Final rules were published in today's Federal Register amending the regulations concerning institutional eligibility, general provisions, Pell Grant, Federal Work-Study (FWS), TEACH Grant and LEAP. These revisions are based on public comment received in response to a Notice of Proposed Rulemaking (NPRM) published on August 21, 2009. The NPRM was a product of a regulatory process that began with public hearings and negotiated rulemaking.

The two issues that prevented consensus among the negotiators who worked on the NPRM were the addition of placement information to student consumer information, and implementation of the year-round Pell Grant. Both issues inspired comment. In the final rule, the Department of Education (ED) has retained the placement rate provision as proposed, but changed its year-round Pell interpretation.

NASFAA's upcoming Fall Training webinars will highlight these final rules, and the final rules concerning loan programs published yesterday, on Nov. 12, 19, and 24. Details of content and registration are available at www.nasfaa.org/redesign/falltraining09_center.asp.

Placement Rate

Although commenters pointed out that the law does not specify use of placement rates in the type of information about placement that schools must provide, ED remains convinced that the intent was to have schools give as much information as they have available, including any rates the school voluntarily calculates. Calculated rates must be disclosed whether they are on an institution-wide basis or for a given program of study. Whether a school advertises the placement rate does not matter.

Institutions that calculate placement rates must also explain the methodology used in the calculation, the source of information, and the time frame to which it applies. Note that the regulation does not require institutions to calculate a placement rate; disclosure applies if the institution calculates one or more rates.

Year-Round Pell Grant

The final rule allows a student to receive funds from a second scheduled award within an award year if the student is enrolled for credit or clock hours attributable to a second academic year within that award year. The student need not have completed a full academic year's worth of coursework prior to the payment period in which the second scheduled award funds are paid. For example, a student earned 9 credits in the fall semester and 9 credits in the spring semester. If the school uses 24 credits to define the academic year and places summer in the concluding award year, the student would need to enroll for more than 6 credits in the summer term to be paid funds out of the second scheduled award (6 credits to finish the first academic year's worth of work, plus some additional number of credits that count toward the second academic year). This student would be paid any remaining first scheduled award funds plus the amount of second scheduled award funds needed to make up the payment for the term as calculated under the appropriate Pell formula. (Note that this qualification is based on earned hours, not attempted hours or hours resulting from AP, IB, testing out, or other such competency measures.)

If the student drops the credits attributable to the second academic year, the regular recalculation policies used by the school under section 690.80 for a change in enrollment status would determine whether the student must forfeit the second scheduled award funds. For example, if the school has a census date after which it no longer recalculates a Pell Grant payment, a student who drops credits after that date is not required to repay any portion of the Pell payment, including the second scheduled award funds (assuming, as always, that the student had actually begun attendance in all classes for the enrollment status used to calculate the award, including the dropped courses).

A school may, on a case-by-case basis, waive the requirement that a student be taking credits that are attributable to the second academic year if documented circumstances beyond the student's control prevented a student from meeting that requirement. However, a student must be enrolled at least half-time in all cases to receive second scheduled award funds in a payment period.

Under the new rules, an institution must place a cross-over payment period (i.e., a payment period that begins before, and ends on or after, July 1) in the award year that yields the higher payment to the student. With the changes made to the proposed rule language (now allowing second scheduled award funds even if the student had not accrued the hours applicable to the first academic year), it is much less likely that this provision will penalize students, and more likely to benefit them. A school will still be required to reassign the cross-over payment period if subsequent information changes the year in which the higher grant will be paid, but the final rule establishes clearer deadlines after which such reassignment will be at the school's discretion. Further, the provision allowing a student to request reassignment based on what most benefits him or her over a two-year period was dropped; it was deemed unnecessary since the ability to qualify for second scheduled award funds is more flexible than had been proposed.

The procedures for determining eligibility of transfer students for second scheduled award funds still uses a straightforward assumption method, but gives schools some additional flexibility to choose an actual assessment of credits earned at the previous school. Additional clarifications have been incorporated regarding the impact of subsequent changes in information available to the school to make the determination of second scheduled award eligibility: an institution will not be required to redetermine eligibility for payment periods already completed.

Institutions are also afforded flexibility with regard to the implementation date of these rules, especially with regard to both 2009 and 2010 cross-over periods.

Other changes

The final rules also include clarifications of:

• servicemember readmission
• for proprietary institutions, the 90/10 rule, provision of a liberal arts baccalaureate, and acquisition of additional locations through teach-out agreements with closed schools
• the disaggregation of graduation/completion rates into aid recipients/non-recipients,
• timeframes related to missing person notifications
• fire statistics (specifically, fire-related injuries)

Tune in to NASFAA's upcoming Fall Training webinars for training on these final rules and how to implement them. Details of content and registration are available at www.nasfaa.org/redesign/falltraining09_center.asp.

Posted 10/29/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.