Spring 2011 GASFAA Hot Topic

1. Spring 2011 GASFAAHot Topic

2. THEProgram Integrity Regulations OR�

3. THE GOOD THE BAD THE UGLY�.

4. Resources *NPRM of June 18, 2010 *Final of October 29, 2010 (DCL) GEN-11-05 (DCL) GEN-11-06 (DCL) GEN 11-10 (DCL) GEN 11-11 NASFAA Resources http://www.nasfaa.org/ & IFAPP: http://www.ifap.ed.gov/ *Read both the preamble discussions & the regulations!

5. Program Integrity ��to improve the integrity of the Title IV student assistance programs.� Generally effective July 1, 2011 (2011-2012 Award Year) Exceptions: Verification and Updating � July 1, 2012 (2012-13 AY) State Authorizations � distance education �good faith� extensions till July 1, 2014 No Early Implementations

6. Topics Evaluating the Validity of High School Diplomas Ability to Benefit Misrepresentation Incentive Compensation State Authorization Credit Hour Definition Clock to Credit Hour Conversion Written Agreements Between Institutions Verification Satisfactory Academic Progress (covered in concurrent session) Repeated Coursework Return of Title IV Aid (R2T4, covered in earlier hot topic) Disbursement For Books & Supplies Gainful Employment

7. High School Diplomas A high school diploma is a basic element of student eligibility for Title IV funds, but equivalents are accepted: (GED) (ATB) Institutions must develop and follow procedures to evaluate the validity of a student�s high school diploma IF the institution or the Secretary has reason to believe the diploma is (1) not valid or (2) was not obtained from an entity that provides secondary school education. Does not apply to home schooled students (See Ch 1, Vol 1 of FSAH for guidance) 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

8. High School Diploma 2011-12 Award Year: No requirement to: collect high school diplomas, compare ISIRs with information collected by Admissions FAFSA collected HS information will be for ED analysis purposes only. This data element may be flagged as part of the verification process in future years. 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

9. High School Diploma 2011-12 FAFSA Only students who indicate are: first-year undergraduates AND respond they do have H.S. diploma are presented with Q27 � requests name, city and state of high school 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

10. High School Diploma 2011-2012 FAFSA List of most, but not all public and private high schools in the FAFSA drop-down box [populated by ED�s National Center for Education Statistics (NCES)]. NOT a master list of legitimate schools; therefore, absence from or presence on the list is neither good nor bad. 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

11. High School Diploma Acceptable documentation can include: HS diploma and a final transcript Information from companies that evaluate foreign transcripts Student-certification not sufficient No student appeal process in regulations Acceptance of diploma�s validity not binding on another school 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

12. High School Diploma Don�t forget the alternatives to the HS diploma: GED ATB (Tests or 6 hours of college credit) 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

13. High School Diploma Big ED is to provide further guidance as needed: Electronic Announcements DCLs FSA Handbook 34 CFR 668.16(p), October 29, 2010 FR pages 66887 - 92

14. Ability To Benefit ATB provides alternatives to the HS diploma/equivalent requirement for student FSA eligibility. Historically, ATB has been demonstrated by passing an approved ATB test. HEOA expanded ATB definition to include satisfactory completion of 6 credits or the equivalent applicable towards a degree or certificate program at the institution. 34 CFR 668.32, October 29, 2010 FR pages 66919 - 29

15. Ability To Benefit Regulations now define - the equivalent of 6 credits as: 6 semester hours 6 trimester hours 6 quarter hours, or 225 clock hours Do not have to apply toward student�s particular program Must be applicable toward a T4 eligible program at the institution 34 CFR 668.32(e)(5)

16. Ability To Benefit Transfer credit coursework will also satisfy the ATB requirement IF accepted by the new institution towards its own degree or certificate. 34 CFR 668.32(e)(5)

17. Ability To Benefit Testing out does not satisfy completion of 6 hours No T4 for the payment period in which the 6 credits are earned. In non-term, clock hour school and modular programs cannot pay T4 retroactively to the beginning of the payment period. 34 CFR 668.32(e)(5)

18. Ability To Benefit New and revised definitions added that affect ATB testing: �Certified� test administrator �Independent� test administrator �Assessment center� �Individual with a disability� �Test� �Test administrator� �Test publisher� 34 CFR 668.142; FR of October 29, 2010 pages 66921-29

19. Ability To Benefit Requirements for test publishers Must have process for handling test score irregularities Describe accommodations for individuals with disabilities Revised test approval procedures 34 CFR 668.144 (c)(17)(18); 668.145; FR of October 29, 2010 pages 66921-29

20. Ability To Benefit Non-native English speakers enrolling in programs taught in their native language with an ESL component or with a portion taught in English Student must take an approved English proficiency test prior to beginning the English portion of the program For individuals with disabilities, the regulation revises acceptable documentation of disability 34 CFR 668.153(a)(2), (a)(5); DCL GEN-11-08; FR of October 29, 2010 pages 66921-29

21. Misrepresentation Describes misrepresentation with respect to: Nature of the educational program, Nature of financial charges, Employability of graduates, Relationship with ED i.e. A school can not describe its eligibility to participate in T4 in a way that suggests approval or endorsement by ED of the quality of its educational programs. 34 CFR 668.71-75; DCL GEN 11-05; FR October 29, 2010, pages 66913-19; NPRM of June 18, 2010, pages 34834-37

22. Misrepresentation Misrepresentation is any false, erroneous, or misleading statement made by the institution directly or indirectly to a student, prospective student, member of the public, accrediting agency, state agency, or to Big ED. Misleading statement - includes any statement that has the likelihood or tendency to deceive or confuse (ironic word choice by Big ED) Statement - any communication made in writing, visually, orally, or through other means� Includes student testimonials given under duress or because such testimonial was required to participate in a program. Directed at institutional departments that provide students information primarily as part of recruitment efforts. 34 CFR 668.71-75; DCL GEN 11-05; FR October 29, 2010, pages 66913-19; NPRM of June 18, 2010, pages 34834-37

23. Misrepresentation Substantial misrepresentation is any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person�s detriment. 34 CFR 668.71(b),(c)

24. $$ Incentive Compensation A school can not provide a commission, bonus or other incentive payment based in any part, directly or indirectly on success in securing: Enrollments (recruitment), or financial aid, to any person or entity engaged in any student recruiting or admission activities or in making decisions regarding awarding Title IV funds. The 12 Safe Harbors removed No other activities are subject to the ban. HEA Section 487 (a)(20); 34 CFR 668.14 (b)(22); GEN 11-05

25. $$ Incentive Compensation Definitions Commission, bonus, or other incentive payment � a sum of money or something of value, other than a fixed salary or wages, paid or given to a person or entity for services rendered Enrollment � admission or matriculation of a student into an eligible program Securing enrollments or the award of financial aid Activities a person/entity engages in at any point in time through completion of an educational program for the purpose of admission or matriculation of students for any period of time or the award of financial aid to students. 34 CFR 668.14(b)(22)

26. $$ Incentive Compensation Definitions: Entity/person engaged in any student recruitment or admission activity or in making decisions about the award of financial aid means: Any institution or organization that undertakes the recruitment or the admitting of students or that makes decisions about and awards T4 funds; AND Any person who undertakes recruiting or admitting of students or who makes decisions about and awards T4 funds, and any higher level employee with responsibility for recruitment or admission of students, or making decisions about awarding T4 funds.

27. $$ Incentive Compensation Two-part test to evaluate if is incentive compensation: Whether the payment is a commission, bonus, or other incentive payment, defined as an award of a sum of money or something of value paid to or given to a person or entity for services rendered; AND Whether the commission, bonus, or other incentive payment is provided to any person based in any part, directly or indirectly, upon success in securing enrollments or the awarding of financial aid. If the answer is YES to both questions, then payment would be prohibited October 29, 2010 FR, page 66876

28. State Authorization *�The legal basis for the institution�s existence as an eligible institution under the HEA is its authorization, by name, to offer postsecondary education.� Revised regulations provide more detail about what constitutes state authorization for an institution to operate and grant degrees or certificates 34 CFR 600.9; *DCL GEN-11-05; Also See Fred Sellers Webcast http://wcet.wiche.edu/advance/state-approval

29. State Authorization State�s role is: Institutional approval; Institutional monitoring, and Responding to public complaints 34 CFR 600.4(a)(3); 600.5(a)(4); 600.6(a)(3); 600.9; DCL GEN-11-05

30. State Authorization Schools must be authorized by name to provide post secondary educational programs by: State charter, constitution, license, or other document 75 FR 66867, Oct. 29,2010 notes to the extent a public community college is a State institution and an instrumentality of a State govt. it would be compliant without being specifically named. Federal Government approval Indian Tribe Religious institutions exempt from state authorization 34 CFR 600.9; 668.43(b); DCL GEN-11-05

31. State Authorization States must establish a process (mechanism) to review and act on complaints about an institution and enforce state laws. BoR? TCSG? Privates? For-Profits?

32. State Authorization & Distance Education Schools must document they are legally authorized to offer postsecondary education in any state where their distance education students are located while receiving instruction). An otherwise T4 eligible student residing in another state is eligible for T4 only if the required state approval has been obtained *Enforcement: Big ED will not limit student eligibility for distance education undertaken prior to July 1, 2014, if the school is making good faith efforts to identify and obtain necessary authorizations before that date. 34 CFR 600.9(c); DCL GEN-11-05; *DCL GEN-11-11

33. State Authorization & Distance Education Evidence of Good Faith Effort Documentation that a school is developing a distance education management process for tracking student place of residence when engaged in distance education. Documentation that a school has contacted a state to determine if authorization is needed. An application to a state, even if not yet approved. Documentation from a state that an application is pending. DCL GEN-11-11

34. State Authorization & Distance Education Comprehensive Directory Big ED now committed to developing a comprehensive directory, and Once developed, will make it publicly available on ED Web site *State Higher Education Executive Officers (SHEEO) DCL GEN-11-11; *http://www.sheeo.org/stateauth/stateauth-home.htm

35. Credit Hour DCL GEN-11-06 issued �to highlight the flexibilities inherent in the definition and to correct common misunderstandings circulating in the higher education community� DCL seeks to assure institutions the new regulations are �grounded in commonly accepted practices in higher education, do not intrude on core academic decisions��� The DCL provides very good guidance with Q&As

36. Credit Hour Is an institutionally established equivalency that reasonably approximates some minimum amount of student work reflective of the amount of work expected in a Carnegie unit - key phrases being: �Institutionally established� �Equivalency� �Reasonably approximates�, and �Minimum amount�

37. Credit Hour Is an institutionally established equivalency that reasonably approximates not less than: One hour of classroom or direct faculty instruction and a minimum of two hours out of class student work per week, OR Equivalent work for other academic activities as established by the institution Including laboratory work, internships, practica, and studio work The regulations create procedures that accrediting agencies must use to determine if an institution�s assignment of a credit hour is acceptable 34 CFR 600.2; 602.24

38. Credit Hour Regulations also modify provisions on when institutions (1) must use clock or credit hours and (2) standards for credit-to-clock-hour conversions Undergraduate non-degree credit hour programs must use clock-to-credit hour conversion unless each course in the program is fully acceptable to a minimum two year degree program at the institution. Institution must also be able to demonstrate that students enroll in and graduate from that degree program. 34 CFR 668.8(k)

39. Credit Hour For programs subject to the clock to credit hour conversion, the new regulatory conversion formula is: One semester or trimester credit hour is equal to at least 37.5 clock hours One quarter credit hour is equal to at least 25 clock hours 34 CFR 668.8(l)(1)

40. Credit Hour An exception to using the new 37.5 clock hour semester/trimester and 25 quarter hour conversion formula is provided for institutions that demonstrate the credit hours meet the new definition of credit hour IF: *NO deficiencies identified by accreditor or state in assigning credit hours, AND If institution complies with certain additional requirements when there is outside classwork *DCL GEN -11-06, Encl B 34CFR 668.8(l)(2)

41. Credit Hour When the institution meets the preceding requirements, then the current minimums apply: One semester or trimester credit hour is equal to 30 clock hours One quarter credit hour is equal to 20 clock hours 34 CFR 668.8(l)(2)

42. Written Arrangements to Provide Educational Programs Arrangements between 2 or more eligible schools owned or controlled by the same individual, partnership, or corporation (i.e. for-profits): Currently, no limit to the percent of the program that can be provided by the other institution. Effective July 1, 2011, the for-profit school that grants the degree/certificate MUST provide MORE than 50% of the program. This does not apply to public or nonprofit institutions. 34 CFR 668.5(a)(2)

43. Written Arrangements For arrangements between an eligible and an ineligible school/organization, the program is not eligible for T4 if the school�s ineligibility resulted from ANY adverse action by: ED, or The accrediting agency, or State oversite entity 34 CFR 668.5( c)

44. Written Arrangements The maximum amount of the eligible institution�s program that can be provided by an ineligible institution owned or controlled by the same individual, partnership, or corporation as the eligible institution is limited to 25%. Where the ineligible institution is not owned or controlled by the same individual, partnership, or corporation as the eligible institution, the percentage must be less than 50% (currently is 50%). 34 CFR 668.5(a)

45. Written Arrangements Required disclosures to prospective and enrolled students where program is designed to be offered by another entity: Portion of program not being offered by the degree/certificate granting school Name and location of the other school/organization Method of delivery not being offered by the degree/certificate granting school Estimated additional costs may incur due to the arrangement 34 CFR 668.5(e); 668.43(a)(12)

46. Verification Effective July 1, 2012! So are applicable to the 2012-13 FAFSA processing year which begins January 1, 2012! 34 CFR 668.51 - 60; FR October 29, 2010, pages 66902- 66912; NPRM June 18, 2010, pages 34825 - 34834

47. Verification Definitions Verification applies to T4 programs where eligibility is based on EFC, aka subsidized financial aid. Pell, FSEOG, FWS, Perkins Loan, Direct Subsidized Loan Verification does not apply to T4 programs where eligibility is not based on EFC, aka unsubsidized financial aid. TEACH �Grant�, Direct Unsubsidized Loan, Direct PLUS Loan 34 CFR 668.52

48. Verification Professional Judgment Verification must be completed before any PJ adjustments can be made to FAFSA data School�s written verification policy/procedures must include statement that no adjustments can be made until verification completed 34 CFR 668.53(c)

49. Verification Selection Schools must verify all applicants selected by CPS *30% cap option eliminated 34 CFR 668.54(a) *ED has stated their intent is to continue to select approximately 30% of all applicants; however, their process focuses on Pell eligible applicants where there is a strong likelihood verification will result in a change in the Pell award.

50. Verification Verification NOT required if: Student is eligible to receive only unsubsidized aid Student did not receive any aid (for reasons other than failure to complete verification) Transfer student already completed verification at a prior school Current school must collect statement from prior school, including the transaction number of the ISIR Death of student 34 CFR 668.54(b)(1)

51. Verification Exclusions: Verification not required for parents (dependent student) or spouse (independent) if parents/spouse: Reside outside U.S. and cannot be contacted by normal means of communication Cannot be located because contact information is unknown and cannot be obtained Mentally incapacitated Deceased (spouse) 34 CFR 668.54(b)(2), (b)(3)

52. Verification Exclusions: Note that the exclusion for citizens of the Republic of Palau, the Marshall Islands, and the Federated States of Micronesia has been eliminated!

53. Updating & Dependency Status Updating Marital Status (BIG CHANGE): Schools MAY require a student to update his/her FAFSA due to a change in his/her marital status if necessary to more accurately assess his/her ability to meet education expenses Is option of the school, exercised on a case-by-case basis, not a PJ. Will need to update HH size, number in college, dependency status and family financial information . We can establish a cut-off date 34 CFR 668.55(c); FR October 29, 2010, Pages 66906-07

54. Verification Beginning 2012-13 ED will publish Federal Register Notice < each award year FAFSA processing to list possible verifiable items and acceptable documentation! SAR/ISIR will specify the required verification items for the individual student 34 CFR 668.56

55. Verification Tax filing extensions � schools MUST accept as acceptable documentation to verify an applicant�s FAFSA information: All W2s, (or if self-employed, a signed statement of AGI and taxes paid), and A copy of IRS Form 4868 �Application for Automatic Extension of Time to File U.S. Individual Income Tax Return� that was filed with IRS, or A copy of IRS�s approval for an extension beyond the automatic 6 month extension 34 CFR 668.57 (a); FR October 29, 2010, page 66910

56. Verification Tax filing extensions: Schools MAY request a copy of the tax return once filed, but we MAY NOT delay verifying an applicant�s FAFSA information until the tax return is received if the applicant provided the extension documents. If we require the applicant to submit the actual tax return once filed, we MUST then re-verify the AGI and taxes paid. 34 CFR 668.57 (a); FR October 29, 2010, page 66910

57. Verification For subsidized programs, ALL changes resulting from verification MUST be submitted to CPS if change is: To any non-dollar item, or A single dollar item of $25 or more ($400 tolerance eliminated) If required to submit one change, must submit all changes 34 CFR 668.59

58. Verification No longer limits student to lesser Pell award if verification completed after enrollment ended! Student receives Pell payment based on correct EFC

59. Verification For 2010-11 & 2011-12 A school may consider IRS retrieved information as acceptable verification documentation IF: ED has identified those items as having come from the IRS and have not been changed (IRS Request Flag = 02) 34 CFR 668.57 (a)(2)

60. Repeated Coursework Amends definition of full-time student to allow repeated coursework to count toward enrollment status in term-based programs May repeat previously passed course once May repeat failed course until passed May not repeat previously passed coursework that would be taken due to a student�s failure of other coursework 34 CFR 668.2

61. Disbursement For Books and Supplies Institutions must provide a way for Pell eligible students to purchase or obtain books and supplies no later than the 7th day of a payment period if: T4 funds could have been disbursed 10 days prior to beginning of payment period, AND Disbursed funds would have created a T4 credit balance ( i.e. a balance payable to the student) School provides student lesser of presumed credit balance or amount needed by student as determined by the school 34 CFR 668.164(i), October 29, 2010 FR, pages 66929-32

62. Disbursement For Books and Supplies Schools may use various options to assist students in obtaining or purchasing books and supplies Cash disbursements, Bookstore vouchers, Stored-value cards, School credit, Check, EFT transfer to student bank account 34 CFR 668.164(i), October 29, 2010 FR, pages 66929-32

63. Disbursement For Books and Supplies If a student uses the way provided by the school to obtain the books/supplies, the student is considered to have authorized the use of T4 funds and does not need to provide a written authorization for this purpose only! 34 CFR 668.164(i), October 29, 2010 FR, pages 66929-32

64. Disbursement For Books and Supplies Schools must have a policy whereby students may opt out of the way an institution provides for them to obtain or purchase books & supplies. If the student opts out, the school is not required to offer the student another way to purchase books and supplies Disbursement of books and supplies policy for Pell eligible students must be provided to students in their consumer information 34 CFR 668.164(i), October 29, 2010 FR, pages 66929-32

65. Gainful Employment (GE) NPRMs of June 18, & July 26, 2010 Two sets of Final Rules published on October 29, 2010 with effective date of July 1, 2011 re. Program Integrity-Gainful Employment Reporting and Disclosures Gainful Employment � New programs DCL GEN-11-10 dated April 20, 2011 Implementation of Regulatory Requirements Incl. Attachment re. Gainful Employment Reporting Draft Data Elements Preliminary List http://ifap.ed.gov/GainfulEmploymentInfo/ ANN-11-11: ED Live Webinar 5/25 & 5/25/11 on Reporting and Disclosure requirements

66. Gainful Employment (GE) All T4 eligible programs must lead to either a degree Associate Bachelor�s Graduate Professional, OR Prepare students for �gainful employment in a recognized occupation� HEA, Part G, Section 481(b)

67. Gainful Employment (GE) Applies to public, non-profit and for-profit institutions: * For-profit schools - All programs except: Program leading to bachelor�s degree in liberal arts offered since January 2009 at a school regionally accredited since October 2007 * Public or non-profit schools - Any program that is not: Leading to a degree, or A transfer program of at least two years 34 CFR 600.4(a)(4)(i)(C); *DCL GEN-11-10 provides details

68. Gainful Employment (GE) Schools must submit annual information to ED re. ALL (not just T4) students enrolled in T4 eligible gainful employment programs. first reports must be submitted by October 1, 2011, Must include information on ALL (not just T4) students enrolled in a GE Program during Award Years: 2006-07 (to extent data is available); 2007-08; 2008-09 & 2009-10 34 CFR 668.6(a); DCL GEN-11-10

69. Gainful Employment (GE) Reporting Process & Technology Enrollment Reporting data format will be modified to include the additional data items. ED will provide more information once modified See Attachment to GEN-11-10 �GE Draft Data Elements List�

70. Gainful Employment (GE) Disclosure Requirements to Prospective Students for each T4 GE program: Effective July 1, 2011 Must be provided in all promotional materials and on school�s program Web site Schools use own disclosure form until ED provides schools its form which will be an on-line Web app we use to create a Web page containing required disclosure information (see page 6 of GEN-11-10) Summary of disclosure information provided pages 5-6 of GEN-11-10 34 CFR 668(b)

71. Gainful Employment (GE) Adding New GE Programs Schools must notify ED (*E-APP process) at least 90 days prior to first day of class when intend to add new GE Program (must notify ED by July 1, 2011 if program�s first day of class is on or after July 1, and before October 1, 2011) If school provides the notice to ED 90 days prior to first day of class they may begin offering the program without receiving ED approval, unless School provides late notice, OR At least 30 days prior to the first day of class, ED requests additional information or otherwise informs the school to delay the start of the additional program. 34CFR 600.10; 600.20; GEN-11-19; *0910 SFAH, Vol 2, Chs 2 & 5

72. Questions? The �Ask a Fed� Session is Thursday, May 19, 9:00 � 9:50 am, Salon 5!!

73. END� THE