29 Jun “Perkins Surprise and V6 Demise”
By Stacey Musulin, Assistant Director Financial Aid Services, CT Community Colleges
On June 1, 2016, Zack Goodwin, Training Officer for the Department of Education (AKA “the Department”), presented CAPFAA members a Federal Update of recent changes and clarifications to financial aid regulations and required practices. This article does not seek to repeat Mr. Goodwin’s presentation in its entirety, but provides some highlights. Ensure that your institution is compliant: The slides for this presentation are available by logging into the CAPFAA member portal and selecting Membership> Members Only> Presentation Archives.
Perkins Loan Program Wind-Down:
The Perkins Loan program technically ended in 2012, though Congress extended it annually on a few occasions until it was no longer renewed and effectively ended on September 30, 2015. The program was then reauthorized on December 18, 2015, and extended only to September 30, 2017 under new rules summarized in DCL GEN-16-05. The “New Perkins” rules associated with the reauthorization contain updates to the definition of a “new borrower,” disclosure requirements, and eligibility rules specific to student status. New awarding requirements include:
- Eligible graduate borrowers must have received a Perkins loan prior to 10/01/2015 and must be enrolled in the same academic program as when the prior loan was received.
- Undergraduates identified as current borrowers must have Subsidized Direct Loan awarded prior to consideration for any Perkins loan.
- New undergrad borrowers must have both Subsidized and Unsubsidized DL awarded prior to any Perkins loan, including any increase in eligibility for aid-year progression as well as additional Unsub per PLUS denial.
Clarifications were also made to the rules regarding Excess Liquid Capital (ELC) in a school’s Perkins Loan Revolving Fund. If cash on hand exceeds the Perkins Loan program obligations, the excess must be returned to the Department by December 31st each year. Review IFAP’s Campus-Based Aid page including the new Perkins Loan Q&A page for additional information. (This may be updated throughout the summer.)
Gainful Employment – Pending D/E Ratios:
The draft Gainful Employment (GE) Completer Lists were released on June 1st. These are the students who completed the institutions’ reported GE programs and whose Social Security Administration earnings data will be requested by the Department in order to determine student loan debt-to-earnings ratios. Should schools find errors in their lists, a 45-day challenge window (June 14 – July 28, 2016) exists to submit challenges directly to the National Student Loan Data System site (NSLDS). Note: The challenge procedure published last year using a Data Challenge & Appeals Solution (DCAS) website did not come to fruition. [Author’s addition: Procedures for submitted corrections were later released in the Electronic Announcement dated 06/10/2016 and Chapter 6 of the NSLDS Gainful Employment User Guide.] Mr. Goodwin indicated that students who only received Federal Work-Study funds may be omitted from the completer lists, and this is an example of a challengeable situation.
The Department still plans to release draft debt-to-earnings ratios in late summer, with a similar associated 45-day challenge period. The final debt-to-earnings ratios on which GE programs will be judged as “Passing,” “Zone,” or “Failing” are planned to be released in January 2017. Refer to the Gainful Employment Information Page on IFAP for additional information.
Verification Review and Changes for 2017-18:
Schools were reminded of an October 2, 2015 announcement regarding alternative documentation that may be used for 2015-2016 verification when students & families are unable to use the IRS Data Retrieval Tool nor obtain a Tax Return Transcript. No alternative documentation has been announced for 2016-2017 verification at this time.
The possibility of changing a student’s Verification Tracking Flag from another group to V5 was new for 2016-2017: Mr. Goodwin reminded us that if aid disburses after completion of verification under a different tracking group, and the student’s flag changes to V5, no more aid may disburse until the additional requirements under V5 have been reviewed. Should the student not provide additional documentation to complete verification under the V5 tracking group, the student is not eligible for any federal aid, including that which already disbursed prior to selection under the V5 flag. Whether the Department will require schools to return previously-disbursed aid or report the student to a federal department for collections has not been determined as of this writing.
Changes for 2017-2018 verification include:
- Elimination of the V6 “Other Untaxed Income” tracking group
- No need to verify Child Support Paid and SNAP Benefits Received for the remaining verification Tracking Groups (V1, V4, and V5)
- IRS Verification of Non-Filing Statement required of students (and parents) selected for verification who indicate that they did not and were not required to file a 2015 tax return
- The Department has incorporated this new requirement for 2017-2018 verification due to their finding that a high percentage of those indicating that they did not file in fact DID file when cross-referenced with IRS Data.
- Mr. Goodwin reminded us that a Verification of Non-Filing letter from the IRS is not proof that a person is not required to file, so the amount of income earned from work must still be compared to the 2015 tax filing thresholds.
In addition to answers to common questions, the Program Integrity Q&A for Verification provides links to verification requirements by aid year and summarizes information clarified in recent announcements.
The above is only a portion of what Mr. Goodwin covered! More information is available within the presentation slides, which included Ability to Benefit & Career Pathway Program changes, the Revised Pay as You Earn (REPAYE) program, new Cash Management regulations (effective July 1, 2016), DL interest rate & fee updates, an upcoming new Direct Loan Servicing portal, and FSA in-person training opportunities among other topics. Prepare for the 2016-2017 aid year now by logging in to view the entire presentation, double-checking your timelines and procedures against this valuable resource. Many thanks to Zack for another informative session!