ED Contemplating 2012 Budget Act Provisions

The U.S. Department of Education is expected to issue a Dear Colleague Letter (DCL) in the near future to explain the provisions of the 2012 budget agreement signed into law shortly before Christmas. NASFAA has raised a number of questions regarding effective dates, which may be addressed in the DCL. These questions include:

Loss of the Stafford Loan interest subsidy during the grace period (provision is effective for new loans made on or after 7/1/12):

  • What is a “new” loan and at what point is a loan made? (For example, upon origination or when the first disbursement is made?)
  • Can ED grant forbearance so that students will not have to pay accruing interest during the grace period? Would unpaid accrued interest during the grace period be capitalized?

Elimination of ability to benefit as an alternative to the high school diploma for purposes of student eligibility for Title IV aid (provision is effective for students who first enroll in a program of study on or after July 1, 2012):

  • Does the effective date refer to the student’s current program of study, or any previous program of study?  (That is, would a student who attended anywhere in any program prior to 7/1/12 be grandfathered for any attendance anywhere on or after 7/1/12?)
  • How will a previously eligible student who transfers on or after 7/1/12 to a new school or to a different program be treated?
  • What does “enroll” mean: accepted, registered, actually attending class? (668.2 defines “enrolled” as having completed the school’s registration requirements (except for the payment of tuition and fees), but there is no guarantee that this regulatory definition will be applied to a statutory provision.)
  • Is a student who has completed a two-year associate degree considered to have the equivalent of a high school diploma? (The regulations define a transcript showing completion of a two-year program fully acceptable to a bachelor’s degree as the equivalent of a high school diploma; these are commonly referred to as “transfer programs” and do not actually result in a credential. This seems like a mere technicality but is more specificity in the regulation now necessary?)

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