800.242.0977

djainfo@gotodja.com

3000 W Kellogg Drive

Wichita, KS 67213

NOVEMBER 2016 NEWSLETTER

I VETERANS DAY FEDERAL HOLIDAY PROCESSING

DJA will be open on Veterans Day however; federal offices as well as some Title

IV processors and contact centers will be closed on Friday, November 11, 2016 to

observe the Veteran’s Day federal holiday. CPS - The Central Processing System

(CPS) will accept data on Friday, November 11, 2016 but will not process

Get ready to fall back! The end of Daylight Savings Time 2016 is quickly approaching. Keep in mind that most areas of the United States observe DST, except for Arizona, Hawaii and several overseas territories. Don't forget to turn back the clocks at or before 2 a.m. on Sunday, November 6 and enjoy that extra hour of sleep! As Veterans Day approaches, I take this opportunity to say THANK YOU to all Veterans and military personnel, whether at home or abroad, active duty, reserves, or retired. I appreciate your service. And to our valued clients and colleagues, all of us at DJA wish you a holiday filled with an abundance of good times and great memories with family and friends on Thanksgiving.

Thank you and until next time, have fun!

Deborah John, President

IMPORTANT DATES:

November 2

DJA Webinar

Program Integrity

11:00 a.m. CDT

November 4-7

AACS Conference

November 6

November 11

Veteran’s Day

November 24 & 25

DJA Closed – Thanksgiving

November 29 – December 2

FSA Conference

IN THIS ISSUE:

Verification Updates

Gainful Employment

Updates

Campus Policing

150% DL SUB Loan Limit

- COD Updates

Conditional Acceptance

DJA Calendar

November 2016 2

Institutional Student Information Records (ISIRs) until Monday, November 14, 2016.

DJA will continue to import and export on Monday, but new processed ISIRs will not be available to import

from CPS until Tuesday morning.

COD System - The Common Origination and Disbursement (COD) System will accept and process data from

schools and send back responses/acknowledgments on Friday, November 11, 2016, but schools will not be able

to receive any federal funds on that day. Requests for changes in funding levels and for funds will not be

processed until Monday, November 14, 2016.

Please see the attachment to this electronic announcement for the various FSA centers’ operation status on the

holiday.

https://ifap.ed.gov/eannouncements/102616VetDayFedHolidayProcessingAndCustServHours.html

NEW AND UPDATED VERIFICATION GUIDANCE

FSA posted revised and new Q&As to the verification portion of the program integrity page on their website in

October at: http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/integrity-qa.html

NEW - Guidance issued 10/6/2016; and applies beginning with the 2017-2018 award year.

DOC-Q29. Since a Social Security Number, an Individual Taxpayer Identification Number, or an Employer

Identification Number is required to obtain a verification of non-filing from the IRS, how can a nontax filer

without one of these identifiers meet the verification requirement to obtain confirmation of non-filing from the

IRS?

DOC-A29. We are aware of circumstances where one or both of the parents of a dependent student or the

spouse of an independent student does not have a Social Security Number, an Individual Taxpayer

Identification Number, or an Employer Identification Number and therefore is unable to obtain a verification of

non-filing from the IRS. Individuals in these cases and whose income is below the IRS filing threshold must

submit to the institution:

1. A signed and dated statement--

◦Certifying that the individual(s) does not have a Social Security Number, an Individual Taxpayer Identification

Number, or an Employer Identification Number; and

◦Listing the sources and amounts of earnings, other income, and resources that supported the individual(s) for

the appropriate tax year; and

2. If applicable, a copy of IRS Form W–2 for each source of employment income received for the appropriate

tax year or an equivalent document.

Note: Individuals who submit W-2s that total a gross income that equals or exceeds the IRS tax filing

threshold must request a Social Security Number, an Individual Taxpayer Identification Number, or an

Employer Identification Number and file an income tax return before the student is eligible to receive Title

IV aid.

https://ifap.ed.gov/eannouncements/100616ProgramIntegrityQuestionsandAnswersQAWebsiteUpdate.html

November 2016 3

CHANGES IN VERIFICATION TRACKING GROUPS – EXPANDED GUIDANCE

In Dear Colleague Letter GEN-15-11, posted on June 29, 2015, FSA announced that, beginning with 2016-

2017, some applicants may be moved from a previously assigned Verification Tracking Group of V1, V4, or V6

to Verification Tracking Group V5. Such a change would be based on corrections made to the applicant's CPS

record or on other information available to the Department.

An Electronic Announcement posted on October 31st expands on the guidance provided in GEN-15-11 by

listing the possible changes to an applicant’s Verification Tracking Group. The chart also covers situations

where an applicant was selected for verification and filed an income tax return extension. The guidance in this

Electronic Announcement and the attached chart applies to both the 2016-2017 FAFSA processing year and to

all subsequent years, including the 2017-2018 FAFSA processing year.

The information on the chart shows that, in general, whether a student is initially or subsequently selected for

verification, the applicant must complete verification of all the information required for the applicant’s current

Verification Tracking Group. Of course information that had previously been verified for the FAFSA year does

not need to be re-verified. Failure to complete verification will, in most instances, require the applicant (not the

institution) to repay any Title IV aid that had been disbursed. Similarly, if after completing verification, it is

determined that the applicant was overpaid Title IV aid, the student (not the institution) is responsible for

repaying those funds. The only exception that would place responsibility for repaying Title IV aid on the

institution is if the aid was disbursed under the interim disbursement provision of the regulations at 34 CFR

668.58.

FSA is aware that prior to this Electronic Announcement, there may have been instances where an institution

received a subsequent 2016-2017 ISIR that placed the student into Verification Tracking Group V5 after some

2016-2017 Title IV aid had been disbursed. As provided in attached Chart B, if that student does not

satisfactorily complete verification, including verification of identity/statement of educational purpose and high

school completion status, the student must return all 2016-2017 Title IV aid that had been disbursed. Again,

institutions are reminded that under these situations the institution is not liable for the return of any of these

funds.

Attachments/Enclosures:

Changes in Verification Tracking Groups Chart in Microsoft Word Format, 41KB, 3 Pages

https://ifap.ed.gov/eannouncements/103116ChangesinVerificationTrackingGroup.html

ACCEPTABLE DOCUMENTATION UPDATE FOR 2016-2017 AWARD YEAR VERIFICATION

An Electronic Announcement posted on October 18th

provides an update on acceptable documentation for

individuals selected for verification who filed a 2015 tax return with the IRS, but who are unable to obtain a tax

transcript from the IRS. This applies only to the 2016–2017 award year and to individuals who attempted to use

November 2016 4

one of the official IRS processes to request a tax transcript of the information that was included on their 2015

tax return that was filed with the IRS.

In Dear Colleague Letter GEN-16-07 FSA noted that the documentation used to verify 2015 income and tax

information for the 2016–2017 award year may be used to satisfy a 2017–2018 verification requirement if that

documentation meets the acceptable documentation requirements for 2017–2018, as noted in the April 1, 2016,

Federal Register notice. However a 2015 income tax return submitted to an institution for 2016–2017

based on the guidance in this Electronic Announcement is not acceptable to complete verification for the

2017–2018 award year.

For the remainder of the 2016–2017 award year verification process, a signed paper copy of a 2015 IRS tax

return (IRS 1040, IRS 1040A, IRS 1040EZ) may be provided by the tax filer as "acceptable documentation" for

income and other tax related verification information if the tax filer had recently requested a tax transcript from

the IRS but was unsuccessful in obtaining the tax transcript.

As noted below, the tax filer will need to provide to the institution proof that the IRS was unable to provide the

tax transcript. Note that, for a tax filer who recently filed their tax return, adequate time should be allowed,

generally four to six weeks, for the IRS to have processed the tax return before a tax transcript is requested.

The alternative documentation that must be submitted to the institution by a tax filer who meets the

requirements described above is as follows:

1. A signed copy of the relevant (i.e., applicant, spouse, or parent) 2015 IRS tax return that was filed with

the IRS.

2. A statement from the tax filer, on or attached to the tax return, which certifies that the tax return

submitted to the institution, includes the same information that was submitted to the IRS.

3. Documentation from the IRS that the tax transcript request was unsuccessful.

o For tax filers who requested a tax transcript using the IRS online transcript request process (Get

Transcript Online or by Mail), a signed and dated copy of the screen shot from the official IRS

Web page that displays a message indicating that the tax transcript request was unsuccessful.

Failure of a tax filer to successfully register for Get Transcript Online is not a sufficient reason for an institution

to accept the alternative documentation discussed in this Electronic Announcement. In such a case, a tax filer

must request a tax transcript using Get Transcript by Mail or by using paper Form 4506T-EZ or Form 4506-T

and provide documentation from the IRS that the tax transcript request was unsuccessful, if applicable.

o For tax filers who requested a tax transcript using IRS Form 4506T-EZ or Form 4506-T, a copy

of the IRS response that was mailed to the tax filer stating that the IRS could not provide the tax

transcript. The copy of the IRS response must be signed and dated by the tax filer.

Note: Because the IRS does not provide written confirmation of the failure of a tax transcript request made by

calling 1-800-908-9946, there is no alternative documentation for that process. Impacted tax filers must request

a tax transcript using either the online (Get Transcript Online or by Mail) or paper process (IRS Form 4506T-

EZ or Form 4506-T).

4. A completed and signed IRS Form 4506T-EZ or Form 4506-T that includes on line 5 the name, address,

and telephone number of the institution as the third party to whom the IRS is to mail the 2015 IRS tax

November 2016 5

transcript. The institution should proceed with verification and simply retain the IRS Form 4506T-EZ or

Form 4506-T and not submit it to the IRS. However, if the institution questions the accuracy of the

information on the signed copy of the paper tax return, it must, before verification can be completed,

submit the IRS Form 4506T-EZ or Form 4506-T to the IRS and wait for the IRS to return the tax

transcript or confirmation that a tax transcript is not available for that tax filer.

https://ifap.ed.gov/eannouncements/101816AcceptableDocUpdateAY20162017Verification.html

INFORMATION REGARDING INSTITUTIONAL RESPONSIBILITIES TO RESOLVE 2017-2018 COMMENT CODE 399 CONFLICTING INFORMATION ISSUES In Dear Colleague Letter GEN-16-14, published on August 3, 2016, FSA provided guidance on the

identification and resolution of possible conflicting information between students’ 2016-2017 FAFSAs and

2017-2018 FAFSAs. That guidance included a thorough discussion of the setting of ISIR Comment Code 399.

As a reminder, Comment Code 399 is assigned when the student or parent reported different 2015 income and

tax information on their 2017-2018 FAFSA than what was reported on their 2016-2017 FAFSA.

Reprocessing - In an Electronic Announcement published on October 13, 2016 FSA informed institutions that

on October 17, 2016, the CPS would reprocess a number of 2017-2018 FAFSAs to remove incorrectly assigned

ISIR Comment Code 399s. If the ISIR transaction resulting from the October 17 reprocessing no longer

includes Comment Code 399 the institution is not required to take any action to resolve the Comment Code 399

that was included in the earlier ISIR transaction. Of course, any subsequent ISIR that includes Comment Code

399 must be resolved using the guidance provided in Dear Colleague Letter GEN-16-14.

Graduate Students – As noted in Dear Colleague Letter GEN-16-14, FSA has focused selection of ISIRs for

Comment Code 399 on 2017-2018 FAFSA applicants who are, or could be, Pell Grant eligible. The calculation

used by the CPS to set Comment Code 399 does not automatically exclude FAFSA applicants simply because

they reported on their FAFSA that they would be a graduate student since we know that in some cases that self-

reported grade level is in error. That said, an institution is not required to resolve the reported Comment Code

399 if –

The institution determines that the student was, or will be, a graduate student for all of 2016-2017 and

will continue to be a graduate student for all of 2017-2018; and

The student did not, and will not, receive Federal Work-Study for either the 2016-2017 or 2017-2018

award years.

Note that this relief does not apply to a student who was or who will be an undergraduate student even if the

student has already completed a bachelor’s degree program. This is because such a student, while not eligible

for a Pell Grant or FSEOG funding, is eligible for other subsidized Title IV aid.

Professional Judgment – Dear Colleague Letter GEN-16-14 indicated that FSA would not be placing

Comment Code 399 on 2017-2018 ISIRs if a professional judgment transaction (Professional Judgment Flag set

to ‘1’) has been created for either year. Based upon information provided by some institutions, it has been

determined that there may be a minor processing error resulting in some 2017-2018 ISIRs being flagged with

November 2016 6

Comment Code 399 when professional judgment had been used. FSA is currently investigating the

circumstances around this issue and will provide guidance on its resolution as quickly as possible through a

subsequent Electronic Announcement.

https://ifap.ed.gov/eannouncements/102116RegardInstitutionalResponsibilitiesResolve20172018CommentCode

399Conflict.html

DRAFT GE DEBT-TO-EARNINGS (D/E) RATES CHALLENGE PERIOD: OCTOBER 24 TO DECEMBER 7, 2016

USDE released the information below over the past few weeks. Although, we have outlined the details, you

must go to the links provided for each electronic announcement and read them in their entirety.

The 45 day challenge period to submit challenges to certain underlying loan data used to calculate the draft

GE D/E rates began on October 24th

. The final day of the draft GE D/E rates challenge period will be

Wednesday, December 7, 2016. The challenge submission functionality in NSLDS will be available until 11:59

P.M. (ET) on December 7, 2016.

Challenge Instructions As described in Gainful Employment Electronic Announcement #92, during the 45-day challenge period

institutions may challenge certain Title IV loan data that is used to calculate the median debt for the students in

a GE program. The three primary reasons why an institution may want to submit a challenge are as follows:

The loan does not belong to the student or to the institution;

Incorrect loan period dates;

The Loan Debt Amount is incorrect (although the Loan Debt Amount is not challengeable, the Loan

Debt Amount can be updated by challenging the Loan Amount, Cancellation Amount, and/or Refund

Amount).

After reviewing the GE Debt Measures Backup Data detail file, if an institution determines that some of the

data is in error, the institution will need to submit a challenge using the NSLDS Professional Access website.

For detailed instructions on submitting these challenges, refer to Chapter 9 of the updated NSLDS Gainful

Employment User Guide, available on the NSLDS User Documentation page on the IFAP website.

Once the challenge has been entered in NSLDS, the system will prompt the institution to enter a detailed

comment explaining the reason for the challenge for each loan challenged. Note that there will only be one

comment box per student. If the student has multiple loans that the institution wants to challenge, the institution

must enter all comments for each loan within the maximum allotted space of 500 characters. In order to easily

tie each explanation to the specific loan being challenged, the institution must include in the comment the GE

Record ID – Loan Record ID (e.g., 0AACC-0AKYE) for each loan being challenged before entering the

detailed comment.

Supporting Documentation Institutions will need to submit supporting documentation that substantiates the challenges being submitted. The

Department will deny challenges submitted without supporting documentation. A detailed list of the acceptable

November 2016 7

and unacceptable forms of documentation and examples of the comments institutions must enter can be found at

this link “Documentation for Challenges to Draft D/E Rates”.

Before submitting a challenge in NSLDS, institutions should first obtain supporting documentation from

NSLDS or from the Common Origination and Disbursement (COD) System. If the documentation is not

available from those systems, the institution may obtain the supporting documentation from the current loan

servicer. If the loan is currently serviced by a federal loan servicer, the institution should use the servicer’s self-

service website. For a table that includes each federal loan servicer’s self-service website and email address,

read Federal Loan Servicer Contact Information for GE Data Requests in PDF Format, 221KB, 1 Page

Once all documentation has been obtained and challenges have been submitted to NSLDS, the institution must

email all supporting documentation to GE.Operations@ed.gov. Because of the need to ensure the privacy of

borrower information, before emailing the supporting documentation to the Department, institutions must

follow these step-by-step instructions How to Submit Supporting Documentation for Draft Debt-to-Earnings

(D/E) Rates Challenges in PDF Format, 332KB, 3 Pages. Failure to submit supporting documentation for all

challenges entered as described in the step-by-step instructions will result in the automatic denial of the

challenge.

Attribution Rules The Department uses the reported enrollment dates to attribute a student’s loan amounts to the relevant GE

program. In instances where a student was enrolled in more than one GE program during a loan period, they

attribute a portion of the loan to each program in proportion to the number of days the student was enrolled in

each program. In instances where a loan was made for a period that included enrollment in both a GE program

and in a non-GE program, the loan will be attributed to the GE program under the assumption that the student

would have taken out the loan if the student was enrolled only in the GE program. Application of the attribution

rules may result in a lower loan debt for a particular student.

Since there may be instances when a Title IV loan has been attributed to more than one GE program, if the

institution determines that the data for that loan is incorrect the institution must submit separate challenges for

each program. If the challenge is approved, the updated data will not carry over to the same loan in the other

program.

Read the entire electronic announcement at:

https://ifap.ed.gov/eannouncements/102116GEAnnounce94DraftDEChallengePeriod1024to120716.html

GE Debt-to-Earnings Backup Data Viewer Tool “GE Debt Measures Backup Data” detail files and cover letters were sent to schools overnight on October 19

th

The cover letter is self-explanatory, but the detail files contain the draft Gainful Employment (GE) Debt-to-

Earnings (D/E) rates for each GE program at the institution as well as the data used to calculate the rates. In

order to import, view, and sort these backup detail files you must use the GE Debt-to-Earnings Backup Data

Viewer Tool.

Java software must be installed on the user’s computer to access and use the GE Debt-to-Earnings Backup

Data Viewer Tool. To download the tool from the IFAP website, click on the “GE Debt-to-Earnings Backup

November 2016 8

Data Viewer Tool” link in the "Resources" section of the Gainful Employment Information Page. Institutions

will then save the file to a location on their computer, open the zip file from that location, and unzip the

software file (NSLDSGEDebtViewer.jar).

After downloading and opening the software, the user must first browse and locate the institution’s GE Debt

Measures Backup Data detail file. Once the file has been located, the institution’s OPEID and School Name

appear below the file extension. The GE Debt Measures Backup Data detail file must then be uploaded to the

Viewer Tool.

https://ifap.ed.gov/eannouncements/102016GEAnnounce93DERatesDistributedViewerToolAvail.html

Contact Information If you have questions about how to read your GE Debt Measures Backup Data detail file, the GE Debt-to-

Earnings Backup Data Viewer Tool, or access to NSLDS, please contact the NSLDS Customer Support Center

at 800/999-8219. You can also contact Customer Support by email at nslds@ed.gov.

For questions about how to submit challenges in NSLDS, supporting documentation, or what to include in your

comments, please contact the GE Customer Support Center at 877/281-1995. You can also contact the Gainful

Employment Operations Team by email at GE.Operations@ed.gov.

The Gainful Employment Information Page on the IFAP website contains publications and resources on GE as

well as Frequently Asked Questions (FAQs). If you have a policy question about the GE regulations that has not

already been addressed in the FAQs section of the Gainful Employment Information Page, please submit the

question to ge-questions@ed.gov.

DEBT-TO-EARNINGS RATE ALTERNATE EARNINGS APPEALS As part of the Gainful Employment (GE) regulations, an institution may submit an alternate earnings appeal if it

has a GE program with a final Debt-to-Earnings (D/E) rate that is failing or in the zone. While final D/E rates

will not be issued until January 2017, institutions may submit their Notice of Intent to appeal upon receipt of

their draft D/E rates. The sections below provide further information about the alternate earnings appeals

process.

Alternate Earnings Appeals

Appeals may be submitted if using the alternate earnings would change a program’s D/E rate from zone to pass

or from fail to either zone or pass. An institution electing to submit an alternate earnings appeal must file a

Notice of Intent to appeal with the Department no later than 14 days after the issuance of the final D/E

rates, which is planned for January 2017. Instructions on how to submit a Notice of Intent are provided

below.

For institutions that have filed a proper Notice of Intent to appeal with the Department, the materials to

substantiate the appeal are due no later than 60 days following the issuance of the final D/E rates. As indicated

November 2016 9

in the regulations, appeal submissions must be complete, timely, accurate, correctly formatted, and consistent

with any instructions issued by the Department. Institutions failing to submit a Notice of Intent to appeal and

the appeal itself within the relevant timeframe waive their right to appeal the GE program’s D/E rate. For

GE programs with appeals under consideration, the D/E rate consequences under 34 CFR 668.410 will not

apply while the appeal is under review by the Department. If a program’s final D/E rate is under appeal when

final rates are made public, the program’s final D/E rate will be annotated to indicate that it is under appeal.

Under the GE regulations at 34 CFR 668.406, the institution submitting the appeal must calculate the GE

program’s new D/E rates using, as the numerator, the annual loan payment amount from the final D/E rate

calculated by the Department and the higher of the mean or median alternate earnings as the denominator. If

the appeal is approved, the recalculated D/E rate becomes the GE program’s final D/E rate. If the appeal is

denied, the previously issued final D/E rate remains the program’s final D/E rate. Institutions will be notified of

appeal results and of any consequences resulting from the final D/E rate.

Instructions for Appeal

To submit a Notice of Intent, institutions must send an email to AltEarningsAppeals@ed.gov. While a Notice

of Intent must be received by the Department no later than 14 days after the issuance of the final D/E rates,

institutions may submit their notice upon receipt of their draft D/E rates. Notice of Intent email messages must

have the subject line “Notice of Intent to File Alternate Earnings Appeal” and the body of the email must

include the institution’s name, 6-digit OPEID, and the CIP codes and credential levels for each program that

will be part of the appeal.

Income data for alternate earnings appeals must be from the same calendar year used by the Department in its

calculation of the program’s D/E rates; 2014 for the current cycle of calculations.

Alternate earnings data for D/E rate appeals may be obtained by the institution from either an institutional

survey of the GE program’s former students or from a state-sponsored data system. In either instance, the

students included in the appeal must be those who were in the cohort that was used by the Department or in a

comparable cohort period.

RECENT GRADUATES EMPLOYMENT AND EARNINGS SURVEY (RGEES)

As described in Gainful Employment Electronic Announcement #85, the Department has created a survey and

calculation tool to assist institutions, at their option, with conducting their own survey. The RGEES Platform

and a Best Practices Guide are available in the “Resources” section of the Gainful Employment Information

Page on the IFAP website. It is highly recommended that you start reviewing this information immediately if

you plan to file an alternate earnings appeal.

Regardless of whether institutions elect to use the RGEES Platform, the survey must be conducted in

accordance with the Department’s Standards for Conducting the Recent Graduates Employment and Earnings

Survey (RGEES). When submitting documentation of survey results for an alternate earnings appeal,

institutions must include a signed certification from their President/CEO attesting that the survey was conducted

in accordance with the Standards and that the mean or median earnings used to recalculate the GE program’s

November 2016 10

D/E rate were accurately determined from the survey results. An examination-level attestation engagement

report from an independent accountant or independent auditor must also be included, certifying that the survey

was conducted in accordance with the Standards.

When submitting documentation of alternate earnings data from a state-sponsored data system, the institution

must demonstrate that the data were obtained for at least 50 percent of the completers in the cohort period and

that it included at least 30 completers. The submission must be accompanied by the President’s/CEO’s signed

certification that the state-provided earnings data were accurately used to recalculate D/E results. Completed

appeal packages must be emailed to AltEarningsAppeals@ed.gov with the subject line “Alternate Earnings

Appeal” and must include all required documentation as attachments to the email. Appeals submitted after the

60-day period or with incomplete documentation will be denied.

Contact Information

If you have questions about the information in this Electronic Announcement, contact the Gainful Employment

Operations Team at AltEarningsAppeals@ed.gov.

The Gainful Employment Information Page on the IFAP website contains publications and resources on GE as

well as Frequently Asked Questions (FAQs). If you have a policy question about the GE regulations that has not

already been addressed in the FAQs section of the Gainful Employment Information Page, please submit the

question to ge-questions@ed.gov.

https://ifap.ed.gov/eannouncements/102616GEEAnnouncement95DebttoEarningsRateAlternateEarningsAppeal

s.html

GUIDANCE ON CAMPUS POLICING, CLERY ACT DISCLOSURES, AND RELATED CIVIL RIGHTS OBLIGATIONS

As you are aware, all postsecondary institutions participating in the student financial assistance programs are

required by law under the Clery Act to take a number of actions to improve campus safety. In early September,

USDE issued guidance on campus policing in DCL GEN-16-17. This letter, from U.S. Secretary of Education

John B. King Jr., calls for your attention to the issues and events surrounding community and police relations,

racial injustice, and officer and public safety. Secretary King highlights the legal responsibilities you have to

address such issues on campus and shares many resources that can help you do so.

Please take the time to read this important and timely guidance.

https://ifap.ed.gov/dpcletters/GEN1617.html

November 2016 11

COD SYSTEM CHANGES FOR THE 150% DIRECT SUBSIDIZED LOAN LIMIT - EFFECTIVE OCTOBER 30, 2016

Changes to Subsidized Usage Period Calculations

Zero Disbursement Exception - Prior to October 30, 2016, the payment period of a Direct Loan award was excluded

from the Subsidized Usage Period calculation if the disbursement amount for that payment period is $0 and the

disbursement date is outside the Financial Award Begin and End (loan period) dates.

Beginning October 30, 2016, a payment period of a Direct Loan award will be excluded from the Subsidized Usage Period calculation if the disbursement amount for that payment period is $0 and the Payment Period Start Date (PPSD) is outside the loan period dates.

As a result, a school will be able to change the Financial Award Begin and/or End (loan period) dates as long as the disbursement amount is $0. A school will no longer have to change the disbursement date to adjust loan period dates. Note: The Payment Period Start Date must be outside the revised loan period dates.

Loan Limit Exception - Prior to October 30, 2016, the Subsidized Usage Period of a Direct Loan award was calculated

as 1 year when the award amount is equal to the annual loan limit for that grade level and the loan period is less than the

academic year regardless of the actual length of the loan period and academic year.

Beginning October 30, 2016, the COD System also considers a student’s highest grade level when a student progresses to a higher grade level during the academic year when applying the loan limit exception.

The Subsidized Usage Period for a Direct Loan award will be calculated as 1 year, regardless of the actual length of the loan period and academic year, when all of the following conditions are true:

The award amount is equal to the annual loan limit (for that grade level)

The loan period is less than the academic year

The borrower does not have another active Direct Subsidized Loan within the same academic year at a higher grade level

Example of the loan limit exception change

Before COD System Implementation - Total SUP is 1.2 years; Loan limit exception triggers on the 001 loan.

LOAN LOAN PERIOD ACADEMIC YEAR GRADE

LEVEL LOAN AMOUNT

SUP

001 Fall-spring Fall-spring-summer 1 $3500 1.0 year

002 Summer Fall-spring-summer 2 $1000 0.2 year

November 2016 12

After COD System Implementation - Total SUP is 1 year; Loan limit exception no longer triggers.

LOAN LOAN PERIOD ACADEMIC YEAR GRADE LEVEL

LOAN AMOUNT

SUP

001 Fall-spring Fall-spring-summer 1 $3500 0.8 year

002 Summer Fall-spring-summer 2 $1000 0.2 year

Changes to COD System Edits

Effective October 30, 2016, FSA made changes to the COD System to modify the conditions for returning some

existing COD System edits to schools.

COD Reject Edit 046 - Incorrect Academic Year Dates - Schools have been reporting Direct Loan Academic Year Start and End Dates that are less than the required minimum number of weeks. Schools should be reporting academic year start and end dates that reflect their defined academic year for annual loan limit purposes.

In general, an academic year for a credit-hour or direct assessment program must include at least 30 weeks of instructional time. An academic year for a clock-hour program must include at least 26 weeks of instructional time.

Beginning October 30, 2016, COD Reject Edit 046 will be returned when the Direct Loan Academic Year Start and End Dates do not equal at least 26 weeks for origination and maintenance records. The new edit will apply to the 2016-2017 Award Year and forward.

Example

Fall disbursement was made, but the student withdrew before the spring term and no spring disbursement was made. The school correctly—

• zeroed out the spring disbursement

• reduced the loan amount to the amount disbursed in the fall

• shortened the loan period to remove the spring term

• also reduced the academic year from fall-spring to fall-only

Reject edit 046 will be returned in the Common Record response because the academic year length in the maintenance record is less than 170 days.

Additional information about academic years and payment periods for Direct Loan awards can be found in the Federal Student Aid Handbook, Volume 3, Chapter 1 and Volume 3, Chapter 5.

November 2016 13

COD Reject Edit 205 - Payment Period Start Date is outside the Award Begin and End dates - Prior to October 30,

2016, COD Reject Edit 205 was returned when the Payment Period Start Date for a disbursement was not contained

within the Financial Award Begin and End Dates (Loan Period) of a Direct Loan award. However, the edit was not

returned when the disbursement amount has been reduced to $0, the

Payment Period Start Date was outside the loan period, and the disbursement date remained inside the

loan period.

Beginning October 30, 2016, COD Edit 205 will not be returned when a disbursement has been reduced to $0 and the Payment Period Start Date is outside the loan period, regardless of whether the disbursement date falls inside or outside of the loan period. Refer to the ‘Zero Disbursement Exception’ section above for additional information.

COD Reject Edit 206 - The Remaining Subsidized Eligibility Period is less than zero for this award; and

COD Reject Edit 207 - The Remaining Subsidized Eligibility Period is less than zero for this award after this

disbursement was approved from the Action Queue - Prior to October 30, 2016, Edits 206 and 207 were returned to

schools when a Direct Loan award or maintenance record was submitted and the calculated Remaining Subsidized

Eligibility Period was less than zero. Edits 206 or 207 were also returned when a maintenance record was submitted and

the Remaining Subsidized Eligibility Period increases but the period remains less than zero.

Beginning October 30, 2016, Edits 206 and 207 will no longer be returned when a maintenance record is submitted and the Remaining Subsidized Eligibility Period is increased or remains the same but the period is still less than zero.

Example

Student was in a 2-year program (maximum eligibility = 3.0 years) and received subsidized loans before transferring to a 4-year program where he or she received additional subsidized loans. The sum of the student’s subsidized usage is now 4.0 years when the school realizes it failed to make an update to an earlier loan that was awarded for the 2-year program.

Former loan:

Loan amount: $3500

Fall disbursement: $1750

Spring disbursement: $0

Loan period: fall

Academic year: fall-spring Subsidized Usage Period (SUP) of this loan: 1.0 year

Remaining Eligibility Period (REP) on this loan/for this program: -1.0 year

Before COD System implementation - The school should have reduced the loan amount, but could not do so because even though the SUP decreased, the REP was negative.

November 2016 14

After COD System implementation - The school should reduce the loan amount and can do so now as long as the SUP does not increase. This update will decrease the SUP by around 0.5 years.

Subsidized Usage Period (SUP) once the update is made: 0.5 year

Remaining Eligibility Period (REP) on this loan once the update is made: -0.5 year

New COD Edits

Effective October 30, 2016, FSA made changes to the COD System to return two new edits to schools.

Correcting Edit 219 - Award Amount was greater than the sum of the Disbursement Amount(s) - In order for the COD

System to correctly calculate the Subsidized Usage Period for a Direct Loan award; a school must ensure both the loan

amount and disbursement amounts reflect the total amount disbursed to the student. FSA determined that many schools

have been reducing the disbursement(s) of a loan without also updating the loan amount.

Beginning October 30, 2016, a new Correcting Edit 219 was added for Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and TEACH Grants for the 2016-2017 Award Year and forward. When a school submits a maintenance record to reduce the disbursement(s) on a Direct Loan or TEACH Grant award, the COD System will correct the award amount to equal the new sum of the actual and anticipated disbursements.

The updated award amount will be returned to the school in the Common Record response (COMREC, CRDL, CRTH, CRAA) within the existing <ResponseErrorValue> tag.

Example - A school zeroes out an unused disbursement but fails to reduce the loan amount.

ACTION LOAN AMOUNT

1ST

DISB 2N

D

DISB 3r

d DISB TOTAL OF

ALL DISBS New

origination $3500 $1166 $1167 $1167 $3500

Maintenance record sent

$3500 $1166 $1167 $0 $2333

Correcting Edit 219 triggers

$2333 $1166 $1167 $0 $2333

Note for EDExpress Users: Prior to October 30, 2016, in the EDExpress software, the Loan Amount Approved was automatically reduced when the total disbursements were lowered below the current Loan Amount Approved amount. Now, when an EDExpress user imports a CRAA response, the user will see the corrected Loan Amount Approved values on the Import Edit Report for review and action.

Warning Edit 220 - The disbursement has an amount of $0 and a payment period start date within the loan

period -When a student does not receive a disbursement for a payment period, schools have been reducing

disbursement amounts to $0 without also making the appropriate adjustments to the loan period. As a result, the

Subsidized Usage Period is not calculated correctly. Note: Refer to the ‘Changes to Subsidized Usage Period

Calculations’ section above for additional information.

November 2016 15

Beginning October 30, 2016, a new Warning Edit 220 was added for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans for the 2014-2015 Award Year and forward.

Warning Edit 220 will be returned at the disbursement level when a disbursement amount is reduced to $0 and the loan period remains the same, leaving the Payment Period Start Date within the loan period.

Warning Edit 220 will be returned at the award level when a disbursement is equal to $0 and the Financial Award Begin and/or Award End (loan period) dates are changed but the Payment Period Start Date remains within the loan period.

The warning edit reminds schools to verify that the reported Financial Award Begin and/or End dates reflect the correct period of enrollment for the loan.

Example - A school zeros out an unused disbursement but fails to shorten the loan period.

ACTION LOAN PERIOD BEGIN

LOAN PERIOD END

DISB-1 AMOUNT, DATE, & PPSD

DISB-2 AMOUNT, DATE, & PPSD

Loan originated

9/1/2016 5/15/2017 $1750 on 9/15/2016

PPSD = 9/1/2016

$1750 on 1/10/2017

PPSD = 1/9/2017

First maintenance record sent and accepted

9/1/2016 5/15/2017 $1750 on 9/15/2016

PPSD = 9/1/2016

$0 on 1/10/2017

PPSD = 1/9/2017

When the first maintenance record is accepted, the school will receive Warning Edit 220. The school should have shortened the loan period so it ended at the end of the first term/payment period. Warning edit 220 alerts a school that the PPSD is still inside the loan period so the loan period has not yet been shortened.

ACTION LOAN

PERIOD BEGIN

LOAN PERIOD END

DISB-1 AMOUNT, DATE, & PPSD

DISB-2 AMOUNT, DATE, & PPSD

Second maintenance record sent and accepted

9/1/2016 12/18/2016 $1750 on 9/15/2106

PPSD = 9/1/2016

$0 on 1/10/2017

PPSD = 1/9/2017

When the second maintenance record is accepted, the school will not receive Warning Edit 220 because the PPSD of the $0 disbursement no longer falls within the loan period. Note: A school no longer has to change the disbursement date for the second disbursement to be able to adjust the loan period. https://ifap.ed.gov/eannouncements/101816CODSystemChangeforthe150DirectSubsidizedLoanLimitOctober2016.html

November 2016 16

COMPLIANCE CORNER

CONDITIONAL ACCEPTANCE AND TRIAL PERIODS OF ENROLLMENT

Schools may offer trial periods of enrollment to allow a student to “try out” a program, without incurring

charges or receiving Title IV aid, before deciding to continue the program as a regular student and applying for

federal student aid. A regular student is someone who is enrolled or accepted for enrollment for the

purpose of obtaining a degree or certificate offered by the school.

For example, until they provide further documentation, such as academic transcripts or test scores, or

demonstrate an ability to succeed in the program by receiving acceptable grades in program coursework, the

student is only provisionally accepted. Typically, the school will limit these students’ enrollment in terms of

number of courses or enrollment status until they meet the necessary conditions. A trial period can play a

valuable role by allowing a student to attend classes for a brief period before making a financial commitment to

regular enrollment in the program.

If the student continues beyond the trial period and enrolls as a regular student, the school can pay him FSA

grants for the entire payment period and loans for the period of enrollment. Students admitted as conditional

are regular students only if the school officially accepts them into the eligible degree or certificate program.

USDE does not define official acceptance or admission. If the student is merely allowed to take some courses

before being officially admitted to the program, she is not considered a regular student and is not eligible until

she is officially admitted.

The term “trial period” is used to describe the beginning of the student’s attendance in an eligible program, in a

situation where the institution has not admitted the student as a regular student. The trial period provides an

opportunity for a student to take classes on a trial basis before deciding to continue attending the program as a

regular student, at which time the student would be responsible for program charges and would, if otherwise

eligible, become eligible for Title IV program funds.

While the details of each program may vary, the trial period of attendance is a part of an eligible program and

academic credit earned by the student will count toward the student’s completion of that program if the student

becomes a regular student after the trial period. Because this trial period is part of the eligible program, if the

institution admits the student as a regular student after the trial period, total charges for the program would

include the trial period, and, if otherwise eligible, the student could receive Title IV aid for the trial period.

For example, if an institution has an educational program that is 18 weeks in length and includes a four-week

trial period:

Student A completed the four-week trial period at which time the institution admits the student as a

regular student. Student A would now be assessed institutional charges and become eligible for Title IV

funds for the program, including the trial period.

November 2016 17

Student B completes two weeks of the trail period and decides not to continue enrollment. Student B is

not assessed institutional charges and would not be eligible for any Title IV funds for enrollment during

the trial period. A R2T4 is not required to be up completed as the student is not a regular student.

Student C completed the four-week trial period at which time the institution admits the student as a

regular student. Student C would now be assessed institutional charges and become eligible for Title IV

funds for the program, including the trial period. However, after three more weeks as a regular student,

Student C decides to withdraw from the program. The institution must perform a Return of Title IV Aid

calculation to determine the amount of aid that the student earned as of the student’s withdrawal date at

the end of the seventh week.

Standards of Participation

Policies and procedures for a trial period of enrollment must specifically include information on which students

are required to participate in the trial period, and which students may participate at the student’s option, if

available. Students participating in a trial period must also be provided with clear information about the trial

period, including that they are not eligible for Title IV aid unless, and until, the institution admits the student as

a regular student after the trial period. After or just prior to the end of the trial period, students need to confirm

their intention to continue the program. Once determined to be a regular student, otherwise eligible students

become eligible for Title IV funds back to the beginning of the payment or loan period, as applicable, including

the trial period. The institution must ensure that students have the necessary books and other materials to

succeed during the trial period.

Your school must also provide information describing the procedure for withdrawing at the completion of the

trial period if the student decides not to continue enrollment. This information should make clear that students

will not be eligible for Title IV funds during the trial period if they do not continue enrollment. Students who

do not attend beyond the end of a trial period should only be charged a nominal fee (such as an application fee),

if any, to participate.

See Volume 1—Student Eligibility 2016-17; Chapter 1; page 1-3 of the FSA Handbook and Dear Colleague

Letter GEN 11-12 at http://ifap.ed.gov/dpcletters/GEN1112.html for more information.

DJA CALENDAR

Monthly DJA Webinars

December: 1098T Reporting – Wednesday, December 7, 2016 at 11 a.m. CST

NOTE: There may be a difference between DJA local time and your time zone. To determine your time zone

equivalent, click on this link to view a time zone map: http://www.worldtimezone.com/time-usa12.php

Webinars are free to clients. There is a $45 fee for all others who may be interested in joining us for these

presentations. Invitations are automatically sent to all clients, however all other participants must register by

November 2016 18

sending an email to Kim Onderek at konderek@gotodja.com. After registering, you will receive the log-in

information. Questions can be directed to Kim by email or by calling toll free at 1-800-242-0977.

American Association of Cosmetology Schools (AACS) Annual Convention

November 4-7 in Orlando, FL

AACS is a national nonprofit association open to all privately owned schools of Cosmetology. DJA will be an

exhibitor at this convention. We look forward to seeing you there! For additional information about this

conference visit the AACS website at www.beautyschools.org

2016 FSA TRAINING CONFERENCE FOR FINANCIAL AID PROFESSIONALS

The Federal Student Aid Training Conference for Financial Aid Professionals will be held in Atlanta, GA at the

Georgia World Congress Center (GWCC) November 29 through December 2, 2016. Please visit

http://fsaconferences.ed.gov for details.

Disclaimer: The information presented in this Newsletter is provided as a service and represents our best efforts to assist institutions with federal student aid

regulations. We have collected information we believe to be important in finding and obtaining the resources for administering federal student aid; however, we assume

no liability for the use of this information. The information in this newsletter does not constitute, and should not be construed as, legal advice.