NASFAA has received a request for further clarification of the Department of Education's guidance regarding the return of Title IV funds for student reservists called up to active duty status as a result of the increasing military mobilization.
As previously reported, schools should follow the guidance contained in Dear Colleague Letter GEN-01-13. However, financial aid administrators have said that while institutional policy may dictate a 100% refund for tuition and fees for activated reservists forced to leave school, ambiguity remains about how to apply the return of Title IV requirements to students that received federal financial aid.
Some say the DCL guidance could be construed as contradictory. That's because while it strongly encourages schools "to provide a full refund of required tuition, fees, and other institutional charges" for student reservists reassigned to active duty status and thereby forced to withdraw from school, it then goes on to say that if a Title IV eligible student withdraws because of military requirements "the school must perform the Return of Title IV Funds calculations that are required by the statute and regulations."
It is NASFAA's understanding that although ED encourages schools to refund 100% of institutional charges for reservists called to active duty, the return of Title IV funds provisions still apply to the student.
That is, the school must determine whether Title IV funds must be returned to the Title IV programs and/or FFEL lender or whether the student is due a post-withdrawal reimbursement.
If Title IV funds must be returned, the school must use the amount of the institutional charges the student incurred as of the date of the student's withdrawal when calculating the portion that the school is responsible for returning. Any amount calculated as the school portion must be returned by the school. Should the calculation of the student portion indicate an overpayment of Title IV grant funds, the Letter states that the school is not required to contact the student or to collect the overpayment. Furthermore, the school is not required to notify NSLDS of the overpayment or to refer the overpayment to the Department for collection.
Should the school decide to eliminate or reduce the student's charges, the return of Title IV funds calculations should be performed using the amount of the student's charges before they were reduced or eliminated.
NASFAA currently has no statistical or other information about whether schools are reducing or eliminating the institutional charges of student reservists called to active duty.
By Elizabeth B. Guerard
NASFAA Assistant Director of Communications
Posted January 27, 2003 on
www.NASFAA.org, the Web Site of the
National Association of Student Financial Aid Administrators (NASFAA).
Copyright 2003.
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