By Jill Desjean, Director of Policy Analysis
On Friday, the Department of Education (ED) issued a new electronic announcement (EA) as a follow-up to its January 10 announcement that NSLDS Postscreening Results would not appear on Institutional Student Information Records (ISIRs) until “early Spring 2025,” delayed from an earlier promise that this functionality would be operational in late 2024.
The January 17 notice provides information on a new report ED is developing to help schools identify students who would normally be identified as having potential Title IV aid eligibility issues on the Institutional Student Information Record (ISIR) via the further-delayed National Student Loan Data System (NSLDS) Postscreening process.
As a reminder, in July ED issued guidance that “schools or their third-party servicers can request batch Financial Aid History (FAH) reports for any applicant or review individual student NSLDS records through the NSLDS website,” to identify students with potential issues impacting their Title IV student aid eligibility. At that point, ED was anticipating ISIRs to include NSLDS postscreening results by late 2024.
With postscreening now delayed an additional several months, ED has created a new tool — an Excel file of students whose eligibility status may have changed as a result of new information in NSLDS since their initial 2024-25 FAFSA submission — which will be available to schools to use by January 31. This “NSLDS Post-screening Eligibility Changes file” will be available to institutions for download on the Common Origination & Disbursement (COD) website and will be updated monthly.
One group of students will be missing from the January file but are expected to appear in the February file. Those are students who entered default on a Title IV loan that was previously not in default. ED intentionally excluded this group of students to allow them to review the default status of borrowers who participated in Fresh Start.
Institutions are not required to use the NSLDS Post-screening Eligibility Changes file to identify students with potential eligibility issues, and may choose to use any of the options ED has suggested, including those offered in the July EA.
Institutions would use this Excel file to either request financial aid history for listed applicants through the normal NSLDS Financial Aid History batch process, or through the upcoming Financial Aid History (FAH) Report (FAT001) which will also be available by January 31.
Based on conversations with ED officials, NASFAA estimates that just under 80,000 2024-25 ISIRs would have had one or more NSLDS postscreening codes if the process for including those results on ISIRs was currently functional. Not included in this figure is the number of students with loan default statuses, which, as noted above, will not be identified until next month. Some ISIRs, of course, may contain more than one code, meaning the number of individual students affected should be lower than this total count. With just under 6,000 Title IV-participating institutions, we expect that some smaller schools may have few or no impacted records. However, larger institutions should expect proportionally larger numbers of impacted records.
ED notes in the EA that schools can request for “many students at once,” but does not specify exactly how many.
Although not mentioned in the EA, under regulation 668.164, a school is responsible for confirming a student’s eligibility at the time of disbursement. Since the correct information is in NSLDS and only the postscreening process is inoperable, it is unclear whether ED will hold schools accountable for disbursements made prior to the availability of NSLDS postscreening results.
The EA advises that “if an institution disbursed aid for a student, and the student’s eligibility for Title IV funds is subsequently reduced and creates an overpayment, the school must resolve the overpayment.” It is NASFAA’s understanding that any overpayments created as a result of the delayed provision of NSLDS postscreening results on the ISIR would be considered overpayments for which the school is responsible, which means:
The school may attempt to collect from a student funds the school was required to return.
The overpayment can never result in a student losing Title IV eligibility and must never be reported to NSLDS or referred to ED for collection.
The overpayment can never become a student’s FSA debt.
The school cannot withhold official transcripts or take any other negative action against a student related to a balance owed.
NASFAA recommends the following options for institutions based on this new information:
For students for which your institution has already fully disbursed aid for 2024-25, your institution has the following options:
Now: Follow the July guidance to identify and resolve overpayments in accordance with Volume 4, Chapter 3 of the Federal Student Aid Handbook and continue to do so until postscreening is operational;
Late January through whenever postscreening results begin to appear on ISIRs: Access the NSLDS Post-screening Eligibility Changes file when it becomes available and after each monthly update and resolve overpayments in accordance with Volume 4, Chapter 3 of the Federal Student Aid Handbook; or
Early Spring: Wait until postscreening results appear on ISIRs to identify overpayments and resolve overpayments in accordance with Volume 4, Chapter 3 of the Federal Student Aid Handbook.
For students for which your institution has not yet fully disbursed aid for 2024-25, your institution can:
Now, and before disbursing aid: Follow the July guidance to identify students whose pending disbursements would create an overpayment and make necessary adjustments to pending disbursements and continue to do so until postscreening is operational;
Late January, and before disbursing aid: Access the NSLDS Post-screening Eligibility Changes file when it becomes available in late January and after each monthly update and make necessary adjustments to pending disbursements to prevent overpayments; or
Early spring, and before disbursing aid: Wait until postscreening results appear on ISIRs in early spring and make necessary adjustments to pending disbursements to prevent overpayments.
Taking action early will ensure compliance with federal regulations, including changes to the administrative capability requirements effective since last July that require institutions to disburse funds to students “in a timely manner that best meets the student’s needs.”
It will also allow for the most time to adjust pending disbursements; resolve overpayments; explain aid adjustments and/or overpayments to students; and assist students in finding financing solutions that ensure they can remain enrolled and on a path to successful completion.
Regardless of which option your institution chooses, once NSLDS Postscreening results begin to appear on ISIRs, your institution must review all postscreening results and adjust pending disbursements and/or resolve any overpayments that may have been missed through any of the manual alternative solutions ED has offered.
NASFAA will continue to engage with ED on this issue, particularly about ED’s authority to grant any waivers or flexibilities. Read Today’s News for the latest developments.
Publication Date: 1/17/2025
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