30 Jun Cyber Breakfast Live – A Valuable Review of Aid Regulations and Their Effects

by Stacey Musulin, Assistant Director of Financial Aid Services, CT Community Colleges

At the CAPFAA Annual Business Meeting on 6/3/2015, Alex Muro, Director of Financial Aid at the Yale University School of Forestry and Environmental Studies and Co-Chair of the CAPFAA Federal and State Relations Committee, presented an update and discussion of three issues related to recent and/or potential changes in Federal & State financial aid regulations. This presentation was a “live” version of the weekly “Cyber Breakfast” updates emailed to the membership on Fridays. The Cyber Breakfast emails are the brainchild of Sam Rush, Deputy Director of CHESLA and Co-Chair of the CAPFAA Federal and State Relations Committee.

Mr. Muro updated attendees on the following topics and then opened the floor for questions and discussion:

  1. Use of prior-prior year income data for completion of the Free Application for Federal student Aid (FAFSA)
  2. Changes to Unusual Enrollment History Review
  3. Expansion of in-state tuition and State financial aid eligibility at public institutions in CT

Prior-Prior Year (PPY)

Support has been building within the Federal Health, Education, Labor, & Pension Committee for significant changes to the data used to determine Federal financial aid eligibility. Committee Chairman Lamar Alexander is particularly focused on reducing the number of questions on the FAFSA and using data from two years prior (PPY). The Higher Education Opportunity Act Section 473(a)(1)(C) gave the Department of Education (ED) the authority to consider the use of PPY income information to complete the FAFSA. One of the possible changes in the Higher Education Act (HEA) reauthorization currently in review is the required use of PPY information.

ED has not previously authorized PPY info for FAFSA completion due to continued questions about the potential impact of Pell Grant eligibility changes to the Federal Aid budgets. A 2013 study by the National Association of Student Financial Aid Administrators (NASFAA) indicated that the vast majority of students would not see any change in Pell eligibility if PPY was implemented. However, there were differences in impact depending on which Expected Family Contribution (EFC) formula was used. For example, Independent Students without Dependents (Formula B) were more likely to have a Pell Grant change than Dependent Students or Independents with dependents.

A May 2015 study by the University of Michigan found that if the current FAFSA was eliminated in favor of using only data gleaned from the Internal Revenue Service (IRS), the vast majority of students would have little or no change in Pell Grant eligibility. The study found fewer significant Pell changes if IRS data alone was used than if PPY data was used (either alone or in combination with the IRS-Data-only scenario).

There are significant potential benefits to many students if the HEA reauthorization required use of PPY data. Less estimation would be needed and students would have more time to complete the FAFSA. More students would be able to utilize the IRS Data Retrieval Tool (IRS DRT) with subsequent increases in data accuracy. FAFSA completion could commence months earlier – as early as September versus the current January 1st date.

Of course there would be groups for whom PPY would not be a benefit. There could be an increase in the number of families who appeal for Professional Judgment consideration because the income data of two year prior is not indicative of their current ability to pay educational costs. In addition, the benefits of early FAFSA completion may be rendered moot if institutions could not finalize financial aid awards earlier because their state or institutional aid budgets were not yet set. Schools might also need to delay packaging until necessary software updates for EFC recalculations were received.

CAPFAA members attending the session concurred in analyzing these PPY pros and cons. Removing barriers to education via a simplified application was supported. If PPY were utilized, schools would NOT require updates to information once the most current tax return was filed, so changes to financial aid after receipt of revised FAFSA data might decrease. However, institutions might see a sharp uptick in appeal requests for certain populations, thus increasing the schools’ administrative burden. This might be offset with the increased use of the IRS DRT with subsequent faster verification, but the impact is not certain.

If the FAFSA was changed, schools would need to determine whether or not to use Federal Methodology (FM) to determine eligibility for their institutional funds. For example, if the FAFSA were limited to two questions with additional use of IRS info alone (i.e., no asset questions), schools might be driven to collect additional alternative applications to utilize Institutional Methodology (IM) to determine eligibility for aid coming from the schools’ own resources. In addition to retraining students and families in FAFSA completion, coordination with other on-campus departments (Admissions, Budget, IT) and off-campus partners (software vendors, high school counselors) would be necessary to implement any new requirements.

Unusual Enrollment History (UEH)

In March 2015, ED expanded the review of UEH to include four prior award years (versus the original two) and review of all terms with Direct Loan (DL) disbursements in addition to Pell Grant.

As you’ll recall, DCL Gen 13-09 established a process whereby student ISIRS would be flagged for special review to determine whether Pell was disbursed during terms for which the student ultimately received no academic credit. This was in response to incidents of fraud in which individuals (AKA “Pell runners”) would enroll in school only long enough to obtain federal aid refunds, without any intention of completing courses.

Under the process amended for the 2015-16 year, students with Communication Code 359 (UEH Flag 2) would continue to have the UEH review waived so long as the student previously received Pell and or DL from that same institution, since actual student enrollment would certainly be verified. Students having Comm Code 359 without prior disbursement of Pell and/or DL and students with ISIR having Comm Code 360 (UEH Flag 3) require a full review of academic transcripts at all schools at which Pell and/or DL were disbursed in the prior four aid years. If no academic credit was earned for any term in which aid was disbursed, the student must provide documentation to indicate why credit was not earned. Financial Aid Administrators (FAAs) must determine whether or not the evidence proves that the student’s lack of credit completion was not due to an intention to commit fraud. Students may then be put on a plan with scheduled reviews of academic progress, similar to Satisfactory Academic Progress (SAP) monitoring.

CAPFAA members indicated that the UEH review might provide opportunities to discuss academic plans with transfer students in advance of any difficulties that may arise in the SAP process. A few members questioned whether the UEH process is preventing further cases of fraud. Members indicated a substantial amount of time is spent reviewing transcripts without finding any cases of fraud. Other members reported UEH review impacts on admissions decisions, particularly when evidence is found that the student did not include all previously-attended schools on the admissions application, thus calling into question a student’s honesty. Mr. Muro initiated a discussion on whether or not the implementation of a Federal Unit Record System could relieve schools’ administrative burden related to UEH reviews. This would require schools to report to a Federal database credits earned in addition to the enrollment information reported to the National Student Loan Data System (NSLDS).

Assistance for Undocumented Students

In June 2011, the CT State General Assembly passed Public Act 11-43, which allows students without legal immigration status to qualify for in-state tuition at CT public colleges & universities if they meet the following criteria:

  • Reside in-state
  • Have completed four years of high school in CT, earning a diploma or its equivalent
  • Submit an affidavit of application for legal immigration status

This year’s House Bill 6844 decreases the number of years that an undocumented student must have attended a CT high school in order to qualify for in-state status from four years to two years. The bill was passed in both the House and Senate and was signed by Governor Molloy on June 19, 2015.

Senate Bill 398 was passed by the Senate and put on the House’s calendar, but ultimately was not called for a vote. If it passed, this bill would allow students eligible for Deferred Action for Childhood Arrivals (DACA) status to apply for and receive state aid from public institutions, beginning in fall 2016. Schools would need to establish forms and procedures for determining eligibility by January 2016. Beginning in fall 2017, state aid eligibility would not be determined by DACA status criteria, but would revert to whether or not the student qualified for in-state tuition. Legislators acknowledged that the new regulation would not include an increase in state funding. Thus, the law would be a reallocation of existing resources over an expanded eligible student population.

CAPFAA members expressed dismay at lack of funding to accompany the proposed increase in number of State aid-eligible students. Mr. Muro indicated that an anonymous survey of the CAPFAA membership regarding this issue would be forthcoming, with subsequent reporting of results after the data was analyzed.

Alex Muro and Sam Rush will continue to be engaged in the CAPFAA State and Federal Relations Committee for the 2015-16 year, but will step down as Co-Chairs. A new Chairperson will be announced after the CAPFAA Executive Retreat. Cyber Breakfast emails will resume after a well-deserved summer break.

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