NASFAA's Take on Year-Round Pell Implementation Questions

By Joan Berkes, Policy & Federal Relations Staff

The return of the year-round Pell Grant has sparked some inevitable implementation questions, despite guidance issued by the Department of Education (ED) in June. The earliest schools will likely begin disbursing additional funds beyond a student's full scheduled award is Spring 2018, but pending additional formal ED guidance, NASFAA has the following observations.

Note that the terminology is as follows: the dollars used to pay the first 100 percent of a scheduled award constitute the "initial" scheduled award. Funds used to pay above the scheduled award in the same award year constitute the "additional funds" (and are capped at 50 percent of the student's scheduled award).

The amended law regarding the year-round feature of Pell Grants is relatively concise and straightforward:

  • Effective in the 2017–2018 award year, eligible students "shall" be awarded up to one and one-half Federal Pell Grants (i.e., 150 percent of the student's scheduled award) during a single award year.

  • In order to receive additional funds beyond one full scheduled award, the student must be enrolled for one or more additional payment periods during the award year that are not otherwise fully covered by the student's initial scheduled award.

  • The student must be enrolled on at least a half-time basis in the payment period during which the additional Pell Grant funds are received.

  • All Pell Grant funds received, including additional funds beyond the initial scheduled award, must be counted towards the student's overall lifetime eligibility limits.

  • ED must allow institutions to determine the award year to which cross-over summer periods are assigned.  

Based on NASFAA's reading of the new law, and considering existing rules and guidance, we draw the following principles:

  • Student eligibility for the additional Pell Grant funds beyond one full scheduled award in a single award year differs in only one respect from eligibility for an initial Pell Grant scheduled award: a student must enroll at least half-time in the payment period in which he or she receives the additional funds.  

  • A student must use all of the initial scheduled award before tapping into the additional 50 percent of the scheduled award, but a Pell payment for a specified payment period may consist of funds from both the initial scheduled award and the additional 50 percent. For example, a student enrolled full-time in the standard fall semester and three-quarter-time in the spring has 12.5 percent of his initial scheduled award remaining. If he enrolls half-time in summer, his payment would include the remaining amount of the initial scheduled award, plus additional funds to make up his full eligibility for the payment period: in this case, another 12.5 percent of the scheduled award. He has then used 112.5 percent of his scheduled award for the award year.

  • A student is entitled to receive any Pell Grant for which he or she is eligible. Eligibility for a cross-over period, however, depends in part on the award year to which the school assigns that period.

  • Assignment of cross-over periods still rests with the institution. While there is no change in authority and methods, there are new implications that institutions might want to consider in setting their policies, given availability of additional funds in the final payment period of an award year. See Q&A #1 below.

  • Disbursement rules for the additional Pell Grant funds are generally the same as those for the initial scheduled award.

Questions and Answers Based on NASFAA's Understanding

1. Does YRP need to be disbursed during the summer term?

Yes, if the student has eligibility for the award year to which the institution assigns the term. From GEN-17-06: "For a student who is eligible for the additional Pell Grant funds, the institution must pay the student all of the student's eligible Pell Grant funds, up to 150 percent of the student's Pell Grant Scheduled Award for the award year."

Remember that year-round Pell does not apply to the 2016-17 award year. If a student has used 100 percent of his or her 2016-17 scheduled award during the regular academic year (e.g., fall and spring semesters), there is no remaining eligibility for summer 2017 sessions assigned to 2016-17.

If the institution assigns summer 2017 to the 2017-18 award year, it must pay any Pell for which the student is eligible for summer sessions that cross over July 1 or that begin on or after July 1. Currently, a student may decline Pell for the summer, but that would not be in the student's best financial interest given the availability of additional funds beyond the initial scheduled award.

A student who receives a Pell payment for the summer as the first payment of the award year does not need to be enrolled at least half-time, since payment is being made from the initial scheduled award. The student would receive fall payment also from the initial scheduled award. Depending on enrollment status in the summer and fall, the student may have some funds remaining from the initial scheduled award for spring, but those remaining funds might not be enough to cover the student's full spring payment. In that case, the institution would "top up" the payment to the student's full calculated eligibility using funds from the additional 50 percent now available under "year-round Pell." Since additional funds beyond the initial scheduled award are in play, the student must be enrolled at least half-time in the spring. (Note that enrollment status used to determine eligibility for the additional funds would be determined by the total number of credits for which the student enrolls in that period, regardless of the mix of dollars used to pay the calculated Pell award.) If the student is enrolled less than half-time in the spring, only the remainder of the initial scheduled award may be paid.

2. Must dollars from additional funds beyond the initial scheduled award be separately tracked?

Schools need not separately track the proportion of initial scheduled award and additional funds used for any given payment, as long as the total availability of 150 percent is not exceeded. Similarly, credits within the payment period are not assigned to the initial scheduled award or to the additional funds; that is, if half-time is defined as 6 credits, then a student enrolled for a total of 6 credits in the extra payment period is eligible for any mix of dollars from the initial scheduled award plus the additional funding. Per GEN-17-06, schools must submit a payment made up of both initial scheduled award and additional funds as one amount for reporting to the Common Origination and Disbursement System (COD).

3. How must schools assign summer cross-over sessions?

Assignment rules and options have not changed. See Volume 3, Chapter 3, of the FSA Handbook. The new law directs ED to "allow the eligible institution in which the student is enrolled to determine the award year to which the additional period shall be assigned, as it determines is most beneficial to students."

4. Do we have 180 days after summer to disburse as a late disbursement?

We assume that normal disbursement and late disbursement rules apply. Remember, however, that additional Pell funds are not available yet for summer 2017 (see Q1 above), so late disbursements of additional Pell funds beyond one full scheduled award will not be an issue for summer 2017.

5. Can we disburse an eligible YRP summer after we disburse the fall?

For summer 2018 and beyond: If the summer Pell payment is the last term assigned to the concluding (prior) award year, we assume normal late disbursement rules apply to the additional Pell funds. If summer is the first term in the upcoming (current) award year, we assume 690.76 would apply. Under 690.76, you can disburse one lump sum for all the prior payment periods for which the student was eligible within the award year, but for completed periods you must determine the enrollment status according to work completed.

For example, the institution assigns summer 2018 to the 2018-19 award year, but the student does not complete verification until after the fall term begins. He had enrolled for 6 credits but completed only 3, having dropped a course. Since summer was the first term of the award year, summer payment is made from the initial scheduled award and the half-time minimum status does not apply. The institution could pay the student's summer and fall Pell Grant in one lump sum, but the summer amount must be determined using the less-than-half-time disbursement schedule.

6. Will COD take a summer Pell as disbursement 2 after a fall 1, or do they all need to be canceled and resequenced?

We assume the process would be the same as the current process when payment for a second payment period is made ahead of payments for the a payment period. ED has promised additional information regarding editing and reporting requirements for the COD System and EDExpress, to be posed on IFAP.

7. Must students meet any special requirement to obtain additional Pell funds (e.g., is there an acceleration component)?

There is no "acceleration" requirement as there was the last time we implemented a year-round Pell provision, when the student had to complete an academic year's worth of coursework before accessing a second Pell award. However, the current provision includes a minimum enrollment provision: the student will have to be enrolled at least half-time to receive additional funding beyond the initial scheduled award. This enrollment requirement applies to the payment period in which the student will actually receive the additional funds.

8. If a student falls below half-time status in the additional payment period, will the additional Pell funds have to be pulled back?

The previous iteration of year-round Pell (effective in 2010-11) also required a student to be enrolled at least half-time in the payment period for which funds from a second scheduled award were paid; in addition, an acceleration clause required the student to take at least one hour of coursework beyond an academic year's worth (when all prior periods in the award year were totaled). If the student failed to remain enrolled for credits that qualified him or her to receive the additional Pell, the funds from the second scheduled award had to be pulled back. (The student did not have to pass the course and receive the credit, but could not drop the course.) From the 2010-11 FSA Handbook: "If a student drops any classes during a period in which they were scheduled to complete credits required to push a student into 2nd Scheduled Award eligibility, you must recalculate Pell for the payment period, regardless of your school's census date."

Although ED has not yet issued guidance for 2017-18 in this regard, it would be reasonable to expect the same approach with regards to the minimum half-time enrollment requirement.

9. Are students who are enrolled in a program that uses a trimester calendar where the students are expected to attend all three terms spanning a full 12 months eligible for additional Pell Grant funds? The institution currently disburses the annual award in three equal payments for three standard trimesters (fall, spring, and summer), which are all equal in length. Can the school now divide 150 percent of the scheduled award into three equal payments?

No, the school cannot divide 150 percent of the scheduled award into three payments. A student must utilize 100 percent of the initial scheduled award before accessing additional Pell Grant funds. If the institution retains its current disbursement pattern, students in this program will not be able to access additional Pell Grant funds. However, the institution may choose to redesign its disbursement pattern.

Regulations require that the minimum academic year for a trimester system consist of two trimesters, as long as the period covered by the two terms is at least 30 weeks long. Pell Grant regulations permit an institution to disburse the student's annual award over the minimum two trimesters, or to divide it up among all three trimesters as long as the same approach is applied consistently to all students in the program. Normally an institution that does not expect students to attend all three terms in the year would use the two-trimester approach. If an institution chooses to disburse an annual award across three trimesters, students who attend only two of the three terms would only receive two-thirds of their annual awards, so this approach only makes sense if students are expected to attend all three terms in the year. The academic year in that case would have to be defined using the total number of weeks in all three terms.

Given the new availability of additional Pell Grant funds beyond a single scheduled award, the institution may want to change its disbursement method so that the initial scheduled award is distributed over two trimesters and the third is then eligible for the additional Pell funds. In that case, the academic year for the program of study would be redefined to encompass the number of weeks in the first two trimesters (fall and spring in the question as posed). Because the academic year definition for a given program applies uniformly for all Title IV purposes, loans would also be affected by the change in definition.

Editor's Note: This article has been corrected to address an incorrect calculation.

 

Publication Date: 8/1/2017


Kayla G | 8/16/2017 2:30:26 PM

Although I don't doubt that more questions will arise, this is a very thorough explanation of year round Pell. Thank you.

Kevin C | 8/2/2017 3:59:35 PM

James C - The calculation in the article is actually correct, as 75% (three-quarter time) of the spring award only represents 37.5% of a (full-year) scheduled award. In this example, the student uses 50.0% of a scheduled award for fall, 37.5% of a scheduled award for spring, and 25.0% of a scheduled award for summer, for a total of 112.5% of a scheduled award for the full award year.

James C | 8/1/2017 9:36:56 AM

This statement does not seem correct. The student will have used 112.5% of the Pell not 125%:

"For example, a student enrolled full-time in the standard fall semester and three-quarter-time in the spring has a quarter of his initial scheduled award remaining. If he enrolls half-time in summer, his payment would include the remaining amount of the initial scheduled award, plus additional funds to make up his full eligibility for the payment period: in this case, another quarter of the scheduled award. He has then used 125 percent of his scheduled award for the award year."

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