MASFAP 2018 Clock hour training

MASFAP 2018 Clock hour training

Topics Definitions Year-Round & Crossover Pell Acceleration
Programs < Academic Year Apportioning Tuition and Fees Books and Supplies

Definitions

Definition of a Clock Hour
A clock hour is defined as a period of time consisting of A minute class, lecture, or recitation in a 60 minute period; A minute faculty-supervised laboratory, shop training, or internship in a 60 minute period; or 60 minutes of preparation in a correspondence course All clock hour programs must use Formula 4 for calculating Pell. Always use full-time payment schedule. A clock hr is based on an actual hour of attendance but each hr may include a 10 minute break.

Measuring in Clock Hours
Regulations require clock hour measurement for Title IV if: School’s accrediting agency requires it School must measure student progress in clock hours when receiving federal or state approval or licensure to offer the program Completion of clock hours is a requirement for graduates to apply for licensure of the authorization to practice the occupation that the student is intending to practice

Eligible Program Certificate/Diploma programs that lead to gainful employment in a recognized occupation Must contain at least 600 clock hours over a minimum of 15 weeks of instruction OR Must contain at least 300 clock hours over a minimum of 10 weeks of instruction and admit as regular students only persons who have completed the equivalent of an Associate’s degree

Eligible Program For Direct Loan only, a program may qualify with 300 clock hours over 10 weeks of instruction Must meet 70% completion and 70% placement requirements

Enrollment Status Full-time is at least 24 scheduled clock hours per week. Half-time is at least 12 scheduled clock hours per week. Does your institution report their Part-time programs on their ECAR? Notes: A student attending 24 hours per week will complete 900 hrs in 37.5 weeks. A student attending 30 hours per week will complete 900 hrs in 30 weeks. A student attending 35 hours per week will complete 900 hrs in 26 weeks.

Minimum Academic Year Definition
Regulations set the following minimum standards for coursework earned by a full-time student in an academic year in an undergraduate educational program (including direct assessment programs) as: 900 clock hours, for a program measured in clock hours, and 26 weeks of instructional time A week is a consecutive 7 days period containing at least 1 day of regularly scheduled instruction or examination.

Payment Periods Programs equal to one academic year or multiple academic years Academic year is divided into two equal payment periods PP1 = Half the clock hours AND half the weeks in the defined academic year PP2 = The remaining half of the clock hours AND weeks in the academic year. Subsequent Payment Periods are figured the same.

Payment Periods If program is longer than one academic year with remainder more than half of the academic year Remainder is divided into 2 equal payment periods, each being half of clock hours and weeks If program is longer than an academic year with remainder less than or equal to half of academic year Remainder is one payment period Example #1: clock hours/50 weeks program AY: 900/30 weeks PP1 450/15 PP2 450/15 PP3 300/10 PP4 300/10 Example #2: clock hours/35 weeks program AY: 900/26 weeks PP1 450/13 PP2 450/13 PP3 150/9

Payment Periods Programs less than one academic year
Program is divided into two equal payment periods PP1 = Half of the clock hours and half of the weeks in the program PP2 = The remaining half of the clock hours and weeks in the program Example: 600 clock hours/20 weeks program Minimum Academic Year: 900 clock hours/26 weeks Payment Periods: /10 and /10

Year-Round & Crossover Pell

Legislative Background
The Consolidated Appropriations Act of 2017 allows a student to receive Pell Grant funds up to 150% of the student’s Scheduled Award for an award year Effective beginning with the award year DCL GEN issued June 19, 2017

General Requirements Payment period may include awards from both the initial Pell Grant Scheduled Award and from the additional Pell Grant award When the calculated award for a payment period is greater than the remaining balance of an initial Scheduled Award, the award for the payment period is the remaining balance plus an amount from the additional Pell Grant award *Remember to flag the additional Pell indicator on the origination.

General Requirements Student must be otherwise eligible to receive Pell Grant funds for the payment period Student must be enrolled at least half-time in the payment period for which the student received the additional Pell Grant funds Additional Pell Grant will be included in the student’s 600% maximum Pell Lifetime Eligibility Used (LEU)

Differences from Two Pells in an Award Year
No acceleration requirement No requirement to place a crossover payment period in the award year that produces the largest Pell Grant award

Unchanged Pell Rules Definition of an Academic Year
Definition of a Scheduled Award Award Amount Payment period determination Pell Grant formulas Crossover payment periods Recalculation policies

Definition of an Academic Year
Must be defined for each eligible program May be the same for all programs May be different for some or all programs Credit-hour and clock-hour programs will have different academic years For a clock-hour program, must contain a minimum of 900 clock-hours and 26 weeks of instructional time

Definition of a Scheduled Award
The scheduled award is the amount that a full-time student would receive for a full academic year based on the student’s EFC and COA No change in the way an award for a payment period is calculated Pell Grant formulas have not changed Award is calculated by payment period based on a student’s Scheduled Award

Payment Period Determination
Defined in 34 CFR 668.4 For nonterm programs and all clock-hour programs, payment period is half of the hours and half of the weeks in an academic year

Crossover Payment Periods
Includes both June 30 and July 1 overlapping two award years Institutions have the flexibility to assign crossover payment periods to either of the relevant award years Must consider the crossover payment period to occur entirely within one award year Must have a valid SAR/ISIR for the selected award year May be different than the award year used for other Title IV aid (i.e., loans, campus-based)

Crossover Payment Periods
Choice of crossover payment period award year can be made based on an institutional policy that— Provides for an individual decision for each student Applies to all students (or a category of students) without exception or Applies to all students (or a category of students) with allowance for an individual student exception One exception: If more than 6 months of a payment period is scheduled to occur within one award year, you MUST place that payment period in that award year.

Changed Pell Rules Scheduled Award limitation
Old: Student may receive only one Scheduled Award for an award year New: Student may receive up to one and one-half of a Scheduled Award for an award year Enrollment status Old: Less-than-half-time enrollment eligible at all times New: Must be enrolled at least half-time to receive the additional award

Additional Pell Amount
When the calculated award for a payment period is greater than the remaining balance of the initial Scheduled Award, the award for the payment period is the remaining amount of the initial Scheduled Award plus the Additional Pell amount Awarded as one amount Reported to COD as one amount Again, make sure to mark the indicator on the Pell origination.

Clock-Hour Example 1125 clock-hour program that occurs entirely within the award year Academic Year = 900 clock-hours/26 weeks Student’s Scheduled Award is $6095 for 450 hours/13 weeks $3,048 450 hours/13 weeks $3,047 225 hours/6.5 weeks $1,524 Award Year Reminder on the final payment period, lesser of hours v weeks for Pell calculation. 125% AY

Accelerating the program

Acceleration In many clock hour programs, students are allowed to progress at an individual pace. For example: a school that defines its academic year as 900 clock hours and 26 weeks of instructional time offers a 900 clock hour program that most students complete in 26 weeks. However, one student might complete the 900 clock hours in 22 weeks and another in 30 weeks. You do not have to prorate the loan limit for the occasional student who completes the program in less than 26 weeks. *Note that this policy applies only to programs that are exactly one academic year in length. If a program is longer than an academic year, proration may be required for a loan covering only the remaining portion of the program.

Acceleration For programs that are more than an academic year in length, a student may complete the hours quicker than the defined academic year. In this case, the student cannot move onto the next academic year until they complete both the hours AND the weeks. For those students, at the end of their first academic year in weeks, we must ask for their current hours and prorate loans for the remainder of the program accordingly. Pell would not need to be prorated unless they are accelerating the program as a whole, and the weeks would be the lesser of. *

Acceleration Example Loans
A student is enrolled in a program that is defined as 1500 clock hours/50 weeks. The academic year is defined as 900 clock hours/30 weeks. The student accelerates in the first academic year and reaches 900 clock hours in 26 weeks. When can the student move onto Grade Level Two loans? – When the student completes the 30 weeks in their academic year. What hours does the Grade Level Two loan period begin with? – The number of hours the student has earned at the 30th week. What is the correct Grade Level Two loan period? – The loan period may begin the day following the end of the Grade Level One loan period and will end when the student completes 1500 clock hours. *

Acceleration Example Pell
A student is enrolled in a program that is defined as 1500 clock hours/50 weeks. The academic year is defined as 900 clock hours/30 weeks. The student accelerates in the first academic year and reaches 900 clock hours in 26 weeks. The student then has some attendance issues during the second academic year and completes the remaining 600 clock hours in 25 weeks. Do we need to prorate the Pell award? – No, as the student is not accelerating the program as a whole. It is actually taking the student 51 weeks to complete the program. *

Programs < academic year

Minimum Academic Year Definition
Regulations set the following minimum standards for coursework earned by a full-time student in an academic year in an undergraduate educational program (including direct assessment programs) as: 900 clock hours, for a program measured in clock hours, and 26 weeks of instructional time

Program Length Although most programs are at least one academic year in length, some eligible programs are shorter than an academic year.

Effect on Awards Awards are affected when a program does not meet the academic year standard (900 clock hours/26 weeks). This includes when a program is an academic year in length in clock hours but not in weeks of instructional time. An example would be Professional Deep Sea Diving. 900 clock hours in 25 weeks. *Awards are reduced by weeks 25/26.

Pell Award Calculation
The Pell Award is LESSER OF (1) OR (2): (1) (Pell Award) X (#Hours in Program) (Total # Hours in Academic Year) Or (2) (Pell Award) X (# Weeks in Program) (Total # Weeks in Academic Year)

Direct Loan Award Calculation
The Direct Loan Award / (LESSER OF (1) OR (2) IF program is shorter than AY): (1) (Sub Award) X (# Hours in Program) (Total # Hours in Academic Year) Or (2) (Sub Award) X (# Weeks in Program) (Total # Weeks in Academic Year) (1) (Unsub Award) X (# Hours in Program) (2) (Unsub Award) X (# Weeks in Program)

Diving Program Example
Professional Deep Sea Diving is 900 clock hours and 25 weeks. Minimum Academic Year Definition for a clock hour program is 900 clock hours and 26 weeks. This program would be considered less than an academic year and would be pro-rated by the lesser of the hours v weeks. When determining weeks, it is INSTRUCTIONAL time taken and should match their ECAR. Does NOT include vacation time, etc.

Pell Award Calculation Example
The Pell Award is LESSER OF (1) OR (2): (1) ($6095) X (900) = $6095 (900) Or (2) ($6095) X (25) = $5861 (26) *Assumes a zero EFC from 18/19 Full-time Pell Chart

Direct Loan Award Calculation Example
The Direct Loan Award / (LESSER OF (1) OR (2) IF program is shorter than AY): (1) ($3500) X (900) = $3500 (900) Or (2) ($3500) X (25) = $3365 (26) (1) ($6000) X (900) = $6000 (2) ($6000) X (25) = $5769

Another Diving Program Example
Commercial Deep Sea Diving is 720 clock hours and 20 weeks. Minimum Academic Year Definition for a clock hour program is 900 clock hours and 26 weeks. This program would be considered less than an academic year and would be pro-rated by the lesser of the hours v weeks.

Esthetics Program Example
Esthetics is 750 clock hours and 22 weeks. Minimum Academic Year Definition for a clock hour program is 900 clock hours and 26 weeks. This program would be considered less than an academic year and would be pro-rated by the lesser of the hours v weeks.

Credit hours awarded

Student enrolled into an Esthetics program (750 clock hours/25 weeks) and was awarded 397 credit hours/13 weeks from a prior enrollment (different program). 750 clock hours – 397 awarded = 343 left to complete. 25 weeks – 13 awarded = 12 left to complete.

What is the Pell payment period? Rules: If less than a payment period AND academic year it may be disbursed in 1 payment period. If more than a payment period BUT less than an academic year, it must be split into 2 equal payment periods.

353 Clock hours remaining is less than the payment period (450 clock hours) AND an academic year (900 clock hours) so may disburse in 1 payment period clock hours/12 weeks.

What are the Direct Loan payment periods? Hours remaining would be split-in half equally. What are the Direct Loan payment period dates for originations? If hours are less than a normal payment period then the dates would be the same, even though they are being split into equal disbursements.

Esthetics Program Example w/ Overlapping Loans
Student enrolled into an Esthetics program (750 clock hours/25 weeks) on August 19, 2018 and was awarded 397 credit hours/13 weeks from a prior enrollment (different program). Anticipated grad date is November 16, clock hours – 397 awarded = 353 left to complete. 25 weeks – 13 awarded = 12 left to complete.

Student has an overlapping loan from his prior program that began 5/3/18 and ends 12/13/18. How do we calculate Pell? How do we calculate DL? What is our loan period? What is our academic year?

How is Pell calculated? The LESSER of the following: $6095 X 353 hrs remaining/900 hrs in academic year = $2391 OR $6095 X 12 weeks remaining/26 weeks in academic year = $2684 *If Pell was paid in the same award year you would use lesser of proration above or remaining award year eligibility.

How is Direct Loan calculated? The LESSER of the following: Amount Remaining from Overlapping Loans OR Proration of Program (lesser of hours v weeks) *Remember a student can never receive more than the program itself is eligible for in Title IV aid.

Beginning of the loan period would be the start date of the Esthetics program (8/19). Since the student only has 353 hours left to complete, he will graduate prior to the end of the overlapping loan period. The end of the loan period would be the grad date of the Esthetics program (11/16). Loan period = 8/19/18-11/16/18.

Remember, this student has an overlapping loan from a prior program. The prior academic year began 5/3/18 and ends 12/13/18. Since our loan period falls within this time period, our academic year is as follows: 5/3/18-12/13/18

Apportioning Tuition & Fees Books & Supplies

Cash Management Regulations – 34 CFR 668.164(c)(2)
Under the cash management regulations, an institution may include the costs of books and supplies as part of a student’s tuition and fees if: The institution has an arrangement with a book publisher or other entity that enables it to make those books or supplies available to students below competitive market rates, provides a way for a student to obtain those books and supplies by the seventh day of a payment period; and has a policy under which the student may opt out of the way the institution provides for the student to obtain books and supplies; The institution documents on a current basis that the books or supplies, including digital or electronic course materials, are not available elsewhere or accessible by students enrolled in that program from sources other than those provided or authorized by the institution; or The institution demonstrates there is a compelling health or safety reason. So long as the conditions under 34 CFR (c)(2) are met, the institution should be able to include the costs. Because the institution must offer the books and equipment at below competitive market rates to qualify under the regulations, and because of the convenience factor, most students enrolled at your schools choose to purchase books and equipment from the school rather than purchasing those items on their own.

2017-2018 FSA Handbook Apportioning & Prorating Charges
The 2017 Federal Student Aid Handbook provides an example of apportioning charges that are all posted during the first payment period. In this example, a 1,500-hour program posts the charges for the entire program at its beginning. The FSA handbook states that “When a school charges for an entire program at the start of the course (up front), it may apportion or otherwise assign the total charges for a multiyear program to determine the amount of those charges applicable to each year (loan period or award year as appropriate).” The 2017 FSA Handbook further states that, for example, the institution could "increase the charges it assigns to the first loan period and decrease the charges in the second loan period because it retains charges for books and materials in the first period.”

2017-2018 FSA Handbook Apportioning & Prorating Charges
Institutional charges (generally speaking, tuition and fees) allocated to each year (or portion of a year) would be based on the education and services the school provides during that period of time, in the same way as they are for schools that charge their students year by year. Charges for books, equipment, supplies, and other materials could be allocated on a pro rata basis, or, alternatively, could be allocated to the period in which they must be purchased. An institution would use the total charges allocated to each year in determining the amount of current-year charges. The amount of current-year charges would then be used for determining whether the student has an FSA credit balance Based on this guidance, a school should be able to apportion the charges for books and equipment to the first payment period, assuming of course that the institution satisfies the provisions of 34 CFR (c)(2). DJA believes that this understanding not only complies with the cash management regulations of Subpart K and the guidance published in the FSA Handbook, but is also in the best interests of students. Institutions are able to provide books and equipment at below market rates to students when they start their program. Accordingly, an institution should be allowed to apportion its charges to the period in which the institution incurs the costs and transfers the books and equipment to the student’s possession. As an aside, it is noteworthy that, if an institution does not include book and equipment charges in tuition and separately sells such items to students in a particular payment period, 34 C.F.R. § (c)(1)(ii) clearly recognizes that the institution may use Title IV funds available in that payment period to pay such charges in full without any requirement for proration.

USDE Guidance This is in response to the concerns raised in your February 24, to Cynthia Hammond regarding the payment period application of Title IV funds to student purchase of books, equipment, uniforms, and supplies. Although Department staff have provided the position outlined below on a number of occasions, we understand from your that there may still be some confusion on the matter. This response is the Department’s official position on this topic and any necessary clarifications will be incorporated into the FSA Handbook.

Institutional Charges
The determining factor in whether the proration requirement applies is whether or not the charge for books, supplies and equipment is an institutional charge. The Department’s longstanding guidance has been that books and supplies must be considered an institutional charge if a student does not have a real and reasonable opportunity to purchase the required course materials from any place but the school.

Real and Reasonable Opportunity
A student has a “real and reasonable” opportunity to obtain required course materials from another source if, the required course materials are available for purchase at a relatively convenient location unaffiliated in any way with the institution; and the institution does not restrict the availability of financial aid funds, so the student can exercise the option to purchase the required course materials from alternative sources in a timely manner.

Demonstrating Real & Reasonable Opportunity
A school may treat charges for books, supplies, equipment, and materials as noninstitutional charges if the school can substantiate that its students have the option of obtaining the required course materials from an alternative source. The school must be able to document that (1) the required course materials were available for purchase at a relatively convenient location unaffiliated with the school, and (2) the school provided financial aid funds in a way and at a time that made it possible for the student to purchase the materials in a timely manner. A signed statement by a student that he or she had the option to purchase the materials from an alternative source is not sufficient documentation.

If students do not have a real and reasonable opportunity to obtain the required books and supplies from another source, the institution must ensure that it meets requirements for including the costs for those items in tuition and fees, e.g. ensuring that the books and supplies are made available at or below market rates. See 34 C.F.R. § (c)(2)…

Cash Management Regulations – 34 CFR 668.164(c)(2)
Under the cash management regulations, an institution may include the costs of books and supplies as part of a student’s tuition and fees if: The institution has an arrangement with a book publisher or other entity that enables it to make those books or supplies available to students below competitive market rates, provides a way for a student to obtain those books and supplies by the seventh day of a payment period; and has a policy under which the student may opt out of the way the institution provides for the student to obtain books and supplies; The institution documents on a current basis that the books or supplies, including digital or electronic course materials, are not available elsewhere or accessible by students enrolled in that program from sources other than those provided or authorized by the institution; or The institution demonstrates there is a compelling health or safety reason. So long as the conditions under 34 CFR (c)(2) are met, the institution should be able to include the costs. Because the institution must offer the books and equipment at below competitive market rates to qualify under the regulations, and because of the convenience factor, most students enrolled at your schools choose to purchase books and equipment from the school rather than purchasing those items on their own.

Q: Does “real and reasonable opportunity” include internet options such as Amazon or E-Bay? Or does this mean buying from a physical location? A: It can be online – as long as it is not affiliated in any way with the institution, and the institution does not restrict the availability of funds.

Q: What about first-time borrowers who have a 30 day delay? A: Students generally cannot go 30 days without their books and kit. Most workarounds that have been proposed will result in the school routinely debiting student ledger accounts for the amount of the book and kit charges which results in the book and kit becoming an institutional charge that must be prorated across all four payment periods. “The determining factor in whether the proration requirement applies is whether or not the charge for books, supplies and equipment is an institutional charge. If the charge is part of an enrollment agreement or any addendum, and/or the institution routinely debits the students ledger account for the amount of the charge along with tuition and fees, it is an institutional charge considered to be part of tuition and fees. Also, as noted above, if the student has no real and reasonable opportunity to purchase these items elsewhere, it is an institutional charge.”

Institutional Charge If a charge is part of an enrollment agreement or any addendum, and/or the institution routinely debits the students’ ledger accounts for the amount of the charge along with tuition and fees, it is an institutional charge. The Department considers all institutional charges to be part of a student’s tuition and fees for purposes of implementing the regulatory language regarding the crediting of a student’s account. See 34 C.F.R. § (c)(1)(i).

34 C.F.R. § 668.164(c)(1)(i) (c) Crediting a student's ledger account.
(1) An institution may credit a student's ledger account with title IV, HEA program funds to pay for allowable charges associated with the current payment period. Allowable charges are— (i) The amount of tuition, fees, and institutionally provided room and board assessed the student for the payment period or, as provided in paragraph (c)(5) of this section, the prorated amount of those charges if the institution debits the student's ledger account for more than the charges associated with the payment period

Special Provisions for Books & Supplies
A student must be able to purchase books and supplies at the beginning of the academic period. By the seventh day of a payment period, a school must provide a way for a student who is eligible for FSA funds to obtain or purchase the books and supplies required for the payment period if ten days before the beginning of the payment period, the school could have disbursed FSA funds to the student; and disbursement of those funds would have created an FSA credit balance. In order to academically succeed in a program, a student must be able to purchase books and supplies at the beginning of the academic period. Therefore, by the seventh day of a payment period, a school must provide a way for a student who is eligible for FSA funds to obtain or purchase the books and supplies required for the payment period if ◆◆ ten days before the beginning of the payment period, the school could have disbursed FSA funds to the student; and ◆◆ disbursement of those funds would have created an FSA credit balance. A school must consider all the FSA funds a student is eligible to receive at the time it makes the determination, but the school need not consider aid from non FSA sources. A school that includes the costs of books and supplies in the tuition charged and provides all of those materials to the student at the start of his or her classes meets the requirements of these regulations. The amount a school must provide is the lesser of the presumed credit balance or the amount determined by the school that the student needs to obtain the books and supplies. In determining the required amount, a school may use the actual costs of books and supplies or the allowance for those materials used in estimating the student’s cost of attendance for the period.

School must provide the lesser of the presumed credit balance or the amount determined by the school that the student needs to obtain the books and supplies. In determining the required amount, a school may use the actual costs of books and supplies or the allowance for those materials used in estimating the student’s cost of attendance for the period. A school that includes the costs of books and supplies in the tuition charged and provides all of those materials to the student at the start of his or her classes meets the requirements of these regulations. In order to academically succeed in a program, a student must be able to purchase books and supplies at the beginning of the academic period. Therefore, by the seventh day of a payment period, a school must provide a way for a student who is eligible for FSA funds to obtain or purchase the books and supplies required for the payment period if ◆◆ ten days before the beginning of the payment period, the school could have disbursed FSA funds to the student; and ◆◆ disbursement of those funds would have created an FSA credit balance. A school must consider all the FSA funds a student is eligible to receive at the time it makes the determination, but the school need not consider aid from non FSA sources. A school that includes the costs of books and supplies in the tuition charged and provides all of those materials to the student at the start of his or her classes meets the requirements of these regulations. The amount a school must provide is the lesser of the presumed credit balance or the amount determined by the school that the student needs to obtain the books and supplies. In determining the required amount, a school may use the actual costs of books and supplies or the allowance for those materials used in estimating the student’s cost of attendance for the period.

The institution must have a policy under which the student may opt out of the way the institution provides for the student to obtain or purchase books and supplies under this paragraph (m). A student who opts out under this paragraph is considered to also opt out under paragraph (c)(2)(i)(C) of this section; In order to academically succeed in a program, a student must be able to purchase books and supplies at the beginning of the academic period. Therefore, by the seventh day of a payment period, a school must provide a way for a student who is eligible for FSA funds to obtain or purchase the books and supplies required for the payment period if ◆◆ ten days before the beginning of the payment period, the school could have disbursed FSA funds to the student; and ◆◆ disbursement of those funds would have created an FSA credit balance. A school must consider all the FSA funds a student is eligible to receive at the time it makes the determination, but the school need not consider aid from non FSA sources. A school that includes the costs of books and supplies in the tuition charged and provides all of those materials to the student at the start of his or her classes meets the requirements of these regulations. The amount a school must provide is the lesser of the presumed credit balance or the amount determined by the school that the student needs to obtain the books and supplies. In determining the required amount, a school may use the actual costs of books and supplies or the allowance for those materials used in estimating the student’s cost of attendance for the period.

Prorating Charges The regulations provide a specific formula for prorating charges if an institution assesses charges for more than a payment period at a time. For programs with substantially equal payment periods, total institutional charges, including any book, supply or equipment charges, must be divided by the number of payment periods. For other programs, the institution must divide the number of credit or clock hours in the payment period by the number of hours in the program and multiply the result by total institutional charges for the program. 34 C.F.R. § (c)(5)

Prorating Charges For programs with substantially equal PPs: For all other programs:

Prorating Charges Regardless of whether the institution charges for other types of tuition and fees by payment period, the cost of books or supplies (including kits) must be prorated when determining the amount of Title IV aid to credit for a given payment period if students do not have a real and reasonable opportunity to purchase the books and supplies elsewhere and the books and supplies are intended for use over a period greater than a payment period.

Prorating Charges In cases where an institution charges tuition and fees by payment period, but is required to prorate the cost of books and supplies intended for use over more than one payment period, the institution should add the cost of the books and supplies prorated under the regulatory formula to the tuition and fees it charges for the payment period when determining the amount of Title IV aid to credit to the student’s account for that payment period. Any other outcome would render the regulatory language above meaningless.

Institutional Refunds
This provision affects credit balances and the amount of institutional charges utilized when performing R2T4 calculations. For credit balance purposes – the school must prorate tuition and fees, as well as books and kit across all four payment periods. The same proration applies to R2T4 to calculate institutional charges used in the calculation.

Unreturned Equipment & R2T4
Note that when a student withdraws, the Department’s guidance limits the amount of Title IV aid that an institution must return to the Department for aid credited for certain types of unreturned equipment, even if charges for such equipment would otherwise be considered an institutional charge. When performing a Return of Title IV funds calculation, an institution may exclude from institutional charges the documented cost of unreturnable equipment and the documented cost of returnable equipment if not returned in good condition within 20 days of withdrawal.

Registration and Other Fees
If a fee, such as a registration fee is required for all students in a program, then the fee should be considered an institutional charge and would be subject to proration.

Example

Application USDE guidance applies to:
Any student who started at your school in the 17/18 award year, as well as students who started before July 1, 2017, but whose first Title IV disbursement was out of the 17/18 award year. Does not apply to any student who started and received Title IV funds from your school prior to the 17/18 award year and then crossed over into the 17/18 award year

Compliance Prorate kits, books, supplies and equipment over the program length. Correct the student’s ledger. After completing (1 & 2) above, determine if a credit balance existed in prior payment periods and/or the current payment period. As a quick reminder, a credit balance is when the total of Title IV funds disbursed for the payment period exceeds the total institutional charges for the payment period.

Compliance Return any credit balance from the payment period(s) to the student. Document why the credit balance is being returned later than the 14 days required (Updated USDE interpretation). Revise R2T4 — the ledger for any student who received 17/18 Title IV funds and withdrew from school must also be revised, and the R2T4 re-calculated. If you contract with DJA for R2T4, please send over a revised R2T4 form with the kits, books, supplies and equipment prorated over the payment period. We will recalculate them and send back the revised R2T4. You may have additional refunds that need to be made to Title IV. To revise the R2T4, we have to charge you to get this accomplished. It will be at $85 an hour (15 min increments). If the school does their own R2T4, be sure and take the time look at, and revise the schools R2T4 once you have revised the student’s ledger. I am hoping we can do these quickly (by quickly I mean the time to revise them so the cost will be better) for you as everything else on the form should be accurate.

DJA Disclaimer This training is intended to review various aspects of Title IV regulations. It is not intended to be all inclusive and it is up to institutions to be well acclimated to these rules and regulations (ifap.ed.gov). DJA accepts no responsibility nor liabilities on the information presented in this training.

Resources

Resources Information For Financial Aid Professionals (IFAP) Website: Dear Colleague Letters (DCL) FSA Handbook, Volume 3

MASFAP 2018 Clock hour training

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