A general principle held by the Department of Education (ED) is that when a change in law affects a school's administration of Title IV funds, the institution (1) must make a good faith effort to comply by the statutory effective date, and (2) will not be held liable for differences between its reasonable interim interpretation of the law and ED's ultimate regulatory interpretation. This article examines implementation of the year-round Pell Grant in that light, given that it is statutorily effective for the 2009-10 award year.
The just-concluded negotiated rulemaking did not achieve consensus on the implementation of year-round Pell Grant. Discussion ensued about institutional options for 2009-10, in light of the fact that a number of institutions had given their students certain assurances about their eligibility that may not be consistent with ED's view. ED confirmed that even though final rules will be issued by November 1, 2009, those rules will not become mandatory until July 1, 2010, and schools can follow through the 2009-10 year with their original interpretations.
The law states that a student may receive a second scheduled award to "permit such student to accelerate the student's progress toward a degree or certificate if the student is enrolled --
(i) on at least a half-time basis for a period of more than one academic year, or more than two semesters or an equivalent period of time, during a single award year; and
(ii) in a program of instruction at an institution of higher education for which the institution awards an associate or baccalaureate degree or a certificate."
The disagreement that prevented consensus centers on the interpretation of "accelerate the student's progress." Some non-federal negotiators believed the statutory language was intended to allow a student to accelerate whatever graduation date would have resulted from his or her own pace of progress, so that even a part-time student could be considered to accelerate his or her program by attending year round.
For example, Adam has a Scheduled Award of $5,000 and attends 3/4-time, accruing a total of 18 semester credits in the fall and spring terms. His annual award from the 3/4-time disbursement schedule is $3,750, and thus he received $1,875 per term. The school considers the summer cross-over term to be part of the preceding award year, so Adam has $1,250 remaining from his Scheduled Award (SA) that he can use for summer attendance. Under the interpretation that would allow part-time students to accelerate, if Adam enrolls in the summer for another 9 credits, he could receive the $1,250 remaining from his first SA, plus an additional $625 from the newly-authorized second SA to make up the full 3/4-time payment amount of $1,875.
However, ED believes acceleration was meant to speed up the full-time equivalent of program completion. Under ED's interpretation, a student must first complete one full academic year's worth of work (as measured in credit or clock hours) before becoming eligible to draw on a second scheduled award within the same award year. In that case, Adam would not be eligible for second SA funds in the summer unless he had completed 24 credits in the fall and spring (assuming the institution defines the credit-hour component of its Title IV academic year as 24 credits).
One of the difficulties with ED's interpretation is that students typically attend the more compressed summer session on a part-time basis, thus making it unlikely that a student who begins the award year by attending a summer term assigned to the upcoming year could accrue the requisite number of credits in order to take advantage of the second scheduled award.
For example, Chris earns 6 credits during the summer term and 15 credits during the fall semester. He enrolls for 15 credits in the spring. His Scheduled Award is $5,000; he receives $1,250 in the summer for half-time enrollment and $2,500 in the fall for full-time enrollment. Chris has $1,250 remaining from his first SA. Since he only has 21 credits accrued prior to beginning the spring term, he would not be eligible for second SA funds and would receive only the $1,250 remaining from his first SA. If he were eligible for second SA funds, he could receive a full award of $2,500.
It is this scenario that concerns aid administrators who elected to implement the second SA provision this summer. That is, these schools assigned summer 2009 to the 2009-10 award year believing that their students would be able to fill out their spring awards with second SA funds. When asked how these schools might proceed, the ED negotiator reiterated that schools are allowed -- and in fact must -- interpret the law as best they can in order to comply with provisions that become effective before ED is able to put final regulations into effect. The ED negotiator pointed out that final rules on year-round Pell Grant will not become mandatorily effective until July 1, 2010, and until then schools may still operate on the good faith interpretations they made.
After several days of negotiations and thoughtful considerations of many proposals and counterproposals on this issue, the final divergence of opinion regarding the meaning of acceleration was one of the issues which prevented consensus.
Initially, ED had proposed to allow a student to receive second scheduled award funds for a payment period in which the student was both finishing the hours from the first academic year and earning credits towards the second academic year within the same award year. Under that proposal, both Adam and Chris could have received second SA funds (assuming both of their schools used 24 credits to define the Title IV academic year). However, ED added a caveat that for students to whom the school paid second SA funds, any census date policy the school had for recalculation of the Pell Grant would be suspended; the school would be required to recalculate throughout the payment period for those students.
So, let's look at Adam again. He accrued 18 credits in the fall and spring and enrolled for another 9 credits in the summer. Under the original proposal, 6 of those credits complete the first academic year and 3 would go towards the second, so he would have qualified for second SA funds. But if he dropped 3 credits at any point in the term, the school would have to recalculate his payment, and he would no longer qualify for those second SA funds because he was no longer earning credit beyond one academic year's worth.
Even a student who had completed at least 24 credits in the fall and spring and was taking 6 during the summer could have run afoul of the recalculation requirement; by dropping 3 credits even towards the end of the term, that student would no longer be enrolled at least half-time when the recalculation was done, and half-time enrollment is a requirement for second SA funds to be paid.
Non-federal negotiators felt that requiring recalculation throughout any term for students receiving second SA funds was too problematic.
The trade-off ED wanted for dropping this recalculation requirement was to require that the full complement of credits defining an academic year be earned prior to beginning the extra term in the award year in which the student could receive second SA funds. Along with that change, ED added a special circumstances provision that would have allowed a school to waive the requirement to earn one full academic year's worth of work prior to receiving second SA funds if circumstances beyond the student's control prevented him or her from doing so. For example, a student had to withdraw for courses due to illness, or the coursework the student needed to take was not offered. However, ED cautioned that such determinations had to be made on a case-by-case basis and would not be expected to recur on a long-term basis. Thus, a student who continued to enroll part-time due to financial considerations brought about by the failing economy could not be granted the waiver.
Because consensus could not be reached, ED is free to publish proposed rules as it sees fit. Traditionally ED has made a commendable effort to retain as much of the elements of compromise as it could even in the face of final disagreement on the whole. For year-round Pell Grant, it remains to be seen what approach ED will take. Institutions will need to read and analyze the proposed rules, which will be republished in NASFAA's Today's News, and comment thoughtfully and carefully.
Posted 05/26/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.
