Pop Quiz – May Loans Be Disbursed During a Module in Which the Student Is Not Attending?

Question:

A school has a credit-hour program, with nonstandard terms that are not substantially equal in length, meaning it uses the nonterm rules for disbursing Direct Loans. A student registers for classes in modules 1-5 (all of Fall) and completes them successfully. The student registers for classes in Spring for modules 6, 8, 9, 10, and 11 and meets the school’s definition of full-time for both terms. The student attends and successfully completes module 6.

The school understands it cannot make the second Direct Loan disbursements until the student completes both half the number of weeks and half the number of credits in the program's academic year (i.e., the student reaches the midpoint of the academic year in terms of weeks and credits). See 34 CFR 668.4(b).

The student reaches half the number of credits at the end of module 5 after half the required 10 classes/modules are done. The student reaches half the number of weeks during module 6. She is not enrolled in or attending module 7 but is still registered full-time for the rest of the second nonstandard term.

Answer:

According to guidance NASFAA has received from the U.S. Department of Education (ED), immediately at the point where both the weeks and hours associated with the first payment period are completed, a second disbursement may be made. In the scenario described above, that point would be mid-way through module 6.

Provided the student had previously attended during the payment period, it is permissible to make a disbursement during a module he or she is not attending. The student entered the second payment period during “module 6” and, presumably, attended through that module. Accordingly, the school can make a second disbursement during “module 7” even though the student will not be in attendance for that module. This is because the student is enrolled for the overarching second nonstandard term payment period (consisting of modules 6, 8, 9, 10, and 11) for which the disbursement is being made.

 

Publication Date: 6/16/2017


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