NASFAA Seeks Resolution on Outstanding Student Aid Issues
Recent changes to the student aid programs have raised a host of issues and questions at financial aid offices across the country. NASFAA has been collecting these issues and questions from members and delivered them directly to the Under Secretary's office at the U.S. Department of Education. At the specific request of Congress, NASFAA has also been keeping lawmakers informed of these outstanding issues, some of which are causing serious frustration for families and schools.
While many of these issues have not been officially resolved and many questions remain outstanding, Department officials have told NASFAA that they are working hard to release official resolutions in the near future. The following is a list of issues we have raised with senior Department officials. Let us know if we’re missing anything by leaving a comment at the end of this article.
- IRS data retrieval, tax transcript delays: Reported problems include error messages saying the IRS site is down and data retrieval and transcripts not being available in a timely manner for tax filers who owe taxes.
- Conflicting answers and delayed guidance on IRS data retrieval: Tax filers have reported receiving guidance from the IRS that conflicts with how ED says the IRS data retrieval process should work, specifically around time frames and who can use the data retrieval tool. On rare occasions, financial aid administrators are reporting that regional trainers have provided conflicting guidance on when tax transcripts would be made available. NASFAA has requested that schools immediately be allowed to begin using 1040s in the verification process to start clearing verification backlogs.
Policy Interpretation Issues
- Saving Pell Grants for future usage: Another question that has arisen is whether students can elect to decline a Pell Grant in one term because they anticipate needing it in a future term. A student who is nearing the newly imposed lifetime limit may wish to manage his or her resources in this way. For example, a student taking summer classes might want to decline Pell because he has other sufficient resources, such as earnings, in that enrollment period, but anticipates a greater need for the Pell Grant during an upcoming regular term.
- Elimination of crossover regulations: Schools are facing reinstatement of regulations requiring assignment of summer crossover periods to the year that yields the larger payment; this often results in taking Pell from the upcoming award year regardless of whether eligibility is remaining from the prior award year. Those regulations were constructed when two Scheduled Pell Grants were available, and before the lifetime limits were imposed. Congress prohibited their enforcement for 2011-12 when the two Pells provision was repealed. In the current environment, the crossover regulations could cause students to receive less total Pell Grant funds, rather than more. We’ve been assured that the Department will resolve this issue, but pending a resolution, some schools are reporting internal processing conflicts and are therefore packaging summer financial aid using crossover regulations.
- Loss of ATB as an academic qualifier for Title IV eligibility: We appreciate the Department’s interpretation that allows many ATB students to be, in effect, grandfathered into the current Title IV programs. However, there are still some issues that confuse schools. For example, does "previously enrolled" mean having received Title IV in the past or simply mean previously enrolled in a qualified Title IV program irrespective of whether they actually received aid?
- Subsidy elimination and Master Promissory Notes (MPNs): How will the loss of subsidy during grace periods be incorporated into the MPN? Will borrowers be required to complete a new MPN or can this be handled through an addendum to the current MPN? The latter scenario is preferred by institutions.
Loan Servicing Issues/Questions
- Lack of standardization among loan servicers: There is a lack of consistency between student loan servicers that has a significant financial impact on borrowers. This includes capitalization of interest and calculation of monthly repayment amounts for borrowers using the Income-Based Repayment plan. NASFAA’s Graduate and Professional Issues Committee has worked for more than a year on this issue and believe the issue may be resolved, yet official guidance from ED has yet to be released.
- Special consolidation: Borrowers and schools have reported receiving conflicting guidance from loan servicers regarding special consolidation. Will borrowers have two payments, one for their special consolidation and another for a "regular" consolidation? Will borrowers who use special consolidation lose their grace period?
- Lost paperwork & delays in processing: Reports of lost paperwork and delays most often pertain to Income-Based Repayment (IBR) and consolidation applications. Students are attempting to sign up for IBR and/or consolidation several months before repayment begins, and due to delays and paperwork mishaps outside of their control they are entering repayment with the process unfinished. For example, the student might go into standard repayment and/or have loans that remains unconsolidated, even if they have indicated otherwise.
- Servicer Transition Issues: Institutions have reported problems related to transitioning from one servicer to another (i.e., lost paperwork, payments not being credited correctly, etc.)
We understand that many financial aid offices are frustrated with the lack of guidance on these issues. We will continue to work with the Department to secure and disseminate official answers.
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