One of the most popular benefits of a NASFAA membership is our AskRegs service. Staffed by the financial aid experts in NASFAA's division of Professional Assessment, Training, and Regulatory Assistance (PATRA), AskRegs gives NASFAA members personal assistance with regulatory or compliance questions. Many questions require research and/or consultation with the Department of Education. Applicable statutory or regulatory citations as well as other Department of Education guidance references are provided with our answers.
Here are some recent questions that AskRegs staff fielded:
Question: What are the rules concerning late disbursement of ACG? How late can we disburse? Under what circumstances?
Answer: The information that you are looking for is located in the cash management regulations under section 34 CFR 668.164(g). In general, prior to July 1, 2009, if the enrollment status for an otherwise eligible student was full-time on the date the student ceased to be enrolled, the school could make a late disbursement of an ACG. Effective July 1, 2009, the Ensuring Continued Access To Student Loans Act (ECASLA) of 2008 changed the enrollment status requirements for the ACG program to allow students attending at least half time to receive a prorated grant amount. That being said, detailed information about late disbursements can be found on pages 4-56 to 4-59 of the 2008-09 FSA Handbook. Please review this information in light of the student eligibility enrollment status change mentioned above.
Question: How old does a student have to be to sign a Stafford master promissory note?
Answer: The regulations do not specify a minimum age for a Stafford Loan Borrower. However, there are three separate but related issues that you have to consider when sorting out the answer to this one. The first is an institutional eligibility issue, the second is a student eligibility issue, and the third is related to contract law in your state.
- Currently, under the institutional eligibility regulations, to participate in Title IV programs a school must admit as regular students only persons with a high school diploma or its recognized equivalent, or persons beyond the age of compulsory attendance in the state where the institution is located. The age of compulsory attendance may vary from state to state and is usually 16 years of age or older. It is important to note that they HEOA of 2008 changes this requirement to allow schools to admit home-schooled students who do not have a high school diploma or GED as regular students effective July 1, 2008.
- Once an individual has been admitted as a regular student, he or she must meet some general student eligibility requirements. One of which is to be eligible for Title IV aid, a student demonstrating appropriate academic preparation for the program he or she is undertaking. To demonstrate this the student must: 1-Have a high school diploma or its recognized equivalent; 2-Complete a secondary education in a home school setting; 3-Have the ability to benefit from the education or training offered, as documented by a passing score on a federally approved test; or 4- Enroll at an institution that participates in a federally approved state process.
- The final factor you should explore is the contract law in your state. Historically, we are not aware of any state laws that would prohibit the enforcement of terms and conditions of a Stafford Promissory note based on the age of the student; however, we strongly encourage you to consult with your school's legal counsel to gain a better understanding of the interplay between the laws in your state and Title IV laws and regulations on this topic. References: 34 CFR 600.2; 2009-10 FSA Handbook, Volume 2
Question: Our school chooses to mail paper prom notes for Perkins loans. What is the earliest date we can obtain a signature for a student on the prom note? In other words, if we mail out the notes in June and the student signs it June 15, with a fall term start date of August 24, is this okay? Can you give me citation address as well?
Answer: 34 CFR 674.16(a)(1) states that an institution must have a signed Perkins Prom Note before it makes the first disbursement.
The 2008-09 FSA Handbook reads: Making a Perkins Loan - Perkins Loan (or NDSL) is made when the borrower has signed the Perkins Master Promissory Note (MPN) and the school makes the first disbursement of loan funds under that promissory note for that award year. The student is required to sign the MPN only once. Additional Perkins Loans may be disbursed to a student for up to 10 years after the date the MPN is signed.
Although the borrower is only required to sign the MPN once, a school may choose to require a borrower to sign a new MPN for each award year. A student may also make a written request to sign a separate MPN for each award year. Therefore, there is nothing in the law, regulations, that dictate the earliest date on which the school can obtain a borrower's signature on the Perkins Promissory Note.
However, note that when a school credits a Perkins Loan disbursement to a borrower's account, the school must notify the borrower of the date and amount of the disbursement, the borrower's right to cancel all or part of the disbursement, and the procedures for notifying the institution that the borrower wishes to cancel the loan or the loan disbursement. The school must send this notification to the borrower no earlier than 30 days before, and no later than 30 days after, crediting the borrower's account.
In addition, each Perkins Loan received under an MPN is a separate and distinct loan. Disclosure information must be provided to the borrower annually, before the first disbursement of each new Perkins Loan awarded under the MPN. The disclosure information must include a statement of the total cumulative balance owed by the borrower to the school and an estimate of the monthly payment amount needed to repay the balance. In the case of a borrower who makes payments on the loan while still in school, the statement of cumulative balance owed by the borrower should be adjusted to reflect those payments. References: 34 CFR 674.16(a); 2009-10 FSA Handbook, pp. 6-66 to 6-69
If you have a regulatory question for NASFAA, submit your questions to AskRegs. When researching answers, NASFAA does not share identifiable institutional information with the Department unless authorized by the school. AskRegs responses represent NASFAA's understanding and while NASFAA believes that this response is accurate and factual, it has not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation for audit or program review purposes, please contact your ED Secretary's Regional Representative (SRR) or ED School Participation Team representative for additional guidance in this regard.
Posted 08/20/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.
