program. The base yearand the "base level of effort" for your State are shownon page 1 of this document. (It is understOod.that thisbase level of effort is subject to later audit before beingfinally accepted by the Commissioner.)5. The total costs charged to the Federal Governmentfor the performance of this grant shall not exceed thetotal amount set forth in the attached NotificationofGrant Award, or any appropriate modification of thegrant. Expenditures of the agency may be charged tothis grant only if (a) they are in payment of an approva-ble obligation for student awards incurred during thegrant period, and (b) they conform to the approved,State application for Federal SSIG Program funds forthis grant period.6. All Federal SSIG Program funds shall be expendedonly for making grants to eligible undergraduate stu-dents with substantial financial need:

1 tiv

a. No portion of the granted funds shall be usedprogram administration.b. The agency shall make initial awards only toeligible students who have not previously receivedawards under the SSIG Program, within the ap-proved dollar limit appearing on the grant awardnotification document.c. The agency shall make continuation awards onlyto eligible students who have previously receivedeither initial or continuation awards under the SSIGProgram.

d. No payment may be made to astudent under thisprogram unless the student (1) is maintainingsatisfactory progress in a course of study accordingto the standards and practices of the institutiol atwhich the student is enrolled, (2) does not owe a re-fund on a grant previously received under the BasicEducational Opportunity Grant, Supplemental Educa-tional Opportunity Grant, or State Student IncentiveGrant Programs, or (3) is not in default on a loan made,insured, or guaranteed Student Loan Programs.

4

1077

ey

Appendix A

Current Regulations ForStudent Financial AidPrograms Authorized UnderTitle IV Of The HigherEducation Act Of 1965, AsAmended

This appendix lists all final regulations and Noticesof Proposed Rule-making that have been published inthe Federal Register throu g une 1977 by the variousprogram units within the B au of Student FinancialAssistance, USOE, governing the current operation ofthe Title IV student financial aid programs. Earliersets of regulations applicable to prior years that arenot included here.

Regulations appear in the Federal Register either asfinal regulations, interim final regulations, or as aNotice of Proposed Rulemaking (NPRM). Unleis in-dicated as an NPRM or as interim final regulations, alldocuments listed beilow are final regulations.

I. General Provisions Relating ToStudent Assislance Programs-

Sections 131, , 132, and 133 of the EducationAmendments -of 1976 contain general provisions ap-plicable to all six student financial did programsauthorized under Title IV of the Higher Education Actof 196501 as amended (as well as to the Title IVprogYams of special services to students).. Notices ofProposed Rulemaking (proposed regulations) imple-menting Sections 131, 132, and portions of Section133 were published in the Federal Register on April 8,1977.

The regulatory material implementing Section 131.and protions of Section 133 added three new parts toTitle 45 of the Code of Federal Regulations:

Part1. Part 168,part H

SubjectSub- Procedures fol9 the

Limitation, Suspen-sion, or Termina-tion of InstitutionalEligibility forPrograms under Ti-tle ly of the HigherEducation Act of1965.

Date of PublicationDecember 23, 1977

2. Part 178

3 Part 178a

Student Consumer December 1, 1977Information Ser-vices

State Administered September 14, 1977Pfograms-IncentiveGrants for StateStudent FinancialAssistance TrailingPrograms

The material imp!ementing Section 132 was publishedas fotir Notices of Proposed Rulemaking amendingapplicable sections of the Basic Educational ._1ppor-tunity Grant, Supplemental Educational OpportunityGrant, College Work-Study, and National Direct Stu-dent Loan Program regulations - respectively, Sec-tions 190.75 and 190.77, Sections 176.14 and 176.17,Section 175.9, and Section 144.15. proposed regula-tions implementing Section 132 with respect to theState Student Incentive Grant Program and theGuaranteed Student Loan Program will be issuedlater.

H. Basic Educational OpportunityGrant Program - Code of FederalRegulations Title 45; Part 190,

At the time of printing, the current Basic Grant ad -ministrative regulations were as follows:

Subject: pateScope, General Difinitions, November 6, 1974Application Procedures, andAllowable Educational Costs

Administration of Payments December 2, 1974

Part-time student eligibility August 10, 1976and award calculation.,

A-1

At the time this handbook went to print, the publica-tion date of the final regulations resulting from theMay 15, 1978 Notice of Proposed Rulemaking was'notknown. These regulations will revise and consolidateall existing regulations other than those contained inthe Family Contribution Schedules, which are revisedannually in accordance with statutory requirements.

A list of the May 15, 1978 NPRM subparts-follows:Subpart Subject

A Scope. Purpose, and General DefinitionsB Application Procedures for Determining -Expected

Family Contribution.C Family Contribution Schedule -, Dependent Stu-

dentsD Family Contribution Schedule - Independent Stu-

dentsE Cost of Attendance

. F Determination of Basic Grant AwardsG Administration of Grant Payments - Regular Dis-

bursements SystemH Administration of Grant Payments - Alternate Dis-

bursement System

This NPRM, as well as the final regulations whenpublished, is available from the Division of Policy andProgram Development, Bureau of Student FinancialAssistance, U.S. Office of Education Washington,D.C. 20202.

III. State Student Incentive GrantProgram - Code of FederalRegulations Title 45, (Dart 192

The program regulations are codified as CFR Title45, Part 192. They were first published as final regula-tions on May 31, 1974; and were amended on April 23,1975. Special allotment procedures were publishedannually and later incorporated in Regulation 192.3(f)to cover distribution of lump sum appropriationsunder the separate authorizations for initial and con-tinuation awards. Updated and consolidated regula-tions were published in final form September 14, 1977.

IV. Campus-Based StudentFinancial Aid Programs-Supplemental EducationalOpportunity_Grants, College Work-Study, and National Direct StudentLoans

A. The Most recent set of program regulations foreach of the three campus-based programs is a singlepublication of all codified program regulations. Thisdocument was published as Interim Final Regulations

A-2

on August 24, 1978. It includes NDSL (CFR 45, Part144r, CWS (CFR 45, Part 175); and SEOG (CFR 45,Part 176).B. In additiOn to the above documents, there are twosets of proposed regulation applicable to theseprograms:1. Treatment of Assets of Eligible Indian or NativeAmerican Students, NPRM, August 27, 1976, amend-ing unspecified sections of the SEOGP, CWSP, andNDSLP regulations.C. Special Publications Pertaining to the Commis-sioner of Education's Approval of Need AnalysisSystems-.

The following Federal Register publications are notcodified. They are revised annually, in accordancewith the provisions of Sections 176.13, 176.13, 175.13,and 144.13 of the SEOG, CWS, and NDSL regula-tions, respectively.1. June 23, 1977 - US. Office of Education SampleCases and Benchmark Figures for Academic Year1977-78.2. October 5, 1977 - Approved list of Need AnalysisSystems for use by Institutions of Higher Education inApplying for Funds and in Determining Awards toStudents for the Academic Year 1977-78 under theSEOG, CWS, and NDSL Programs.D. For each academic year the Commissioner ofEducation must publish in the Federal Register a listof public and other nonprofit elementary and second-ary. schools at which National Defense Student Loanand National Direct Student Lean borrowers, or both,may receive accelerated cancellation for teaching ser-vice. These lists are submitted by State educationalagencies in accordance with approved State plans. Be-cause the statutory conditions governing the compila-tion of these lists vary between Defense loans andDirect loans, it is possible for a particular school to bean eligible school for accelerated cancellation forDefense loahs only, Direct loans only, or both, for aparticular academic year. The most recent publishedlisting at the time the Handbook went to print was alisting published on November 6, 1975, pertaining toteaching service during academic year 1975-76. Acombined listing for academic years 1976-77 and1977-78 was published on June 2, 1978 and wasmailed to all institutions participating in the NDSLProgram.E. See Section I above for additional propo dregulations published on April 8, 1977, resulting omSections 131 and 133 of the Education Amen mentsof 1976 and pertaining to all Title IV stude mancial.aid programs.

V. Guaranteed Student LoanProgram

A. There have, been 66 regulations documents

published in the Federal Register ipplementing theGuaranteed Student Loan Program since its originalenactment as Title IV, Part B, of the Higher EducatiOnAct of 1965, November 8, 1965. Many of these havebeen announcements of the quarterly specialallowance rates. The current program regulations are

`,codified as CFR Title 45, Part 177.B. A complilation of the complete regulations as.ofJanuary 29, 1976 was included as Appendix C of theFederal Insured Student Loan Program Manual forLenders, published on September 30, 1976. A copy ofthat compilation may be obtained from the Office ofGuaranteed Student Loans.C. Proposed and final regulations which have beenpublished in the Federal Register (other than specialallowapre rates) since the Appendix C compilation areas follows:

Date andFederal RegisterReferenceNovember 5,1976,Vol. 41, No. 215,pp. 48862 -48910

November 5, 1976Vol. 41, No. 215,pp. 48910 -48912

Deember 1'4.1976 Vol. 41, No.241, pp. 54487 -54489

'April 5, 1978

sn

SubjectProposed rules for general revision ofprogram regulations in accordance with Sec-tion 503 of the Education Amendments of1972 (P.L. 92-318). Includes impact ofEducation Amendments of 1976 (P.L.94-482) and a notice of intent to publish im-plementing regulations. as well as the text ofselected provisions of P.L. 94-482.Proposed rules to provide therommitsionerwith discretionary authority to require len-. ders to disburse FISLP loan proceeds to bor-rowers by means of an escrow agent.Interim final regulation amending previousregulations by substituting 3 presiding officerfor unavailable Administrative Law Judges athearings considering limitation or termina-tion of ar; institution's or lender's programeligibility.Proposed rules providing inmpementationand interpretation of the legislative amend-ments of 1976 and 1977, and incorporatingvarious policy changes which do not resultspecifically from the legislative amendments.

A-3

DEPARTMENT OF HEALTH, EDUCATION, AND WELFAREOFFICE OF EDUCATIONBUREAU OF STUDENT FINANCIAL ASSISTANCEAMEIVENT COVERING INSTITUTDW\LTARTICIPATION INPROGRAMS OF STUDENT FINANCIAL ASSISTANCE

Name of Institution

Address of Institution

IRS Employer Identification Number

(referred to below as the-"Institution") and the Commissioner of Education, U.S. Department of Health,

Edudation, and Welfare (referred to below as the "Commissioner ") agree to the terms of ARTICLES I, IL Y1and XII, and the other ARTIcTFs of this agreement that are applicable to each program identified inAtTICLE I.

ARTICLE I. SCOPE OF COVERAGE

1. This Agreement covers the Institution's eligibility to participate in each orthe following checkedprograms:

( ) BASIC EDUCATIONAL OPPORTUNITY GRANTS PROGRAM (BEOG) - Regular Disbursement System 20 U.S.C. 1070a;

45 CFR Part 190.

( ) BASIC EDUCATIONAL OPPORTUNITY GRANTS PROGRAM (BEOG) - Alternate Disbursement System A U.S.C. 1070a;45 CFR Part 190 Subpart H.

( ) NATIONAL DIRECT STUDENT LOAN PROGRAM (NDSL)* - 20 U.S.C. 1087ra- 1087ff; 45 CFR Part 144.:

C ) GUARANTEED STUDENT LOAN PROGRAM (GSLP) - 20 U.S.C. 1071-1087-4; 45 CFR Part-177...

( ) SUPPLEMENTAL^EDUCATIONAL OPPORTUNITY GRANTS PROGRAM (SEOG) - 20 U.S.C.,1070b; 45CFR Part 176.

( ) COLLEGE WORK STUDY PROGRAM (CWS) - 42 U.S.C. 2751-2756; 45 CFR Part,175, Subpart A.

( ) JOB LOCATION AND DEVELOPMEM PROGRAM - 42 U.S.C. 2756a; 45 CFR Part 175, Subpart a.

* The National Direct Student Loan Program is a continuation of the National Defense Student Loan Programauthorized by Title II of the National Defense Education Act of 1958,'as mended. (20 U.S.C. 4217429)

2. The Institution agrees to comply with the statute of each program checked, any applicable proviiionof the "General Provisions Relating to Student Assistance Programs" found in Title IV-F of the HigherEdmation Act of 1965, as amended (20 U.S.C. 1088-1088g) ("General ProvisiOns") and any. regulations, asthey become effective, implementing those statutory reqUirements.

3. The Institution agrees toouse the funds advanced to.it under each program for the Purposes spefifiedin, and:in accordance with the provisions set forth in, the statute authorizing the program, the "GeneralProvisions", and the regulations in effect implementing that program statute and the "General Provisions...

4. The Institution agrees to comply with Title VI of the Civil Rights Act of 1964, as amended, and theregulations implementing that act445 CFR Part 80 and 81 (discrimination on the basis Of race, color, ornational origin);. Title IX of the Eduction Amendbents of 1972and its implementing regulation, 45 CFR'Part 86 (discrimination on the basis of sex); and section 504 of-the Rehabilitation Act of 1973, 45 CFRPart 84 (discrimination on the basis of physical handicap).

ARTICLE II. PROVISIONS APPLICABLE TO ALL PROGRAMS

The institution agrees to perform thefunctions and activities required to be performed underparagraphs 2 and 3 of ARTICLE I of this agreement. These' functions and activities include, but arenot limited to:

1. Student Eligibility, ,

Before paying. any money under any'program (other than the Guarani-Pea Student Loan P J9Lam), theInstitution agrees to:

-

(a) determine that a student is'eligible under the specifid program regulations for that j-assistanCe, and 0

(b) have on file the required executed affidavit of educational purpose.

- 130

.

Before providing any information-to a lender under the Guaranteed Student Loan Program, theInstitution agrees to determine that a student is eligible for that loan.

2. Administrative Allowance

If an Institution receives an administrative allowance under any program,) it agrees Lc use thosefunds to carry 6ut the Student Consumer Information requirements set forth in section 493A of the HigherEducation...Act of 1965, as amended, and the Student Consumer Information Services regulations, 45 CFR 178.The Institution agrees to use any administrative allowance remaining after it carries out those activitiesto admini-s`ter the Federal student financial assistance programs.

ARTICLE III. BASIC GRANTS PROGRAM - REG.ILAR DISBURSEMENT SYSTEM

r.The Institution agrees to perform the-functions

regulations (45 CFR 190, Subparf.G). These functionsactiyities set forth in Subpart G of the p t:v am

include, but are not limited to:

1. determining the eligibility of students receive awards,2.

3.

computing the amount of Basic Grants a ding .to Subpart F of e,e. program regulations .

and the payment schedule provided by the ioner,documenting and'verifying the informatio the Student Eligibility Report for students-sellactedrby the

4. paying funds to the student ectly or e student's ac9unt,5. recovering award oveipayments, and6. maintaining records and accounting for funds.

ARTICLE Iv." BASIC GRANTS PROGRAM - ALTERATE DISBURSEMENT SYSTEM

.059.Under the Alternate Disbursement System the Institution 'Agrees to perform the functions set

in Subpart H of theprogram regulations. (45.CFR 190, Subpart H). These functions include:.

providing each student, upon request, with thr4 appropriate form needed to calculatg,the .student's award,

providing information necessary for the amputation and disbursement of awardsincluding oamEirmffig that the student is eligible for a payment/certifying.the accuracy of the infoNmati.on supplied by the student,maintaining re6brds relati66 to a Basic Grant recipiait's enro1lm4nt status,costs of attendance and period of enrotIment, and

5. providing.aocess to the. Commissioner of his designate to those records.

1.

ARTICLIEV. NATIONAL DIRECT STUDENT LOAN - SPECIFIC PROVISIMS

forth

1. The Institution agrees to,establish and maintain a National Direct Student Loan fund (Fund) for thepurpose of makingjoans eligible studentA. .eAny student loan Fund establishe_!lnder an agreement under

1. Section 2C4 of Title II. c&f the National Defense Education Act of 1958, as amended, is considered estab-lished under Section 463 Title IV, Part E, ot the Higher Education Act of 1965, as amended. Anyasset of that Fund is considered to be an asset of the Fund established upder'this.Agreenent.)

2. The Institution agrees to deposit promptly inthe4und:

(a) Federal Capital Contributions received by the Institution,.(b) an amount from its own funds, equal to not less thakone-ninth of the Feral

qontvibutions(nstitutional capital contribution),(c) dollections of principal and. interest-on loans made from the Fund,(d) penalty charges collected according to Subpart B of the program regulations,(e) payments made ,to the Institution by the ComMissioner as a result of-aancellations

an loans made'after June 30, 1972 (DirectIcems),.(f) my other earnings of the Fund, and(g) short,term interest-free loans made by the Institution to the Fund in anticipation

of oollecticns.'

3. The

(a)

(b)

(c)

w(d)

(e)

Institution agrees.to-usg3the Fund only for: . I

loans to'studenis in accordance with the program regulations,an adninistrative allowance in accordance with ABM= II, paragraph 2 of this

progam regulation

Agreement,costs of litiga 'and other collection costs as specified in-Subpart C of the

Capital.dietribu as provided in Subpart A of the program regulations, andrepayment to the institution of the short-temin loans made in accomeamevdthsubparagraph.2 (g) of this Amticle. ,

,

4.. The Institution agrees to use due diligenee'in the colledtion of loans made fran the Fund 4coordingto the requirements of Subpart C of the program regulations., If a loan has been in default foi1.4at least

years despite the Institution's exercise -of due diligence, the Institution may assign its fights to'the note to, the United States Government without recompense.

4

sr

5. The Institution agrees to submit7a report.to the Cammissioner. least a semi-annual basisindicating the total number of loans made from its Fund which are in d t for 120 days for loansrepayable in monthly installments or for 180 dayS for loans repayable in s frequent installments.and ,

6. The Institution agrees to make loans from the FUM reasonably available (to the extent of availablefunds in the FU d) to all eligible students in need thereof.

ARTICLE VI. GUARAMEPED STUDENT 1,641- SPECIFIC PROVISIONS

1. The institution agrees to comply with all program statutes and regulations.

2. This Agreement.dces not authorize the Institution make loam under the Guaranteed Student LoanProgram.

ARTICLE VII.- SUPPLEMENTAL EDUCATIONAL OPPORTtNITY GRAMS - SPECIFIC PROVISIONS

1. The Institution agrees to consider the source of a student's income and that of any individual orindividurlis upon wham the student relies primarily for support and agrees to make an appropriate reviewof the. assets of the student and these individuals in determining whether the student has exceptionalfinancial,need:

2. The Institution, either'on its own or'in cooperation with other eligible institutions, agrees toundertake a vigorous effortto identify youths of exceptional financial need and encourage tnall.t0continue theiF educatiOnrbeyond secondary school through the development of close liaison with highschool prinolpalslocunselors and community leaders. The Institution agrees, to the extent feasible,to make conditional commit mults for Supplemental Grants to qualified seceindary.students who, but forsuch grants, would be unable to receive a postsecondary education. In making commitments, theInstitution further, agrees to place special emphasis upon students in grades 11 or lower who showevidence of academic or creative promise.

3. The Institution agrees to make Supplemental Grants reasonably available (to the extent ofavailablefunds) to all eligible students.

ARTICLE VIII. COLLEGE WORK-STUDY PROGRAM - SPECIFIC PROVISIONS

J.. The Institution agrees-tO.conduct a program of part-time employment for."-for the Institutidwitself (except in the case of a proprietary institution

work.in the public interest fot a Federal, State, or local public'agency ororganization under'an arrangement between-the Institution and the agency oris not considered in the public interest ifi

eligible students in raorkof 'higher edrioation), or

a private non"-profit

organization. That work

(a) it is primarily for the benefit of the members of a limited membership organization (such.as a credit.union, a fraternal. or religious order, or a cooperative)'; rather than for thepublic,at'large,

(b) it is to'be performed for an elected official other than as Oart.of the regular administrationof Federal, State, or local.government'-, orit is work.for which the political affiliationlof'the student is taken intoconsideration.

. e2. In selectingstudents for employment, the,Instituthe greatest financial need, taking into account gror private sources.,_

,,,

.

.

on agreespegive preference to students withassistance provided the student from any

3. The Institution agrees to furnish employment only to a student who:'

(a) had financial need;

(bJ Shows evidence of academic or.creative promise and capability of maintaining good standingin that course of study while employed; and

(c) has been accepted for enrollment at-the institution as at least a half-time student or, inthe case of.a student already-enrolled an and attending the institution, is in good standingand in attendancethere'as at least a half-time student. .

4. (a) Thelnititution agrees that the Federal share =of theempensation of students employed underthis Agreement will not exceed 80 percent of such compensation. ("Federal share" means the C6 funds .

allocated to the institution.)(b) The Commissioner may approve a Federal share of more than 80. percent of the compensation under

conditions:Jset forth in Subpart A ok the program 'regulations where the Institution 'has been officially.designated a "developing institution of higher education," or the Institution can demonstrate that atleast 50 percent of4itS students who are enrolled as at-least half-time students have_pprents whose '

annual adjusted 'gross ihdbme is leps than $7,500.

5. The Institution agrees that no student employed in the Collegelibrk-Study Program will be required .

to terminate:that,empIoyment during a semester (or otherregUlar enrollment period) at 'the time inpame'derived from any additional employment:together with the'College Wark-,Study income is in excess of the

st

132B -3

amount detthrtined to be needed by the Student for that semester (or otn'e'r regular enrollment.period).However, when that excess income equals $200 or more, continued etployment under the College Work-StudyProgram must not be subsidized with funds allocated to the Institution under this part.

6. The Institution agrees that employment under the College Rork-Study PLegLam will be made reasonablyavailable (to the extent of the available funds) to all eligible students in the Institution in needthereof, and that equivalent employment offered or arranged by th&' Institutionwill be media reasonablyaiilable (to the extent of ayailable.funds) to all students in the Institution who desire employment.

7. An area vocational school agrees to the provisions of paragraph (1) through (6) of this Article andfurther agrees that a student in that school is eligible to participate in theCollege.Work-Study Programonly if the student:

(a) Has a certificate of graduation fran a school providing secondary education or the recognizedequivalent of that certificate (GED) ; and

(b) Is pursuing a program of education or training which requires at 1Paqt six months to completeand is designed to prepare the student for gainful employment in a recognized occupation.

AATICLE IX. PROVIETINACE OF EFFORT - SEOG AND CWS PROGRAMS ONLY

f. For each award year in which an Institution receives an .allocation underthe Supplemental EducatiOnalOpportamity Grants Program or the College Work-Study Program,. theanstibition agrees to spend from its Aown scholarship and student aid programs, from sources other than funds received under this'AgreeMent, an

t which is not less than its three year base level amount. The base level amount is calculated inwith the maintenance of effort section of the Supplemental Educational Opportunitypants

Program and Collect Work -Study PLuyl.am regulations (45 CFR 176 and 175 respectively)'.

2, This Agreement is not a new agreement for purposes of the maintenance of effort requirements setforth in the Supplemental Educational Opportunity Grants and College Work-Study Program regulations. .

ARTICLE X: *JOB LOCATICN AND DEVELOPMENT PROGRAM - SPECIFIC PROVISIONS

In establishing a Job Location and Development Program, or in expanding its own existing prograys,the Institution agrees to &Imply yith the conditions set forth in 45 CFR 175 Subpart B which include,but are not limited to, the folloWing:

1. The Institution certifies that the Federal funds used for this program can realistically beexpected to help generats student wages exceeding-in the aggregate the.amounts of these Federalfunds.

. 11, 1 -

2. The Federal share of the cost of any Job Location andDevelopment program, will not exceed 80percent of the program's cost.

3. The Institution will continue to spend in its own job location and development programs, fromsources other than funds received under Subpart B of the program regulations, not less than theaverage' expenditures per year made during themost recent three fiscal years preceding theeffective date of this Agreement,

4. The Program will locate and develop jobs for students during and between periods of enrollmentand will not locate or develop jobs for students td Obtain upon graduation.

5. The Program wi4. not:

(a) locate or develop jobs at the Institution, or(b) displace currently employed workers- or impair existing contracts for services.

6. The Institution will sulanitr annual report to the Coamissioner providing:

a) the uses made of funds provided for the Job Location and Development Programregulations, and

(b) an evaluation of the effectiveness of the program in benefittAngthe Institution.

7. If fundSare used to contract with7other organiiatiop, the contract will include a iateperformance standards

8. The effective date of,the Job Location and Development Program will be the later of (a) July 1,1977 or (1,1 the date on which this progra6 is initiated-by the Institution.

ARTICLE XI. AC JP DURATION

Except for the Job Location and Development Program discussed in MIME X, this Agreement iseffective on_the date executed by the Cainissioner. This Agreement supersedes any prior AgreementsbetWeen'the Doti iesioner and the'Institaltion concerning the administration of any Title IV programcovered by this Mreement.

B4

of2. This Agreement.terminates:

4")

(a) Cnt.the date the Institution undergoes a charge of ownership which results in a chalge. of contro)., or

(b) On June 30th of the award year in which the Institution undergoes a certification review.

3. A certification review means a formal appraisal by the Commissioner cf the Institution's financialresponsibility and administrative capability to administer and participate in the programs covered bythis Agreement.

4. The Commissioner or the Institution may terminate this Agreement under a program regulation or underthe Limitation, Suspension or Termination regulations (45 CT1 168). In the even* of termination by eitherparty, the termination will become effective on the 6ate specified by the applicable regulation.

AATICLE XII. SIGN] ti

As Chief Executive Officer of this Institution, I agree that this Institution, its branch campus(es)(if any) and its represent4tives will comply with all laws and program regulations applicable Under thisAgreement,

Signature of Chief Executive Officer Data

Name

Title

This agreement includes the following Branch CampUs(es):

Name(s) and.Address(es) of Branch Campus(es)'

75

IRS -EI Number

For the Ccumassioner Date

1 )t.)

STUDENT AFFIDAVIT

(For the Basic Educational Opportunity Grant, Supplemental Educational Opportunity Grant, College WorkStudy,National Direct Student Loan, Guaranteed and/or Federally Insured Loan Programs)

TO THE APPLICANT FOR FEDERAL STUDENT FINAN-CIAL ASSISTANCE

Section 498 of the Higher Education Act (20 U.S.C. 1088g)requires that each recipient of a grant, loan, or loan guaranteeunder the Basic Educational Opportunity Grant, Supplemen-tal Educational Opportunity Grant, National Direct StudentLoan or Guaranteed/Federally Insured Student Loan Pro-grams file an affidavit stating that money attributable to sucha grant, loan or loan guarantee will be used solely for ex-penses related to attendance or continued attendance at aninstitution of higher education. The amount of compensationreceived from employment under the College Work-StudyProgram is based qn a student's need for such funds toattend an institution of higher education, thus earnings fromthat program must be used solely for expenses related toattendance at such an institution. A student participating inthe College Work Study program shall file an affidavit to thateffect. .

WHERE TO FILE THE AFFIDAVIT

A notarized copy of this form is to be filed with the institution or agency which provides the funds to the applicantunder these programs. In other words, if you receive aFederal grant or loan from an institutioncf higher educationan affidavit must be filed with that institution. If you ob-

tain a Guaranteed or Federally insured loan from a bank orother lending agency, the form must be filed with that bankor lending agency. The institution or agency will insert theaffidavit in your records.

NOTE: The student must tign this affidavit in the presenceof a notary or other person legally authorized to administeroaths or affirmations. This person must also silo theaffidavit.

NUMBER OF COPIES/

You may need to file more than one copy of this affidavitin case more than one institution or agency is providingmoney to you. If you receive a grant from an institutionof higher education and Wan from a bank, a notarizedcopy of the affidavit must be filed with both the ins F tionand the bank. if you receive a grant, work-study assis nce,and a loan from an institution of higher education, on Y onecopy of the affidavit must be filed with the institution.

WHEN TO SUBMIT THE AFFIDAVIT

The affidavit must be submitted before or at the time youreceive financial assistance from the institution or agency.The certificatieT is effective for the academic periodcovered by the student financial aid award you arereceiving.

1

SEAL

AFFIDAVIT

I hereby affirm that any funds received under the BasicEducational Opportunity Grant, the Supplemental Educa-tional Opportunity Grant, the College Work - Study,, theNational Direct Student Loan, or the Guaranteed/Federally Insured Loan Programs will be used :solely forexpenses related to attendance or continued attendance atthe institution below. I further and stand that I amresponsible for repayment of 9 profited amount of anyportion of payments made which cannot reasonably beattributed to meeting educational expenses related to theattendance at that institution. The amount of suchrepayment is to be determined on the basis of criteriaset forth by the U.S. Commissioner of Education.

I affirm that, to the best of my knowledge, I do nct owe arepayment on a Basic Educational Opportunity Grant, aSupplemental Educational Opportunity Grant, or a StateStudent Incentive Grant previously received for study at theinstitution below. To the best of my knowledge, I am notin default on a National Direct Student Loan made at theinstitution or any Guaranteed/Federally insured studentloan guaranteed.or insured by the Commissioner or by aguarantee agency for attendance at that Institution.

(Na of Institution)

Date:Signature (sign only in presence of Notary)

Academic period covered by award(s) 19 to 19(month) (year) (month) (year)

'Subscribed and sworn before me this day of

My commission explies

135

, 19.

(Signature of NOtbry Public)

(Address of Notary Public)

B-7

1,4.,-.11E St. Ht :141 I,.Etas, UOD,rtuelo ,'.,ants

./ed, 19/9 /9

I1 t)1 13' Ul. IL, NO.

1(7 8)IN NO

(9 20)

tM11:: (,,1 Hi. AL I".I tIL.A. A I PJN, ANL, WE LI Alrl

LJuLAWe.1.ng LJ c

PLEASE read il5110,It,fr,In, rot.,

r, H171 APPPovE100'H P0993

11 a keb,irl for IL,eC .,e ELL, r/o1,)Li 'R., 31 2 [1 et 28 3 June 30

4 Li AU Hoc 1-regunt ft,: Change in Curter,: OE APpruved Autnot,ration(USe between'reporting periods 7/1/70 thru 6/30j 79)

5 June Revised (Use only rf June 30 report previously hied)

SECTION I GENERAL INF.ORMAT(31i1Compleie onlyonly.il rprObnatlorr below is incomplete or'incoriecT)

4. Institution NAME and ADDRESS

(28) i I Chec, ',ere when NAME. and/or ALJUVIE.SS has changed and inc.,. ale (43.48) 98. No. of 197879 Par; tune fiErri7. recipients

'(79-lei g Dale or Submission. /daY year

(35-42) 9A. An.,,,,; ,41 19/0 /9 Par1 HI r, . reLipleols

changes below

1(49) 10. SIGNATURE

Official responsible for this PR GRESS REPORT (Sign item 10)5 Name:6 Title7 Phone

.

SC C 1,;;.# if l'ilLIIII-04131111 below fiscomplyth.t. inctilieto

WARNING. Any Person who knowingly makes a false statement ormisrepresentation can this form may be subject to a fine of up to31(1,000 or to imprisonment of up to 5 years or to both under DrO.visi,)ns of the United Stares Criminal Code. Such Provisions may inClu.le. among others 18 U.S.C. 1001.

(50) 11 Type 011,1011010n:

1 Univers ty

2 Other I-year

3 At least 2.yr. but less than 4-year

4 At least 1-yr. but less than 2-year

5 At least 6 mos., but less than 1 -yr.

(51) 12. Control:

1 PubliC

2 Private, non-profit

3 Private, profit making

(52.54) 13 U S Congresuonal District:

1978-79 UndergraduateEnrollment

PerCtn1 LivingCr- . :a.-npus

(55-60) 14. A. Fuji -time: (61-63) B. Full - tine:

(64 -69) 15. A. Part-time.

(74.75) 17, Len oho( Academic veer (from 7/1/78 to5/30/79 or equivalent on which chargesbelow are based-

months

(70-72) B. Part -time:18.

% 2(7)(9.16)

73) 16. Accreditation Status:

1 Fully Accredited

2 Candidate

3 Corresprindent

4 "3 Letters"

Specify Agency:

(17.24)

Average institutional Charges per Full -timeUndergraduate Student For 1978.79.

Tuition and Fees iln-State) A. $Rohm (On-Campus) 8. S

25-32) Boa,d (On-Campus) - C. $For 1979-80 (Estimated)

(33 -40) Tuition and Fees (In-State) D. S

(41-48) Room (On-Campus) E. $

49.55) Board (On-Campus) F. $

slu rv()N. sT TI)SUl Al4T 110Ift hi ION 151, inst%.cfliins. Show riot leis only Do NOTsfoond Cents

Amount (A) No, of BEOG Recipients (B)

3(7)(916? 19.19 Gross Expeischhures (ctual payments to studants to date 'or current academic year)

(25-32) 20.20. Less Recover., .,to date for current academic year only)_ _ _ _ _

(41-43) 19 - 20 . 21.21. Net Expenditures

$ (17-24)

$

$

ESTIMATED DEMAND FOR ADDITIONAL FUNDS (for remainder of current academic year):(57-64) 22.

72. Amount for Present ReciPlents .

23. Amount for Additional Recipients Expected to Qualify (65-72) 23.

$

$ (73-80)

24. Total Estimated Expenditure and Recipients4(7)(9-16) 21 + 22 + 23' 24A.

(for ENTIRE academic year: 7/1/78-6/30/79) 198 + 238 - 248.

$

(17-24)

(25-32) 25.25. Current OE Approved Authorization per USOE records as of._

(for academic year 7/1/78-6/30/79)(33-40) 24 . 25 . 26.

26. Institution's Estimated Authorization Adjustment

$

$ +-(41-48) 27.

27. Number of Studiint Eligibility Reports Previously Submitted(49-56) 28.

28. Number of Student Eligibility Reports Submitted with this Report29. Total Number of Student Eligibility Reports Submitted (57-64) 27 + 28 - 29.

30. Tape Number (for Institutions utilizing taps exchange Program)

(20 USC 1070a,45CFR 19021). OE FORM 255-36/78 PREVIOUS EDITION IS OBSOLETE.

1 '

B-9

Further nemies ot uther bern.fits may, but not necessarily, be withheld under this program unless this report is completed arid filet, as required under existing law and regulations (20 USC 1010a, 45 CF R 190.81).

INSTRUCTIONS FOR PREPARING PROGRESS REPORTOE FORM 255 36/78

Progress Reports are the vehicle through which necessary adjustmints to the initial authorization of BEOG funds are made, based onthe actual demand for funds as reflected by the enrollrnent of actualentitled students at the institution. .Progrt'ss Reports are ,also intended to monitor the allocation of Basic Educational OpportunityGrant funds for a given funding period and to report the payment ofthese' funds by institutions to student mcipients. Progress Reportsmust be filed for accounting periods ending October 31, February28, and June .30. Those reports must be forwarded to USOE byNovember 15, March 15, and July 15, respectively.. In addition, AdHoc reports may be submitted once per reporting period, if itbecqmes necessary for an institution to obtain an adjusted &it/Ioniation amount to receive additional funds. Tile June 30 Progress Report, is intended to be the final report of expenditures of BEOGfunds.

The following should be rioted with regard to the completion of theProgfess Reports:

A. Accurate Completion of the Progress Report is essential to insurethat BEOG funds for your students are received without lengthydelays. You should read the following instructions carefullybefore entering the infolnation requested for each item. Youshould respond to all applicable questions on the Report form.

B. If you are a Central Administrative Unit reporting for severalcampuses or schools, you must be certain to include informationoily for those campuses or schools eligible to participate in theBEOG program and included 'in your Current BEOG Letter ofAgreement with the Office of Education. ,

C. When estimates of your school's need for additional BEOG funds-.are requested;the-esti es should be as realistic and accurate as

possible. Since all approp 'ate BEOG commitments to studentswill be honOred, no system tic advantage will accrue from over.requesting of funds. If you equest excessive funds you may ex'perience a delay in the auth rization of the fundsyou will realis-tically need for your stude is as a result of editing and reviewprocedures in USOE.

D. The Progress Report is a four part form. The processing, file, andSER copies, along with the SERs, should be mailed to:

Basic Grant ProgramP.O. Box 2468Washington, D.C. 20013

The SEAs are submitted to document the disbursements you havemade since filing your last Progress Report (see instructions,Items 27, 28, 29). You should retain the fourth copy of theProgress Report for your records. Do not mail SE Rs separately.They must accompany a Progress Report. Separately mailed SERswill be returned, to the sander.

,

If you have ciuestions concerning the Progress Report, please contactyour Area Representative on (202) 245.1271 for assistance.

PREFACE

On the regular Progress Report, complete .all items. On the corn'putergenerated form, complete all blank spaces and any informa-tion which is incomplete or incorrect.

IDENTIFYING DATA

Item 1. BEOG ID No. (Previously referred to as OE Vendor No.)Enter the six digit number assigned to your institution by the U.S.Office of Education. This number appears on your BEOG Authoriza-tion Letter. If you are not sure of your number, contact your AreaRepresentative.

Item 2. EIN No. Enter the twelve digit number assigned to yourinstitution by the U.S. Office of Education. This number appears onyour BEOG Authorization Lener. II you are not sure of yournumber, fornact your Area Representative.

NOTE: YOU MUST ENTER YOUR CORRECT EIN ANQBEOG IDNUMBERS FOR FUNDS TO BE ,ADVANCED TO YOUR STUDENTS IN A TIMELY FASHION. TO INSURE ACCURACY, USETHE NUMBERS AS THEY APPEAR ON YOURBEOG AUTHOR,ZAI ION LETTER.

Item 3. Report Type. Progress Reports must be regularly filed for repoi tiny periods endly on October 31, February 28, and June 30. Inaddition, "Ad Hoc" Requests may he filed once per reporting periodwhsn an institution wishes consideration for a revised AuthorizationAmount. However, filing an "Ad Hoc" Report about the same timeas regularly scheduled Reports will often delay the processing of adjusted Authorization Letters. Check the "Ad Hoc" box if this is areport to request an authorization change at a time other than aregularly scheduled report date. If an authorization adjustment isrequired after June ;30 and a June 30 Progress Report has been filed,do not use "Ad Hoc.," use "June Revised. '

SECTION l: GENERAL INFORMATION

Item 4. Name/Address. Enter the -name and full address, includingzip code of your institution.

Note: If the name and/or address of your institution differs fromthat shown on your BEOG Official Authorization Letter. check thebox.

Items 5, 6, 7. Responsible Official. The institutional administratorwho is officially responsible for the Progress Report must sign theReport in Block 10. This must be the individual who is authorizedby the institution to submit the Progress Report and who is re-sponsible for the accuracy and completeness of the report. Thisperson's name, title, and phone number must be entered in theappropriate space.

Item 8. Submission Dote. Enter the date this report is submitted.Use numbers only (i.e., November 12, 1978 should be entered as11/12/78).

Item 9A. Amount for Part-tirrie BEOG recipients. Enter the dollaramount for recipients horn line 19A who are part tirne students.

Item 98. No. of Pa Itime BEOG recipients. Enter the number ofrecipients from line 19B who are part time' students.

Item 10. SIGNATURE. If the form is not signed it will not be pro-cessed.

SECTION II

Item 11. Institution Type, Enter the correct number for the insti-tution type that best describes your school.

Item 12. Control. Enter the correct number for the institution con-trol that best describes your school.

Item 13. U.S. Congressional District. Enter the number of the U.S.Congressional District of the reporting school.

Item 14A. 1978-79 FullTime Undergo duate Enrollmern. Reportthe total number of undergraduate stuoents who are enrolled on afulltime basis for the 1978-79 academic Year. Do not include full-time equivalents.

Item 148. Percent of Full-Time Enrollment Living on Campus. Enterthe percent of your full-time undergraduate enrollment that will beliving on campus for the 1978.79 academic year.

Item 15A. PertTime Undergraduate Enrollment. Report the totalnumber of undergraduate students who are enrolled for less than afull-time course load fas defined by the institution) for the 1978-79academic year. If the institution has no part-time students, enterzero.

Item 158. Percefit of PartTime Enrollment Living on Campus. Enterthe percent-of your part-time undergraduate enrollment that will beliving on campus for the 1978-79 academic year.

Item 16. Aicreditation Status. If you have status with a nationallyrecognized accrediting agency, enter the name of the organizationand check the type of status which is currently held (full accredita-tion, candidate or correspondent).

If you have no such status, but have received a certification letterfrom the Office of Education, confirming the eligibility of yourschool for this program via the acceptance of credits from your in-stitution "on transfer by not less than three institutions which are soaccredited ..." indicate under the eligibility via "3 letters" response.

Item 17. Cersgth of Academic Year. Give the length in months of theacademic year on which the average charges in Item 18 are based.

Item 18. Average Institution Charges. Enter the average institutionalcharge per full-time undergraduate student for in-state tuition andfeet, on-campus room and on- campus board for each of theace lemic years indicated. If on-campus room and/or on-campusboard are not available at your school, enter "N/A" in the approp-riate spaces. Also enter "N/A" in Tuition and Fees for 1979.80 ifschool will not be operating in that academic year.

SECTION III: STATUS OF AUTHORIZATION.

This is a cumulative report. 't is required that you report both. thedollar amounts (rounded to the nearest whole dollar-do not showcents) and (where appropriate) the corresponding number of BEOGrecipients in each category.

Items 19A, 1913. Gross E, enditures. In Item 19A, enter the totalamount of BEOG funds you have paid but and/or credited to stu-dents' accounts from July 1 of the current academic year to the enddate of the period this report covers. Fos reporting purposes, thisamount should not exceed the current OE approved authorization(Item 25A). In Item 19B, enter the total unduplicated number ofrecipients to whom these funds were paid.

Item 20. Dollar Recoveries. In hemp, enter the total amount offunds recovered from BEOG recipients to date of this report. Suchrecoveries would include funds restored to the Basic Grant accountat the institution for (1) student withdrawals or terminations whichresult in credits to the BEOG account or (2) student refunds to theinstitution, Only those recoveries as of the end date of the periodwhich this report covers should be entered. For PRIOR YEAR RE.COVERIES contact your Area Representative for the proper form.

Item 21A. Net Expenditures. In Item 21A, enter the net expendi-tures (both direct payments and credits to student accounts) madeto BEOG recipients during,jhe current academic year up to and in-cluding the current period. This figure is obtained by subtractingLine 20A from Line 19A.

Item 22A. Eailnietod Demand for Additional Funds (for presentrecipients for remainder of 1978-79 academic year). This item is toreflect your requirements for funds ln addition to those already ex-pended, as reported in Item 21A, to meet the need of student re-cipients currently enrolled at your Institution for the remainder of

B -12

the 1978.79 academic year. To arrive at this estimate, fotoi theamount of BEOG funds obligated to students as the "expected illsbursement" in Section 4 of the Student Eligibility Reports you haveprocessed to the date of this report. SirbtraLt from that figure theGross Expenditures on Line 19A. Adjust this figure by sulitrac hog

. estimated additional recoveries (based on your experience to date)for the remainder of the academic year. Enter the re.,ulting figure on..ine.22A.

Items 23A, 238. Estimated Additional Recipients. Enter the tr ilamo nt of funds you estimate will be necessary to covr the nerds,of new (not currently enrolled or processed) BEOf ; Pcipier '5,wit are likely to be eligible during the remainder of ,'1, 1978 .,1academic year. In arriving at this figure, keep in mind th,t these n i

students may not be eligible for a fall BEOG award, since a pm, 1

of the academic year has expired.

In Item 238, enter the number of students involved in arriving at thefigure in 23A.

Item 24A. Total Estimated Expenditures. Enter the total amount offunds you estimate will be necessary to fund all BEOG recipients forthe entire 1978.79 academic year. This figure is obtained by addingLines 21A, 22A, and 23A.

Item 248. Total Estimated Recipients. Enter the total estimatednumber of BEOG recipients for the entire academic year. This num-ber is obtained by adding items 19B and 23B.

Item 25A. Current OE Approved Authorization. This is the USOEapproved BEOG Authorized Amount indicated on your most recentUSOE Authorization Letter.

Item 26. Estimated Authorization Adjustment. If Item 25A is greaterthan Item 24A, subtract Item 24A from Item 25A and enter the dol-lar amount, circling the () prefix.

If Item 25A is smaller than Item 24A, Subtract Item 25A from Item24A and enter the dullar amount, circling the ( +) prefix.

This figure should represent the total additional funds you estimatewill be necessary to fund your BEOG recipients for the remainder ofthe academic year. A new Authorization Letter will be produced in-dicating this change.

Item 27, 28, 29. Student Eligibility Reports Submitted. A StudentEligibility Report (SERI, reflecting each of your BEOG recipients'entitlements for an award, must be submitted to document yourpayment of their awards. These SERs are to be submitted with regu-larly scheduled as well as Ad Hoc Progress Reports, and should notbe sent separately. Separately mailed SERs will be returned to thesender.

In Item 27, enter the number of SERs you have submitted prior tothis report (if any). In Item 28 enter the number of SERs submittedwith this Progress Report-to reflect students who have begun partic-ipation in the BEOG program since your last Progress Report wassubmitted. Also included in this item will be new SERs for studentswho are already participating in the program during the currentacademic year who have had their awards adjusted on the basis of arevised SER.

In Item 29, enter the total number of SERs you have submitted tothe date of this report This is the sum of Items 27 and 28 andshould equal or exceed Item 19B. .

These SERs should be packaged and mailed with all three copies ofthe Progress Report.

Item 30. Tape Nulfibar. For institutions utilizing the tape exchangeprogram enter the tape number which corresponds to the number ofStudent Eligibility Reports reported in item 28 above.'

j 1 9 )

THE BEOG PROGRAM INFORMATIONAND MONITORING SYSTEM

The Progress RVp.ort you are being asked to complete is an important part of a total system for allocating BEOGfunds to participating institutions, monitoring their disbursement to entitled students and providing reportinginformation for the program. For those institutions that may not be familiar with this system, it is outlined asfollows:

1. A file of eligible institutions was establishedbased on legislatively prescribed eligibility criteria for institutionsto participate in the BEOG program. This file is based on documentation from the Accreditation andInstitutional Eligibility Staff of OE.

2. Your school's interaction with the BEOG Program Information and Monitoring System (PIMS) began when youreceived, as an institution eligible to participate in the BEOG program, a mailing from OE which includedinstructions for calculating student BEOG awards from their Student Eligibility Reports (SER's), a PaymentSchedule for making award determination, and a Letter of Agreement for establishing your school'.participation in the program. When the Letter of Agreement was signed and returned to OE, your schoolbecame a participating institution.

3. Next, your school was allocated an initial ceiling amount of BEOG funds which could be drawn from theDepartmental Federal Assistance Financing Systems (DFAFS) in order that the first BEOG award paymentsmight be made to your entitled students. This initial ceiling amount was communicated in the AuthoriiationLetter you recently received and an institutional BEOG account was established for your school with theDFAFS.

4. DFAFS then utilized one of two methods for paying BEOG funds to your school: the Letter of Credit or CashRequest System. The Letter of Credit method allows the school to draw funds, up to the ceiling amount, fromthe Federal Reserve System through a local commercial or federal reserve bank. This procedure is establishedthrough special arrangement with DFAFS. The Cash Request System, which is the procedure normally used,permits the school to draw funds, up to the ceiling amount, on a monthly basis from the Treasury Department,through DFAFS, using a monthly cash request procedure. Schools using this procedure submit a Grantee'sMonthly Cash Request 'form to DFAFS for funds to cover estimated cash expenditures on a monthly basis.

. DFAFS, upon receipt of this form, will schedule a payment (U.S. Treasury'check) to reach the schco: duringthe first week of the month for which cash is requested.

Questions regarding payment to schools only should be directed to:

PHEW/OS/Federal Assistance Financing Branch00 Fishers Line

c/o Rockwall Building, Rm. 833Rockville, Maryland 20B57

Whenever you contact FAFB, you should refer to the Award Recipient E IN and document number as shownon your BEOG Authorization Letter.

5. The funding of the Basic Grants Program for your institution may involve multiple funding authority, morethan one Appropriation and Common Accounting Number (CAN). The utilization cif funds shown in theProgress Report does not require differentiation of the source of funds under separate CANs, however, you arerequired by the DFAFS to separately identify expenditures where more than one fundiiig authority has beenutilized.

6. The year-end reconciliation of expenditures, required under the Grantee Quarterly Report of Expenditures,should coincide with the final report of expenditures shown on the June 30 Basic Grants Progress Report.End-of-year reconciliation and closerout of financial systems, Basic Grants, Office of Education and DFAFS isfacilitated by the reporting of compatible information.

B-13

7. The enclosed Progress Report is the mechanism through which the initial BEOG ceiling amount may headjusted to reflect the demand for an increase in BEOG funds to pay entitled students who actually enro'l at

" your school (or a possi e decrease if fewer entitled students enroll than was anticipated). Therefore, theaccurate completion the Progress Report is essential in insuring that an adequate flow of RFOG funds isaccurately directed to each school so that entitled students whO enroll in participating schools may he. paidtheir awerds in a ti ly fashion.

In addition, the Progress Report also collects a minimum of institutional identifying data which is neces.siiry forinitial ceiling allocation, mailing and report purposes. The Progress Report information is retained in theinstitutional file and is also used to adjust institutional ceilings through the DFAFS.

8. SER's reflecting award information for each student to whom an award is paid are forwarded to OE at the wile.ime as the Progress- Report is filed. These data are used to document your. requests for authorization adjustments and to form an informational base from which the contihuous eligibility and award status of studentsmay be monitored and from which reports may be generated.

These individual award records*will also be identified by the institution which the student is attending. ABEOG Student Validation Roster will be generated at the end of each award year and mailed to each schoolattended by BEOG award recipients. Schools will verify each student recipient's status and the actual awardamount each received and return the roster td, 0E.,This information, when compared with Progress Report dataand actual BEOG institutional accounting data, will setae to reconcile each school's BEOG accounts at the endof the year. It will also serve to monitor the status of individual student award recipients.

9. Data will be drawn from each of the system components and the SER processing system to provide reports forinformational, program evaluatio,,, and planning purposes.

The above components are integrated into a total BEOG Information and Monitoring System which is designed toeffectively serve the needs of everyone involved in the BEOG program, includinvtudents, institutions, and thefederal government. Timely submission of all institutionally based reports (the Pr,ogress Report, the StudentValidation Roster, etc.) is essential to the efficipnt operation of the system. This system is graphically illustrated.

BEOG PROGRAM INFORMATION AND MONITORING SYSTEM'

Student

BEOG Application'

SER

Monthly Cash Requestor Letter of Credit

' BEOGApplicationProcessing

ParticipatingInstitutions

Institutional Agreement

OEAuthorized Ceilings

Deport manta I

Federal AssistanceFinancing System

(DFAFS)

Authorization Letters

Progress Reports, SERs

End of year student roster

REPORTSA

Congress,

OE Staff,Other Publics

TresisuryDepartment orFederal Reserve

System

B -14

14O6

en,

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REPORT FOR ITUDINTIMEgtr

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FOOT MASI

STUDENT26,4

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STUDENT2619 8

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810ENT300 D

sot, ic,DR 1100 ID I

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

BUREAU OF STUDENT FINANCIAL ASSISTANCE

OFFICE OF EDUCATIOK, WASHINGTON, OC, 20202

BASIC EDUCATIONAL OPPORTUNITY GRANT PROGRAM

STUDENT VALIDATION ROSTER

FORM APPROVED

ine.Na 5141055

TYPE OF REPORT

DATE OF REPORT

ENDPOPNYEAR WORT

INITIAL. DISTRIBUTION

DECEMBER 12tPAGE

0502 am 03USOE USA ONLY

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ORIGINAL 9ER ID C

(17.30)

NFoRmiT ON REPORTED 0 USCE ON MSSTUDENT TOTAL SCHEDULED ExPECTEDELIG STUDENT BLDG DISBURSEINDEX LOST AWARD , NOT

(31.41)

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END0OWEAR REPORT

INITN, DISTRIBUTION

DECC1EP 12, .3

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SAMPLE SCHOOL EIGHT USOE USE ONLY IINFORMATION REPORTED TO USOE ON SERS !FOR INSTITUTION VERIFICATION

888 wASHINdTON PLO R STUDENT TOTAL SCHEDULED EXPECTED

SAN DIEBLO, CO 80000 ORIGINAL SER 10 C ELIG STUDENT BEOG DISBURSE+ TOTAL

INDEX COST AWARD. MENT DISBURSEMENT STATUS

(I7+30) (1141) (47411 (5208) (71671)

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END OF,REPORT ACCOUNTINGINFORMATIONS ft

INFORMATION REPORTED ON YOUR LATEST PROGRESS REPORT DATED 06n0/TS

TA!, EXPENDITURES FO ACADEMIC YEAR 07647 (ITEM d1A1 5500,00

NUMBER OF STUDENTS RECEIVING BEOG FuNDOITEm5

NumBFR OF SERS. SUBMITTED TO UsOOTTEm 29)S,

INFORMATION SUMMARIZED FROM SERS ON THIS ROSTER

TOTAL EXPENDITURES FOR ACADEMIC yEAR19764T15/531,00

NUMBER OF SERS CURRENTLY IN UsoE.FILESib

DIFFERENCEBE-NEN PROGRESS REPORT AND SER EXPENDITURES151151,00

DIFFERENCE BETWEEN PROGRESSREPORT RECIPIENTS AND SCR COUNT 11

HAVE YOU SUBMITTED SERS OR COPIES OF SERS WITH THIS REPORT?YES 1..1 NO 1..1

ENDOwEAR REPORT

INITIAL' DISTRIBUTION

DECEMBER 121'

. ,

IF YES, NUMBER OF SERS 1 1, SUM OF TOTAL DISBURSEMENTS FROM THESE SEAS*NOTE( DISBURSEmENT'ACTUALLY RECEIVED BY THESE STuDENTS'HUSTBE ENTERED ON EACH SER,,

'SIGNATURE AND TITLE OFOFFICIAL COMPLETING, THIS REPORT!

4

SIGNATURES

TITLE'

TELEPHONE OBERI

/

RETURN THIS REPORT TO1 BASIC EDUCATIONAL OPPORTUNftY'GRANTRoGRAN14 SI OFFICE OF EDUCATION

P, 0, BOX 296B

WASHINGTON, DI C, 20013

END OF SECTION

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STUDENT VALIDATION ROSTER RECONCILIAT ON INFORMATION

4 PLEASE COMPLETE THE FOLLOWING TWO IONS IN ENTIRETY

.SECTION ILIA EXPENDITURES

I, TOTAL EXPECTED DISBURSEMENT FOR STUDENTS ON

ROSTER, (IF THERE IS A 3LINE ENTRY FOR

ANY STUDENT, ONLY THE AMOUNT ON THE SECOND

LINE IS INCLUDED,)

21 ENTER SUM OF EXPECTED DISBURSEMENT AMOUNT FROM

ROSTER FOR ALL STUDENTS MHO 010 NOT RECEIVE

EXPECTED DISBURSEMENT SHOWN, INCLUDING (AI

CATES BEING DELETED AND STUDENTS OF )0100 YOU

HAVE,NO RECORD, (USE SECOND LINE OF.A 3'LINE

ENTRY,)

3, SUBTRACT LINE 2 FROM LINE i AND ENTER

DIFFERENCE,

4, ENTER SUM of THE AMOUNTS ACTUALLY AID TO

STUDENTS INVOLVED IN' LINE 2 CALCULATION,

5, ENTER SUM OF THE AMOUNTS ACTUALLY PAID TO

STUDENTS NOT APPEARING ON THIS ROSIER,

(SUBMIT THE SER OR A COPY IF PREVIOUSLY

SUBMITTED AND ENTER COUNT IN IIIINE 5),

6, ENTER TOTAL OF LINES 3, 9 AND 5,

7, TOTAL ACTUAL EXPENDITURES REPORTED ON YOUR

LATEST PROGRESS REPORT ACCORDING To USOE

RECORDS (ITEM 21A),

SI SUBTRACT LINE 7 FROM LINE 6 AND ENTER

DIFFERENCE,

15,631,00

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.0..1110111=svammal.10

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$500,00

IF LINE S IS UNDER ,/, 11,001 NO EXPENDITURE ADJUSTMENTS ARE

NECESSARY: OTHERWISE VERIFY CALCULATIONS FOR LINES 24, If

FIGURES ARE CORRECT AND REPRESENT YOUR ACTUAL, EXPENDITURES

DURING THIS ACADEMIC YEAR, COMPLETE HE PROGRESS REPORT IN

SECTIONAV TO ADJUST OUR RECORDS, LINE 6 HERE HOST, BE ENTERED.

IN NET EXPENDITURES MEN 2IA) AND TOTAL EXPENDITURES (ITEM 244ON YOUR REVISED JUNE 30 PROGRESS REPORT,

EN00F,YEAR REPORT

INITIAL DISTRIBUTION

DECEMBER 12,

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Appendix B-11

Instructions for CompletingThe Student ValidationRoster

Section I Instruction

In Section I please comply with the following in-structions. One or three lines have been printed foreach BEOG award recipient. For purposes of iden-tification, the student's name, social security number(or BEOG identification number, if social securitynumber was not available), date of birth, and transac-tion number as indicated on the Student EligibilityReport (SER):have been provided. The roster is pre-pared in alphabetical student name order for your con-venience. Prior to completing Section I, review theRoster Reconciliation Worksheet (Section III) so thatall required totals can be accumulated in conjunctionwith.entering the Section I data. A ample worksheet toaccumulate these figures is shown at the end of the in-structions for Section I;

Single Line Entry

The purpose of a single line entry on the ValidationRoster is to obtain the total disbursement of the BEOGfunds to each student. To accomplish this, we haveprovided space on the right 'side of each line entryfor enton one of the three types of validation information.The validation is accomplished as follows:

1) Determine whether the student was enrolled atyour institution (i.e., a SER was submitted toUSOE by your institution for this student). If youhave No Record of the student at your institution,enter "NR" under "Status". On your PreliminaryReconciliation Worksheet enter the "ExpectedDisbursement" shown on the roster in (A). Nofurther action is required.

2) If you submitted a SER to USOE for the student,compare the "Expected Disbursement" printed onthe roster to the amount of BEOG funds disbursedper your records.

a) If the two amoants are equal, enter a checkmark in the small box under the heading "TotalDisbursement".

b) If the two amounts are not equal, enter the ac-tual amount of BEOG funds disbursed in thelarger box under the "Total Disbursement". Onyour Preliminary Reconciliation. Worksheetenter the Expected Disbursement shown on the

roster in (C) and the correct Total Disbursementin (D).

c) If the student withdrew prior to payment of anyBEOG funds or refunded all BEOG fundsreceived, enter zero in the larger box under theheading "Total Disbursement". On yourPreliminary Reconciliation Worksheet enter the"Expected Disbursement" shown one the rosterin (C).

3) Determine if deletions are required for any in-dividual students who appear more than once onthe roster.

a) If the social security number, name, transactionnumber, Scheduled BEOG Award and institu-tion attended are identical, enter "Delete"beside the entry(ies) you wish to have removedfrom your roster. On your Preliminary Recon-ciliation Worksheet, enter the "Expected Dis-bursement" shown on the roster in (B). Do, notuse the "Delete" designation for students forwhom you have No Recorc since these studentsrequire special processing by USOE' and mustnot be deleted.

b) If funds were paid to the student under morethan one SER transaction number or EligibilityIndex, validate each entry on the roster accord-ing to the instructions in (2) above. The sum ofthe Total Disbursement amounts for all entriesfor one student should not exceed the highestExpected Disbursement. Include the number ofsuch extra multiple entries (i.e. entries over one)in the non-duplicate extra record count (F) onthe Preliminary Reconciliation 'Worksheet.

Please exercise one of the optioUs described above toconfirm the validation status of each student listed onthe roster.

For each award recipient, we have also provided someof the key data fields from the SER. If, in the processof reviewing the roster, you should discover an error inone or more_of these please _make- carrections -b-yrrectcrossing out the erroneous data and entering the cor-met information above it. This is particularly impor-tant for students wits incorrect Social Security num-bers or Date of Birth, or whose Scheduled BEOGAward or Expected Disbursement was recalculated

15J B-21

after submission of the SER due to a change in the fac-*tors affecting these 0,elds. This will assist us in main-taining and reporting accurate information regardingBEOG award recipients. The data under the "USOEUSE ONLY" heading corresponds to the student iden-tifier from the bottom of the SER.

Three Line Entry

A three line entry on the Validation Roster for an in-dividual student designates those BEOG award reci-pients for whom discrepancies were detected in thedata supplied on the Student Eligibility Report (SER).Because of these inconsistencies, we have made cer-tain assumptions about the data elements found to bein error. These assumptions have been made in aneffort to facilitate the correction process.

We realize that some of the assumptions may be due toUSOE processing errors as well as errors made in thereporting of data on the SERs.

In addition, the assumptions may lead to further er-roneous conditions. For this reason, we would ap-preciate a careful review of each assumption made andsubmission of corrections when necessary.

The first line provides student, identification andaward data collected from the SER. The second linecontains the SER award data as it appeared after ap-plication of the computer assumptions. The third lineis provided for entry of any corrections you wish tomake to the information shown on the second line. Ifno correction is entered for a particular data field, wewill assume that the field immediately above is accur-ate.

The final function to be performed for three line en-tries* is io"indicate the total disbursement of BEOGfunds to each student. Please follow the validation in-structions provided above for the single line entry.

When completing the Total Disbursement field, usethe Expected Disbursement shown on the second lineto determine the appropriate entry. Please be certain totake one of the 'actions described for each studentlisted on, the report.

We should emphasize the importance of a carefulreview of each of the assumptions made on the datareported to USOE on the Student Eligibility Report.Your assistance in determining the accuracy of this in-forniation will be most appreciated.

Preliminary Recontiliation Worksheet

(B)(A)Expected Disburse-ment Shown onRester for NR Stu -dents

B-22

Expected Disburse-ment Shown onRoster for Dupli-cates Being Deleted

(C)

Total $ =No. of NRs

(D)Total Disbursementfor StudentsReceiving Amt.Other Than EDShown on RosterTotal -=

Total S =No. of Deletes =.

(E)Total Disbursementfor Students NutAppearing OnRoster

Total S =NO, of Adds =

Section 11 InstructionsCheck the appropriate box if you do/do not have anyadditional SERs to submit with the Validation Roster.Submission of SERs with the Validation Roster isrestricted to cases, where the SER was properly submit-ted with a Progress Report but does not appear on theroster or was inadvertently omitted. You may not sub-mit SERs for students who did not meet the eligibilityand enrollment deadlines established by Basic Grantregulations. If you do submit_additional SERs, enterthe number you are submitting 'and the sum of theTotal Disbursement from these SERs in the space pro-vided and in (E) on your Preliminary ReconciliationWorksheet. Also enter the disbursement actuallyreceived by these students on each SER submitted.After completing Section III, and IV if needed, ac-cording to the instructions below, sign the ValidationRoster, enter your title and telephone number and mailto USQE. Special Note: If the Validation Roster isreceived at USOE without a signature, it will bereturned to the institution.

Total S =

(F)Count of Extra(Non-Duplicate)SERs On Roster

Section III InstructionsThe Roster Reconciliation Worksheet has beendesigned to assist you in reconciling disbursement toincaidual students, as reported in Section I, with thesummary expenditure and recipient count datareported on your latest Progress Report.

As Section I is completed, the figures indicated on thePreliminary Reconciiiation Worksheet (page 3) shouldbe accumulated. These totals should then be posted toSection III as follows:

1. Add dollar total for (A), (B), (C) and enter sumin IIIA-Line 2.2. Enter (D) in IIIA-Line 4.3. Enter dollar total for (E) in IIIA-Line 5.4.. Enter student count in (A) in IIIB-Line 2A.

Expecttd Disburse-ment SWown onRoster for StudentsReceiving Amt.Other Than EDShown

5. Enter-student count to (B) in IIIB-Line 2B.6. Enter student count in (E) in IIIB-Line 5.7. Enter (F) in 7.

Important: If (D) includes disbursements to any 3tu-1ci+A,in excess of the highestScheduled BEOG Award

as shown or as corrected on the roster, attach a letterexplaining how the overaward(s) occurred and anysteps being taken to recover the excess awards.

After posting-the figures above, follOw the instructionson thy Roster Reconciliation Worksheet. To facilitatecompletion of this Section, the calculations for thetotal Expected Disbursement and the number of stu-dents shown on the roster are computer-printed foryour convenience.

The results of Section III will determine ifyou need tofile a revised June 30 Progress Report to reconcileyour account. ShOuld you need assistance in complet-ing the Preliminary Reconciliation Worksheet or Sec-tion III, contact your Area Representative. Yourcooperation in this important part-of the fiscal controlrequirements of the Basic Grant Program will expeditecompletion of the processing cycle for this academicyear at your institution and permit prompt preparationof your final roster and Authorization letter.

Section IV Instructions

In the event that revised June 30 Progress Report isneeded in order to reconcile your account, Section IVprovides'a Progress Report facsimile'to allow you tomake any changes that were not made when filing youroriginal June 30 Progress Report, Please use the sameinstructions that were used when completing your1976-77 Progress Reports except as noted here. Note:if you have not filed a June 30 Progress Report, youshould use Section IV to do so at this time.

Progress Report Facsimile

Line 19: Gross ExpendituresReport the total amount disbursed to BEOG recipientsin (A); report the total number of recipients receivingBEOG funds in (B). The recipient count must be the

same as Section IIIB-Line 8, i.e., the number of un-duplicated students on the roster.

Line 20: Less RecoveriesReport the total amount of BEOG funds recoveredfrom recipients in (A); report the number of recipientsreturning BEOG funds in (B). Any student from whoma total recovery (i.e., a zero disbursement in Section I)has been received should be included in this count andin 19B.

Line 2IA: Net ExpendituresReport the total amount expended for BEOG awards(line I9A minus line 20A). This amount must be thesame Z.3 the amount in Section IIIA-Line 6 as ac-domulated from the individual student entries. Showwhole dollars only; do not report cents.

Lines 22 and 23: Estimated Demand for AdditionalFundsAll items (22A, 23A and 23B) must be reported aszero. No entry required.

Line 24: Total Estimated ExpendituresReport the same amount as Line 2IA for 24A; reportthe same recipient count as Line 19B for 24B.

Line 25: Current OE Approved AuthorizationReport the USOE Approved BEOG Authorizationamount indicated on 'your most recent USOEAuthorization Letter for academic year 1976-77.

Line 26:Institution's Estimated Authorization Adjust-,ment

Report the difference between Lines 24 and 25 circlingthe plus for increase or the minus for decrease.

Lines 27, 28, 29: SERs SubmittedReport as indicated. The number reported on Line 29must be the same as the SER count in Section IIIB-Line 6.

Line 30:Sign as indicated.

1 rJB-23

Appendix C

This is an explanation of how the figures which ap-pear in the 1978-79 Payment and DisbursementSchedules were computed. We have written this inresponse to questions from people within the Bureauas well as in the'field regarding the methods by whichthe Payment Schedule amounts were computed. Pleasenote that this is for your information only,and workingwith the Payment Schedule does not require completeknowledgeof these prdtedures.

As you may know, maximum awards for the BasicGrant Program will increase from$1,400 to $1,600 forthe ;978-79 award -period. However,due to thenature of the-budget appropriation for 1978-79 and thelanguage of the authorizing legislation for theProgram, the amounts which appear in the PaymentSchedule were calculated in, a somewhat differfntmanner than in the 1977-78 award period. The pur-,pose of this memo is to explain the steps involved inthe calculation of 'those figures.

Full-funding

Under the law, full funding Basic Grant entitlementsare prescribed to be the lesser of:

1) $1,800 minus Expected Family Contributions(EFC);2) Half of Cost;3) Cost minus EFC. and,4) They may not be less than $200.

Less than Full-funding

Scheduled reduction. If appropriated funds are at alevsuch that full entitlements cannot be met, the lawfrovides a schedule of reductions. Under thisschedule, awards of the neediest students are reducedthe least. The maximum award at scheduled reductionwith an $1,800 ceiling is $1,350. _

Above scheduled reduction. Appropriated fundsmay be at a level that enables awards to be higher thanthose at scheduled reduction buts than the max-imum award, i.e., $1,351. to $1,799. In this case the'legislation states that an entitl;mtent which is reducedunder scheduled reduction provisions, should be in-

creased "in proportion to thy: degree to-which that en-titlement is unsatisfied."Below scheduled reduction. If the funding level islower than that reqUired for scheduled reduction, thenall awards are reduced by a constant factor from thosecalculated at scheduled reduction, This award level iscalled "pro-rata reduction."For the 1978-79 award period, the Basic GrantProgram is funded at an award leverwhere the max-imum is higher than at scheduled reduction, bin lessthan full funding: i.e., $;:600. The requirement that agiven sthedireU reduction awafd be increased "in pro-portion to the degree to which that entitlement is un-satisfied" results in the following calculation steps:

I. Calculate the full-funding entitlement.2. The full-funding award may not be less than

$200. Thus, the !bllowing conditions must bemet:

(a) entitlement of step No. 1 is not less than$200;

(h) need (COST- EFC) is not less than $200;(c) half of cost is not less than $200;(d) a full-funding part-time award, i.e.., the

least of steps (a) through (c) above multiplied by.50 or .75, is not less than $200. .

If any of these conditions are not met, theaward rs zero. This step prevents students fromreceiving awards at reduced funding who wouldnot be eligible at full-funding.

3. Reduce entitlement by multiplying the result ofstep No. 1 times the appropriate factor shown inthe following schedule of reductions;

FF Entitlement$1,000 or more$801 - $1,000

, $601 - MOO$600 or less

Reductiot, Factor.75.70.65.50

4. Calculate the "unsatisfied entitlement"'as stepNo. 1 minus step No. 3.

5. Multiply unsatisfied entitlement by .556.6. Add the results of step No. 5 to the scheduled

1 5 C-1

reduction entitlement determined in step No. 3.Compare the results of step No. 6 to half of thestudent's cost of attendance and the student's"need" (need equals cost minus EFC). The stu-dent's Scheduled Award is the lesser of thethree.

8. If appropriate, a part-time reduction is applied.9. If the award of step No. 7 or step No. 8 is less.

than $50, the student's award (Expected Disbur-sement) is zero.

The following are case examples that follow thisstep-by-step procedure through the award calculation.

It should be noted that the result- of the examplecalculation may differ slightly from the amounts thatappear on the 1978-79 Payment and DisbursementSchedules. This is because the awards in theSchedules are calculated on the basis of a series ofeligibility index and cost of education ranges, using themidpoints of each range. As a result, the worksheetaward may vary above ot below the Pay-ment/Disbursement Schedule award to a small degree,depending on the specific eligibility index and cost ofeducation used.

C-2

1978-79 Payment/Disbursement SchedulesWorksheet

Eligibility Index (EFC)Cost of Education =Enrollment Status =

1. Full-Funding (FF) Award:The lesser of:FF Entitlement ($1,800 minus EFC) =

Half of Cost =Need (Cost minus EFC)Reduce for part time, ifappropriateIf any cf the above is less than$200, Award at FF or Reduced-Fundingequals zero.

2. Reduced Entitlement:FF Entitlement multiplied byappropriate peccentage =

3. Unsatisfied Entitlement:FF Entitlement minus ReducedEntitlement

2

X

41 Unsatisfied Entitlement multiplied .556by adjustment factor =

5. Above-Reduced Entitlement:Reduced Entitlement plus result ofStep #4 =

6. Full-l'ime Reduced Award equals thelesser of:

Above-Reduced Entitlement (Step #5)Half of CostNeed

(the result of Step #6 would appearinthe full-time Payment Schedule)*

7. Reduce Full -Time Award for part time,if appropriate:(the result of Step #7 would appear inthe_part-time DisbursementSchedules)*

8. If result of Step #6 or Step #7 isless than $50, then student's ExpectedDisbursement equals zero: Expected Disbursement =

Reduction Percentages

a). $1,000 or more 75%b) $801 to $1,000 709/c) $601 to'$800 654d) $600 or 50%

Amounts may be slight( differentfrom the Payment and DisbursementSchedules because of the use ofcost and eligibility index rangesin the Schedules.

15 6'

Example 1

1978-79 Payment/Disbursement SchedulesWorksheet

Eligibiay Index (EFC)Cost of Education =Enrollment Status =

1. Full-Funding (FF) Award:The lesser of:FF Entitlement ($1,800 minus EFC)

Half of Cost =Need (Cost minus EFC) =Reduce for part time, ifappropriate =If any at the above rs less than$200, Award at FF or Reduced-Fundingequals zero.

2. Reduced Entitlement:FF Entitlement multiplied byappropriate percentage =

3. Unsatisfied Entitlement:FF Entitlement minus ReducedEntitlement =

4. Unsatisfied Entitlement multipliedby adjustment factor =

li800 o go

v200';000=..-=

.000 x I:0 = 1 SOO

I Soo x =

1180.0_ 1,35o

LI-50 x .556

5. Above-Reduced Entitlement:Reduced Entitlement plus result ofStep #11_

6. FullTime Reduced Award equals thelesser of:

AboveReduced Entitlement (Step #5) =Half of Cost =Need =

(the result of Stg`p #6 would appear inthe full-time Payment Schedule)*

7. Reduce Full-Time Award for part time,if appropriate:(the result of Step #7 Would appear inthe part-time DisbursementSchedules)*

8. If result of Step #6 or Step isless than $50, then student's ExpectedDisbursement equals -.ero:

Reduction Percentages

If entitlement is:a) $1,000 or more 75%b) $801 to $1,000 70%c) $601 to $800. 65%d) $600 or less 50%

Opp

11-50

25a

1,_35* 260 //boo

600.2.412120

461"212 000

I &cox 1. 1,600

IE booxpected Disbursement =

*Amounts may be slightly differentfrom the Payment and DisbursementSchedules because of t' I use ofcost and eligibility index rangesin the schedules.

15,9

t.

Example 2

1978-79 Payment/Disbursement SchedulesWorksheet

Eligibility Index (EFC) 'TOOCost of Education = _41_3.,241.111, _.Enrollment Status = __3/4,FTUne

1. Full-Funding (FF) Award:The lesser of:FF Entitlement ($1,800 minus EFC) =

Half of Cost =Need (Cost minus EFC) =Reduce for part time, ifappropriate =If any of the above is less than$200, Award at FF or'Reduced-Fundingequals zero.

2. Reduced Entitlement:FF Entitlement multiplied byappropriate percentage =

3. Unsatisfied Entitlement:FF Entitlement Minus ReducedEntitlement =

4. Unsatisfied Entitlement multipliedby adjustment factor =

5. Above-Reduced Entitlement:Reduced Entitlement plus result ofStep #4 =

6. Full-Time Reduced Award equals thelesser of:

Above-Reduced Entitlement (Step #5) =Half of Cost =Need =

(the result of Step #6 would appear inthe full-time-Payment Schedule)*

7. Reduce Full-Time Award for part time,if appropriate:(the result of Step #7 would appear inthe part-time Disbursement Schedules)*

8. If result '..)f Step #6 or Step #7 isless than $50, then student's ExpectedDisbursement equals zero:

Reduction Percentages

If entitlement is:a) $1,000 oY moreb) $801 to $1,000c) $601 to $800d) $600 or less

1A81)_o_ 1,5"oo =

3,200 1,500X .75 =

3oo x ,so =

300_ 150=1.50 x .556

150 + 83 =

.213 x .75

300t 600701)_2.25

4

/so

150

233

233les0-0-IrToo

_25"

175

Expected Disbursement 211 fig

75% Amounts may be slightly differentfrom the Payment and DisbursementSchedules because of the use ofcost and eligibility index rangesin the Schedules.

70%65%50%

160

Example 3

'1978-79 Payment/Disbursement SchedulesWorksheet

Eligibility Index (EFC)Cost of Education =Enrollment Status =

1. Full-Funding (FF) ,Award:The lesser of:FF Entitlement ($1,800 minus EFC) =

Half of Cost =Need (Cost minus EFC) =Reduce for part time, ifappropriate =If any of the above is less than$200, Award at FF or Reduced-Fundingequals zero.

2. Reduced Entitlement:FF Entitlement multiplied byappropriate percentage =

,)c.

3. Unsatisfied. Entitlement:FF Entitlement minus ReducedEntitlement -=

4. Unsatisfied Entitlement multipliedby adjustment factor =

5. Above-Reduced Entitlement:Reduced Entitlement plus result ofStep #4 =

6. Full-Time Reduced Award equals thelesser of:

Above-Reduced Entitlement (Step #5) =Half of Cost =Need =

(the result of Step #6 would appear inthe full-time Payment Schedule)*

7. Reduce Full-Time Award for part time,if appropriate:(the result of Step #7 would appear inthe part-time Disbursement Schedules)*

8. If result of Step #6 or Step #7 isless than $50, then student's ExpectedDisbursement equals zero:

Reduction Percentages

If entitlement is:a) $1,000 or moreb) $801 to $1,000 70%c) $601 to $800 65%d) $600 or less 50%,

100

litoo - 100 = ptiopVroo 2

__9200100 = voo

_100 x _1.6 =_00

Ox .75 I 27g

i 70o - Isan di-25

*25 x .556 =

I/2:75 + 236= Oris

x 1.0

1,526_

illoct 900

Expected Disbursement =4100

75% 'Amounts may be slightly differentfrom the Payment and DisbursementSchedulet because of the use ofcost and eligibility index rangesin the Schedules.

C-6

GI

162

DEPARTMENT OF HEALTH, ED4ATION, AND WELFARE

OFFICE OF EDUCATION

REGIONAL ADMINISTRATORS, STUDENT FINANCIAL ASSISTANCE

REGIONS I-X APRIL 1978

REGION I

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

Mr. William T. Logan, Jr.

Regional Administrator

Student Financial Assistance

Office of Education, DHEW

John F. Kennedy Federal Building

Boston, Massachusetts. 02203

REGION 11 Mr. Josue Diaz

New Jersey Regional Administrator

New York Student Financial Assistance

Puerto Rico Office of Education, DHEW

Virgin Islands 26 Federal Plaza

Panama Canal / New York, New York 10007

Zone

TEL: 617-223-7205

FTS: 8-223-7205REGION VI

Arkansas

Louisiana

New Mexico

Oklahoma

Texas

TEL: 212-264-4045

FTS: 8-264-4045-3952REGION VII

Iowa

Kansas

Missouri

Nebraska

Dr. Arthur Lee Hardwick

Regional Administrator (acting)

Student Financial Assistance

Office of Education, DHEW

1200 Main Tower Building

Dallas, Texas 75202

TEL:*214-767-Q59FTS: 8-729-4359

Mr. J. William Keifer, Jr,

Regional Administrator

Student Financial Assistance

Office of Education, D,HEW

601 East 12th Street

Kansas City, Missouri 64106

TEL: 4-374-5875FTS: 8-758-5875

REGION III

Delaware

District of

Columbia

Maryland

Pennsylvania

Virginia

West Virginia

Mr. Robert Smallwood

Regional Administrator

Student Financial Assistance

Office of Education, DHEW

Post Office Box 13116

3535 Market Street

Philadelphia, Pennsylvania 19101

TEL: 215-596-1018FTS: 8-596-1018

REGION IV Dr. Carmen L. Battaglia

Alabama Regional Administrator

Florida Student.Financial Assistance

Georgia Office of Education, DHEW

Kentucky 101 Marietta TowerThird FloorMississippi Atlanta, Georgia 30323

North Carolina

South Carolina

Tennessee

mommamommeme

TEL: 404-221-5008,5009

FTS: 8-242-5008,5009

REGION VIII

Colorado

Montana

Nortk Dakota

South Dakota

Utah

Wyoming

Mr, Irwin E. Kirk

Regional Administrator (acting)

Student Financial Assistance

Office of Education, DHEW

11037 Federal Office Building

19th and Stout Street

'Denver, Colorado 80294

REGION IX Mr. Charles F. Hampton

Arizona Regional Administrator

California Student Financial Assistance

Hawaii Office of Education, DHEW

Nevada 50 United Nations Plaza

American Samoa San Francisco, California 94102

Guam

Trust Territory of the

Pacific Islands

Wake Island

TEL: ,303-837-4128

FTS: 8-327-4128

TEL: 415-556-8382FTS: 8-556-8382

REGION V Mr. Francis J. Yanni

Illinois Regional Administrator

Indiana , Student Financial Assistance

Michigan Office of Education, DHEW

Minnesota 300 South Wacker Drive

Ohio Chicago, Illinois 60606Wisconsin

TEL: 312-3534127

FTS: 8-353-5127 REGION X Mr, W. Phillips Rockefeller TEL: 206-442-0434

Regional Administrator FTS: 8-399-0434AlaskaStudent. Financial Assistance

Oregon Office of Education, DHEW

Washington Arcade BuildingM.S. 1506

1321 Second Avenue

Seattle, Washington 98101

163

a

Appendix E

J

Directory Of State StudentAssistance, Agency OfficialsResponsible For Admiriistering StateStudent incentive Grant (SSIG)Funds

Officials arm designated' as follows: Senior AgencyOfficial (a), SSIG Program Official(s) (P), and FiscalOfficer (F). Central OE Officials are listed at the end ofthis birectory.

ALABAMADr. John F. Porter, Jr. (A) (F) Execu-ti.c Director'

Tom A. RoberVM, CoordinatorAlabama Studetit AssistanceProgram

. -

+tfr4LASKA':.Dr, Kerry D'Romesburg (A) Exeau-ti4e Director

Ms. Mary Ann Isturis (P)Student Fi-nancial Aid Officer

Bill Gillespie (F) Financial Officer

ARIZONA, .

(Vacant) (A) (T) Executive Dirocloi.~

Dr. Richard Erbschloe (P) AssistantDirect& for Programs and Ad-ministration

e IARKANSASDr. M. Olin Cook (A) Director

Dr. Tom Spencer '',(-P) AssociateDirector of Cominruriity College\

Robert McCormack (P) AssociateDirector for Finance

CALIFORNIAArthuz S. Marmaduke (A) Director

Ms.. Driitha (P)-DeputyDirector

Fred Brill (F)Adminfitrative ServiceOfficer

-COLORADODr. Lee Kerschner (A) ExecutiveDirector

Ms. Lindsa; Baldner (P) Director ofStudent Services

ADDRESSESAlabama Commission onHigher Education; One .6Coat Square, 221Montgomery, Alabama36104

T1:(205) 832-6555

Alaska Commission onPostsecondary Education;,Pouch F, State Officeduitaing Juneau, Alaska999811# Tel: (907) 465-2855

Arizona Gammission ggfprPostsecondary, Educati;1650.W. Alameda Drive,Room 115 Tempe,Arizona 85282-.Tel: (602) 271-3J OP

Department Of 'HigherEudcation; 1301 West Se-venth street Littje Rock,Arkansis 722014

Tel: (501)'.371-1441,Ext. 23

CtIlifornia Student Aidcommission; 1410- 5th-Street --Sacramento,California 95814

(916).445-0880

Colorado Commission onHigher Education; 1550Lincoln pStreet, Room 210,Denver, Colorado 80203

Tel: (303) 892-2723

Jack Armstrong (F) Director, Busi-ness Services

CONNECTICUTDr. Samuel Gould (A) Chancellor ofHigher Education Pro Team

Romeo Bern:er (P; Associate Direc-tor for Student, Financial Assistance

,Dr. Robert Bokelman (F) FiscalOfficer

DELAWAREKenneth C. Madden (A) StateSuperintendent

Harry M. Peyser (P) ExecutiveSecretary Higher Education Scholar-ship Council

lohtt Ryan (F) Assistant Superinten-dent Administrative Services Branch

DISTRICT OF COLUMBIAAlbert P. Russo (A) Director

(I) Ms. Jacqueline Johnson (P)Assiitant Director for State AgencyAffairs

,:'(2) Shepard Cohen, Controller (F)Office of the Controller

'FLORIDARalph, b. Turlington (a) Commis.sinner "`

..

Donald Smading (p) Program Direc-tor

Ted J. Meredith (F) Department ofCom er Student Financial Aid

6

,

Board of Higher Educa-tion; 340 Capitol Avenue,P.O. Box 1320 Hartford,Connecticut 06101

Tel: (203) 566-3910

Department of Public In-struction John 0, ToWn-send Building Dover,Delaware 19901

Tel:(303).678-4620

Department of HumatiResources Government ofthe District of Columbia;1305 E. Street, N.W.,Room 420 Washington,D.C. 20004

Tel: (202) 629-5443

(1) Department of HumanResources Government ofthe District of Columbia;1329 E Street, N.W.; Suite1023 Washington, D.C.2000:4

(2). Department of HumanResources GovernMent ofthe District of Columbia;801 North Capitol Street,N.W., Room 513Washington, D.C, 20002...

Tel: (202) 629-3216

Department of EducationState of Florida; 563 KnottBuilding Tallahassee,Florida 32304

Tel: (904) 4 87-1800

E-I.t,

GEORGIADr. Donald E. Payton (A) (T) Execu-tive Director

Tel: (404) 393 -7!08

R6bert R. Mc Cants; DirectorDivision of Student Services

Tel: (404) 393-7253

Ralph D. Roberts (F) Director ofFiscal Affairs

Tel: (404) 393 -724 I

(P)

HAWAII*Dr. Fujio Matsuda (A) Pr:esident

Nils Ueki (P) Administrative Officer

Kenji Sumida (F) Director of Fi-nance

IDAHOMilton Snits" (A) ExecutiveDirector

Ms. Delia M. McManus ( P)Scholar-ship Office

Stephen Keto (F) Fiscal Officer

Or. Jos;ph D. Boyd (A) ExecutiveVirector

James A. Eanes (P) Director of State'Student Grant Program

Ralph Godzick: (F) Assistant Executive Director Fiscal Affairs and Ad-ministration

William L. Hilton Director Infor-mation Services

INDIANAJames E. SuLday (a) (P) ActingExecutive Secretary

IOWAMs. Willis Ann Wolff (A) ExecutiveDirector

Gary W. Nichols (P) Director Stu-dent Aid Programs

KANSASDr. John Conrad (A) ExecutiveDirector

Gerald R. Bergen (P) StudentAssistance Officer

Phillip Arnold (F) Budget Officer

Georgia Higher EducationAssistance Authority; 9

LaVista Perimeter Park,Suite 110 Tucker, Georgia30084

State PostsecondaryEducation 'CommissionUniversity of Hawaii, 210Bachman Hall; 2444 DoleStreet Honolulu, Hawaii96822

Tel: (808) 948-7487

Office of State Board ofEducation Len B. JordanOffice Building, Room307; 650 West Staie StreetBoise, Idaho 83720

Tel: (208) 384-2270

Illinois State ScholarshipCommission; 102 WilmotRoad Deerfield:. Illinois

160015

Tel: (321) 945-7040945-1500, Ext. 201

Illinois State ScholarshipCommission; 203 NorthWabash Avenue, Room2118 Chicago, Illinois60601

Tel: (312) 793-3745

Indiana State StudentAssistance CommissionEDP Building, 2nd Floor;219 North Senate AvenueIndianapolis, Indiana46204

Tel: (317) 633-5445

Iowa Higher EducationFacilities Commission;201 Jewette Building 9thand Grant Avenue DesMonies, Iowa 50309

Tel: (515) 281-3501

Board of Regents, State ofKansas Merchants national Bank Tower, Suite1416 Topeka, Kansas66612

Tel: (913) 296-4827

Not participating to the SSI. AI Pr gram for IV 1401

E-2

K ENTUCK IPaul P. Borden (A) (F) ExecutiveDirector

Ms. Marleen Ingle (P) Deputy Direc-tor of Grant Program

Ms. Brenda Fulkerson (T)Coordina-tor for Student Financial Aid

LOUISIANARichard W. Petrie (A) (P) Execu-tive Director

Ms. Billie R. Ritter (F) Fiscal Officer

MAINEH. Sawin Millets, Jr. (A) Commis-sioner

Harold M. Grodinsky (P) Coot-dinatyr Student Aid Programs

Phillip Dumont (F) Director of Fi-nance

Af.4 R YEA NDDr. H. Kenneth Shook (A) (P)Executive Director

Ms. Patricia A. Schmidt (F) FiscalAssociate II

MASSACHUSETTS'Leroy Keith (A) Chancellor

Graham R. Taylor (P) (F) ViceChancellor for Student Affairs

MICHIGA NDr. John W. Porter (A) Superinten-dent of Pubiic Instruction

Ronald 1, Jursa, Director StudentFinancial Assistance Services

Aaron Hall (P) Supervisor ofScholarship and Tuition GrantProgram

Robert Mc(err (F) Associate Super-visor for "Business and Finance

,IHNNESOiADr. Clyde Ingle (A) Executive Direc-tor

Margaret Dean (P) Coordinatorof State Scholarship and GrantPrograms

Arlon Haupert, Director (F) Ad-ministrative Services

ISSISSIPPI*James Harold McMinn (A) (P) Ex-ecutive Director

Ms. Damian Mercier (F) Manager.Fiscal Affairs

Kentucky Higher Educa-tion Assistance Authority;691 Teton Trail Frankfurt,Kentucky 40601

Tel: (505) 564-7990, Ext. 26

Louisiana Higher Educa-tion Assistance Commis-sion; P.O. Box 44 12 7.Capitol Station. BatonRouge, Louisiana 70804

Tel: (504) 389.5491

State Department ofEducation and CulturalServices State Departmentof Education BuildingAugusta, Maine 04333

Tel: (207) 289-2541

State Scholarship Board;2100 Gui!Jord Avenue,Room 206 Baltimore,Maryland 21218

Tel: (301) 383-4941

Massachusetts Board ofHigher Education ParkSquare Building, Room632; 31 St. James AvenueBoston, Massachusetts02116

Tel: (617) 727-5366

Michigan Depatment ofEducation; P.O. Box30008 Lansing, Michigan48909

Tel: (517) 373-3394

Minnesota Higher Educa-tion Coordinating BoardCapital Square Building,Suite 901; 55() CedarStreet St. Paul, Minnesota55101

Tel: (612) 296 -5715

Governor's Office of JohDevelopment and Train-ing; P.O. Box 4300Jackson, Mississippi39216

Tel. but ) 981 2635

.VIISSOURIDr. J. Bruce Robertson (A) Commis -sione r

Richard C. Stillwagon (P) Direc-tor of Student Aid Programs

T. Michael Elliott (F) Assistant Com-missioner for Budget

Dr. U.wrence K. Pettit (A) Commis-siorxr of Higher Education

William J. Lannan (P) Directorof Special Projects and CommunityCollege Coordinator

John Noble, Jr. (F) Financial Deputy

NEBRASKADr. William S. Fuller (A) (P) Execu-tive Director

Ms. Katheryn Hayes (T) (F) Ad-ministrative Assistant

NEVADADr. Donald H. Baep ler (A) (F) Act-ing Ahancellor

Ms. Mary Lou Moser (P) Budgetand Research Analyst

NEW I1,4 NIPSHIRDr. James Busselle (A) ExecutiveDirector

Ronald Wilson (P) (F) State Finan-cial Assistance Coordinator

NEW JERSEYDr. T. Edward Hollander (A) Chan-cellor

Dr. Haskell Rhett (P) AssistantChancellor for Student Assistanceand Special Projects

George Cole (F) Director of Ad-ministrations

NEW MEXICODr. Robert A. Huff (A) ExecutiveSecretary

Thomas E. Wilson (P) AssistantPostsecondary Coordinator

Ms. Lou Holmes (F) Fiscal Officer

NEW YORKM%.. Eileen Dickinson (A) President

Michael Cruskie (P) Vice Presi-

dent Research and Policy Analysis

Peter Grant (F) Supervisor of HigherEducation Services, Corporation Ac-count,

Missouri Department ofHigher Education; 1130East Elm Jefferson City,

4 Missouri 65101Tel: (314) 751-3940

Office of the Commis-sioner of Higher Educa-tion; 33 Last ChanceGulch Helena, Montana59601

Tel: (406) 449-302-1

Nebraska CoordinatingCommission forPostsecodnary Education;301 Centennial Mall SouthP.O. Box 95005 Lincoln,Nebraska 68509

Tel: (402) 471-3847

University of NevadaSystem; 504 MarshAvenue Reno, Nevada89508

Tel: (702)784-4901

Postsecondary EducationCommission; 66 SouthStreet Concord, NewHampshire 03301

Tel: (603) 271-2555

Department of HigherEducation; 225 West StateStreet Trenton, New Jersey08625

Tel: (669) 292-8770

(I) Department of HigherEducation state Scholar-ship Commission 1474Prospect Street Trenton,New Jersey 08625

Tel: (609) 292 -4646

Board of Educational Fi-nance Legislative-Ekecu-five Building, Room 201Santa Fe, New Mexico87503

Tel: (505) 827-2115

New York State HigherEducation Services Cor-poration Tower Building,28th Floor Empire StatePlace Albany, New York12255

fel: (518) 474-4898

Tel: (518)474-3712

Lorenz Worden (F) Director ofHigher. Award and Loan Program

Tel: (518) 474-3712

NORTH CAROLINAStan C. Broadway (A) (P) ExecutiveDirector

No Fiscal Officer Designated

NORTH DAKOTAKenneth Raschke (A) Commissioner

Clark J. Wold (P) (T) Director NorthDakota Student Financial AssistanceAgency

Floyd B. Case (F) Director of FiscalAffairs North Dakota Student Finan-cial Assistance Agency

OHIODr. James A. Norton (A) Chancellor

Charles W. Seward, III (Pl(T) Direc-tor, Student Assistance

Henry Whitcomb (F) Director of Fi-nancial Management

OKLAHOMADr. E.T. Dunlap (A) Chancellor

John Hopkins (P) Tuition Aid GrantCoordinator

Walter Williams (F) Loan Officer

OREGONJeffrey M. Lee (A) Executive Direc-tor

Gary Weeks (P) Deputy Director

Ms. Elizabeth Hands (F) SeniorBudget Analyst of Budget Depart-ment

PENNSYLVANIAKenneth R. Rceher (A) ExecutiveDirector

Earl R. Fielder, Chief (P) Researchand Plans

Samuel Johnson Deptay DirectorTel: (717) 787-1910

Dr. J. Edward Rican, Chief (F) Ad-ministrative Serve ,-s

RHODE ISLANDThomas C. Schmidt (A) Commis-sioner of Education

Don Galamage (F) Deputy AssistantCommissioner for Budget

(I) John Madigan (P) (T) Coordina-tor

1f;

North Carotin StateEducation AssistanceAuthority Box 2688,University Square West'Chapel Hill, NorthCarolina 27514

Tel: (919) 929-2136

3oard of Higher Educa-tion 10th Floor, StateCapitol Bismarck, NorthDakota 58505

Tel: (701) 224-2960

Ohio Board of Regents; 30East Board Street, 36thFloor Columbus, Ohio43215

Tel: (614) 466-7420

OklabOma State Regentsfor Higher Education; 500Education Building StateCapitol ComplexOklahoma City, Oklahoma73105

Tel: (405) 521-2444',Ext. 37

Oregon State ScholarshipCommission; 1445Willamette Street Eugene,Oregon 97401

Tel: (503) 686-4166

Pennsylvania HigherEducation AssistanceAgency Towne HouseHarrisburg, Pennsylvania17102

Tel: (717) 787-1937

Rhode Island Departmentof Education; 199 Pro-menade Street Providence,Rhode Island 02908

(I) Rhode Island Depart-ment of Education Office

E-3

SOUTH CAROLINAR. Laine Ligon (A) (P) Directorof Tutition Grant Agency

Grady L. Patterson, Jr. (F) StateTreasurer of South Carolina

Tel: (803) 758-7695

SOUTH DAKOTADr. Ronald Reed (A) (P) Secretary

Ms. Addle Hayes (F.) AssistantSecretary for Finance

TENNESSEEKenneth Barber (A) (T) ExecutiveDirector

Howard T. Wall (P) Grant Ad-ministrator

Ms. Emma Willson (f) GrantManagement Officer

TEXASDr. Kenneth H. Ashworth (A) Com-missioner Coordinating Board

Mack C. Adams, Head (P) Divisionof Student Services

Ms. Jane Innis (P) Director of GrantPrograms

James McWhorter, Head (F) Divi-sion of Administration

UTAHDr. Terre! H. Bell (A) Commissioner

Harden Eyring (P) AssistantCommissioner Director of Planning

Dr. Howard Nielson (F) AssociateCommissioner of Finance

VERMONTRonald J. Iverson (A) ExecutiveDirector

Don Vickers Director of Administra-tion

Don Bernier (P) Director Grant andScholarship Division

Herb Kingsland (F) Controller

VIRGINIADr. Gordon K. Davies (A) (F) Direc-tor

Barry M. Dorsey (P) CoordinatorFederal Programs and Planning Ad-ministration

Dr. Sharon Bob (P) Associate Coor-dinator Federal Programs and P1an-

E-4

of Student AssistanceRoger Williams Building,Room 202 22 Hayes StreetProvidence, Rhode Island02908

Tel: (401) 277-2050

South Carolina TuitionGrants Agency; 411Keenan Building Colum-bia, South Carolina 29201

Tel: (803) 758-7070

Department of Educationand Cultural Affairs StateCapitol, Office of theSecretary Pierre, SouthDakota 57501

Tel: (605) 224-3134

Tennessee Student Assis-tance Coporation; 707Main Street Nashville,Tennessee 37206

Tel: (615)741-1346

Texas College and Univer-sity System; P.O. Box12788m Capitol StationAustin, Texas 78711

Tel: (512) 475-4147

Utah System of HigherEducation; 807 East SouthTemple, Suite 204 SaltLake City, Utah 84111

Tel: (801) 533-5617

Vermont Student Assis-tance Corporation; 5Burlington SquareBurlington, Vermont05401 ,

Tel: (802) 658-4530

State Council of HigherEducation for Virginia;700 Fidelity Building 9thand Maine Streets Rich-mond, Virginia 23219

Tel: (804) 786-3951

ning AdministrationTel: (804) 786-8654

WASHINGTONPatrick Callan (A) Executive Coor-dinator

Carl Donovan (P) Deputy Coordina-tor

Ms. Sharyn Ward (F) AdministrativeOfficer

WEST VIRGINIADr. Ben L. Morton (A) Chancellor

John F. Thralls (P) Director of Stu-dent Services

Tel: (304) 348-0111

Ms. Randi Brooks (F) AccountantBookkeeper

Tel: (304) 348-2101

WISCONSINJames A. Jung (A) Executive Secre-tary

---Richard H. Johnston (P) Ad-ministrator Division of Student Sup-port

Richard S. Severson (F) Data Pro-cessing

WYOMING(Vacant) (A) (P) (T) Executive Direc-tor

No Fiscal Officer Designated

AMERICAN SAMOA*Mrs. Mere T. Betham (A) Director ofEducation'

Sill M. AtuataSi (P) Program Official

Lealofi Uiagalelei (F) Fiscal Officer

GUAM*Dr. Rosa Carter (A) (P) President

Cesar R. Pereyra (F) Vice PresidentBusiness Affairs

PUERTO RICOLuis E. Gonzalez-Vales (A) Ex-ecutive Secretary

Eduardo Bermudez-Davila (P) Coor-dinator, Fiancial Aid

Andres Medina Pena (F) Acting Fi-nance Officer

TRUST TERRITORY* and COM-MONWEALTH OF THE NORTII-ERN MARIANA ISLANDS*David Ramarui (A) Director ofEducation

Harold W, Crouch (P) FiscI/Federal

Council on PostsecondaryEducation; 908 East 5thStreet Olympia,Washington 98504

Tel: (206) 753-3571

West Vriginia Board ofRegents; 950 KanawhaBoulevard EastCharleston, West Virginia253'01

Tel: (304) 348-3101

State of Wisconsin HigherEducational. Aids Board;150 East Gilman Madison,Wisconsin 53702

Tel: (608) 266-1095

Wyoming Higher Educa-tion Council' 1720 CareyAvenue, Boyd BuildingCheyenne, Whyoming82002

Tel: (307) 777-7763

Department of EducationPago Pago, AmericamSamoa 96799

Tel: (Overseas) 63 -5237

University of Guam Boardof Regents; P.O. Box EK''igana, Guam 96910

Tel: (734) 2177

Council on Higher Educa-tion; Box F, U.P.R. StationRio Piedras, Puerto Rico00931

Tel: (809) 765-6590, Ext. 26G

Headquarters, Departmentof Education Trust Ter-ritory of the Pacific IslandsSaipan, Mariana Islands

Program Coordinator

Terry Edvalson (T).

Herman 91,errero (F) Shop andStudt. :.ervices Officer

VIRGIN ISLANDSDr. Gwendolyn E. Kean (A) Com-missioner

(I) Dr. Rehenia A. Gabriel (P)Director Pupil Personnel Services

Ms.. Shirley D.' Richardson (F)Departmental Business Manager

96950 Central SSIG Staff - Office of EducationTel: (Saipan) 9780

Virgin Islands Departmentof Education CharlotteAmalie St Thomas, VirginIslands 00801

(1) Virgin Islands Depart-ment of Education; P.O.Box 630 St. Thomas,Virgin Islands 00801

Tel: (809) 774-0100,Ext. 271

Not participating in the SSFAT Program for FY 1977

Dr. Richard L. McVityDirectorState Student Incentive Grant Program7th and D Streets, S.W., Room 3674 - ROB No. 3Bureau of Student Financial AssistanceU.S. Office of EducationWashington, D.C. 20202

Program Officers:John FiniwickLanora SmithTelephone: (2)2) 245-2201-2-3 and 245-2354

Richard M. MillardDirector of Postsecondary

EducationMs. Nancy M, BerveAssociate DirectorEducation Commission of the States300 Lincoln Tower Building'1860 Lincoln StreetDenver, Colorado 80203

Tel: (303) 893-5200

E-5

Appendix F.

Sources Of Information on the GuarmiteedStudent Loan Program

AlabamaActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region IV,101 Marietta Tower Third Floor ,

Atlanta, Georgia 30323(404) 221-5008

AlaskaDirectorAlaska Commission on PostsecondaryAlaska State Education DepartmentPouch F, State Office Building

Juneau,Ataska 9g8111--

Arizona (See California)

ArkansasStudent Loan GuaranteeFoundation of ArkansasSuite 515, 1515-West 7th StreetLittle Rock, Arkansas 72202(501) 371-2634

CaliforniaActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region IX50 United Nations PlazaSan Francisco, California 94102(415) 556-1630

ColoradoActing Regional. AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region VIIIFederal Office Building,.Box 360819th and Stout StreetsDenver, Colorado 80294(303) 837-4128

ConnecticutExecutive DirectorConnecticut Student Loan Foundation

(15 Pratt Streetsartford, Connecticut 0610303) 547-1510

DelawareDirector

Delaware Higher Education Loan Programc/o Brandywine College.Post Office Box 7139Wilmington, Delaware 19803(302) 478-3000 Ext. 34

District of ColumbiaDirectorD.C. Student Loan Insurance Program1329 E Street, N.W., Room 1005 .

Washington, D.C. 20004(202) 638-1063 or 1020

Florida (See Alabama)

Georgia_ _ Executive Director

Georgia Higher Education Assistance Corporation9 LaVista Perimeter Park2187 Northlake ParkwayTucker, Georgia 30084(404) 393-7241

161J

Hawaii (See California)

Idaho (See Washington)

IllinoisAdministrative DirectorIllinois Guaranteed Loan Program102 Wilmot RoadDeerfield, Illinois 60015(312) 945-Vu40

IndianaActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region V300 South Wacker DriveChicago, Illinois 60606(312) 353-5127

Iowa (See Missouri)

KansasDirectorHigher Education Assistance Foundation51 Corporate Woods9393 West 110th Street, Suite 405Overland Park, Kansas 66210(913) 648-4255

Kentucky (See Alabama)

F-1

LouisianaExecutive DirectorLouisiana Higher Education Assistance CommissionPost Office Box 44127, Capitol StationBatoo Rouge, Louisiana 70804(504)389 -5491

Louisiana (Vocational Students AttendingState Schools)United Student Aid Funds, Inc.200 East 42nd StreetNew York, New York 10017(212) 661-0900

Out of

MaineFederal State CoordinatorState Department of Education & Cultural ServicesAugusta, Maine 04330(207) 289-2475

Maryland____F_xecutive-Director

Maryland Higher Education Loan Corporation2100 Guilford AvenueBaltimore, Maryland 21218(301) 383-4150

MassachusettsPresidentMassachusetts Higher Education Assistance Corpora-tion

' 1010 Park Square BuildingBoston,;Massachusetts 02116(617) 426-9434

MichiganDirectorMichigan Higher Education Assistance Authority309 North Washington AvenueLansing, Michigan 48902(517) 373-0760

MinnesotaDirectorMinnesota Higher Education Assistance Foundation1100 Northwestern Bank Building55 East Fifth StreetSt. Paul, Minnesota 55101(612) 227-7661

Mississippi (See Alabama)

MissouriActing Regional AdministratorStudent, Financial AssistanceOffice of Education, DHEW, Region VII601 East 12th StreetKansas City, Missouri 64106(816) 374-5875

F-2

Montana (See Colorado)

Nebraska (See Missouri)

NevadaSuperintendent of Public InstructionNevada State Department of EducationCarson City, Nevada 78901(702) 885-5700 Ext. 270

New HampshireEiecutive Dir forNew Hampshire Higher Education Assistance Foun-dation143 North Main StreetConcord, New Hampshire 03301(603) 225-6612

New Jersey

New Jersey Higher Education Assistance Authority1474 Prospect Street, Box 1417Trenton, New Jersey 08615(609) 292-3906

New Mexico (See Texas)

New. York'PresidentNew York Higher Education Services CorporationTower Building Empire State PlazaAlbany, New York 12255(518) 474-5592

North CarolinaExecutive DirectorNorth Carolina State Education Assistance AuthorityPost Office Box 2688Chapel Hill, North Carolina 27514(919) 929-2136 or 966-5236

North Dakota (See Colorado)

OhioExecutive DirectorOhio Student Loan Commission50 West Broad Street, 8th FloorColumbus, Ohio 43215(614) 466-8716

OklahomaChancelloiOklahoma State Regents for Higher Education500 Education Building_Slate _Capitol_ComplexOklahoma City, Oklahoma 73105(405) 521-2444

OregonExecutive DirectorOregon State Scholarship Commission1445 Williamette StreetEugene, Oregon 97401(503) 686-4166

PennsylvaniaDirectorPennsylvania, Higher Education Assistance Agen_y660 Boas Street, Towne HouseHarrisburg, Pennsylvania 17102(717) 787-1932

Puerto RicoActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region II26 Federal Plaza, Suite 406New York, New York 10007(21'i) 264-4045

Rhode IslandExecutive DirectorRhode Island Higher Education Assistance Corpora-tion187 Westminster MallRoom 414, Box 579Providence, R1,ocic Isiand 02901(401) 421-4964 Ext. 1834

South Carolina. (See Alabama)

South Dakota (See Colorado)

TennesseeExecutive DirectorTennessee Student Assistance Corporation707 Main Strr etNashville, Tennessee 37206(615) 7' 4 1 - 1 3 4 6

TexasActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region1200 Main Tower BuildingDallas, Texas 75202(214) 655-3811

VermontDirectorVermont Student Assistance Corporation5 Burlington Square, 4th FlootBurlington, Vermont 05401(802) 658-4530

VirginiaExecutive DirectorVirginia State Education Assistance AuthoritySuite 311, Professional Building501 East Franklin StreetRichmond, Virginia 23219(804) 786-2035

WashingtonActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region XArcade Building M.S. 1511

_1321 Second AvenueSeattle, Washington 98101(206) 442-0460

West VirginiaActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW Region, IIIPost Office Box 137163535 Market StreetPhiladelphia, Pennsylvania 19101(215) 596-1027

WisconsinDirectorWisconsin Higher Education Corporation115 West Wilson StreetState Office BuildingMadison, Wisconsin 53702(608) 266-0887

Wyoming (See Colorado)

American Samoa (See California)

VI Guam (See California)

Trust Territory (See California)

UtahDirectorUtah Higher Education Assistance Authority807 East South Temple, Suite 301Salt Lake City, Utah 84103(801) 533-5617

Virgin Isla:idsActing Regional AdministratorStudent Financial AssistanceOffice of Education, DHEW, Region II26 Federal Plaza, Suite 406New York, New York 10007(212) 264-4045

Appendix G

Self-Evaluation Checklist

The following self-evaluation checklist is anunofficial version of the revised program reviewchecklist. It is included in this Handbook to provide ameans for schools to evaluate their own administrationof Federal financial aid programs, and as a means ofinforming schools of the kinds of questions that wouldbe asked during an actual program review.

I. General Program Administration

2.

3.

a. What is the level and composition (profes-sional - clerical) of staffing in the financial ,idoffice?*b. During what hours is tht financial aid officeopen-to-students?*c. Has the institution designated an official whohas the responsibility for coordinat;on of thevarious Federal programs among themselves alsoFederal programs with the non-Federalprograms?d. Does the FAO (staff) regularly attend profes-sional conferences and workshops?

a. Is there a financial aid committee?b. If so, what is the composition of that commit-tee?

*a. Are major functional responsibilities(Piogram/Fiscal) .divided so that a single in-

,dividual does not bear sole responsibility fOr theentire administration of the programs?*b. Are the functions of authorizing funds anddisbursing funds divided in such a fashion that noone office has responsibility for both functionswith respect to any particular student aided?c. Is there a systematic method by which recipientlists, withdrawal/graduation lists, and any adjust-ments are furnished to the fiscal office?

*4. Does_ the institution have written priorities andprocedures (including appeals) established inselecting students to receive aid?

5: Are adMinistrative files current and do the filescontain:a. Eligibility Letter(s) frotp Division ofEligibilityand Agency Evaluation (DEAF)?b. Terms of Agreement and extensions for eachprogram? Is the inOtution aware of the expirationdate of each Agreement or extension?c. Program Allocation Letters?d. Program reports (Fisc-Ops Report, DefaultReport, Progress Reports, Student Validation

"Represent" questions which are linked h, statuairy tlir regulatory requirements.

Report, Student Confirmation Reports, DFAFSQuarterly Report)?

e. NDSL Interim Regs. (11/24/76) (8/24/78)SEOG Interim Regs. (11124/76) (8/24/78)CWS Regs. (09/01/76) (CWS NPRM 9/28/77)

(8/24/78)BEOG Regs. (08/10/76) (06/11/76) (04/04/75)

(12/02/74) (11/06/74) BEOGNPRM (6/15/78)

GSL Regs. +2/20/75) (1/29/76) (8/14/75) (GSLNPRM 5/5/78)

Consumer Info. Regs. (12/i/77)LS&T Regs. (12/23/77)

f. Notification of review action on institution'sapplications and appeals?g. NDSL List of designated low-income schoolspublish-id-In-We Federal Register?h. Current Student Financial Aid and BEOGhandbooks?i. NACUBO manual?j. NDSL collections manual?k. DFAFS manual?1. DFAFS Quarterly Reports?m. HEW Audit Guide?

6. Are the following forms/documents available forexamination?

a. Financial Aid Brochureb....Financial Aid Applicationc. Catalogd. Student Master Record Carde. Affidavit of non-supportf. Affidavit of Educational Purposeg. NDSL Note (new), Disclosure Statement, andRepayment Agreementh. Notification and Acceptance Formsi. CWS Time Sheet/Recordsj. Manual of Institutional Financial Aid Voliciesk. Enrollment Agreement1. Written Refund Policym. Current Student Budget el Supporting Datan. Evidence of Payment

*7. In non-proprietary institutions, does the admis-sions policy allow for admitting students whohave not completed high school or a GED, butwho are beyond the age of compulsory atten-dance? 1

7a1 In the case of proprietary schools, does the in-stitution admit only students possessing a highschool diploma or GED certificate.

8. a. What is the institution's definition of anenrolled student?

b. Is there a systematic method by which theenrollment status of the student is verifiedbefore disbursement is made?

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9. What is the institution's normal academic year?*10. How does the institution define satisfactory

progress?*1 i. Is there a systematic method by which the finan-

cial aid office verifies the status of a student ingood standing?

12. How does the institution define full-time, three-quarter time and half-time students?

I 3, a. Is there a systematic method by which thestudent financial .aid office (and lender whereappropriate) is notified when a student with-draws or drops courses?b. What method does the institution use todetermine a withdrawal date when a studentdoes not formally withdraw?c. What is the dropout rate at the institution?d. Is the NDSL collections person notifiedwhen a student withdraws?e. What procedures exist for assuring notifica-tion to lenders of GSL recipients' cessation of at

-least- half:time-studies?* 14. a. Does the institution have a written refund

policy?b. Is this policy systematically applied?c. How does the institution proportion the re-funds to the various program accounts?

* 15. Which institutional official(s) notarizes thefollowing:a. GK. applications?b. Affidavits of Educational Purpose?

* 16. What needs analysis system is used?

Consumer Information Requirements

For schools receiving an administrative costallowance, does the information" prepared fordissemination to students include descriptionsof:a. Programs authorized under Title IV?b. Programs administered by the State in whichthe institution is located and the institution'sown programs?c. Procedures and forms for applying for aid,student eligibility requirements, recipient selec-tion criteria, and eligibility criteria for the aboveprograms?d. Rights and responsibilities of studentsreceiving aid under the Federal Financial AidPrograms?

*2. For schools offering vocational courses ofstudy, is the appropriate information includedon employment and salaries and is the studentdetermined to be able to benefit from suchstudy?

3. Is information provided to prospective GSLstudents as to complete dc.,cription of programsand facilities offered?

G-2

III. Analysis of Student.Financial AidFiles

Does each student file take into considerationthe amount of BEOG a student is entitled toreceive, whether that student has applied for aBEOG or not, when making an award of cam-pus based funds?

2. Does each student folder contain the followingdocumentation for each year of award:*a. Financial aid application if appropriate?*b. Citizenship or resident status?*c. Information on any prior aid received atanother institution?*d. Valid SER (institution copy)?*e. GSL Application, if appropriate?*f. Completed parent's/student's financial,statement?*g. Computed need analysis using the system(s)approved by the institution in the Terms ofAgreement?*b. Clear data which show an accurate bit, betfor the student?*i. Clear data which readily permit a deter-mination of resources and student's need?*j. Written documentation when changes havebeen made in the family resources and/or thestudent's computed need (preferably signed anddated by source of information?*k. An award letter?

(1) Dated?(2) Listing all campus-based and other ap-plicable aid awarded? (BEOG' eligibilityconsidered even if student has not applied?)(3) Signed by the Financial Aid Officer?(4) Award period indicated?

*1. A dated acceptance of award signed by thestudent?*m. A notarized Affidavit of Educational Pur-pose?*n: Appropriate certification or documentationof student's indpendence?

3. Is there evidence that students' awards arepackages so that:*a. No student's total aid awarded exceedsneed?*b. NDSL awards do not exceed cumulativelimits?*c. No SEOG is less than $200 or greater than$1,500 for an academic year?*d. SEOG awards do not exceed cumulativelimits?*e. A student receiving an SEOG award meetsthe definition of "exceptional financial need(family contribution + 50% of need)?"*f. An SEOG award is apporpriately matchedwith other eligible aid?

SEOG awards are proportionately reduced

1

for periods less than an academic year?4. If an adjustment should be necessary in the

award package is there evidence that the institu-tion makes appropriate adjustments to the fi-nancial aid package within the term or theaward year involved?

5. Summer CWS earnings:.*a. If student works on CWS during a summerperiod, or other period during which she/he isnot enrolled, are costs incident to employmentconsidered to be 20 percent of the student'sgross earnings or $300, whichever is less?*b. Is there written documentation in-the stu-dent's file if costs incident .to employment ex-teed the lesser of $300 or 20 percent?*c. Do such earnings not exceed the lesser of$600 or 40 percent in all cases?

*6. Does the institution's Basic Grant cost of educa-tion reflect the allowable expenses?

*7. Was the appropriate payment schedule or dis-bursement schedule used by the institution(enrollment status and current year) for theperiod involved?

* 8. Is there a valid Student Eligibility Report (SER)secured prior to disbursement of BEOG funds?

*9. Are the SERs properly completed, dated andsigned by the institutional representative?

* 10. Were BEOG awards calculated correctly?*11. Were proportional reductions of Basic Grants

made where required for part-time students?*12. When the student's acadeinic year crosses two

fiscal year's, have two SERs been secured andproper prorations been made?

* 13. Are appropriate records maintained regardingGSL students' academic standing and coursestaken?

14. For student withdrawals, is there evidence ofproper applications of the appropriate refundpolicy?

IV. Programmatic Section

Are written job descriptions avaifible on theCWS positions?

*2. Are job categories appropriate, i.e., are re-ligious, political and displacement provisionssatisfied?Does off campus employment meet the public in-terest test?

4. Off campus CWS agreements:*a. Is there a current written agreement on filefor each off -campus agency participating in theCWS program?*b' Are agreements properly executed withonly private non-profit or public institutions?*c. If the institution is proprietary, is it clearthat all CWS employment is Mth off-campus

"i

employers which satisfy the conditions above?*d. Are agreements dated?*e. Do the agreements follow the model as setforth in Appendix B of the CWS regulations?

5. Minimum wage regulations: -*a. Is the institution paying the currentminimum, wage to CWS students?*b. If less, and if the instiution is a private in-stitution, does it have current approval from theDepartment of Labor, Wage and Hour Divi-sion, to pay subminimum wages?*c. If less, and if the institution is a public in-stitution, (1.) does it have approval which waseffective on June 24, 1976, from the Wage andHour Division to pay subminimum wages eventhough that division no longer makes this deter-mination for public institutions, or (2) has theinstitution requested approval from the Com-missioner to pay subminimum wages?Payroll regulations:*a. Is there a system to limit the earnings of in-dividual students to the amount awarded?*b. Under the system are the earnings posted ona current basis?

7. Restrictions on CWS earnings:*a. Do all CWS students work not more than anaverage of 20 hours per week (excluding sum-mer 40-hour week CWS employment)?*b. If some CWS students are working in. excessof an average of 20 hours per week, but notmore than 40 hours per week, is there writtendocumentation that the student's financial needremains so great it cannot be met from a job of20 hours per week?*c. If students are employed beyond the 40hour limitation, are the excess hours paid solelyfrom other than Federal CWS funds?*d. Are such funds taken into account in deter-mining the resources of that student?*e. Are CWS wages reasonable and appropri-ate in light of local circumstances and type ofemployment?*f. If the institution places CWS students withits private profit making services (food services,security services, etc), does the contract betweenthe institution and the service agencyspecifically provide for the employment of aspecific number of the institution's students,their selection by the institution and the deter-mination of each of the students' rate of pay?

8. Is the hourly wage not tied to class status(junior, senior, etc.) and need?

9. Time cards:*a. Are CWS time cards submitted at leastmonthly?*b. Does the time card contain a certificationby the student's supervisor stating that the stu-dent has worked the number of hours listed?

*c. Does the time card contain a certificationbythe student's supervisor of whether the work hasbeen performed in a satisfactory manner?d. Does the student sign the time card verify-

ing the hours worked?* 10. Does the institution observe the $100 limitation

on overaward and the $200 limitation on over-award resulting from employment in two or *4.more concurrent jobs with one of these jobsbeing work-study?

V. General Fiscal Administration

Is the institution aware that an audit of its cam-pus-based student financial aid programs mustbe performed not less frequently than once everytwo years?

*2. Has the institution submitted the required reports(fiscal operations report, progress reports, stu-dent confirmation reports, NDSL default reports,and DFAFS quarterly reports, etc.) on a timelyand accurate basis?Has the institution retained all program recordsfor the' required minimum of five years?

*4. Are appropriate files and records protectedagainst fire and theft?

5. Are administrative files up-todate and contain-ing:a. Program allocation letters?b. Copies of required program reports?c. Program and Applicable Regulations, including:

NDSL Interim Regs. (11/24/76) (8/24/78)SEOG Interim Regs. (11/24/76) (8/24/78)CWS Regs. (09/01/76) (CWS NPRM 9/28/77)

(8/24/78)BEOG Regs. (08/10/76) (06/11/76) (04/04/75)

(12/0204) (11/06/74) (BEOGNFRM 615/78)

GSL Regs. +2120/74) (1/29/76) (8/14/75) (GSI:.NPRM 5/5/78)

Consumer Info. Regs. (12/77)LS&T Regs. (12/23/77)

d. NACUBC Manual

*3.

VI. Audit Trail

1. Are the amounts of the allocatioikandauthorization letters correctly entered as a-counts receivable?

2. Do the DFAFS monthly cash .P,quests appearreasonable for one month's (or terms's) disbur-sement?

*3. Are there adequate accounting records in the in-stituticn to assure the integrity of the Federalfunds and to provide a clear audit trail? Oncethe institution receives a Treasury check fordollars requested, is there:a. Evidence of deposit of the Treasury check inan account identified as being for Federal

G-4

*5.

*6.

*7.

*8.

9.

funds?b. A transfer of funds indicated to individualprogram accounts either through subsidiarycontrol legers or bank accounts?c. Evidence of disbursement to students beforefunds are transferred to an institutional operat-ing account?Does the institution have an adequate system toinsure that BET, CWS, NDSL, and SEOG ex-penditure:. are controlled within the currentyear's allocation/authorization grant letters?Has the institution:a. Included, in the name of any account in

. which Federal fundS are deposited, the fact thatfiederal funds are deposited therein, or,b. Sent a letter to the bank(s) listing the specificaccounts in which Federal fund's are deposited?SEOG Fund Disbtirsement:a. Is there evidence that the institution's SEOGpayments are disbursed in pro-rata amountscorresponding to the number of semesters, tri-mesters, 'or quarteri in the institution'sacademic year? Or,b. If the institution does not use such academicperiods, is there evidence that such funds aredisbursed at least twice a year with at least halfof the payment 'made after the midpoint of theacademic year?NDSL Fund Disbursement:a. Is there evidence that the institution's NDSLpayments are disbursed in equal amounts cor-responding tq the number of semesters, tri-mesters, or' quarters in the institution'sacademic year? or,b. If the institution does not use such academicperiods, is there evidence that such funds aredisbursed at/least twice a year with at least halfof the payment made after the midpoint of theacademic year?BEOG Fund Disbursement:a. Is there evidence that the institution's BEOGpayments are disbursed in. equal amounts atleast once at the beginning of each semester, tri-mester, orquarter in the institution's academicyear? or, i

b. If the institution does not use such academicperiods, is there evidence that such funds aredisbursed in equal amounts at least twice a year,with one payment made at the beginning of theacademic year and one payment made at mid -point ?.('WS Time Cards:*a. Are CWS time cards submitted at leastmonthly?*b. Does the time card contain a certificationby the student's supervisor stating that the stu-dent has worked the number of hours listed?*c. Does the time card %.:Inta in a certification bythe student's supervisor of whether the work has

L.1

0

been performed in a satisfactory manner?d. Does the student sign the time card verify-

ing the hours worked?* 10. Are CWS payments made by the institution at

least once a 'month?* I I . Is at least the Federal portion of the CWS wages

paid by check or similar instrument which maybe cashed by the student on his own endorse-ment without further restriction?

* 12. If the institution's CWS share is paid by check,is it disbursed to the student at the same time theFederal share is disbursed?

* 13. If the institution's share is in the form of tuition,fees, services, or equipment for an academicperiod during which the student is employed, isthat share contributed prior to the close of thestudent's final pay period?

*14.. If the institution's share is in the form of prepaidtuition,. fees, services, or equipment for aforthcoming 'academic period, does the ittltitu-tion give the student a statement of this shareprior to the close of tit.: student's last payperiod?

* 15. Is there sufficient documentation at the institu-tion to support all payroll disbursements?

* 16. Do the institution's accounts show that CWSfunds are used only for:a. Payment for the Federal share of compensa-tion to students?b. Transfer to SEOG?c. Payment, of allowable administrative ex-penses?

17. Is the appropriate, ratio of institOonal funds ondeposit at, the time of each CWS payroll disbur-sement?

*18. Does the accounting system shs.i.h that SEOGfunds are used only for:a. Payment tr, students?b. Transfer to CWS?c. Payment of allowable administrative ex-penses?

*19. Does the accounting system differentiate be-, tween initial year and continuing year funds?

*20. Is the institution aware that direct transfers fromthe institution's Initial Year award to Continu-ing Year award (and vice versa) are notallowed?

*21. If the institution participates in tl CWS and/orSEOG programs, is it meeting its Maintenance-of- Level -of- Effort requirements? Cite years forwhich base was calculated.

*22. Does the institution understand that cash or anyexpended grant authority in BEOQ, SEOG andCWS remaining at the end of an award periodcannot be used to increase the spendingauthority (grant letter or authorization letteramount) for the subsequent year?

*23. Are the following NDSL records maintained at

the institution?a. General journal?b. Cash Receipts Journal?c. Cash Disbursements Journal?d. Cancellation Jouranl?e. General Ledger?f. Subsidiary Ledge of Student Accounts?

*74. Is the institutional matching portion (1/9 ofFederal share) deposited into the NDSL fund

.on or before the time that the Federal share isdeposited?

*25. Are loan payments evidenced in the institution'srecords by cancelled checks or vouchers?

*26. Are signed receipts obtained each time a BEOGor SEOG payment is credited to a student's ac-count?

*27. Is the school's refund policy in writing and ap-plied correctly in conjunction with GuaranteedStudent Loans and BEOG?

28. , To whom are FISL refunds sent?29. What accounting procedures do the institution

use to keep track of undisbUrsed loans or por-tions of loans?

VII. NDSL Collections

*1. Do the institution's follow-up activities includethe use of skip-tracing?

*2. Is there evidence that if the institution is stillunable to, obtain payment from the borrower,that ita. Utilizes the services of a collection agency;or,b. Performs collection activities with its ownpersonnel; or,c. Resorts to litigation?Does the institution understand that reasonablelitigation and collection costs may be charged tothe NDSL fund?

*4. Does the institution understand that it has tileresponsibility to make decisions relative to can-cellation and defernient which may not bedelegated to any billing service, collection,agency, or other fiscal agent? .

J If the institution uses a billing .service, does itunderstand that it cannot use a collection agen-cy owned or controlled by that billing service?Has the institution maintained all financial aidrepayment records on National Direct/DefenseStudent Loans for at least 5 years beyond thedate on which the individual borrower's banhas been completely repaid, cancelled orassigned to the Office of Education?

7. Does the school have the NDSL list of desig-nated low-income schools published withFEDERAL REGISTER? The . NDSL Collec-tions Manual?

NM& 1#111NOW

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*8. Does the institution use the appropriatepromissory note form?

9. Is there evidence that the institution Provicle5 tothe borrower not later than the time a pro'hi559-

..ry note is signed, a full disclosure ehis rightsand obligations and Truth in Lending irifortna-tion whenever a loan is made?

* 10. Is there evidence that each borrower reeeive5 anexit interview prior to leaving the institutio1i?

*11. Does the exit interview procedure:a. Provide the borro.ier with a detailed ex-planation of the borrower's rights and Obliga-tions?b. Provide the borrower with a copy Pf therepr.,yment schedu! specifying the total elllountof the loan and the dates and amounts of iristall-ments as they become due?

* 12. If a borrower leaves the institution withoilt. anotice, are there procedures for mailbag tht bor-rower a copy of the note and other materialsthat would have been in the exit intervic-Nt,v,..,and,--advising the borrower of the repaymentschedule?

*13. Does the institution maintain a written record ofthe exit interview including a copyof ize-;;3Y-

ment schedule signed by the borrower?*14. Does the institution hci:e procedures for con-

tacting each borrower no less than three tiniesduring his 9-month grace period?

* 15. Is there evidence that the institution hasestablished and maintained regular billing andfollow-up procedul-es for the period ify which

any outstanding balance remains unpaid?

VIII. State Student Incentive GrantProgram

The State Student Incentive Grant Prograrnmatching formula grants available to states to stimul-ate the establishment and expansion of State financialassistance programs ar.E1 the investment of Stateresources in scholarship/grants for undergraduateswith substantial financial need.

Participating status can use one or a combination oftwo student application and grant award Procethires.Approximately two-thirds of the State operaticrls arecentrally administered. These agencies:

(1) 'receive applications for financial assistancedirectly iTOM financially needy students;

. (2) inform ;hem of their awards (if found eligible);and(3) upon notification of their attendance at art in-stitution, make student /institutional payineots ofgrants.In the remaining states, funds are sub-allocated:I to

eligible institutions on the basis of strdent enrollmentneed formula. The institution receives funds for Stu-

. dent grant payments after submitting documents

G-6 ,

rMecting reci. "mended applicants who meet the cri-teria. for approval by the State agency and after suchgrants, hi* been approved by the State. agency.

Unlike the centrally administered SSIG programsv./here the actual student files are located in the Stateagency, the files in the decentralized systems are main-tained at the institution. However, the statute places inthe State agencies the responsibility of administeringthe SSIG Program. The program regulations require,the,refore, that each participating State is subject to theaudit and retention requirements of the Office ofEducation General Provisions.

Since the states are the designated recipients of theprogram, program reviAs of the SSIG will have to beconduct d at the state agencies regardless of whetherthe Sate operates a centralized or decentralized'system. Naturally, whatever the level of involvement in

SSIG Administration at an individual institution theprogram review would include examination of theoperation of the program to the extent possible. The

followin _questions would be utilized at _a State agencyin their entirety and utilized at an institution to ale ex=tent appropriate under the circumstances. -

*1. a. What are the eligibility criteria for studentsWho receive grants?b. Does the State have a systematic procedurefor verifying, the eligibility information?

2. a. What are the State's standards for determiningsubstantial financial need?b, Are these standards consistently applied?

3. Which approved needs analysis system is used by410the State?

4. What types of schools may a student receiving anSSIG attend?

5. Does'the amount of funds expended by the Statekir the non-Federal portion of SSIG awards foreach fiscal year represent an additional expen-diture for that year over the amounts expended bythe State for grants to all students attending in-stitutions of higher education during the base yearused in the maintenance of effort requirements?

6. a. Are Federal funds used to pay no more than 59percent of the aggregate amount of individual Stu-dent grants made wider the program?b. Are State matching funds made in a timely-manner from appropriate sources?

7. Do student, grants exceed the limit of $1500 peracademic year?

8. Are distinctions between Initial year and Con-tinuing Year funds properly maintained?

9. Is the recipient maintaining satisfactory progressaccording to the standards of the institution atwhich the student is enrolled?

10. a. Does the recipient owe a refund on a grantpreviously received at that institution under theBEOG,,SEOG, or SSJG program?b. Is the recipient in default on a loan made, in- 410sured, or guaranteed under the NDSL or GSLprogram for attendance at that institution?

Exit interview

Thp exit interview will normally include the Presi-dent, Financial Aid Officer, Fiscal Officer and' anyother involved institutional personnel. Since this meet-ing will serve a "summary" of findings, it should hewell organized and be comprehensive.enough so thatno surprises will appear in the formal written report.

Weaknesses in program ma lagernent should beidentified and possible ways of improvement shouldbe offered.

Strengths in program management should also berecognized and the Program Officer should be as sup-portive of the financial aid program as possible. Alsoan expression of appreciation for helpfulness of the in-stitution and the level of cooperativeness of the institu-tion should be acknowledged. In short, the presence ofa "positive" attitude from the Program Officer is vitalto the effectiveness and impact of the program review.

In situations where the program officer has dis--covered serious program violatiOns,. _certainly theseriousness of the problems should be conveyed to in-stitution officials. The subsequent prtgam review reportwill be the official transmittal of all finds and recommen-dations.

Specific statements and questions which areanswered during the meeting should be carefullynoted, so that the written confirmation will folloW theoral responses.

Program Review Report

The purpose of the program review report is to com-municatehe relevant findings of a review relating toany problems the institution may be having with theadministration of student financial aid programs. It isexpected that the presentation of the institution's ad-ministrative strengths and most good management sug-gestions will be coveied in the, exit interview. Thisstrategy is not designed to de-emphasize technicalassistance and positive feedback to the institutions, butis dictated by the necessity to utilize with maximumefficiency the limited time of the Program Officers.

The work sheets and the completed field documentshould provide the reviewer with the necessary docu-mentation to prepare .a report within no more than 30days after the review in the vast majority of cases. Areview finding no program administration exceptions,or exceptions only in classes I and II, would refailt in aletter confirming the findings and instructions given tothe institution's officials during the exit interview. Noregulatory citations would be necessary. The institu-tion should be requested to respond within 30 days of

receipt of such a letter with assurances that any re-quired corrective steps have been completed. orspecifying when stv:h steps will be completed.

A review which uitcovers findings in classes. III , VIwould rr-q' uire a more detailed aid rigorous report.This report should be narrative in form and under eachfinding there should oe a summary of each finding, aspecific example(s), with citations for the applicableprogram regulations. The recommendations for actionshould be clearly related to the appropriate finding sothat the institution will understand both the require-ments and underlying reasons for such requirementS..This report should be completed within 30 days of thereview and the institution's response should again besubmitted 30 days after receipt of the report.

A. special copy of the report or letter should be pre-pared with the appropriate aficlit codes placed in themargin= beside each finding. If the report is prepared bya Regional Office, the annotated report should be sub-..

mated to the Pfogram Review Branch, Division ofCertification-and-Review, in Washington, 13,C-. A copyof Central Office review reports. are transmitted to theappropriate Regional Office. This information will benecessary for the combined, audit - programreview/program abuse information system being im-plemented in DHEW.

Follow-up On Institutional Response

The transmittal of the report on the Program reviewnormally requests a response within 30 days of receipt.In the event that a response is not received within thespecified time period, with all due considerationsgiven, the institution should be contacted and thereason for non-submisSion of a response ascertained.In a small number of cases the reason for lateness maybe unwarranted. Regional Officer staff should con-sider whether a request to the Director, Division ofCertification and Program Review for an EmergencyAction under the LS&T authority is appropriate inthese circumstances.

Once the institutional response is received, it shouldbe reviewed carefully to ensure that all recommenda-tions are adequately treated.

Institutions with no Major Exception Cited

If the institutional response is considered adequateand reasonably in compliance with the recomme'nda-tions-in the report, then the case may be closed. The in-stitution should receive a brief letter confirming thatalirequirements have been met.

If additional information or clarification is needed,the reviewing officer'should then follow through with

G-7

G-8

the institution until a satisfactory response is negoti-ated and the case can be closed. All correspondenceand conversation with institutional officials regardingthe review should be included in the institution'sreview 1!le and copies sent to the Program ReviewBranch ('Washington).

Institatio5.s with Major Exceptions Cited

The basic procedure of reviewing the response foradequacy and reasonableness, documenting all con-versations and keeping copies of all correspondence inthe institutional file should be followed for institutionswith major exceptions cited. However, since theresolution of these reviews will undoubtedly be morecomplex and since some will result in institutional fi-nancial liabilities, a greater amount of diligence andeffort on the part of the Program Officer will be re-quired in these situations.

A great many of these reviews may include the re-quirement for an independent audit to be conducted bythe institution. It will be the responsibility of theProgram Officer in these cases ;o determine an ap-propriate completion date of,the audit, and to be surethat the specific program proCedures are being appliedproperly during the conduct of the audit. Also, coor-dination and consultation with the HEWAA may benecessary, since the audit must be accepted by theHEWAA before the BSFA can be officially cognizantof the contents of that Pudit report.

The Compliance iiivision and the Office of In-vestigations may also} be involved in a number of theinstitutional follow-ups and close coordination needsto be maintained with those offices to insure transmit-tal of the proper information.

In general, the institutional responses in these catego-ries should be scrutinized and wherever thereis any question or justifiable reason to doubt aresponse, there should be no hesitation on the part ofthe reviewing officer to request supporting documenta-tion from the school.

Needless to say, the resolution of reviews involvingmajor exceptions will often require considerablemodifications of standard procedures. Considerabletact, judgment, and re,). ..efulness will be a definiterequirement in dealing with these situations.

Taxonomy of Program Abuse

The classes of errors listed in this section are not in-tended to be mutually exchnive. Conceivably, it wouldbe possible for one institution to have errors in each ofthe classifications. Obviously, a class V situation ismore serious than class II occurrence. The precisepoint Fit which at class goes to the next level isprimati\ily a judgment call exercised by the responsibleProgram Officer.

I. Exceptions to Good Field Practices:

The institution has not implemented- certain goodmanagement practices having wide acceptance in thestudent financial aid community or which have beenadopted by professional associations as conducive toresponsible administration.

Examples:

(I) No financial aid committee(2) Lack of an annual calendar of financial aid ac-

tivities.'(3) Financial Aid Office not open throughout the

day(4) No formal procedures for student grievances

BSFA Act ions:

The reviewer should disseminate information, pro-vide re:,ornmendations and explain how implementa-tion of th se practices can assist the institution in ac-complishing its goals and provide for more effectiveadministration. The review report would be a letterconfirming the findings and recommendations.

II. Violations of ComplianceRequirements:

The institution has faiied to take actions that areclearly required by statute or regulations, yet it has thebasic data necessary to assure that the students aidedwere needy, met other eligibility requirements, andthat the funds were expended only for allowable pur-poses.

Examples:

(1) Absence of award letters or student acceptancedocuments

(2) All functions of determining eligibility and dis-bursing funds are in a single office

(3) Lack of NDSL exit interview procedures

BSFA Actions:

The reviewing office should communicate in theexit interview and by letter the compliance require-ments nat have been met and receive writtenassurance of their impleinentation as a condition ofcontinued participation in the programs.

III. Liability Limited and Determined:

The, institution has failed to Gbtain supporting data,take actions, or made incorrect judgments in the basic

1 -()

areas of student eligibility requirements appropriateexpenditures, or matching requirements, and thefailure is (a) limited in scope, (b) precisely determinedthrough a site visit (program review)or other definitivemeans, and (c) judged to be extraordinary to otherwisegenerally acceptable pro ceudres.

Examples:

(1) Two cases of SEOG awards not meeting thedefinition of "exceptional financial need" in areview sample of SEOG awards for a year

(2) Absence of needs analysis in 10 percent ofreviewed folders

(3) The institution has failed to deposit its institu-tional share when the last two deposits ofFederal Capital Contribution were made to theNDSL funds

(4) In a review of a large number of SEOG awards,two cases were found where the "matching re-quirements" were short by, for example, $300 ineach case due to improper funds being con-sidered as matching

(5) One overaward in the sample of reviewedfolders

(6) Ten percent of the sample indicates missing orimproperly executed Affidavits of EducationalPurpose

(7) Twenty percent or fewer files with missingreceipts

BSFA Aet ions:

The program review report should communicate theextent of the liability to the institution. The recom-mendations of the reviewing office in situations wherethe liability is $50,000 or more are subject to thereview and approval of the Chief, Program ReviewBranch (Washington). The draft report should be sub-mitted to the Chief of the Program Review Branch foran expedited response to the issuing Region. Writtenevidence that the institution has made restitution andimplemented policies or procedures to preclodefurther liability of the type identified should bereceived within 30 days of the institution's receipt ofthe report.

IV. Liability Underter 'ned butReconcilable:

The institution has failed to obtain data, take action,or has made incorrect judgments hi the basic areas ofstudent eligibility requirements, appropriate expen-ditures, or matching requirements. -The failure is ofsuch Scope that it cannot be determined with reasona-ble certainty during a program review but it is judgedto be reasonably determinable by additional actions

taken by the institution (including requirements forspecial independent audit reports at the institution'sexpense).

Examples:

(1) Fifty percent of all SEOG awards reviewed didnot meet the definition of "exceptional financialneed"

(2) Absence of needs analysis in a significant num-ber of the reviewed folders

(3) Overawards in a large number of reviewedfolders

(4) Failure to provide any institutional capitaldeposits to the NDSL fund

(5) More than ten percent of sample indicates miss-ing or improperly executed affidavits

(6) More thaii twenty percent of sample indicatesmissing receipts

BSFA Actions:

Subject to the approval of the Chief, ProgramReview Branch (Washington), the reviewing officemay negotiate with the institution to arrive at amutually acceptable plan for the institution to deter-mine the precise extent of liability and make restitu-tion. Such a plan might include the institution itselfreviewing all cases of a certain type to determineliability, or, in a more complex situation, an institu-tional commitment for a certified audit within a precisetime span. The plan must be in writing, contain actioilsteps, have a precise time for implementation, andreprese A a firm institutional commitment to restoredetermined liabilities.

V. Liability Undertermined andUnreconcilable:

The institution has broad failures to obtain data,take action or has made incorrect judgment in thebasic areas of student eligibility requirements, ap-propriate expenditures, and matching requirements tothe extent that they are not likely to be determinedwithout extensive reconstruction and audit work.

Examples:

(1) Absence of any substantial student eligibilitydocumentation in a large percentage of cases

(2) No fiscal ledgers(3) No traceable expenditure records(4) Little or no evidence of student receipt of funds

BSFA Actions:

The reviewing office should refer these cases to the

10 G-9

Director, Division of Certification an ProgramReview for further action. Precise documentation, "abill of particulars," should accompany the referral andthe reviewing office may recommend the action it con-siders appropriate.

VI. Potential Fraud:

The institution is suspected of dererring Federalfunds for its own purposes or suspicion exists of intentto deliberately circumvent basic Federal requirements.

BSFA Actions:

The reviewing office should refer these cases to theDirector, Division of Certification and ProgramReview for further action. In general, the reviewingoffice should submit copies of documents indicatingpossible fraud whenever possible. The following areexamples of circumstances which indicate, or may in-dicate, fraudulent activity.

(1) Falsification of information_ and records(2) Signatures which appear to be forged(3) Commingling of Federal funds(4) Records inadequate for review (no audit trail)(5) No power of attorney (GSL)(6) Awards to ineligible students or students in in-

eligible prograils(7) Information secured from students, employers,

or reports by other Federal and State agenciesExamples of documents which may assist the further

investigations include:(1) Copies of canceled checks, or ledger entries of

any unauthorized transfer of Federal funds toinstitutional accounts.

(2) Names of student and social security numbersin cases where there appears to be a pattern ofrefund liabi'ity, or other identifying informa-tion in cas,:s where disbursements to non-enrolled or fictitious persons are involved.Brief and precise description of any weak-nesses in fiscal controls where there is suspi-cion, but not concrete evidence, that federalfunds ma,/ have been diverted for institutionalorpersor, al putrnses.

(4) A copy of the institution's current and any pre-vious catalogs.A copy of the institution's financial aid policyand procedures.

(6) Name of key official(s) at the institution in-volved in student financial assistanceprograms.List of as many students receiving financialassistance through BSFA programs as possi-ble.

(8) Copy of institution's refund policy if not in-cluded in institution's catalog.

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(3)

(5)

(7)

1 (,_)

(9) Complaint letters(10) Program review reports and any other reports

relevant to the review.(11) Copy of correspondence between OE and the

institution.

Program Review Codes

General Program Fraud and Abuse

1301 Custody of Federal Funds*02 Previous reported corrective action not

adopted03 Violation of conditions of participation by in-

stitution03A Violation of compliance requirements*

04 Violations of conditions of participation by stu-dents04A Violation of compliance requirements*

General Prcgram Regulatory Violations

1308 Administrative expense claim exceeds limit09 Maintenance of minimum level of effort not

met10 Students charged nonuniform tuition and fee11 Other regulatory vidlations or deficiencies *

1 IA Violation of program regulations*

General Program Accounting Deficiencies

1315 Records inadequate for audit1315A Maintenance of records*

16 Letter of Credit report not reconcilable to otherrecords

17 Cash balances in excess of need18 Audit disagrees with financial report---19 Subsidiary accounts inadequate20 Student ledgers tinadequately or improperly

posted21 Interprogram transfer improper or excessive22 Other accounting deficiencies

22A Inaccurate and incomplete ::formation*

General Program AdministrativeDeficiencies

1323 Written operating procedures not available24 Written refund policy lacking or not followed25 Institution not diligent in obtaining refunds26 Other administrative deficiencies

26A Need to segregate personnel duties*26B Need additional staff*

General Program Student RecordsDeficiencies

NDSL Specific Deficiencies

1415 Delinquency rate excessive1330 Student need docUmentation inadequate 16 Collection procedures inadequate

31 Affidavit of educational purpose not on file 17 Interest computations erroneous32 Other student records incomplete or missing 18 Cancellation inadequately documented

19 Institution Capital contribution untimely or notprovided

General Program Award Processing 20 Promissory notes incomplete or absentDeficiencies 21 Prcmissory notes not Droperly safeguarded

22 Sum of loans exceed allowable maximum1336

37Awards to ineligible studentsAwards to students in ineligible programs

23 Loans exceeds maximum limits during first twoyears

38 Awards miscalculated 24 Loans made to nursing students39 Awards made for less than program minimum 25 Other NDSL deficiencies *40 Awards exceed program maximum41 Other awarding deficiencir;

SEOG Specific Deficiencies . BEOG Specific Deficiencies

1401 Awards nct sufficiently matched 147.8 Awards not paid in at least two equal payments02 Signed acknowledgement of award not on file 29 Award credited to student without signed03 Direct transfer of funds between Iy - Cy or Cy - receipts

Iy 30 SER data not verified with other student data04 Other SEOG deficiencies * 31 Other BEOG deficiencies *

CWS Specific Deficiencies

140607

Federal share of compensation exceeds 80%Institutional 20 percent, untimely or not pro-

GSLP Specific Deficiencies

vided 1435 Loans disbursed prior to commitment08 Federal share of earnings not paid by check 36 Loans disbursed to "no shows" after 90 days09 Students work over 40 hours p: week 37 Loans made or disbursed without due10 Students employed by ineligible agency diligence11 Records not available to support wages paid 38 Interest charged to government excessive12 Other CWS deficiencies * 39 Sale or transfer of ineligible/uninsurable loans

0-11

Student Name

Program Enrolled In

CAMPUS-BASED WORKSHEET.

H.S. Diploma

SSN

A/Y Reviewed

Citizen or Perm. Res.

* * * * * * * it * * * * * * * * -"a * 1"; * * * * * * *

'GENERAL INFORMATION IN FOLDER

Institutional F/A application? _______

F/A transcript in folder?

Stud. affid. signed? ____ Notarized?

Indep. stud. certified or waiver?

Changes in need asal. or award documented? ____ _

AWARD LETTER

Award letter dated'

Award letter signed by FAO?

All financial aid lisfed7

Signed acceptance by stud 7

* * * * a * tii * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

SEOG

Family contrib. less than 50% ofcost of education?

Award at least $200 and not over$1500 a year _______

SEOG within 50% of need?

Award within aggregate limits of$4000; and 4 yr. lira. observed? _______

SEOG matched with eligible aid'

PROGRAMS

NDSL

Cumulative maximum observed'

Promissory Note? Signed?

Truth in Lend. Statemt. Signed? _

Tirne cards kept'

Signed by supervisor'

Payroll voucher'

* * * * * * *

F/A NEED AND AWARD

Total Fin. need? $

*4

tr

tr Method: Ck. to Stud.1

DISBURSEMENTS

Cred. to acct.2 3

BEOG $______ CWS -4 (Arno.int & Date)

SEOG OTHER $_ BEOG $

NDSL $ -4 Signed Rec.

TOTAL AWARD $ SEOG $

Signed Rec.

NDSLDoes award exceed needby more than $100? CWS $($200CWS)

G-I2

-t$ OTHER $

rlV IL)

CWS

4 RECOVERIES

4 Date W/D4'

N/A

BEOG WORKSHEET A/Y Reviewed

Student Name Soc. Sec. No

Program Enrolled in Length

Enrollment Date for Current Academic Year Year in BEOG Program

High School Diploma Citizen or Permanent Resident

SER

Cost of Education on SER Eligibility Index

Breakdown: Scheduled Award

Tuition & Fees Expected Disbursement

Room & Board Award calculated correctly?

Miscellaneous Full time 3/4 Tim.-.! 1/2 Time

Data reported bystudent appears to be reasonable?

Attendance confirmed before disbursement?

Student Affidavit signed? Notarized?

DISBURSEMENT

Disbursement Method: By check to student By credit to's,account

Payment Date Amount Signed Receipt REFUNDS

1Date of withdrawal

2

3

4

5

6

Total

Uomments:

====111

Tuition refund to student $

BEOG recovery $

Calculated correctly'Recovery entered

3asic Grant Cash Account ___P.rogress Report

(heIn Is of reviewer

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Appentix I

411 State Student IncentiveGrant Program

FY 1978 STATE:

PAYMENT r,YSTEM:

BASIC ALLOT-MENT: $

MAINTENANCEOF EFFORT:

Base Year: FYBase Level ofEffort (Subject

to Audit) $(See paragraph 4,below)

Speoial Terms and ConditionsGoverning Administration Of TheState Student Incentive Grant -

Program By State Grantee Agency

The Federal funds granted to the State scholar-ship/grant agency (hereafter referred to as "the agen-cy") designated on the attached Notification of GrantAward (OE Form 6030) shall be administered in ac-cordance with the following specific terms and condi-tions, which are incorporated in that grant byreference:

. The agency shall administer a program of matchingFederal and State scholarship/grant funds designed toexpand existing State programs or establish new'Stateprograms, referred to hereafter as the "State StudentIncentive Grant (SSIG) Progrkin,"under which initialand continuation grants of up iN $1500 ($750 Federalshare) per academic year for attendance et postsecon-dary educational institutions are provided to eligibleundergraduate students who demonstrate substantialfinancial need.2. The agency shall be considered to be the "singleState agency" required to administer the SSIGProgram under Section 415C(b)(1) of the HigherEducation Act of 1965, as amended; and it shall be theonly agency designated within the State to administerthe SSIG funds awarded to the State, provided that theagency may utilize the services of one or more sub-agenices, including postsecondary educational institu-tions, acting on its behalf and at its discretion in carry-

, ing otht individual functions or activities under its

SSIG Program. Whether or not it utilizes the servicesof sub-agents, however, the agency shall remain pri-marily responsible for the proper administration of allasrectc of its SSIG Program, including final approvalof individual student awards.3. The agency shall annually establish criteria, pur-suant to the requirements of Section 415C(b)(3) of theHigher Education ),,et of 1965, as amended, defining"substantial financial need" of students for assistanceunder the SSIG Program; such criteria shall be subjectto annual approval by the U.S. Commissioner ofEducation under the provisions of Regulaticies con-tained in 45 CFR 192.7 and 192.8.

e. Because the Fis al Year 1978 SSIG Program ap-propriations were rnbined for both initial and con-tinuation awards, ates have been permitted to ex-ercise discretion, wtieir-making application for FY78 SSIG Program funds, in suballocating the fundsallotted to each State for Fiscal Year 19-79 as be-tween those two categories of student awr.c4F,'. Finalregulations governing such suballocatir%i,-, werepublished in the Federal Register on September 14,1977 (45 CFR 192.3(f). The agency specifies onLine 12 of its FY 1977 applic-,' on the amount of itsallotment which is estimates .,Auld be suballocatedfor making initial awards, and on Line 19a of its ap-plication, the amount of its allotment which it esti-mates would be suballocated fbr making continua-tion awards. The cited special procedures providefor review by the Commissioner, on or before Sep -tember 30, 1978, of these estim ted suballocations.Not later than September, 1978, herefore, the agen-cy shall report to the Commis loner, any revisionswhich are to be made to the estimated suballoca-tions specified in its application; provided, that norevisions will -be authorized by the Commissionerwhich will cause the agency to exceed the totalaward indicated in the attached notification, or anymodification of the grant, or which will cause thetotal authorized nationally for initial awards in FY78 to exceed the $50 M authorized ceiling for thoseawards. If the Commissioner shall determine, as aresult of this review, that the agency's FY 78 allot-ment will not be fully utilized, it may reduce thatallotment accordingly and reallot these unusedfunds to other States with remaining unmet need forSSIG Program funds. ,f. The agency shall not make further revisions, sub-sequent to 9/10/78, in the amounts of its FY 78 SSIGProgram allotment to be suballocated for making in-itial and/or continuation awards; provided,however, that if the agency shall deem it necessary atthe close of the grant period to make furtherminor adjustments between these suballocations, in

I -1

order to avoid underutilization of funds granted to itfor FY 78 and to maximize the number of studentsreceiving grants, it may, at its option, provide for afinal reyision in its previous suballocations, amount.ing to not more than five (5) percent of the total FY78 SSIG Program funds granted to it, provided suchadjustment will not result in exceeding the $50 Mceiling on initial awards referred to in paragraph e,above, in which case the Office of Educationreserves the right to disapprove such revisions, inwhole or in part.:

7. While no SSIG student awards shall be made to stu-dents enrolled in correspondence schools, the SSIGinstitutional eligibility policy includes 2-year and 4-year public and private colleges and universities, com-munity and junior colleges, vocational schools, techni-cal institutes, acctedited proprietary schools, hospitalschools of nursing, and others. Pursuant to the provi-sions of Sec. 415C(b)(4) of the HEA, as amended and45 CFR 192.4(f), for academic years beginning Octo-ber 1, 1978, or the:eafter, all nonprofit institutions ofhigher education listed in the most recent edition of thepublication "Postsecondary Institutions Eligible forthe Basic Educational Opportunity Grant Program."8. Some States also make awards which students mayuse at institutions located in other States. If the Statewishes to determine whether a specific public or pri-vate nonprofit institution has been recognized as eligiDie for student aid by the Office of Education, the Stateshould contact the Division of Eligibility and AgencyEvaluation in the Bureau of Higher and ContinuingEducation, U.S. Office. of Education, Washington,D.C. 20202.9. The agency shall maintain adequate program andfiscal records and shall submit any reports which arerequired by ,;c Commissioner in order to carry out hisfunctions under the SSIG Program. The agency'srecords shall, in particular, demonstrate the mainte-nance of a clear audit trail reflecting the maintenanceof separate fund accounts to document the receipt anddisbursement of equal Federal and State matchingcontributions to the SSIG Program. These recordsshall demonstrate equality of Federal and State match-ing zontrinutions, both in total, and also on a grant -by-gr2.nt basis, so that each student grant awarded underthe SSIG Program shall be made up of exactly equalNrtions of Federal z..nd State matching funds (in addi-tion to any supplemental awards which the agency maychoose to make to any student frOm 100% Statefunded sources).10. The agency shall furnish access to representativesof.the Secretary and the Commissioner, and to repre-sentatives of Comptroller General of the United States,for purpoes of audit and examination, to any books,documem., papers and records of the agency that arepertinent to this grant, at all reasonable times duringthe requirA period of retention of such records. Sub-mission by mail of specimen documents of the typesenumerated in this paragraph may be -Nuested by the

1-2

SSIG Program.NOTE: The Notification of Grant Award documentcontains specific i&iitification numbers which must beused for fiscal transactions (and related inquiries) withthe Federal Government. The Entity Number or EIN(Employer Identification Number, developed by theInternal Revenue Service) uniquely identifies the reci-pient State agency. The Document Number identifiesthe specific Federal grant under this program. BesidesGrant authority for the disbursement); the CAN (Com-mon Accounting Number), which .dicates the specificFederal account against which the disbursement isdrawn; and the Object Class Number, which indicatesthe specific purpose or use of the Federal funds (forexamPre, the 41. prefix indicates a grant).

Reports

The Grantee shall submit to the OE Finance Divi-sion the reports listed below in conformity with thequantity and due dates shown.

A. PERFORMANCE REPORTS (OE Form 1288-1, attached toFinancial Status Report - HEW 601T - see below)

Type of ReportFinal Report

Quantity3

Due Date30 days after theclose of the FiscalYear.

B. FINANCIAL STATUS REPORT (HEW FORM 601 T) (mailedto Office of Education, Finance Division, I iscal ServicesBranch, Room 3089, 400 Maryland Avenue, S.W.,Washington, D.C. 20202)

Type of Report Quantity Due DateFinal 3 30 days after the

close of the FiscalYear.

C. QUARTERLY REPORTS (Letter of Credit Payment Systemonly; mailed to same address as HEW 60IT above)

ype of Report602T

603T

Quantity Due Date3 Within 15 working

days following eachQuarter

3 Within 15 workingdays following endof each Quarter

Conditions For Payments

The Notification .of Grant Award document indi-cates specific payment system to be used, pro-:edure r requesting tunds, and contact point for in-quiries regarding payments under the award. Theofficially designated State scholarship agency respon-sible for SSIGP may be under any of the followingpayment 7VSterns:

OE Le.Aei,- of Credlt may be used if the grantee ispail of the State Department of Education and if theState is I lot affiliated with the DHEW disbursementsystem known as DFAFS (see below).

DFAFS (Departmental Federal Assistance Fi-nancing System, formerly NIH System) is usedthrough special arrangements between the State fis-cal office ani DHEW.

NOTE man, e Thionent yr sh,., 11 on fir, 6. ant 41, emrrlt

Direct Payment, via U.A. Treasury check, may beused by certain designated State agencies. Federalfunds are requested by submitting form HEW 604 -T, "Request for Advanc; or Reimbursement."

(Name of State Agency)

19... 19_ SSIG Student Institutional Roster

Report Date:

SAMPLE

Institution

1

Other TotalSocial R FamilyState Financial Financial CostSecurity F 0 D Contri Net I S.S.I.G, Matching Aid Aid ofNumber P . Last Name First Name C I bution income C Amount Amount Amount Amount Education

1.

2.

3

4.

5.

6.

7.

8,

9,

10.

11.

12.

13.

14,

1E.

16,

17.

18.

19.

20.

21.

22

23.

24.

25,

26.

27.

28.

29.

30.

DF.Fullime studentP.Part.time student

Approved.

State Scholarship Officer

t1 Dependent student

I.Independent studentI =Initial award

C-Continuation award

I have examined this report and to the best of my knowledge and belief

the information provided herein is true and correct.

Financial Aid Officer

11.0ncampus resident student

0.0Lampusi resident student

OFFICE OF EDUCATIONOFFICE OF GUARANTEED STUDENT LOANS

WASHINGTON. D.C. 20202

FEDERAL

INSUREDSTUD I

LOAN.

APPLICATIO

TITLE IV-BHIGHER EDUCATION ACT OF 1965, AS AMENDED

(20 U.S.C. 1071 El SEQ)

190 K-1

EQUAL ('R VI )IT OPPORTUNITY ACT NOTICE

The Federal Equal Credii Opportunity At prohibits creditor.; from discriminating against credit :Applicant- on th-bit -ice of race. color. religion. national oritin. sex. marital status. age (provided the applicant has the capactt..contract in accordance with applicable State law t; be ause all or part of the applicant's income derives from any putt-he assistance program, or becaus.e the applicant has in good faith exercised any right under the Consumer Credit Pro-tection Act. 'Fbe federal agency that administers conmliance with this law concerning this creditor is designated below.

A Federal Reserve System211th Street and Constitution Avenue. N.W.Washirwon. D.C. 20551

)ffice of tte- Comptroller of the Correney491) L'Enfant Plaza East. S.W.Washington. D.C. 20219

C Federal Deposit Insurance Corporation550 17th Street. N.W.Washington, D.(7.20429

D Federal Home Loa; hank Hoard101 Indiana Avenue. N.W.Washington. 20.552

E National Credit Union 'Administration2025 M Street. N.W.Washington. D.C. 204:t6

F Federal Trade Commission6th Street and Pennsylvania Avenue. N.V.'.Washington, D.C. 205l0

PRIVACY ACT NOTICE

The Privacy Act of 1974 (5 U.S.C. 552a) requires that an agency provide the following notice to each individual whomit. asks to supply information:

1. The authority for collecting the requested information is sections 429(a) (1) and 428(a) of' the Higher EducationAct of 1965, as amended (20 U.S.C. 1079(a) (1) and ,1078(a )). Applicants are advised that participation in theGuaranteed Student Loan Program (GSLP) is voluntary, but the requested In..irniation, except as noted .nparagraph 4, is necessary for participation in the GSLP.

2. The principal purposes of this information are as .follows: to verify the identity of the applicant: to determineprogram eligibility and benefits: to permit servicing of the loan: and in the event it is necessary, to locate missingborrowers and ilect on delinquent or detaulted loans.

3. The routine use., include the following: the information may he furnished during the life of the tan to holders ofthis and other loans made to th'e borrower under the GSLP, to educational institutions in which the borrovat isenrolled or is accepted for enrollment; to guarantee agencies: to contractors which assist the U.S. (;;tice ofEducation in the administration of the GSLP: to Federal or State agencies or private partite who may be able toprovide information necessary for the collection of the loan, or to assist in the servicing or collection of the loan.

4. OE FORM 1154: Applicants must provide all of the information requested .in order to have their applicationsprocessed. except items related to Adjusted Family Income are required only if applictoits are seeking Federal in-terest benefits.

Section 7(b) of the Privacy Act of 1974 (5 U.S.C. 552a note).requires that when any Federal. State, or local governmentagency requests an individual to disclose hi:; social security account -number (SSN). that the individual must also beadvised whether that disclosure is mandatory or voluntary, by what statutory or other authority the SSN is solicited,and what uses will he made of it.

Section 7(a) (2) of the Privacy Act provides that an agency may continue to require disclosure of ar4individuarsSSN asa condition for the granting of right, benefit, or pritlege provideas by law where the agency required this disclosureunder statute or regulation prior to Januaiy 1975, in order 'o verify the identity of an indi--idual.

Disclosure o' e applicant's SSN is required as a condition for participation in the GSLP, as the U.S. Office of Educationhas, for several years, consistently required the disclosure of the SSN on application forms and other necessary GSLPdocuments adopted pursuant to published regulations (45 CFR 177, particularly 45 CFR 177.2(d)', and 45 CFR177.47(b)).

The SSN-will be used to verify the ide-ttit F the applicant, and as an account number (identifier) throughout lie life ofthe loan in order to record necessary ..curately. As an identifier, the SSN is used in such program activities as:determining program eligibility; certif.. school attendance and student status: determining eligibility for deferment ofrepayment; determining eligibility for disability or death claims: and for tracing and collecting in cases of delinquentor defaulted loans.

In addition, the SSN of parents and spouses of applicants seeking Federal interest benefits are also required before anydetermination of eligibility for Federal interest benefitss made. The SSN may be used to obtain verification ofadjusted family income from the Internal Revenue ,Service, and to locate these individuals, if neces.s2-y.

K-2

GENERAL iNsTRurrioNs

RE..,D THE PROVISIONS OF THEAT l'ACH ED PROMISSORY NOTE (0E 1110: BEFORE TAKING THEApnicATIoN To THE LENDER. IF YOU HAVE ANY QUESTIONS. CLARIFY THEM VITH THE LENDERBEFORE THESE FORMS ARE SIGNED OR THE LOAN IS MADE.

1. 'HE STUDENT COM nrcEs SE("rioN I AND THE BACKGROUND INFORMATION ON THE RE-VERSE SIDE OF THE LENDER COPY ANI) SUBNETS ONLY THE Atfil.icATioN (AND THE ATTACH-ED PROMISSORY NOTES) TO THE EDUCATIONAL INSTITUTION.

2. THE EDUCATIONAL INSTITUTION COMPLETES sEcrioN 11 LAND WHEN AP,PLICABLE, SFXTIONHD. AND RETURNS THE APPLICATION AND ATTACLIED PROMISSORY N(YTES) TO THESTUDENT WHO SUr,...ITS THE APPLICATION (ANI) ATrAcHED PROMISSORY NOTES-) TO THELENDING INSTITUTION.

:3. THE LENDING INSTITUTION COMPLETES SECTION IV ANI) FORWARD'S 1 11!7 LENDER COPYAND THE SCHOOL COPY INTACT TO THE OFFICE OF EDUCATION STUDENT `.N PROCESSINGCENTER FOR COMMITMENT. THE LENDING INSTITUTION RETAINS THE TV..0 PROMISSORY'TOTES AN THE STUDENT COPY OF THE APPLICATION UN'T'IL' THE LOAN IS APPROVED.vk.11EN THE LOAN APPROVED, ONE COPY OF THE PROMISSORY NOTE ANI) THE STUDENTCOPY OF THE APPLICATION MUST 11E PROVIDED TO THE STUDENT.

STUDENT INSTRUC'T'IONS

THE OFFICE t .1; EDUCATION DOES NOT WARRANTY OR VOUCH FOR THE QUALITY OR SUITABILITYOF THE EDUCATIONAL PROGRAMS OFFERED BY EDUCATIONAL 'INSTITUTIONS ELIGIBLE TOPARTICIPATE IN THE GUARANTEED STUDENT LOAN' PROGRAM. THE APPLICANT SHOULD USECARE IN SELECTIN0 A SCHOOL. ANI) SHOULD CAREFULLY EVALUATE HIS/HER ABILITY TO BENE-FIT FROM THE PROGRAMS OFFERED BY THE EDUCATIONAL INSTITUTION.

NOTE: Please remove the application from the booklet before completion. Review each copy of the ap2licationto inst:re that all information is lekiEle.

SECTION I

ITEM 2

ITEM 4

Social Security Account Number.Read the Privacy Act Notice before com-pleting this. ;tern.

U,S. Citizen or National.If you checiced 'the "NO" box, you mustindicate in the space provided, your AlienNumber (the "A" number on your AlienRegistration Receipt Card (Fom.I-151)! oryour "Passport or Alien Registration" onthe Form 1-94.

Also, holder's of FOT In 1-94 must place in thespace mar,:ecl' "I-94 Authority" in Item 4the words "Paroled," "Refugee," or"Humanitarian" from the lower rightnandcorner of (tit: 1-94.

ITEM 5 Legal State Residence;,Residcr,,y requ:rements vary from State toState. Be certain you meet the require-ments of the State indicated.

ITEM 6. Major Course of Study.If you have not determined your course ofstudy at this time indicate by marking thisblock "undecided."

ITEM 1 High School Graduate or Equivalent.If you are not a high school graduate,indicate highest grade completed in thespace provided on the form.

ITEMS 8, 9, 10THESE ITEMS NEED NOT BE COM,PLETED IF YOU ARE NOT APPLYINGFOR FEDERAL INTEREST' BEN-EFITS. IF YOJJ ARE NOT APPLYINGFOR FEDERAL INTEREST BEN-EFITS, INDICATE BY WRITING"NOT APPLYING FOR FEDERAL IN-TEREST BENEFITS" 01I,ER THESEITEMS.

1 00STUDENT INSTRUCTIk,NS(CONTINUED ON NEXT I AGE)

K-3

.0

I.'

1.25 1.4

12.2

2.0

1.8

1.6

. MICH0( oPY F ,,Ot UI nri I CHAR!

STUDENT INSTR1 i CIONS (CONTINUED)

FEDERAI INTEREST BENEFITS

Any student whose adjusted family income is less than$25,000 will automat icaliy qualify for Federal interestbenefits. Students with adjusted family incomes of$25,000 or greater applying for Federal interest ben-efits 0.- loans of an amount mast submit to attanalysis f need to be performed by the school. NOTE:if t he still. mt plans to attend a foreign school, he/sheshould contact the lender for instructions regardingperformance of the analysis of need.

For those students eligible for Federal interest ben-efits, the Federal government wilt pay to the lenderthe total interest due prior to the beginning of therepayment period. Students not eligible for Federalinterest benefits or not wishing to disclose necessaryfinancial data required for determining eligibility.may still apply for a loan but. must make arrange-ments with the lender for payment of the interest thataccrues on the loan balance prior to the repaymentperiod. During the repayment period all borrowerswill he responsible for total interest charges. If thestudent qualified for Federal interest benefits while inschool, he/she is also eligible for iliese benefits duringany period of authorized deferment.

Students must qualify for Federal interest benefits at'the time of application for each loan. Future changesin income will not affect the student's eligibility forFederal interest benefits on this loan.

ITEM 10 Adjusted Gross Income.All persons whose incomes are reported (asdetermined in Items 8 and 9) must useincome figures from Cie immediatelypreceding tax year. If the Federal IncomeTax Return for the immediately precedingtax year has not. yet been filed for any income- reported on this stAement, the com-putation on this statement and any Federal'interest benefits, received are subjeG1 toadjustment on the basis of income figuies'that are actually reported. The studentborrower must immeditItely report to thelender any differences in such later report-edfigures which produce amounts in excessof those reported on this form.

Income earned abroad by any individualwhose income is NOT subject to taxationunder the Internal Revenue Code due tothe fact that such individuals are U.S.citizens living abroad, shall he computed inthe same manner as though it were taxable.Income of non-resident aliens or income ofresidents of Puerto Rico shall he treated asprovided for in instructions made availablethrough the lender.

ITEM 11 Number of Applicant's Dependents.Indicate the total number of persons withinyour household who are dependent uponyou for support.

ITEM 12

K-4

Period of Loan.Indicate by date the period for which thisloan is to he used. These dates should

10,

coincide with a school period (e.g. semester,trimester, quarter, academic year, etc.) butmust not exceed.an academic yea:. -

ITEM 1:3 Amount Requested.Enter the mininAmi amount necessary tomeet your educational costs.

ITEMS 14-21Signatures.You are required to sigu this application inthe presence of a notary public or otherperson legally authorized tosadministeroaths or affirmations, who must also signthe form.

Your spouse and/or parents must sign theapplication if their incomes are required inITEM 10. All Social Security Accountnumbers must be entered for those personssigning ITEMS 1(i, 18, and 20 on the ap-plication. All 'persons Signing the applica-tion should read the Privacy Act noticelocated on the inside front cover.

When the application is approved by theOffice of Education, the applicant will Berequired to sign the Promissory Notes andthe statement of Student Rights and Re-sponsibilities on the reverse side of thelender's copy of the Promissory Note.NOTE: Lenders operating under theEscrow Disbursement System may requirethe Promissory Notes to he signed ,.,at thetime of application.

ITEMS 49-54 (ON RP:VP:11SE OF LENDER COPY)Background information.THIS INFORMATION MUST BE COM-PLETED BEFORE THE APPLICA-TION CY(N BE PROCESSED.

ITEM 49 Permanent. Home Residence Address.Your permanent address and -telephonenumber are entered with 'street. number,RFD, or general delivery, as appropriate. Atemporary school 9r military addi-ess is notacceptable.

ITEM 50 Temporary School R.)sidence Address.The current address at which correspond-_

ence fro;:( toe Office of Education, school,or lenclQ. .11'7; b. rec eived. If the same asITEM .19 in,;::;:( by writing "same asabove.'

ITEM 52 Indebtedness.If additional space is needed, continue inthe space marked "Additional Informa-tion".

ITEMS 53-54Uames and Addresses of Barents.If the names are other than those of par-ents, list indiv,iduals who will continue tobe aware of your lotation. Indicate the''relationship of those individuals listed ifother then parents,

STUDENT APPLICATION FOR A FEDERAL INSURED LOAN

WINING ANY PERSON WHO KNOWINGLY MAKES A FAIRFTATEMENT OR MISREPRESENTATION ON THIS FORM IS SUBJECT TO PENALTIES W1IiVH MAY INC1,1111E FINES AND

IMPRISONMENT UNDER THE UNITED STATES CRIMINAL CODEAND 20 DSC 10674

SE ION I TO AE COMPLETED BY STUDENT 'IMPORTANT'READ INSTRUCTIONS BEFORE COMPLETING

LAST NAME - FIRST NAME - MIDDLEJNITIAL2. SOCIAL SECURITY NUMAR 1. BIRTPDATE ,

MONTH . DAY YEAH

, 5. LEGAL STATE

RKSIDF,NCE

A MAJOR ('OURSEOF STUDY 71 [OR SCH001 GRAM' VTE OR EQUIVALENT

3E,SD NOD RICHEST CR ADE,l'OMPI,ETEI)

4 11 S CITIZEN DR NATIONAL

111YESO . (2)N00

ALIEN NUMBER

1.41 AUTHORITY,

A. HAVE YOU DURING THE ?NEC ;DING 12 MONTHS IAI RESIDED WITH.IHi BEEN CLAIMED AS A

DEPENDENT FOR FEDERAL INCOME TAX PURPOSES HY, OR IF BEEN THE RECIPIENT OF ANAMOUNT IN EXCESS (IF $500 FROM ONEOR BOTH OF YOUR PARENTS?

ONES(] (21Nou

IF THE ANSWER TO THE ABOVE QUF,STION IS" ES" IN WHOLE OR PART I YOUR PARENTS MINTCOMPLETE ANDSIGN THISSTATEMENT OF ADIUSTED FAMILY INCOME.

IF51 ARMED. ARE YOU LEGALLY SEPARATE°, OH HAVE You FOR THE PRECEDINGNRINTHS BEEN LIVING APART FROM YOUR SPOUSE?

ID VERO 121NOD

IF THE ANSWER TO THE ABOVE QUESTION IS "NO", Y01111SPOUSE MUST.COMPLETE AND

SIGN 'ME STATEMENT OF ADJUSTEEEAMILY INCOME.

F

O

II

ll

Amount ,)1

yommument I

LOON coMMITME,NT Eq1BESON

DATE sli(wN 1N.FL'M 29(21

In. ADJUSTED GIIOSSIN('OME IFROM FEDERAL l'AyRETURNsFolt IMMEDIATELY PRECEDING TAX YEAR)

A FATHERS MOTHER 4 .10INT $ $

B. STUDENT $ SPOUSES' JOINTS§ 4

U. EYTAI, ADJUSTED GROSS INCoME,LADD LINESIBA AND NB) Mall,0 ENTER m PERCENT OF LINE RX'

$

.,E. ENTER THE Toni, DoLLAB A MoCNToFPERsoNALEXEMPTIoN.4cLAImEO us TA RETTRNs $

AE. ENTER TOTAL OF LINES 100 AND IV / MillC ADJUSTED FAMILY INCOME SURTRACT LINE IREFROM LINE 100

..i._.

II. TOTAL NUMBER 12. OF LOANOF APPLIc ANT'S

DEPENDENTS.

12110

MOD 'DAY, YEAR

rt Sl11'N.1 11EQuEsTEo

EACH OF US, CERTIFY liAT THE INFOIIMATION ChNTAINEDIN THIS APPLICATION IS TRUE COMPLETE, AND CORRECT

TO THE HEST OF MY KNOWLEDGE, AND BELIEF. AND IS MADE IN GOGD FAITH. I, THE\,,,f IMIROWER, EURTHEa CHIVVY THAT THE PROCEEDS OF ANY LOAN MADE.RESULT OF THIS APPI,ICATION WILL HE USED FOR

EDUCATIONAL PURPOSES, AND THAT I, THE BORR(IWER. AM NOT INDM:AIR:TON ANY LOAN MADE UNDER THE Cl IAll ANTEEISTUIW,ST WAN 111IOGRAM0RIATTENDANIT AT THE INSTITUTION

INDICATED BELOW SJGNATURIIS ARE REQUIRE° FO)1 ALI, PERSONS WITOSE,INCOMEIS REPORTED ON THIS FORM THE STUDENT 51.11ST SVIN EVEN THOUGH IIE/SHE HAS NO INCOME.

91 HEREBY Enna THE ED11,. ATIONAL INSTITUTIONTO MAKE REFUNDS 1/11$1 ME TO THE LEM .11

INSTITUTION IN ORDER TO REDUCE MY LOAN OBLIGATIONS

APPLICANT MUST' COMPLETE INFORMATION ON THE REVERSE SIDE OF THE ORIGINAL WENDER COPY) BEFORE APPLICATION CAN BE PROCESSED.14, SIGNATURE OE APPLICANT IMIIST BE NOTARIZEDI

16. SIGNATURE 0E SPOUSE

15. DATE17, SPOUSiN SOCIAL SECURITY NUMBER

IX. SIGNATURE OF FATHER20. SIGNATURE OF MOTHER

19 FA'THER'S SOCIAL SECURITY NUMRER.21. MOTDEll's!',OulAt sEctIRIVi NUMBER

19

Subscribed and nom by student before me this

day of

Notary Public

Nuary a Adrts,

My rommimom Expirvs

SEAL

I

Li j

SECTION II AND III TO BE COMPLETED UTILE EDUCATIONAL INSTITUTION.iSEE INSTiiIVTIONSDN REVERSE 01: SCRIBE!, coPV)NAMEOPF:DITATIoNALINNTrErtioN

.

::. ENTIry NI'NfliEB

dill* I I II2'. ,FIrliENT F..t1I'S '

diFiti. I-1\11y

,21HALLFIME

,

1

2, S'Itlif.SE

1 1,

ol,BAIii

i

NIIERilIAO.olt

1.1 solol. col*:1

i 11 1

cl.A1Fli-AiloN

WrATIoNA.1.1,.

ATE olalcoFEsSioNAL :

1

.:.; ,wAlty,,,th

.1 ABE; roil.: TH.EpHoNENUSIBEB

/qmi

moNTD yEAF,

1

'.' l'Elil000lloAN ...

sioNTD 1111. LUAU

iiillioSi I t

ApORI.N4 .,

iITY ;+ FATE. 711' col)F.

.,-. 1:,.lif iniEldian,,,iial[0.4

I I iEkil

I

0111 1 I

'A INDICATE LENGTH ON AvADEmirVENNI F E E It11 ENT l'itpcicAM IF . . . . . . , . .

4, IS; 6 :,' ':.

1-2 INDIcATE T,H$ NUMMI() 'AcAliEmicl'Eltlas IN AN ArADEMIcYEAlt

.

SECTION III

37 NEVIN ANALYSIS LEE: issTnirnosi.

iA I;NIF0IISILV A011.1E1) BEFEllsoNATIoN or NI.I.:11

FA.INChldill'IA 1K1 IINIlliEISSTI(3)A1:1.1;1:)%1:NiT,A.11).11':Filti'F.I'liVHISS.AAN:11.AIATAATTIIIIFt: :FAMILY RE.IFFICALLYtoNTIOlil"FE,

,H i "

.11 Tills I.GAS IS PHI Mull k'ADEsitcVI:ARM:THE (TIDIEST PRocliAM ..e , , ,

i Atkiti; Evii m'Aili.,414,1KmoilroVEIIED Dv Tills !DAN 1,1- , -4,1:- 1rd ' .

34 DISHDI

DATE

SEMENTSclIEDITEISEEINgItUCITONs)

A. B. ,

D E.

TyrAL

AMOUNT.

, .

i.

.

H NEEDsANALYsISSIET11011.

I IIEH:IIV cEPTIPITHATTHEABoVESTOBENT

IS Al ErrED FOR ENBOLLSIENTOli. Is EN

ROLLED IN Cool) STANDING AND IS'MAKINC

sATISFAIIIIItY PlosHIESs IN A I'lioi;BASI OE.

TERMINF.IiloBE ELIGIBLE Foli THE PAIIAN

TEED sTITENT LOAN mini:RAM ANIf THAT

'illE SIVIIEN'I' DIES Sin' ME A liFFt".41) OS

6HAN1's 111EVIotsl.Y HErEIVED AT THIS IN

siIIITION UNDER TITLE (VIII DIE HIDIIF:II

EDITATBIN Arr OF rc. AS ASIENO.I.:0, (HI Issoi Is DEFAULT (IN ANY LOAN FROM A

STUDENT LOAN FlNI) AT THIS INSTITUTIoN

FIRVIDED FOII.iN PAW!' E OF THE AHoVE,NAMEIIAcT. oft A 1,14N MADE, VSI(UH 11w,

(ICAIIANTEED ..11'1)ENT INN 1110CRAM,Eoli

ATTENHANrE AT 'NHS INSTITPTION I

itiallEli CEIITIFV, THAT THE INFOBNIA'110N

GIVEN ABOVE IS TM:, (,.0M1,ri:, Atill co01

DEr MD mi.: HEAT OF 511 KNOWI,FIX;F, ANA

'lour ,

KaimAmorosi,soqi)rATIoN FURIOUS I,Eltloo

FINANcIAL AID Hilt.1,0ANITItIoil

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SECTION IV TO BE COMPLETED BY THE LENDING INSTITUTION 1SEE INSTRUCTR)NSON REVERSE 0F' LENIJEI{ COPYNAmEOFLENDING INsTiTumoN .

t42. ENTITY:NUMBER

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A. lidnIIII,F, yoD FEDERAL INTEREST' BENEFITS $ ___,____0

IL NoTEI,IDDII,F.Folt FEDEBM,INTEREST BE NEFITS S

CITY

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STATE ZOLCOIDi.

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CJIECK INFORMATION ON THE REVERSE, SIDE OF THE ORIGINAL

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'1' TOTAI, AMOUNT. APPIO1VED BY LENDER I

ILENDER COP' FOR COMPLETION BEFORE SUBMITTING FOR PROCESSING41i. SIGNATTIBROFAIITHORIZE,DLENDINc OFFICIAL 45 , PRIMA-I TYIT, NAME AND TITLE

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41 HATE j1

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APPLICANT'S BACKGROUND INFORMATION 1THIS PORTION MUST BE (TIMPLETED BEFORE PROCESSIN(:o

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SECTION IV LENDER INSTRUC4NS,

The Equal Credit Opportunity Act of 1975 (ECOA) provides that lenders must

inform loan applicants, at the time of appliceion, of the supervisory agency .that

oversees that lender's operations. The ECOA NotiCe located on the inside front

cover of this booklet provides a space for lenders to indicatthis information.

State chartered member banks may indicate the Federal Reserve System (A) as

their monitoring agency for purposes of the Federal Insured Student Loan

Program,

The lender should review the application ?or completeness including certification

of the borrower's signature by a notary public or other person authorized, to

administer oaths or affirmations, ITEMS 49.54,above must he comieted before

this applibtion can be processed. Students not applying fur Federal interest

benefits need not complete ITEMS 8, 0; or 10.

The fender must complete Sectii.n iV. The Lender and School copies of the

application must then he submitted to the Office. of Education Student Loan

Processing Center for the insuratce commitment. When the loan is iipproved, a

copy of the promissory note and the Studet?t Copy of the application must be

provided to the student.

The Disclosure of finance Charges (OE 1200) has been incorporated in the

promissory note, thereby eliminating that form. However, it is essential that OE

form 1201 (or oth r acceptable disclosure notice) be properly executed when the

loan goes into repayment.

Except for I6ders holding compr'ehenSive certiEc'ates of insurance or Gpressly

approved by the Commissioner of Education's designee, the disbursement of

funds must not be made until the 'original copy (Lender(opy) Of this application

is returned to the lender with the insurance commitment stamped in the upper

righthand corner. Disbursements should be reported to the Office of Education

on the Lender Manifest (OE 1151).

Disbursements must be made by check payable to the order and requiring the

end.,rsement orthe student, In addition, disbursements may not be male after

the expiration of the kW period (the last date in ITEM 29) without.the Approval

of the Office of Guaranteed Student Loans. ,

ITEM 42 Entity Number..

This number consists of the nine-digit Employer Identification.

Number assigned to the lender by the Internal Revenue Service with

a one -digit, prefiX (alwaysi 1) and a twodigit suffix (indicating

different branches or other Organizational units). If the lending

institution official is not aware of the Entity Number, he/she should.

contact the nearest Office of Education regional office, ,

ITEM 43 Lend`er Code.

All eligible lending institutions have been assigned a six-digitiender

code which must be entered here. When the Entity Number system

nas been fully implethented, the Lender Code will no lodger be

requested.

ITEM 45 Amount' Lender Approves.

The total amount approved them 45C) must not exceed the lesser of

the amounts in Item 13 (Amount Requested.) or Item 38 (Net Cost of

Education) within statutory limits, Statutory limits Vary for type of

lender and year of study, For specific inforniation, please check the

Lender Manual,

If'Item 10G (Adjusted Family Income) is less than $25,000, the full

'amount of the loan is eligible for Federal interest benefits. If Item

10Q, is $2500 or mare, check Item 37B (Interest Benefits

vfor the amount'of the loan eligible for Federal interest benefits, If the

( lender feels the arf,.;',int in Item 37B should be increased, heishe may

approve Federal '',`;,!..es' 'or 'wilts for an amount larger than that in

Item 37B, however, !e lender must justify the increase, in the

Additional Information box on the reverse of the Lender Copy.

ip

SCHOOL INSTRUCTIONS

SECTION II

The financial aid officer, or Other authorized school official completes

Sec'tion Il and when applicalle, Section 111), and returns all col)i [if theapplication (and az attached promissory notes) to the student fortransmittalto the lender.

-rThe function of the educational institution in connection witha student'sapplicaiion for a loan under the Federal Insured Student Loan Program

is to determine: (a) that the student is enrolled in good striding andmaking satisfactory progress or accepted for enrollment in \a. programdetermined to be eligible under the Guaranteed Student Loan Program,(b)'the estimated cost for education expenses, (c) the student's financialaid from other sources, (d) the recommended loan amount, a d (e) insoir; .caskthe' appropriate disbursement schedule for that particularcourse of study. r

iTiM 22 Entity Number.

This number consists of the nine-digit-Employer Identifica-

tion Number issued to the schtiol by the Internal Revenue

Service t'.rith a one-digit prefix (always 1) and atvo-digit

suffix (indicating different campuses). If the educational

institution official is.not aware of the Entity Number, he/she

should contact the nearest Office of Education regional,office,

ITEM 23 School Code.

All eligible educational institutions have been assigned a

six-digit code number which must be entered here. When the

Entity Number system (ITEM 22) has been fully im-. plemented, the School Code willno longer be requested.

ITEM 32 Indicate the Number of Academic Periods.

Indicate the normal number of academia 'periods (i.e

quarters, semesters, trimesters, etc.) which occur in an. academic year for this specific arriculum.

ITEM 33 Mark Each Academic Period Covered. \

Indicate by marking une or more of the blocks which

designate specific academic periods (example: loan is for fi-rst'twoquarters, mark blocks designated 1st and.2nd).

ITEM 34 Disbursement Schedule.

All schools are encouraged to recommend a disburseme

schedule.

ITEM 35 Estimated Costs of Education.

The school's average cost for all students may be used in lieu

of individual estimates in determining the cost of education.

ITEM 36\ Financial Aid.

Indicate all financial assistance awarded to this student. Do

not list financial assistance for which the student has applied

but has not yet been awarded.

2fi3

2,

ITEM 25 Student Status.

The applicant must be enrolled on of least a half-time basis

(as determined by the sthooll to he eligible for a loan.

ITEM 26 Student Classification,

This information is requested to determine applicant's loan

maximums.

ITEM 27 Anticipated Date

The anticipated

ing the insuram

without regard

other institutions.

.nary in calcufat-

ald Ix determined

suture attendance at

ITEM 28 Academic Year.

Indicate by month/year the normal peiiod reqUired to

complete one 'academic sear of study in this particular

curriculum.

ITEM 29 Period of Loan.

Use the dates indicated in ITEM Ins a guide in completing

this block: If the ITEM 12 data do not coincide exactly with

an academic period, (e.g. semesters trimester, quarter,

academic year, etc.) adjust them in Item 29 to coincide with

the closest actual academic period (s).

ITEM 30 'Indieate Length of Program of Study.

This information must be based solely on the applicant's

gram of study at the institution he/she is now attending

or is accepted to attend. Do not include time for programs

beyond the current degree or certificate pr;gran even

thOughihe applicant may plan such further study.

ITEM 31 Loan is ForWhich Academic Year.

Indicate the year of the current Program of Study in which

the applicant is now enrolled for which he/she is seeking a

loan (even though the loan may not cover ,a complete

academic year).

SECTION III

NEEDS ANALYSIS

No assessment of the ability of the student or the parents to 'fleet the cost

of education is to be made unless the student is applying for Federal

interest benefits and the adjusted family nrome (ITEM lOG) is $25,000

or more,

IT ,inputed Support,

determining the expected family contribution, schools

may use methods approved by the Commissioner of Educa-

tion for other Federally supported financial aid programs,

EXCEPT THOU DEVELOPED FOR THE BASIC

EDUCATIONAL OPPORTUNITY GRANT PROGRAM.

Methods most frequently used are: Alternate Income Sys-

tem (AIS), the American College Testing Program System

(ACT), the College ScholarsH,p Service System (CSS), the

Income Tax System (ITS), Other methods may be used if

they produce results, which on the whole, are similar to those ,

which would be produced by the systems mentioned above.

Those persons whok incomes are reported in Item 10

(Adjusted Gross Income) must be considered in computing

support through Needs Analysis.

The individual circuinciances of the borrower should be

considered in determining the family contribution. Indicate

in ITEM 37(A)(3) the following number codes for reasom

used in reducing the amount of computed, family support: (1)

reduction in income, (2) death or disability of wage earner, (3)

loss of job, (4) unanticipated medical or other extraordinary

expenses, (5) non-liquid assets (e.g. home equity), (6) cannot

meet expected contribution from income, (7) other. If code

"7" is used, briefly indicate the basis for this reason in the

"Additional Information" area oil the reverse side of the

Lender Copy of this application.

llITMENT IIKALTII. WCATION. ANI) WEI.FAIth:OFFICE:OF El V.VIIONWASHINGTON. If l' 2020.2

PROM ISS(111Y N()'1'1;FEI)Elt A I. INSURED STUDENT LOAN l'It0(0? kl 120 r.S.C. 1071 et seq I

FIN.ysugullyitc.Es MAN( 1:11.1'r, (late ore(' n:11 be o nyt:IN-ro .eccurgtateJed ,1 Ihe `eer, as theAare of the tr4r,,, Ion ,

T h.

P1(1.;1.ill HNANCE1 ;1:1.;aosurani e leo meow,

AMOUNT OF I n50

$

ANNUAL. PERCENTAGE RATEA. PRIOR TO BEI,INNING OF P. -PAY

MINT PERIODDOPING REPAYMENT PERIOD

hereinafter Called t he. "maker." 'monist. to pay to

lwrvinal) el. called the -lender," located 01

the sum of $ to the. extent it is

advanced to me, plus simple interest at the rate of percent per annum on the mast aniline, balance of such sum and authorized late charges,all reasonable attorney's fees, and of her ,. and charges necessary for t he collection of any amount not paid when due.. The lender will not collect orattempt to collect from the born, of the interest which is payable by the U. N, Government or hyan escrow agent.

The maker and lender furthe,

1. The lender has applied fog"Act," on all Ruins advanced ;the FEDERAL REGU

'hat:

ace under Tit le IV. Part II of the. Higher Education Act of 1965, as amended. hereinafter cited thinSuch terms of t his note- as are subject to interpretation shall be cutest retell in t he light of the ft and '

..ode Aut, a copy of which is on tile with t ht. lender.

monthsII. Subject to the following exception, repayment of outstanding principal, and' unrest. shall be made over a period commencingafter the date on which the maker ceases to carry, at an "eligible institution," at he is `one -Half the normal full-time academic work load, as (let ermined bysuch institution. and (except when paragraph V (2) applies) this period shall en I not Tess than five nor more than ten years after thelielgiiiiiitig-rif therepayment period but in no event shall t he repayment period extend to a date more than 15 years from the date of execution of t his note. EXCEPTION: The maker and lender, during the month period preceding the start of the repayment period. may agree to it repaymentperiod that begins sooner or is of shorter duration, provided that, in theevent that the maker has requested and obtained it repayment period of less thanfive years, he may at any time, prior to t he total repayment of the loan, have t he repayment period extended so that t he tm al repayment period is not hasthan five years. Interest Shall. accrue during the period prior to the commencement of repayment period but at the option of the lender need notbe paid during that period. SeiCh accrued interest shall. at the commencement of the repayment period. be added to and become a part of theprincipal amount of the loan. Repayment of Principal, together with h interest t hereon. shall he made in periodic inst ailment s-:n accordance wit h eit her: ( 1 )the terms of a separate instrument which shall be subject to the terms of this note and which the burrower agrees to execute. prior to commencement ofthe repavment period; or (2) it repayment schedule es1 a blished by t he lender prior to t he commencement of the repayment period which will be madea parto(dthis note. .

4

III: The maker agrees to pay the lender, in addition tit interest and principal due. an amount equal to the premiums that the lender is required to pay tothe U. S. Commissioner of Education (hereinafter called "the. Commissioner") in order to provide insurance coverage on this note.. Paylnentscovering the period of time extending from t he date of execution of this mote to the commencement of t he repayment period (estimated in accordance..with instructions issued by the Corn Missioner I shall be due and naya hie immediately.

IV. Maker authorizes the lender to disburse the proceeds of t his note to an escrow agent. on behalf of the maker, for redisbursement to the maker inaccordance with instructions issued by the Commissioner. Lender will not attempt to collect from the maker such. sums of money as have liven-disbursed to an escrow agent accant but not redisbursed by the escrow agent to or on behalf of the maker.

.

V. This note is subject also to the fallowing conditions:..... .e (1) The maker may at his option and without penalty prepay all or any part of the principal plus t he accrued interest at any time. In the event ofsuch prepayment, the maker shall be entitled to rebate of unearned interest computed by 0 the Sum of Digits Formula (rule of 78thq, 0 tither

(identify)

(2) Periodic installments of principal need not be paid, but interest shallaccrue and he payable; (according to regulations) during any period (A) inwhich the maker is carrying, at an eligible institution, a 'full-time academic load, (Jr is pursuing a course Of study pursuant to a graduate fellowshipprogram approved by the Commissioner, 1.13) not in excess of three years during which the maker is a member of'the Armed Forces of the UnitedStates, (C) not in excess of three years during which the maker is in service as a full-time volunteer under the Domestic Volunteer Service Act of 1973. (D)at the request of the maker, a single period, not in excess of twelve months, during, which the maker is seeking and unable to find full-titne employmentr (E) not in excess of three years in w:,.ich the maker serves as a volunteer tinder t lie Peace Corps Act. Any period described in A, 13,C, D. or E shall notBe included in determining the period during lich repayment must he made. .

(3) Notwithstanding the minimum repayment period set forth in paragraph II, the total aggregate annual payment by a maker during anyyear of the repayment period on all loans insured under the Act to the maker shall not. unless otherwise agreed to by lender and maker. be less than $360or the balance of all such loans plits accrued interest,. whichever is less, except that if a husband and wife both have outstanding insured loans thetotal combined aggregate annual payment on all such loans by husband and wife shall not he less than $360 or the combined balance of all such loans,plus accrued interest, whichever is less.

(4) In the event of a failure to make any payment when due hereunder, the entire unpaid indebtedness including interest due and accreted thereonshall at the option of the lender or any other holder of this note become immediately due and payable.. .(5) In the event of the maker's death or total and permanent disability: maker's unpaid indebtedness on this note shall be canceled pursuant toregulations issued by the Commissioner.

(6) Makerfs shall promptly notify t he lender or any other holder of this not e in writing of any change or changes in his address or his status as atleast half-time student...

(7a ) A late charge'Of 5 percent of the installment payment or $5.04), whichever is less, may be charged on any payment made later than 10 (laysafter the flue date.

SIONATU RE ADDRESS DATE

SIGNATURE ADDRESS DATE

NOTICE: This note shall be executed wit bout security and without endorsetnent, except that, if the maker is n minter and t his note would not,under State law, create a binding ob:igation, endontement may be required. The lender shall supply a copy ofkhis.note to t he maker.OE FORM 1164; 4/77

2tt; K-11

STATEMENT OF BORROWER'S RIGHTS AND RESPONSIBILITIES

BORROWER RIGI-ITS

I. The loan check must be made payable to the borrower and require his/her endorsement.

2, If the lender transfers (e.g. sells) the loan and the right to receive payments. the borrower must be sent a clear notification which spells out the borrower's obligations to the new holder,

3. BorroWers have a right to Federal interest benefits. if qualified. For more information about interest benefits,check the instruction section of the application.

. Lenders must provide the borroyer with a copy of the completed promissory note.

5. Borrowers have a right to a 9 to 12 month "grace period- before repayment begins after the borrower has left school oris attending School less than half-time. The exact length of this period indicated by the lender on the promissory note.

Borrowers have the loan without penalty ,ini,,wer !nay. it -any time, pay the loan balance andany interest ' ,irieed a penalty by HI, .

7. a ki ilk:ferment of repayment I Hover i. ,t required to make paynvint- ot

the loan principal for a period of time. The conditions that qualify a borrower tot ,u ferment are listed in 'v

on the promisory note. Also, if the borrower qualified for Federal interest benefits while in school, he/she will not berequired to pay interest on the loan during the deferment period.

8. 'Borrowers may request forbearance. If the borrower cannot meet his/her repayment schedule,, he/she mayrequest- forbearance from the lender, under which the payments may be reduced for a specified period of time if itwill assist the borrower in avoiding default.

9. The loan obligation will be canceled in the event of death or permanent and total disability. THIS LOAN CAN-NOT BE CANCELED OR "FORGIVEN" FOR DUTY IN THE MILITARY,SERVICE OR FOR TEACHING INSHORTAGE AREAS.

BORROWER RESPONSIBILITIES

I. The borrower must use care in choosing a school. All schools must provide informati?n to prospective studentsabout the school's programs and performance. Borrowers should consider this information carefully before decidingt.o attend a school.

2, The borrower must arrange with the lender to pay the interest on the loan if he/she does not qualify for Federal--interest .benefits. Interest benefits are 'explained in the instruction section of the application i-,C,oklet.

3. Theborroer must notify the lender if any of the following occurs before the loan is repaid.A. graduationB. withdrawal from scIrtibl or less than half-time attendanceC. changes of address

4, The borrower should notify the lender if any of the following occursbefore the loan is repaid.A. name changes (e.g., maiden name to married name)B. transfers to other schools

5. The borrower must repay the loan in accordance with the repayment schedule. More detailed information about therepayment terms is listed in Sections IT and V of the promissory note.

6. The borrower must notify the lender of any occurrence which may affect the borrower's eligibility for a deferment ifthe borrower is under deferfnent of repayment.

By my signature below I CERTIFY that. I have read and discussed my rights and responsibilities listed above with thelender. .

K -12

SIGNATURE OF BORROWER DATE

2.

30

0

4a)z0

E2

c\RIMINAL PENALTIES .

20 USC 1087-4

(a) ANY PERSON WHO KNOWINGLY AND WILLFULLYMBEZZLES, MISAPPLIES, STEALS, OR OBTAINS BY

FRAUD, FALSE STATEMENT, OR FORGERY ANYFUNDS, ASSETS, OR PROPERTY PROVIDED OR IN-SURED UNDER THIS PART SHALL BE FINED NOTMORE THAN $10,000 OR IMPRISONED FOB NOT MOkETHAN FIVE YEARS,ORBOTH; BUT IF THE AMOUNT SOEMBEZZLED, MISAPPLIED, STOLEN OR OBTAINED BYFRAUD, FALSE. STATEMENT OR FORGERY DOES NOTEXCEED 200, THE FINE SHALL BE NOT MORE THAN$1,000 AND IMPRISONMENT SHALL NOT EXCEED ONEYEAR, OR BOTH. .

.._....FEDERAL.INSUREaSTUDENT-LOAN-7% Repaymen't Schedule

Number of Months to Repay

9 18 28 38 4 60 72 86 99 1.64k 120 FINALPAYMENT

INTERESTAMOUNT

TOTAL OF'PAYMENTS

250 30 17.38 7.38 257.38500.

, 18.27 28.27 528.27750 30 1- 5.28 65.28 815.28

1000 30 8.00 118,00 1,118.001250 30 , 27.00 187.00 437.001500 30 12.90 282.90 1,782.901750 30 24.25 404.25. 2,154.252000 30 ,

.48 550.48 2,550.482250 30 '' 29.66 719.66 2,969.662500 30 8.93 958.93 3,458.932750 31.93 '31.96 1,081.63 3,831.633000 34.84 34.00 1,179.96 4,179.963250

.. . .57.74 37.23 1,278.29 4,528.29

3500 46,64 40.46 -- 1,376.62 4,876.623750 43.55 42,50 1,474.95 5,224.954000

, 46.45 45.73 1,573.28 5,573.284250 - 49.35 . 48.96 1,671.61. 5921.614500'

. 52.25 52.19 1,769.94 6,269. 44750 55.16 54.23 1,868.27 6,618. 75000 58.06 57.46 1,966.60 6,96.6E

REGULAR MONTHLY'PAYMENT

-208

4111. S. GOVERNMENT PRINTING OFFICE, 1996 -269'73e/6'604

A

K-13