| AwardYear: 1995-1996 EnterChapterNo: 2 EnterChapterTitle: Student Eligibility and Financial Need SectionNumber: 2 SectionTitle: Overview of Financial Need PageNumbers: 39-56 With the exception of the unsubsidized loan programs (unsubsidized Federal Stafford, Direct Unsubsidized, Federal PLUS, Direct PLUS), a student must demonstrate financial need to receive aid from the SFA programs. Unlike scholarship programs that may award funds based on academic merit or on the student's area of study, need-based aid is awarded to students based on the family's need for assistance. The concept of need is not a requirement solely for federal aid; it has also been used for many years by schools and some states to award their own aid. Financial need is simply defined as the difference between the student's cost of education and the family's ability to pay those costs. Note that the student's financial need will be reduced by aid that is awarded to the student. The educational costs for the SFA programs are defined by statute and are fairly easy to calculate based on the student's tuition and fee charges, living situation (e.g., on-campus, off-campus with parents, off-campus not with parents), as well as other factors that affect the student. However, the student's ability to contribute toward these costs, as measured by the "Expected Family Contribution," is a much more complicated assessment. The purpose of this section is to review the concept of financial need. We will discuss family contribution analysis and the independent student definition first and then proceed to calculating the cost of attendance and a discussion of overawards and packaging. [[The graphic on page 2-39 is currently unavailable for viewing. Please reference your paper document for additional information.] EXPECTED FAMILY CONTRIBUTION The Expected Family Contribution (EFC) is the amount that a family can reasonably be expected to contribute toward college costs. It is based on an analysis of the family's financial strength, including the income and assets of the student and the student's spouse or, if the student is dependent, the student and his or her parents. The EFC formula also takes into account the family's expenses, looking at such factors as the number of persons in the household, the number of those persons attending college, and the special costs of two-worker families. [[HEA '92]] As mandated by the Higher Education Amendments of 1992, the EFC is produced by a need-analysis formula known as the Federal Needs Analysis Methodology. For more information on how the EFC is calculated, see The Expected Family Contribution (EFC) Formulas, 1995-96. You can order a copy by calling the Federal Student Aid Information Center at 1-800-4-FED-AID. If the EFC is less than the cost of attendance (in other words, the student's family cannot be expected to contribute the full costs faced), the student is considered to have financial need. In the case of the Federal Pell Grant Program, however, a maximum eligible EFC is determined each year. Although a student whose EFC exceeds the maximum may have financial need, he or she is not eligible for a Federal Pell Grant. For 1995-96, the maximum EFC to qualify a student for Pell eligibility is 2140. As long as the EFC is less than the cost of attendance, the student will still be eligible for aid from other SFA programs, provided that he or she meets the other eligibility requirements of those programs. [[Simplified needs test]] Some students receive more than one EFC calculation. The Central Processing System (CPS) will calculate a simplified EFC for students who meet certain income and tax-filing requirements. For an applicant who meets the requirements to have a simplified needs test, the family's assets are not considered in the calculation; therefore, the student does not need to provide this information on the application. However, if the student does provide this information anyway, the CPS will calculate two EFCs, one using the simplified formula and resulting in a Primary EFC, and one using the full formula and resulting in a Secondary EFC. In all cases, the formula produces an equivalent or higher figure for the Secondary EFC. The financial aid administrator may use either figure in determining eligibility for aid from any of the SFA programs. A student must meet both of the following qualifications to be eligible for the simplified formula: 1. Of those family members whose financial information is necessary on the application, none is required by IRS rules to file an IRS Form 1040 for 1994. For an independent student, if either the student or the student's spouse is required to file a Form 1040, the student does not qualify for the simplified formula. For a dependent student, if either the student or the student's parents is required to file a Form 1040, the student does not qualify for the simplified formula. If the student (and spouse, if applicable) filed a 1040 but was eligible to file a 1040A or 1040EZ, the student should indicate 1040A or 1040EZ for Question 53 of the financial aid application. Likewise, if the parents of a dependent student filed a 1040 but were eligible to file a 1040A or 1040EZ, they should indicate 1040A or 1040EZ for Question 64 of the financial aid application. 2. The family's 1994 Adjusted Gross Income (earned income in the case of non-filers) did not exceed $49,999. This income limit to qualify for the simplified formula applies to the income of an independent student and spouse or to the income of a dependent student's parents. The income of a dependent student is not counted toward this limit. [[EFC for 9-month enrollment]] The EFC found in the upper right hand corner of the Student Aid Report (SAR) is based on a 9-month enrollment period and should always be used when awarding a Federal Pell Grant, even if the student is attending for a longer or shorter period. At the end of the last page of comments on Part 1 of the SAR is the FAA Information area. The second section of the FAA Information area contains the headings "Months," "Primary EFC," and "Secondary EFC." If only a Primary EFC appears, either the student has not met the simplified-formula criteria (based on income or tax-filing status) or the student has met this criteria and did not supply sufficient asset information to permit a Secondary EFC calculation. [[EFC for other than 9-month enrollment]] In the second section of the FAA Information area, there is also a grid of 1- to 12-month alternate EFCs. These figures represent alternate EFCs that the financial aid administrator may use to award aid-other than Federal Pell Grants for which the 9-month figure is always used-if the student is attending for less than or greater than the standard 9-month period. For dependent students, the alternate EFCs for periods of attendance of other than 9 months are calculated by the CPS according to a formula prescribed in the HEA. For independent students, the law does not specify the adjustments, so the CPS performs a simple proration of the EFC by month for the convenience of the financial aid administrator. [[Special circumstances]] If the student has special circumstances not taken into account by the EFC formula, the financial aid administrator may use professional judgment, on a case-by-case basis, to adjust the value of specific data items reported on the student's SAR. Special circumstances are conditions that differentiate an individual student, not conditions that exist for a whole class of students. Adjustments can either increase or decrease a student's EFC or cost of attendance. For example, if a dependent student's parent had retired since 1994 and, thus, the family expected to have a lower income for 1995, the financial aid administrator might use professional judgment to adjust the parents' income. The reason for an adjustment must relate to that student's special circumstance and must be documented in the student's file. For more information on the use of professional judgment, see The Counselor's Handbook for Postsecondary Schools, 1994-95. One of the most significant decisions in need analysis is whether the student should be treated as a dependent or an independent student (in other words, whose ability to contribute should be analyzed). If the student is considered to be dependent on his or her parents, information on the income (and assets, if applicable) of the parents must be collected on the financial aid application, and a parental contribution will be added to the student's contribution. [[Independent student definition]] Traditionally, need-analysis methodologies have assumed that parents have the primary responsibility to pay for their children's education. However, there have always been exceptions to this rule for students who no longer have contact with their parents, for nontraditional students who are too old to be considered their parents' responsibilities, and for students whose parents are deceased, as well as for other cases. These exceptions have been subject to congressional modifications over the years, and a significant change occurred as a result of the Higher Education Amendments of 1992. These amendments eliminated the provision that allowed students who were not claimed as income-tax exemptions for the two years prior to their first receiving SFA funds to file as independent if they could document resources of more than $4,000 per year for the same two years. [[HEA '92]] For the 1995-96 award year, a student is automatically independent if he or she meets at least one of the following criteria: 1. The student is at least 24 years of age by December 31, 1995. For the 1995-96 year this means that the applicant must have been born before January 1, 1972. 2. The student is a veteran of the U.S. Armed Forces. 3. The student is a graduate or professional student. 4. The student is married (which may depend upon the common law rules in the student's state of legal residence). 5. Either the student is a ward of the court (or was a ward of the court until age 18), or both parents are deceased and the student has no adoptive or legal guardian. Note that a student is not considered a ward of the court based solely on being incarcerated.*9* 6. The student has legal dependents other than a spouse. As you will note from a review of the preceding criteria, a student's living situation (i.e., whether the student lives with his or her parents) does not affect the student's dependency status. Complete definitions of these criteria can be found in the Free Application for Federal Student Aid. [[Professional judgment]] In unusual circumstances, a student who does not meet any of these criteria may still be considered to be independent on the basis of the financial aid administrator's professional judgment. The aid administrator must make this decision on an individual (case-by-case) basis and must document the reason(s) for that decision in the student's file. Because there is no Correction Application for 1995-96, it is now possible to use the SAR to change the student's dependency status. A dependency override can be performed by using the SCHOOL USE ONLY box of Part 2 on the SAR. The Counselor's Handbook and A Guide to 1995-96 SARs and ISIRs (GEN-95-10) provide information on the proper procedures. Please bear in mind that the aid administrator may use professional judgment only to classify as independent a student who would otherwise be considered dependent. An aid administrator cannot require a student who meets one of the criteria for independence to file as a dependent. However, the financial aid administrator may adjust an independent student's assets or income to include a parental contribution if the aid administrator decides that such a contribution is warranted. Again, any such individual determination must be documented in the student's files. COST OF ATTENDANCE The cost of attendance is an estimate of a student's educational expenses for the period of enrollment. A student's financial need for assistance from the SFA programs is equal to his or her cost of attendance, minus the student's EFC, minus financial aid from other sources. Another way to express this formula is to say that the total aid the student may receive from the SFA programs and other sources when added to the student's EFC may not exceed the student's cost of attendance. (However, note that the Federal PLUS loan, the Direct PLUS loan, the unsubsidized Federal Stafford Loan, and the Direct Unsubsidized Stafford Loan can be substituted for the EFC, as described later.) The components of the cost of attendance are the same for all SFA programs. However, in the case of programs of study or enrollment periods that are less than or greater than the school's academic year, the cost of attendance for purposes of loans and campus-based aid will be different from the cost of attendance for the Federal Pell Grant Program. The Pell costs are always prorated to the costs for a full-time student for a full academic year, but the cost of attendance for the other programs is based on the student's actual costs for the period for which need is being analyzed. See Chapter Four for further information. [[Tuition and fees]] Except as provided below, a student's cost of attendance is the sum of the following: [[Books, supplies, etc.]] 1. the tuition and fees normally assessed a student carrying the same academic workload, including costs of rental or purchase of equipment, materials, or supplies required of all students in the same course of study; 2. an allowance for books, supplies, transportation, and miscellaneous personal expenses; [[Room and board]] 3. an allowance for room and board; [[The chart on page 2-44 is currently unavailable for viewing. Please reference your paper document for additional information.]] 4. for a student with dependents, an allowance for costs expected to be incurred for dependent care (during periods that include, but are not limited to, class time, study time, field work, internships, and commuting time for the student), the amount of which should be based on the number and age of such dependents and should not exceed reasonable cost in the community for the kind of care provided; [[Study abroad]] 5. for study abroad programs approved for credit by the student's home institution, reasonable costs associated with such study; [[Costs related to disabilities]] 6. for a disabled student, an allowance for expenses related to the student's disability including special services, personal assistance, transportation, equipment, and supplies that are reasonably incurred and not provided for by other agencies;*10* [[Cooperative education]] 7. for students placed in a work experience under a cooperative education program, an allowance for reasonable costs associated with such employment; and, [[Origination fees and insurance premiums]] 8. for students receiving SFA loans, the fees required to receive them (for example, the loan fee for a Direct Loan or the origination fee and insurance premium for a FFEL loan). Schools may also include the fees required for nonfederal student loans (that is, nonfederal loans that must be considered resources for the student when packaging). In all cases, the school can either use the exact loan fees charged to the student or an average of fees charged to borrowers of the same type of loan at that school. Exceptions to the normal cost of attendance allowances The exceptions to the normal cost of attendance allowances discussed above are: [[Less-than-half-time students]] 1. For students who are enrolled less than half time, only the costs for tuition and fees and allowances for books and supplies, transportation (but not miscellaneous expenses), and dependent care expenses may be included. [[Correspondence study students]] 2. Generally, the cost of attendance for a correspondence study student is restricted to the costs for tuition and fees. However, if the student is fulfilling a required period of residential training, the cost of attendance can also include required books and supplies, an allowance for travel, and room-and-board costs specifically incurred. (Note: a student is not eligible to receive aid from the SFA programs for correspondence courses unless they are a part of an associate-, bachelor-, or graduate-degree program and the school meets the criteria for the percentage of courses taught using this medium. See Chapter Three for further details.) [[Incarcerated students]] 3. The cost of attendance for incarcerated students is limited to cost of the tuition and fees and required books and supplies. Bear in mind that an incarcerated student is ineligible to receive an SFA loan and that if the student is incarcerated in a federal or state penal institution, he or she may not receive a Pell Grant. See Incarcerated Students in Section One of this Chapter. [[Students receiving instruction by telecommunications]] 4. In determining a student's cost of attendance, no distinction is made regarding the mode of instruction, except that the cost to rent or purchase equipment is excluded for students receiving instruction by telecommunications. However, if the aid administrator, using professional judgment, determines that instruction by telecommunication substantially reduces elements of a student's cost of attendance, the aid administrator must reduce the student's eligibility for grants, loans, or work-study assistance by adjusting the cost of attendance accordingly. [[Special circumstances]] 5. The financial aid administrator has the authority to use professional judgment to adjust the cost of attendance for the SFA programs on a case-by-case basis to allow for special circumstances. Such adjustments must be documented in the student's file. AWARD CALCULATIONS, RESOURCES, AND ESTIMATED FINANCIAL ASSISTANCE We have seen how to find a student's financial need by subtracting the EFC from the cost of attendance, but the student may be receiving aid from other sources to help meet that financial need. A basic premise of need-based aid is that the total package of aid must not exceed the student's financial need. Aid in excess of need is referred to as an overaward. Because of differences in the way aid is handled in each of the SFA programs, there are differences in the way that each program takes into account other sources of aid. Determining Remaining Need [[Pell Grants]] Federal Pell Grants are considered to be one of the first sources of aid to the student. The Department issues Pell Grant payment and disbursement schedules that base the award solely on the student's cost of attendance, EFC, and enrollment status. When awarding other sources of need-based aid, the financial aid administrator must take eligibility for the Pell Grant into account. However, it is always possible that the student will receive a scholarship or other aid that, in combination with the Pell Grant, causes the student's financial aid package to exceed his or her need. The school may not award other need-based FEDERAL aid that would cause the package to exceed the need; however, if the student's need is exceeded due to the combination of the Pell Grant and other sources of aid, the student is still eligible for the Pell Grant as determined by the payment or disbursement schedule.*11* [[The graphic "Pell Example" on page 2-47 is currently unavailable for viewing. Please reference your paper document for additional information.]] [[Campus-based resources]] Any available campus-based aid is usually packaged before FFEL and Direct Loans because aid from these programs is more attractive to the student. In contrast to the Pell Grant Program, the regulations for the campus-based programs specifically require the school to take into account all resources available to the student when awarding funds from these programs. Such resources include the student's Pell Grant eligibility (regardless of whether the student applies for a Pell Grant), subsidized Stafford Loans, Direct Subsidized Loans, veterans benefits, outside scholarships, and net earnings from NEED-BASED employment that will be received during the award year. If the total of the student's EFC, resources, and campus-based aid exceeds the student's cost of attendance, the campus-based aid must be reduced to prevent an overaward. Note that there are overaward "thresholds" for the campus-based programs, as we will discuss later in this section. (See also Chapter Five, Section Two.) [[The graphic "Campus-Based" on page 2-48 is currently unavailable for viewing. Please reference your paper document for additional information.]] [[FFEL and Direct Loans estimated financial assistance]] The statute governing the Federal Family Education Loans (subsidized and unsubsidized Stafford, and PLUS) and Direct Loans (Direct Subsidized, Direct Unsubsidized and Direct PLUS) does not use exactly the same definition of "resources" as do the campus-based programs. Instead a similar measure, called "estimated financial assistance," is used for determining FFEL and Direct Loan eligibility. Prior to 1995-96, estimated financial assistance included the estimated amount that a student could receive from the Pell Grant, campus-based, and other federal and nonfederal scholarship, grant, loan, and need-based work programs, regardless of whether the student actually applied for aid from those programs.. For 1995-96, estimated financial assistance, like resources for the other SFA programs, includes the student's Pell Grant eligibility and other aid the student will receive. The school may certify a subsidized Stafford Loan and Direct Subsidized application only for the amount of need that remains after subtracting both the student's EFC and estimated financial assistance from his or her cost of attendance. However, the unsubsidized Stafford, PLUS, Direct Unsubsidized, Direct PLUS, state and private education loans are not considered to be a resource because they can be used to finance (or replace) the EFC. Thus, students may borrow under these programs up to the amount of the EFC without affecting eligibility for campus-based aid or a subsidized Stafford Loan or Direct Subsidized Loan. For instance, in the campus-based example just shown, the student could receive a $1,500 private education loan, unsubsidized Stafford Loan, or Direct Unsubsidized Loan without being overawarded. None of these loans would be considered a resource as long as it did not exceed the EFC. Note that a student may qualify for a combination of a subsidized and an unsubsidized loan. A student loan is "unsubsidized" when the student is responsible for the interest that accumulates while the student is enrolled in school and during the grace period. These interest payments may be deferred until the student enters repayment. For a dependent student whose parents are able to borrow a PLUS or Direct PLUS, the maximum amount the student may borrow under the unsubsidized Stafford Loan or Direct Unsubsidized Loan programs is the amount that can be borrowed under the Stafford Loan or Direct Loan Program for that grade level and program length, less the amount that has been borrowed under the subsidized program (if any). For example, if a dependent student whose loan limit is $2,625 qualifies for a $1,600 subsidized Stafford Loan or Direct Subsidized Loan, he or she may borrow an additional $1,025 ($2,625-$1,600) unsubsidized Stafford Loan or Direct Unsubsidized Loan, as long as the total of all aid received does not exceed the student's cost of attendance. The independent student (or the dependent student whose parents are unable to obtain a PLUS or Direct PLUS loan) is permitted the same amount as the dependent student based on grade level and length of program, under a combination of the subsidized and unsubsidized program (the mix of which depends upon the student's need). However, this student can borrow an additional UNSUBSIDIZED loan amount. The maximum additional amount is limited to either the total of the student's EFC and remaining need or the applicable unsubsidized loan limit found in the chart on page 2-34 minus the subsidized amount already borrowed, whichever is less. When packaging aid, it may help to think of this additional unsubsidized loan as functioning similarly to loans that were borrowed under the Supplemental Loans for Students Program, which has been discontinued. Remember that before the school may certify a Stafford Loan or Direct Loan, it must have determined the student's eligibility for a Federal Pell Grant. The results from the federal processor do not have to be on file at the time the loan is certified. Instead, a determination of the student's Pell eligibility could be made through software available at the school. On the other hand, the school MUST have evidence that the student's data went through the CPS before the loan is disbursed. [[The graphic on pages 2-50 and 2-51 and the chart describing "Resource" and "Estimated Financial Assistance" on page 2-52 are currently unavailable for viewing. Please reference your paper document for additional information.]] Packaging Aid Packaging is the process of finding the best combination of aid to meet the student's financial need, given the constraints of available funds. If your school does not participate in the campus-based programs and does not have its own sources of aid, the student is eligible for a specified Federal Pell Grant amount, and any subsidized loan under the Federal Family Education Loan Program or the Direct Loan Program is limited to either the amount of the student's remaining financial need after his or her estimated financial assistance is taken into account or the loan limit for the student's level and enrollment status, whichever is less. (Of course, as explained earlier, the student may also borrow an unsubsidized Stafford, Direct Unsubsidized Loan, PLUS, Direct PLUS, state-sponsored or private education loan equal to the amount of the EFC.) [[Packaging philosophies]] On the other hand, if your school does have other sources of aid, you must decide how to allocate scarce funds from different sources to meet students' needs. Should you give priority to students who apply for aid first (on a "first-come-first-served" basis)? Should grant assistance be awarded to beginning students and loans and work-study to students who have had a chance to adapt to the academic program? If you do not have enough funds to meet every student's need, should your policy be to give more assistance to the neediest students or to meet an equal proportion of each student's need across the board? [[Vocational Rehabilitation]] Special considerations in packaging also arise when students qualify for both SFA funds and vocational rehabilitation assistance funds. In that case, the school should determine the student's package exclusive of both the costs related to the student's disability and the anticipated vocational rehabilitation assistance. This approach will result in the student's being offered the same aid package as a student who is in the same financial situation but does not have disabilities, and it will result in the student's receiving the maximum amount of vocational rehabilitation aid to which the student is entitled. Otherwise, if the school's packaging procedures consider both the disability-related costs and an anticipated vocational rehabilitation aid amount that happens to be less than those costs, the amount of SFA funds in the student's package may increase to cover the remaining costs; however, when the vocational rehabilitation agency actually disburses funds, rather than disbursing enough to cover all of the disability-related costs, the agency will take that SFA increase into consideration and disburse only the anticipated amount. Although the school has covered all of the student's need in both cases, if the increase in SFA funds in the second case is the result of an increased loan amount, the school has unnecessarily added to the student's debt burden. Although the vocational rehabilitation funds should not be considered a resource when the school packages, the school must coordinate funds available from the vocational rehabilitation agency and from institutional, state, and federal student financial assistance programs to prevent an overaward. The amount of assistance from the vocational rehabilitation agency must be documented in the student's file. Each state association of student financial aid administrators has a voluntary agreement with its state vocational rehabilitation agency specifying the procedures for coordinating vocational rehabilitation assistance with other forms of financial aid. For information about your state association's agreement, contact that association or a regional office of the U.S. Department of Education. Each school may have a different philosophy of packaging, depending upon the characteristics of its academic programs and the makeup of its student body. Section Nine of the Self-Instructional Modules (formerly produced through contract by the Student Financial Assistance Programs) discusses some of the basic types and philosophies of packaging. Although the modules have not been updated, you may still find the general discussion of packaging useful. To get ideas about different approaches to packaging, you may also want to refer to materials prepared by the professional associations representing schools and financial aid administrators or to consult with other aid administrators at schools that have similar characteristics. OVERAWARDS While the school must always take care not to overaward the student when packaging aid, circumstances may change after the aid has been awarded. For instance, the student may receive an academic scholarship, or the student may want to extend his or her work-study employment. When these circumstances would lead to an overaward, the school may be required to adjust the federal student aid in the package. When doing so, the following principles should be kept in mind: [[Pell Grants]] - Pell Grants are never adjusted to take into account other forms of aid, except possibly in the case of recipients of Paul Douglas Scholarship Program and the National Science Scholars Program as noted earlier in this chapter and as discussed at length in Chapter Nine. [[Adjusting Stafford and Direct Loans]] - If all or a portion of a student's unsubsidized Stafford Loan, Direct Unsubsidized Loan, or nonfederal loan or the parents' Direct PLUS or PLUS loan is being used to cover need that was previously unmet, the loan can be adjusted to replace the EFC and, thus, reduce or eliminate the overaward. - The second or subsequent disbursement of a subsidized or unsubsidized loan can be canceled or reduced to reduce or eliminate the overaward. - If these adjustments have been made and an overaward still exists for a Stafford Loan borrower or Direct Loan borrower, the law requires the financial aid administrator to withhold and promptly return to the lender or the federal government any subsidized or unsubsidized funds that have not yet been delivered to the borrower. Note that Stafford and Direct Loan overawards must be repaid before adjusting or canceling campus-based funds. Instead of returning the entire undelivered aid, a financial aid administrator may choose to return only the amount of aid for which the student becomes ineligible. For example, if the loan disbursement were for $1,000 and the amount of the overaward were $800, the aid administrator could return just the $800 or could instead return the entire check and have the lender issue a new check for $200. In either case, the financial aid administrator must provide the lender with a written statement describing why the funds were returned. - For a Direct Loan borrower, the financial aid administrator may choose either to return the amount of loan for which the student becomes ineligible or to cancel the loan, return the full disbursement, and originate a new loan for the lower amount. If we take our Stafford example with a $1,000 disbursement and an overaward of $800 and apply it to a Direct Loan school, we see that the aid administrator could either return just the $800 or return the full disbursement, canceling the loan, and originate a new loan for $200. If the aid administrator chooses the latter, a new origination record must be created, and a new promissory note must be generated for the student to sign. - Funds returned to the lender or the government must be applied to reduce the student's loan balance. Because a Stafford Loan lender deducts the origination fee and insurance premium before disbursing a loan check to a school, the lender must reduce or cancel these fees accordingly when the school returns funds. If only the amount of the overaward is returned, the lender must reduce the insurance premium and origination fee to reflect the lower loan amount. If the full disbursement is returned, the lender must cancel the insurance premium and origination fee. For a Direct Loan, the federal government will adjust the loan fee accordingly. See Chapter Ten, Section Six for more information on returning overawards. - The requirement to refund overawards to the lender or the government does not apply to Stafford Loans made to cover the cost of attendance at foreign schools or to PLUS or Direct PLUS loans. - Although a school is not required to return Stafford Loan or Direct Loan funds that were delivered to the borrower (either directly or by applying them to the student account) before the overaward situation occurred, the law does not prevent the school from returning funds that were applied to the student account if the school chooses to do so. [[Campus-based awards]] - A Stafford Loan or Direct Loan borrower who is overawarded and receives funds disbursed directly to him or her is not required to repay funds that were delivered in excess of need unless the overaward was caused by his or her misreporting or withholding of information. - If reducing undisbursed Stafford Loans or Direct Loans is not sufficient to eliminate the overaward, the school may be required to reduce the amount of campus-based aid that has been awarded the student. Campus-based aid need not be reduced if the overaward does not exceed $300, which is now the overaward threshold for all campus-based programs. Prior to the 1995-96 award year, the threshold was $200 for Perkins Loans and FSEOG and for FWS unless FWS was the only campus-based aid in the student's package. If this were the case, the FWS overaward threshold was $300. NOTE: The $300 threshold is allowed only if an overaward occurs after campus-based aid has been packaged. The threshold does not allow a school to deliberately award campus-based aid that, in combination with other resources, exceeds the student's financial need. See Chapter Seven, Section Two, for a more detailed discussion of these overaward provisions. If the overaward cannot be eliminated by reducing future payments of campus-based aid, the student must repay the full amount of the campus-based funds that he or she received in excess of need. Note, however, that the student cannot be required to repay FWS wages he or she has earned. *9* The Technical Amendments added the provision that a student qualified under this category even though he or she lost the Ward of the Court status as age 18. For 1995-96, application forms have been changed to reflect the broadening of this category. *10* A student is disabled if he or she is deaf, mentally retarded, hard of hearing, speech or language impaired, visually disabled, seriously emotionally disturbed, orthopedically impaired, or autistic, or has a traumatic brain injury, is otherwise health-impaired, or has specific learning disabilities that required special education and related services. There is not maximum to the allowance for expenses related to a disability. However, the school should be careful not to include costs for services or equipment provided free of charge by other assisting agencies. *11* The exception to this is that an adjustment may be needed for recipients of Paul Douglas Teacher Scholarship Program and the National Science Scholars Program. See Chapter Nine for further information. |