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Student Eligibility and Financial Need - Student Eligibility

AwardYear: 1995-1996
EnterChapterNo: 2
EnterChapterTitle: Student Eligibility and Financial Need
SectionNumber: 1
SectionTitle: Student Eligibility
PageNumbers: 3-38


This section discusses the student-eligibility criteria common to most
of the SFA programs. Although there may be variations from program
to program, the basic requirements, such as citizenship and
satisfactory progress, are the same whether the student is applying for
a grant, a loan, or work-study. See the program chapters (4-10)
for specific information on requirements that apply to individual
programs.

In many cases, a student eligibility requirement is linked to an
institutional requirement. For instance, a student must be making
satisfactory academic progress to receive aid; so, a school must have
a satisfactory progress policy in order to monitor this requirement.
Many of these institutional requirements are mentioned in this chapter
but are discussed in detail in Chapter 3.

CITIZENSHIP

In order to receive aid from the SFA programs, a student must be one
of the following:

1. A U.S. citizen or national. The term "national" includes not only
all U.S. citizens, but also citizens of American Samoa or Swain's
Island.

2. A permanent resident of the U.S. A permanent resident of the
United States must either demonstrate eligibility as evidenced by
a comment on the SAR *1* that the INS match has been
successful, or provide further documentation from the
Immigration and Naturalization Service (INS).

3. Certain residents of the Pacific Islands. Citizens of the Marshall
Islands and the Federated States of Micronesia (the former Trust
Territories) are eligible for Federal Pell Grants, Federal
Supplemental Educational Opportunity Grants, and Federal
Work-Study funds only. On October 1, 1994, Palau became the
third Freely Associated State along with Micronesia and the
Marshall Islands. Citizens of Palau are still eligible for Federal
Pell Grants, Federal Supplemental Educational Opportunity
Grants, and Federal Work-Study funds after that date. See
Appendix A for further information.

4. Other eligible noncitizens. An individual who can provide
documentation from INS that he or she is in the United States for
other than a temporary purpose with the intention of becoming a
citizen or permanent resident. This category includes refugees,
persons granted asylum, Cuban-Haitian entrants, temporary
residents under the Immigration Reform and Control Act of 1986,
and others. (For a detailed discussion of the different categories
of eligible noncitizens and INS documentation, see Appendix A.)

[[Attendance at foreign schools]]
Individuals in the above four categories may receive aid at eligible
schools in the United States under the SFA programs. These
individuals may also receive Federal Family Education Loans (FFELs)
at FFEL-participating foreign schools. *2*

[[Match with INS records]]
The Department collects the Alien Registration Numbers for
permanent residents and other eligible noncitizens through the student
application process. (An Alien Registration Number is assigned to
each legal alien by INS.) This information, along with other
identifying data, is then compared with INS records through a
computer match. If a student's data matches the information in INS
records, a comment is printed on the SAR and the electronic ISIR; the
comment code is provided in the record description of the ISIR. The
report then serves as documentation of the student's permanent-
resident or eligible-noncitizen status. This is called "Primary
Confirmation."

[[Secondary Confirmation]]
If the school has conflicting information about the student's citizenship
status or if INS was unable to confirm eligibility for a student who
claims to be an eligible noncitizen, the school must collect other
documentation. This is called "Secondary Confirmation" and is
discussed in Appendix A. Note especially that the INS Verification
Number must now be provided in block 6 of the Secondary
Confirmation Request Form (G-845S). If an INS match is attempted
but the student's data is not confirmed, a 13-digit INS Verification
Number will be assigned to the student and printed in the FAA
Information area of the SAR.

All secondary confirmation requests sent to INS without Verification
Numbers will be returned unprocessed with one exception: If the
school is performing Secondary Confirmation because technical
processing difficulties prevented a computer check from occurring,
the student will receive SAR comment 145, and no INS Verification
Number will be printed. In that case, the school must write at the top
of the G-845S form (preferably in red) "Comment 145 Present,
Application Processed on ________ (processing date from SAR)."
If on the other hand, the student's data did not go through the match
because he or she failed to provide an Alien Registration Number on
the application, the student will likewise not receive a Verification
Number. However, in this case, the SAR should be resubmitted with
the Alien Registration Number so that the computer match may be
attempted.

[[Changes in citizenship status during and award year]]
If a student becomes a citizen or eligible noncitizen at any time during
the award year, the student may be paid Pell Grant or campus-based
funds as if he or she had been eligible during the entire award year.
For example, if a student attending school during the 1995-96 award
year is granted permanent-resident status (and is still enrolled) in
May 1996, the student can receive Pell Grant and campus-based funds
as if he or she had been eligible during all terms that the school
considers part of that award year (July 1, 1995 to June 30, 1996).

Similarly, the loan amount for a Federal Family Education Loan or
Direct Loan borrower who becomes a citizen or an eligible noncitizen
during a period of enrollment may be the same amount the borrower
would have received if he or she had been eligible during the full
period of enrollment. For example, a first-year student has sufficient
need for a full $2,625 Stafford Loan but is not eligible due to his or her
citizenship status. This student enrolls in a two-year program in which
he or she begins classes in July 1995 and advances to second-year
status in May 1996. If this student becomes a citizen or eligible
noncitizen before May 1996, he or she can receive the full $2,625 for
the first year and another loan for the second year, provided that he or
she continues to meet eligibility requirements and has not exceeded
applicable borrowing limits.

If the same student does not become a citizen or eligible noncitizen
until reaching second-year status (after May 1996), he or she
cannot receive a loan for the first year but can receive the full amount
for which he or she is eligible as a second-year student. Note that
because a period of enrollment (the period for which the loan is made
as determined by the school) must coincide with academic terms such
as academic year, semester, trimester, quarter, or other academic
period as defined by the school, the period of enrollment cannot be
adjusted to cover any part of the first year.

A school is required to check a student's eligibility for aid based on
citizenship status when aid is first disbursed for the award year (period
of enrollment for a Direct Loan or FFEL loan). If a student loses his or
her citizenship or eligible noncitizenship status during an award year
(or period of enrollment), the school does not need to take any action.
This is true even if the student applies for and receives aid for a
second academic year during the same award year (or period of
enrollment).

ENROLLMENT AS A REGULAR STUDENT IN AN ELIGIBLE
PROGRAM

With limited exceptions to be discussed later, to receive funds under
the SFA programs, a student must be enrolled as a regular student in
an eligible program. A regular student is enrolled for the purpose of
obtaining a degree or certificate offered by the institution.

The regulatory definition of an eligible program is based on
requirements found in the statutory definitions for an eligible
institution. There is an important distinction between the definition of
an eligible program and the definition of an eligible institution. Some
programs at an eligible school may not meet the requirements for an
eligible program due to the length of the course, the admission
requirements, or other factors, although the school as a whole meets
the definition of an eligible institution and participates in the SFA
programs. It is important that you carefully study the material in
Chapter Three on program eligibility because program eligibility
affects whether the student may receive aid.

Three aspects of the definition of an eligible program are especially
important: the educational credentials the program awards, its length,
and, for "short courses," compliance with certain qualitative factors
regarding graduation and placement percentages. These qualitative
factors are discussed in Chapter Three.

[[Educational credentials]]
Regarding educational credentials awarded, with the exception of the
exemptions for preparatory work and teaching certificates discussed
on the next page, an eligible program must either lead to a certificate,
degree, or other recognized educational credential or be at least a
two-academic-year program that is acceptable for full credit toward a
bachelor's degree. These requirements also apply to programs of
study abroad that have been approved for credit by eligible
institutions. Of course, to receive aid, a student in such a program
must be enrolled as a regular student at the eligible institution that
approved the course. At a proprietary institution of higher education
or a postsecondary vocational institution, the program must lead to a
certificate or degree and provide training to prepare students for
gainful employment in a recognized occupation. (For the Pell Grant
Program, an exception is granted for English as a Second Language
[ESL] training. See Chapter Three for an extensive discussion of this
and other program eligibility issues.)

TWO EXCEPTIONS TO THE "ELIGIBLE PROGRAM"
REQUIREMENT

There are two cases where a student does not have to be enrolled in
an eligible program to receive a FFEL or Direct Loan.

Preparatory Coursework: Students who are not enrolled in degree or
certificate programs are eligible for Federal Family Education Loans
or Direct Loans for a period of up to one year if they are taking
courses that are necessary for the student to enroll in an eligible
program. These courses must be part of an eligible program
otherwise offered by the school, although the student does not have
to be enrolled in that program. For instance, a student who has
already received a B.S. degree might need an additional 12 hours of
specialized undergraduate biology and chemistry coursework to
enroll in a graduate program. If a student is enrolled at least half
time in these prerequisite courses and the courses are part of an
eligible program, the student is eligible for loans for one consecutive
12-month period beginning on the first day of the loan period for
which the student is enrolled. (The loan limits for first-year
undergraduates apply. However, if the 12 month period represents
more than one academic year, the student may receive multiple
loans.)

Teacher Certification: Another exception involving the FFEL, the
Direct Loan, the Perkins Loan, and the Federal Work-Study
programs allows eligibility for students who are enrolled at least half
time in required teacher-certification programs, even though the
teacher-certification program does not lead to a degree or certificate
awarded by the school (e.g., the certificate may instead be granted by
the state). The program must be required for elementary or
secondary teacher certification or recertification in the state where
the student plans to teach, or the state in which the student is
completing the program. This exception is not intended to cover
optional courses that the teacher elects to take for professional
recognition or advancement or courses that the school recommends
but are not required for certification. The school should document
that the courses are required by the state for teacher certification.
For purposes of the FFEL and Direct Loan programs, students are
considered fifth-year undergraduates; therefore, the loan limit is
$5,500, plus an additional $5,000 in unsubsidized loans if the
student is classified as independent.

[[Minimum program length]]
The minimum length required for an eligible program varies with the
type of institution. Special requirements for programs of less
than 600 hours have recently been incorporated in the regulations. See
Chapter 3.

Program length not only determines a program's eligibility; it also
affects the amount of aid that can be awarded to students in the
program. For example, the amount of a student's Federal Pell Grant,
Stafford Loan, or Direct Loan is reduced if the program is less than an
academic year. (See Chapters Four and Ten.)

ABILITY TO BENEFIT

To receive aid from the SFA programs, a student must be
academically qualified for study at the postsecondary level. A student
with a high school diploma or its recognized equivalent is considered
academically qualified for SFA purposes.

The SFA regulations identify several recognized equivalents to a high
school diploma. A General Education Development Certificate (GED)
or a State Certificate is a recognized equivalent of a high school
diploma. In addition, a school may admit into programs that are at
least at the associate-degree level a limited number of students who
do not have high school diplomas but who have excelled academically
in high school and have met the school's admissions standards.
Similarly, a student's postsecondary school academic transcript is
considered the equivalent of a high school diploma if the student has
completed a program that is at least two years in length and is
acceptable for full credit toward a baccalaureate degree.

[[Alternatives to high school diploma]]
An SFA applicant who does not have a high school diploma or
recognized equivalent can be determined to be academically qualified
if he or she passes an independently administered test that has been
approved by the Department or a process that has been both
prescribed by the state in which the school is located *3* and
approved by the Department.

[[WORK IN PROGRESS]]
On August 16, 1994, the Department published a Notice of Proposed
Rulemaking to add regulations governing the approval and
administration of tests. Until these regulations become final, schools
should continue to follow the guidance provided in the Federal
Register notice of December 30, 1992 and "Dear Colleague" letters.

[[Independent administration]]
The Federal Register of December 30, 1992 contains a list of
approved tests, as well as testing requirements. This list was
supplemented by Dear Colleague letter GEN 93-21, dated August 13,
1993. An approved test must be administered and graded by an
individual or organization that has no current or prior fiscal interest in
the school, other than an "arms-length" arrangement to administer
the examination. Thus, the test may not be given or scored by a
current or former employee, consultant, or student of the school, an
owner or member of the board of directors, a person with a financial
interest in the school, or a relative of any of these individuals. An
exception is made for testing or assessment centers at egree-granting
schools as long as these centers are independent of the admissions
process and were in existence as of December 19, 1990.

Generally, the school will arrange with one or more parties to
administer approved tests to those students who do not have high
school degrees or recognized equivalents. The Federal Register
notice contains recommendations for sources of independent test
administrators:

- High school guidance counselors;
- Qualified professional educators;
- Regional and area Armed Forces Commands staff who are experts
in education, training, and human resource development;
- Test and measurement experts; or
- Human resource development professionals.

The use of a public or nonprofit center that offers assessment or
testing services, provided the center operates independently of the
postsecondary school, is also suggested.

[[Approved tests]]
A list of the tests that have been approved by the Department is
shown on pages 2-10 and 2-11. A school may use more than one of the
tests shown on the list. Note that this list does not include state tests
that have been approved by the Department. The Department has
approved all state tests that are required for all students entering a
state's public postsecondary schools and assess the basic verbal and
quantitative skills of these students. (If a state test meets the criteria
for approval, all schools in the state may use it even if they are not
public.) State examinations that do not meet these criteria may be
submitted to the Department for review under the normal
test-approval procedures.

[[Selection of a test]]
When selecting a test, the school should consider the following:

Relevance of test to the educational program. Are the skills and
abilities assessed important for the successful completion of the
student's planned program of study?

Level of difficulty of the test. Is the overall level of difficulty
appropriate to the population of prospective students being
assessed and to the coursework required in the program?

Native language. If the student's program will be taught in a
language other than English, the student should be permitted to
take the test in that language.

Tests for handicapped students. Students with physical handicaps
should receive appropriate assistance in test-taking, in accordance
with the guidelines developed by the American Educational
Research Association, the American Psychological Association,
and the National Council of Measurement in Education.

All tests must be administered in accordance with the procedures
specified by the test publisher. This includes, but is not limited
to, time limits for completion, rules on how often and within what
time frame the test may be re-administered, whether the test may be
given verbally, and so on. If a test has multiple parts, ALL parts must
be used in order for the test to be valid. In evaluating test results, the
passing score cannot be more than one standard deviation below the
mean for that examination for that type of program/curriculum. Test
publishers routinely provide such information in their manuals.

**[A chart containing "Tests Approved by the Department" from
page 2-10 and 2-11 is currently unavailable for viewing. Please refer
ence these pages in the Handbook for further information.]**

[[Provision of GED program]]
In addition to assuring that students who do not have high school
diplomas or recognized equivalents successfully pass ability-to-benefit
tests, the school must make a GED-preparatory program available to
such students. The course does not have to be provided by the school
itself, and the school is not required to pay for the costs of the
program. However, the school must locate a program that is
reasonably accessible to its students. For example, the school should
locate a program that is offered at a place that is convenient for its
students and take reasonable steps to ensure that the scheduling of
the student's program permits participation. The law states that the
GED program must be proven successful. A school may consider that
all programs conducted by its state and local secondary schools meet
this criteria. In addition, a program qualifies if the school has
socumentation that statistically demonstrates the success of the
program.

A student without a high school diploma or recognized equivalent is
not required to enroll in a GED program; however, a school can
make this a requirement for admission.

Although a student may not receive any SFA funds for study in all or
part of a GED program, he or she remains eligible for SFA funds for
enrollment in full-credit, nonremedial courses. (Participation in the
GED program is not considered to be simultaneous enrollment in a
high school program.) A student enrolled solely in remedial
coursework, however, is not eligible for SFA funds. See the following
discussion on enrollment in remedial courses.

[[Duration of student test results]]
A student who has taken an approved, independently administered
test within the last 12 months may submit the official notification of
the test score to the school to demonstrate his or her ability to benefit.
If the school accepts the results of a previously administered test, it
must obtain documentation that the test and test administration meet
the federal requirements. If a student withdraws from school and then
reenrolls more than 12 months after taking the test, he or she must
take a new test.

REMEDIAL COURSEWORK FOR STUDY AT THE
POSTSECONDARY LEVEL

Remedial coursework prepares a student for study at the
postsecondary level. If a student is enrolled solely in a remedial
program, the student is not considered to be in an eligible program and
thus is not eligible for SFA funds. Additionally, if a student's
acceptance into the eligible program is contingent upon the completion
of the remedial work, the student cannot be considered to be enrolled
in the eligible program until the remedial work is completed. The one
exception to this rule, for the FFEL and Direct Loan programs only, is
enrollment in preparatory coursework, which may be remedial in
nature. (See page 2-7.)

If the student is enrolled in a regular program that includes a limited
amount of remedial coursework, payment for that coursework
is permitted as long as the work is at least at the high-school level (as
determined by the state legal authority, the school's accrediting
agency, or the state agency recognized for the approval of public
postsecondary vocational education).

[[Determining enrollment status]]
A problem may arise in determining the enrollment status for a
student who is taking remedial coursework because the school may be
giving no academic credit or only reduced academic credit for the
coursework. To include noncredit remedial hours in the student's
enrollment status for financial aid payments, the school must
determine the number of hours of study the remedial course requires
(both classroom and homework hours) and compare that number with
the hours required for similar nonremedial courses. The school should
then use the same number of credits for the remedial course as for a
nonremedial course that requires a comparable number of classroom
and homework hours. (Clock-hour schools should use the number of
classroom hours attended in the remedial program.)

To determine a student's enrollment status, the credits or clock hours
assigned to the noncredit remedial course are simply added to the
credits or clock hours of regular coursework. This affects whether the
student is paid as a full-time, three-quarter time, half-time, or
less-than-half-time student in the Pell Grant Program and whether the
student is considered to be enrolled at least half time for the FFEL and
Direct Loan programs. When calculating the student's cost of
attendance, be sure to include the tuition paid for noncredit remedial
work.

[[Limit on remedial coursework]]
A school may not take into account more than one academic year's
worth of noncredit remedial coursework for a student (30 semester
or trimester hours, 45 quarter credit hours, or 900 clock hours). ESL
courses do not count against these limits.

[[High School coursework/simultaneous enrollment excluded]]
Noncredit remedial hours cannot be included in a student's enrollment
status or cost of attendance if the remedial course is part of a program
that leads to a high school diploma or its recognized equivalent, even
if that course is required for completion of the postsecondary program.
In other words, students may never receive funds for GED or
high-school training, even if the course is offered at a postsecondary
school. It is also prohibited for a student to receive SFA funds while he
or she is simultaneously enrolled in an elementary or secondary
school. Thus, a high-school student who is taking vocational training
in the afternoon or weekends is not eligible for SFA funds, even if his
or her entire program at the postsecondary school is postsecondary in
nature. In addition, noncredit remedial courses cannot be included
unless they would adequately prepare the student for postsecondary
study after one year's time.

ENROLLMENT STATUS

Half-time enrollment is not a requirement to receive aid under the
Federal Pell Grant Program or the campus-based programs. See
Chapter Four for information on the effect of enrollment status on
students' awards under the Pell Grant Program. See Chapters 5
through 8.

The FFEL and Direct Loan programs do require a student to be
enrolled at least half time to receive aid. A half-time student must be
taking at least one-half the workload of a full-time student.

[[Final Rule 4/29/94]]
As specified in the April 29, 1994 regulations, the full-time load is
defined by the school. This measurement may differ from the one used
for other purposes at the school, such as for purposes of the
registrar's office. The school's full-time definition for a program must
be used for all students enrolled in that program and for all SFA
purposes. For undergraduate students, but not for graduate students,
the school's financial aid office must define full-time status to meet at
least the following minimums:

- twelve semester hours or twelve quarter hours per academic term
in a term-based educational program;

- twenty-four semester hours or 36 quarter credit hours per
academic year for an nonterm educational program using credit
hours. (The prorated equivalent must be used for programs of less
than one academic year.);

- twenty-four clock hours per week for an educational program using
clock hours;

- for a student who is taking a combination of courses offered in
semester credit, quarter credit, and/or clock hours, prorated
percentages of the minimums for credit- and clock-hour
measurement equal to at least one;

- a series of courses or seminars that equal 12 semester or quarter
hours over a maximum of 18 weeks; or

- the work portion of a cooperative education program in which the
amount of work performed is equivalent to the academic workload
of a full-time student.

**[The graphic example from page 2-15 is currently unavailable for
for viewing. Please reference that page in the Handbook for further
information.]**

A student taking only correspondence study is never considered to be
enrolled more than half time.

Note that a student's enrollment status is also important for
deferment purposes. Direct Loan borrowers and new FFEL borrowers
after July 1, 1993 are eligible for deferments as half-time students
even if they do not receive additional loans during the deferment
period. Previously, a student who had FFEL Program loans that had
entered repayment could qualify for an in-school deferment only
if he or she were enrolled full time or enrolled half time or
three-quarter time and again borrowing an FFEL loan for the period
covered by the deferment. (Students who first borrowed prior to the
Amendments of 1986 had more stringent requirements for deferment.)
See Chapter Ten, Section Two for more information.

SATISFACTORY PROGRESS

The regulations for satisfactory progress were initially published in
October 1983 and amended on December 1, 1987, April 29, 1994,
and November 29, 1994. In order for the school to monitor the
statutory requirement that a student be making satisfactory progress,
the regulations require schools to develop and apply a consistent and
reasonable standard of academic progress, which must contain
elements specified in the regulations.

[[Consistency within categories of students]]
The school's satisfactory progress policy for students receiving aid
under the SFA programs must be at least as strict as the policy used
for students who do not receive SFA aid. The policy must be applied
consistently to all students within identifiable categories of students
(such as full-time or part-time, graduate or undergraduate), and must
conform to the standards of the school's accrediting agency if the
school is accredited by a nationally recognized accrediting agency that
has established satisfactory progress standards.

[[Qualitative measurements]]
The school's academic progress policy must include a qualitative
measure of the student's progress, such as a required cumulative
grade point average.

The school may determine its own requirements, as long as it at least
meets the minimum required by law and regulations. The law specifies
that by the end of the second academic year, the student must, in
general, have either a "C" average or its equivalent or have academic
standing consistent with the requirement for graduation from the
program. If a school does not use letter grades, a school's satisfactory
progress policy should define the "equivalent of a 'C' average." Also,
if a school permits less than a "C" average, it must be able to
document that the average it uses is consistent with graduation
requirements.

In addition, schools may use a graduated grade point requirement,
rather than a single fixed standard throughout the program. For
instance, a school might set a minimum grade average of 1.75 (using a
scale of 0.0 to 4.0) at the end of two academic years in a four-year
degree program. Even though the school requires at least a 2.0
average for graduation, it can permit a lower standard after two years
if its policy requires progression toward those graduation
requirements.

[[Quantitative progress]]
A grade point average alone is not a sufficient measure of progress.
For instance, a student might enroll for 12 credits a semester but
withdraw from two classes that he or she was failing. The student
might have an "A" average in the two remaining classes but still not
be progressing towards graduation at an acceptable pace. To
accurately measure the student's progress in the program, the
satisfactory progress policy must have a quantitative measure (the
number or percentage of courses, credit hours, or clock hours
completed), as well as a qualitative measure (the grade point average
in those courses completed).

[[Maximum time frames and increments]]
[[Final Rule 11/29/94]]
To quantify academic progress, a school must set a maximum time
frame in which a student is expected to finish the program. The
November 29, 1994 regulations specify that for an undergraduate
program, the maximum time frame may not exceed 150 percent of the
published length of the program measured in academic years, terms,
credit hours attempted, or clock hours completed, as appropriate. For
instance, if the published length of an academic program is 120 credit
hours, the maximum time frame established by the school could not
exceed 180 attempted credit hours (120 times 1.5).

To ensure that a student is making sufficient progress throughout the
course of study, the school must divide the program into equal
evaluation periods called increments. An increment may not be longer
than half the program or one academic year, whichever is less. In
other words, in a 700-hour program, an increment could not exceed
350 hours. In a 2000-hour program, an increment could not exceed
900 hours, if the school used a 900-hour academic year definition.
Increments are also expected to coincide with payment periods.

Once the school defines the length of each increment, at the end of
each increment, it must compare the number of hours the student
attempted with the number of hours the student successfully
completed to see whether the student is progressing at a rate that will
allow him or her to finish the program within the maximum time frame.

**[The graphic example from page 2-17 is currently unavailable for viewing.
Please reference that page in the Handbook for further
information.]**

[[Students with other than full-time enrollment status]]
In the preceding example, the school has established a minimum
percentage of hours the student must complete each academic year.
By setting a percentage, rather than a fixed number of hours or credits
that must be completed each academic year, it is very easy to adjust
for changes in a student's enrollment status from one period to the
next or to develop different standards varying with enrollment status.
For instance, if in the second academic year, George had enrolled for
only 15 credit hours, his progress would have been measured as
follows:

80% x 45 credit hours attempted (30 in first year; 15 in second) =
36 credits

If George had successfully completed 9 of the 15 credits attempted in
the second year, he would be considered to be making satisfactory
progress (27 completed in the first year, plus 9 in the second equals 36
credits, the minimum which must be completed to achieve an 80
percent completion ratio).

[[Graduated completion percentages]]
As was the case for the qualitative standards, a school may use a
graduated completion percentage for each year. For instance, a school
might use a more lenient completion standard in the student's first
academic year, but gradually increase the completion standard during
the course of study to ensure that the student will complete the
program requirements within the maximum time frame.

**[The graphic example from page 2-18 is currently unavailable for
viewing. Please reference that page in the Handbook for further
information.]**

[[Time frames at clock-hour schools]]
At some clock-hour schools, a student is given "credit" for every hour
attended and thus the hours attempted are always equal to the hours
earned. This is commonly the case at beauty or barber schools. In
such cases, the quantitative standard must be based on calendar time
(in weeks or months). For instance, if a school offers a 900-clock-hour
program that normally takes 8 months to complete, it could set a
maximum time frame of 12 months for completion of the program.
Thus a student would have to complete the first 450 hours of the
program within 6 months to be considered to be making satisfactory
progress.

On the other hand, some clock hour schools structure their programs
with individual subject courses that a student attempts and can
either pass or fail based upon the student's performance. In other
words, even though the student has attended the clock hours for
a given subject, he or she may not get credit for those hours of
attendance because of the grade attained. (This is similar to credit
hour schools where credits may be withheld despite the hours having
been attempted and attended.) In such cases, examination of
the clock hours successfully completed as a percentage of the hours
attempted, as was discussed earlier, is appropriate.

[[Additional elements of a progress policy]]
The regulations further state that the school's satisfactory progress
policy must explain how withdrawals, grades of "incomplete,"
courses which are repeated, and noncredit remedial coursework affect
the determination of the student's progress. A school must also have
procedures for the student to appeal a determination that he or she is
not making satisfactory progress and provide specific procedures for
the student to reestablish that he or she is maintaining satisfactory
progress.

[[Standards must be cumulative]]
The quantitative and qualitative standards must be cumulative and
must include all periods of the student's enrollment, even those
for which the student did not receive aid from the SFA programs.

Bear in mind that other than the minimum qualitative standard of a
"C" average by the end of the second academic year (or an average
consistent with graduation standards) and the minimum quantitative
standard of no more than 1.5 times the normal published time frame,
the Department does not regulate a school's standards of satisfactory
progress; instead, it merely stipulates what the components of the
policy must be.

[[Waivers for special circumstances]]
If a student does not meet the school's standards of satisfactory
progress, he or she may not receive further aid from the SFA
programs, unless the school uses its discretion to waive the
satisfactory-progress requirement. The statute gives specific
examples of cases in which the school might choose to waive the
standards for a student. Some examples are an injury to the student,
an illness of the student, or the death of a relative of the student.
Schools that permit waivers of satisfactory-progress standards must
have written procedures explaining when a student's special
circumstances merit the waiving of the satisfactory-progress
standards.

[[Reinstatement of aid]]
If a student is deemed not to be making satisfactory progress but later
meets the standards, his or her eligibility for SFA funds is reinstated.
A student may be paid for the payment period in which he or she
regains satisfactory progress, but not for any payment periods in
which the student did not meet the standards. For FFELs and Direct
Loans, a loan period may not include any periods in which the student
did not meet the standards.

LOAN DEFAULTS AND GRANT OVERPAYMENTS

In general, a person is not eligible for SFA funds if he or she is in
default on an SFA loan or owes a repayment on an SFA grant. (This
also applies to a parent seeking a PLUS loan (either under FFEL or
the Direct Loan Program). For the parent to receive a PLUS
loan, neither the parent nor the student may be in default or owe a
refund on SFA funds.) In addition, the student may not have pro
perty subject to a judgment lien for a debt owed to the United States.
For example, if the IRS had placed a lien on the student's property,
failure to pay this lien or to make satisfactory arrangements for
repayment would make the student ineligible for SFA funds. The
General Provisions regulations contain several exceptions to these
blanket rules, as noted in the following discussion of overpayments.

Overpayments

[[Eliminating Pell Grant overpayments]]
If a student receives a Federal Pell Grant overpayment, he or she may
continue to receive SFA funds if the overpayment can be eliminated by
reducing the subsequent Pell Grant payments in the same award year.
If the overpayment was the result of the school's error and the school
cannot eliminate the overpayment in the same award year, the school
may continue to pay the student SFA funds if the student agrees in
writing to repay the Pell overpayment within six months. If the
overpayment resulted from the student's error, the student cannot
receive additional SFA funds until he or she repays the overpayment
in full. (See Chapter Four, Section Six for more information on Pell
Grant overpayments.)

[[Overpayment hold file]]
If a school is unable to recover a Pell Grant or FSEOG overpayment
due from the student, the school must report the overpayment to
the Department. Reporting this information will result in the student's
future FAFSAs being flagged for resolution when they are received by
the Central Processing System. The action taken depends on when the
overpayment occurred. Pell Grant overpayment records reported to
the Department prior to approximately 1986 are in the Department's
Overpayment Hold File. (FSEOG overpayments were not recorded
prior to 1986.) When a student for whom an overpayment was
reported prior to 1986 applies, he or she will receive a SAR with no
EFC calculated and with a comment explaining that a repayment is
owed and that the student should contact the Department of
Education.

Records reported to the Department for Federal Pell Grant and
FSEOG overpayments after approximately 1986 are tracked in the
NSLDS. The student will receive an EFC with a comment regarding
the steps to be taken to resolve the overaward. In addition, a "C" will
be printed next to the EFC, indicating that the financial aid
administrator must resolve the issue before payment is made.

[[FSEOG, SSIG, and Perkins overpayments]]
A student who receives a FSEOG, SSIG, or Federal Perkins
overpayment may continue to receive SFA funds if the overpayment
can be eliminated by adjusting subsequent financial aid payments,
other than Pell Grants, within the same academic year. For instance, if
the student's combined aid from the Pell Grant, FSEOG, and Perkins
Loan programs exceed his or her financial need, the student can co
ntinue to receive SFA funds if the later disbursements of the FSEOG
or Perkins Loan for that academic year can be reduced by the amount
of the overpayment. If a reduction of these later disbursements is
insufficient to eliminate the overpayment, the school must eliminate it
by canceling subsequent disbursements and returning to the program
accounts all or part of the disbursements already made. This may
include having the student repay funds that were disbursed directly to
him or her. If the student is required the repay funds, he or she cannot
receive additional SFA funds until the full overpayment has been
repaid. (See Chapter Five, Section Two for more information on
FSEOG and Perkins overpayments.)

Loan Defaults

[[Defaulted but repaid in full]]
If a student has defaulted but has repaid the loan in full, the student is
eligible for all SFA funds. This is also the case if the student and the
holder of the loan agree on a compromise settlement and the borrower
pays that compromised amount. It is not relevant whether repayment
was completed voluntarily or otherwise (that is, through IRS offset or
wage garnishment). Note that a school may consider that the student's
prior default on a loan indicates an unwillingness to repay future loans
and thus deny Perkins Loan funds even if the student has repaid the
defaulted loan in full.

[[Satisfactory arrangements for repayment]]
If a student is in default on a Federal Perkins Loan (including NDSL),
a FISL, Federal Stafford, Federal Direct Loan, Federal SLS *4*, ICL,
Federal Consolidation Loan, or Federal Direct Consolidation Loan or
on a Federal PLUS loan or Federal Direct PLUS Loan he or she
received as a parent, the student may continue to receive SFA funds if
he or she has made satisfactory repayment arrangements with the
holder of the loan. Before a school may pay a student who is in default,
it must receive a written statement from the holder of the loan stating
that the student has made satisfactory repayment arrangements. For
FFEL loans, ICLs, Direct Loans, NDSLs, and Perkins Loans assigned
to the Department of Education, a student is considered to have made
"satisfactory arrangements for repayment" after making six
consecutive full, voluntary payments on time. Although the student is
again eligible for aid at that juncture, the loan cannot be rehabilitated
under the Direct Loan Program or the FFEL Program (assuming the
lender agrees) until 12 consecutive full, voluntary payments have been
made on time. At that point, the student also becomes eligible for
in-school deferment on the loan. (See Chapter Ten, Section Six for
more information on loan rehabilitation provisions.) A defaulted
Direct Loan will automatically be rehabilitated after 12 consecutive
full, voluntary payments have been made on time.

With respect to an ICL, an NDSL, or a Perkins Loan that has not
been assigned to the Department, the school still collecting the loan
has discretion in determining what constitutes satisfactory repayment
arrangements. For loans in this category, the letter confirming
satisfactory arrangements should be obtained directly from the school
that made the loan.

[[Loans discharged in bankruptcy]]
Students who have discharged loans in bankruptcy are eligible for
grants, work-study, and loans. Prior to October 22, 1994, students
who had defaulted loans discharged could not receive loan funds
unless they reaffirmed the discharged debt and made satisfactory
repayment arrangements. However, as a result of changes made by
the Bankruptcy Reform Act of 1994, these students are no longer
required to reaffirm the loans before receiving new loans.

[[Loans canceled for total and permanent disability]]
Beginning July 1, 1995, a borrower whose loan was canceled due to
total and permanent disability may receive all SFA funds. If the
student wishes to borrow another SFA loan, the student must obtain a
certification from his or her doctor that the disability condition has
improved and that the student has the ability to engage in substantial
gainful activity or school attendance. The student must also sign a
statement indicating that he or she is aware that his or her new SFA
loan cannot be canceled in the future on the basis of any present
impairment, unless that condition substantially deteriorates to the
extent that the definition of total and permanent disability is met.
Previously, to borrow again under the same loan program, the
borrower was required to obtain the doctor's certification, sign the
aforementioned statement, reaffirm the previous loan amount, and
make satisfactory repayment arrangements. Note that these
provisions apply only if the student wishes to receive the same type of
loan as the one that was canceled.

[[Certification required]]
The student must certify that he or she is not in default on an SFA
loan or does not owe an overpayment on an SFA grant. A
"Certification Statement on Refunds and Default" is printed on Part 1
of the SAR. However, the school may choose to collect the
certification on other documents. If the school chooses to collect this
statement on another document, the school should be sure that the
document additionally requires the student's SSN. The law requires
that the student include this information with the certification, but the
line is omitted on the SAR because the student's SSN is already
printed on the SAR.

Although the NSLDS makes it easier for an institution to verify a
student's eligibility, a school is required to resolve any conflicts
between the NSLDS information and other information it has received
from the student. For example, if the NSLDS indicates that a student
is not in default but the school has documentation indicating that the
student is in default, the school may not pay the student or certify a
loan application until the conflict is resolved.

**[The chart "Effect of Loan Status on Student Aid Eligibility" from
page 2-23 is currently unavailable for viewing. Please reference that
page in the Handbook for further information.]**

[[Default matches]]
Previously, the Department conducted two matches to determine
whether an applicant had defaulted on a federal student loan:

1. the Title IV Default Match, which contained information on all
defaulted federal student loans assigned to the Department as
well as overpayments on grants, and

2. a Guaranty Agency Default Match, which contained data on
defaulted federal student loans held by guaranty agencies.

For the 1995-96 award year, the NSLDS replaces them. The NSLDS
is a new database established under contract with the Department to
collect student loan information from guaranty agencies, lenders,
schools, and the Department's Title IV Default file. Information
about all students who have previously borrowed under the SFA loan
programs will be maintained in the data base and updated on at least a
monthly basis with information provided by both guaranty agencies
and schools.

The NSLDS page will appear in Part 1 of every SAR, directly after the
FAA Information page. Both the Guaranty Agency and the Title
IV Default match flags and comments have been replaced by the
NSLDS flag and comments. It is anticipated that this new matching
program will provide more timely and complete information than was
previously possible.

An applicant who is found to be in default and who has not made
satisfactory arrangements to repay the loan or who owes a Federal
Pell Grant or a FSEOG overpayment will receive a comment on the
NSLDS page of the SAR directing the applicant to contact the
Department or appropriate guaranty agency. In the case of a
defaulted loan that is held by a guaranty agency, the name and
telephone number of the guaranty agency holding the loan will appear
on the NSLDS page.

If a student makes satisfactory arrangements to repay a defaulted
loan (see "Default with Satisfactory Arrangement" in the chart),
the Department or the guaranty agency will send the student
documentation of the resolution. The student must submit this
documentation to the school to reestablish eligibility for SFA funds.

Other Hold Files

[[Verification hold file]]
If a student has unresolved issues from a previous verification, his or
her records will be placed in the Department's Verification Hold File.
A student whose application is in the "Hold File" will receive a SAR
with no EFC calculated. The SAR will instruct the student on how to
resolve the issue. Either comment 8 or 18 will appear.

[[Drug abuse hold file]]
The Anti-Drug Abuse Act of 1988 gives courts the authority to
suspend eligibility for federal student aid when sentencing an
individual convicted of possession or distribution of a controlled
substance. Students who apply for federal student aid receive the
following warning on their SARs: "As is more fully set forth in
Section 5301 of the Anti-Drug Abuse Act of 1988, if you are convicted
of drug distribution or possession, your eligibility for Title IV student
financial aid is subject to suspension or termination." A student who
has been denied aid will be placed on the Department's Drug Abuse
Hold File upon direction from the Department of Justice. The student
will receive a SAR with no EFC calculated and a comment student
wishes to contest the finding.

(Also note that under the Anti-Drug Abuse Act, schools that receive
campus-based funds are required to certify on a form provided by the
Department that they will provide a drug-free workplace. This is an
institutional eligibility requirement, and is therefore discussed in
Chapter Three, Section Two.)

POSSESSION OF A VALID SOCIAL SECURITY NUMBER

[[HEA '92]]
The Higher Education Amendments of 1992 require that all students
provide a Social Security Number (SSN) to be eligible to receive
SFA funds. Effective for the first time in 1994-95, matches are being
conducted between the Social Security Administration and the
Central Processing System to verify the correctness of the student's
number and the correspondence of the name and date of birth to
that number. Previously, the CPS checked only to see if the SSN the
student reported was within a valid range of Social Security Numbers
that had been issued.

In contrast to data matches such as that for the student's immigration
and Selective Service status, no comment appears if the match
confirms the correctness of the student's SSN. Please note that, as is
the case with all student data, if the school uncovers conflicting
information, it must resolve those conflicts before paying the student,
even if no comment appears on the SAR.

[[Discrepancy on date of birth]]
If a student's name and SSN match but the Social Security
Administration shows a different date of birth, the student will receive
a comment, and the school should resolve the discrepancy. (Often it
will be because the student has reported the current year as his or her
year of birth.) No further action is required through the CPS.

[[Discrepancy on SSN]]
If the SSN does not match, the student will initially receive reject code
"S" and comment 24, instructing the student to verify or
correct the SSN. If the student confirms that the SSN is correct and
can provide evidence to the financial aid administrator, the student
may verify the number on the SAR, and an EFC will then be
calculated. Note that subsequent corrections or resubmissions of other
SAR data do not go back through the Social Security Administration
match, once the student verifies that the SSN is indeed correct.

[[Discrepancy on name]]
If the SSN and the date of birth match but there is a discrepancy in the
student's name, the student will receive a SAR with a "C"
flag and comment 61, telling the student to either correct the
appropriate items or contact the Social Security Administration to
resolve the problem. This is most likely to happen when a student has
used a nickname or when a student has failed to inform the Social
Security Administration of a name change (usually as a result of
marriage). Upon receipt of documentation from the student that the
submitted SSN is correct, the school may disburse funds. The
application does not need to be resubmitted to the processor on
this basis. Comment 61 will print only on the original transaction; it
will not print on subsequent SARs.

[[No match conducted]]
If no match was conducted, the CPS will check to see whether the
reported SSN is within a valid range. If the SSN is within a valid
range, the student will receive either comment 59 (if the student's
record was not sent to the Social Security Administration because he
or she did not provide a last name) or comment 58 and a "C" flag (if
the Social Security Administration could not perform the match). For
cases in which the SSN is within a valid range, no resubmission is
required, as long as the institution maintains documentation of the
accuracy of the SSN. However, if the student did not provide a last
name, the student should submit a correction to supply the name. If
the student must resubmit the SAR (either to supply a name or to
correct other data), the data will be transmitted to the Social Security
Administration, and the aid administrator must be careful to examine
the results of the match when they are received from the CPS. If the
SSN is not within a valid range, the student will receive a rejected
SAR and comment 23 (stating that it appears that the SSN is not
valid).

The student must then verify or correct the SSN and resubmit the
SAR. The student's application will then pass through the SSN match.
The school may make an initial disbursement of aid before the new
SAR is received if the student submits documentation to the financial
aid administrator verifying the number.

[[Subsequent changes to SSN]]
Correction Applications have been virtually eliminated for 1995-96.
There are only two rare cases when they may be necessary:

1. A student may attempt to change an SSN that was matched by
the Social Security Administration. These cases usually arise
when spouses or siblings with similar names use each other's
SSNs by mistake. In such a case, both applicants would have the
same CPS identification number, which comprises the SSN and
the first two letters of the applicant's last name. This will cause
problems for both applicants in the CPS and in the Pell
disbursement system. If this occurs, the student using the wrong
SSN must complete and submit a Correction Application to
change the SSN.

2. A student's application may manage to successfully pass the
SSN match even though there is a problem with the applicant's
SSN. In such a case, the student will not be able to correct the
SSN on his or her SAR (and the aid administrator cannot correct
it electronically) because the SSN has .already been confirmed.
The student must use a Correction Application to correct the SSN.

A financial aid administrator who needs a 1995-96 Correction
Application should contact the Department's Application and Pell
Processing Systems Division and ask for the Correction Application
Coordinator. The telephone number is 1-202/260-9988. The
Department will determine whether a Correction Application is
necessary in each case. If a Correction Application is necessary, it can
be mailed to the school or to the student, as requested.

[[Exception for students from certain Pacific Islands]]
Students from the Republic of the Marshall Islands, the Federated
States of Micronesia, and the Republic of Palau who do not have
SSNs should send their FAFSAs to the following address rather than
to the address listed on the FAFSAs or on the envelopes provided
with the FAFSAs:

Federal Student Aid Programs
P.O. Box 4057
Iowa City, IA 52243

It is preferable that the school "bundle" such applications and send
them as a group. These applications will be assigned a special
identifying number in lieu of an SSN and then sent to the CPS for
regular processing. The application will initially fail the SSN
match and be rejected, but it will be intercepted by the FAFSA
processor and resubmitted. A letter will also accompany the student's
SAR explaining the assigned number and the SSN verification
process. Correction Applications have been virtually eliminated for
1995-96; therefore, if the student's application is rejected for other
reasons, the student should make corrections on his or her SAR.

REGISTRATION WITH SELECTIVE SERVICE

If a person is required to be registered with the Selective Service
System, he must have, in fact, registered before he can receive
aid from the SFA programs. With the exceptions noted below, all
males between the ages of 18 through 25 are required to register with
the Selective Service System. This includes all students with
permanent resident and other eligible noncitizenship statuses.

[[Exceptions to registration included on the Statement of
Registration Status]]
The most common exceptions to the registration requirement are
included on the Statement of Registration Status. These exceptions
are-

1. a female person *5*;

2. a male currently in the armed services on active duty (does not
apply to members of the Reserve and National Guard who are
not on active duty);

3. a male who is not yet 18 at the time he completes the application
(an update is not required during the year, even if the student
turns 18 after completing the application);

4. a male born before 1960; and

5. a citizen of the Federated States of Micronesia, the Marshall
Islands or the Republic of Palau.

[[Exceptions not included on the Statement of Registration Status]]
There are certain less common situations where the requirement for
registration is also waived. Please note that these constitute
allowable exceptions only if the student was not required to have
already registered prior to meeting one of these criteria and if
the student qualifies for an exception for the entire time he is 18
through 25. The exceptions are-

1. students who are unable to register due to being hospitalized,
incarcerated, or institutionalized;

2. students who are enrolled in an officer procurement program at
The Citadel, North Georgia College, Norwich University, or
Virginia Military Institute;

3. students who are commissioned officers of the Public Health
Service on active duty or members of the Reserve of the Public
Health Service; and

4. students who are commissioned officers of the National Oceanic
and Atmospheric Administration.

Since schools will rarely have students in the above categories, in
order to conserve space on the Statement of Registration Status, the
Department has not included these exceptions on the form signed by
students. Instead, students meeting one or more of these criteria are
exempted through reference in the regulations. Whenever a student is
not required to provide a Statement of Registration Status on this
basis, the school must document the student's status in his or her
folder. If the student is not clearly exempt from the requirement to
register, the school should ask the student for a Status Information
Letter from Selective Service documenting the exemption.

[[Registration for students not already registered]]
The Department takes several steps to ensure that students register
with the Selective Service System when required. To make it easier to
register, a student may check Item 103 on either the FAFSA or the
SAR, giving permission to the Department of Education to register the
student with Selective Service if the student is eligible.*6*

As required by the HEA, the Department matches student aid
applications with registration records from Selective Service. If the
student's SAR displays comment 29, "Your registration or your
exemption status has been confirmed by Selective Service," the
school may consider that the student's registration has been
confirmed, and the student is not required to complete the Statement
of Registration Status.

[[Records match]]
If, on the other hand, Selective Service was unable to confirm the
applicant's registration or a match was not conducted for technical
reasons, one of the following five comments will appear:

1. Comment 14: The student received aid in a previous year and
may not have registered. (See Appendix C for the text of all five
comments.)

2. Comment 30: The Selective Service reports that the student is
not registered.

3. Comment 32: The Selective Service was unable to conduct a
match.

4. Comment 33: The student did not provide enough information
for registration or was over the age for registration.

5. Comment 37: The Selective Service was unable to complete the
student's registration.

In all five cases, the school must withhold all SFA funds and may not
certify the student's loan application until the problem is resolved.
Note that whenever these comments appear, a "C" will appear next to
the student's EFC to alert the aid administrator that there is an
eligibility problem that needs to be resolved before disbursements
may be made.

[[Documentation required for students identified during
the records match]]
Unless the aid administrator has documentation that a student who
receives one of these comments is exempt from registration, the
student must present his Selective Service Registration
Acknowledgement or Verification postcard or letter of registration
confirmation to the financial aid administrator as documentation of
being properly registered; otherwise the student is not eligible for SFA
funds. If the student does not have any of these documents, he must
reconcile the conflict with the Selective Service. If the conflict is
resolved in the student's favor, the student will receive a letter from
Selective Service documenting that the student is registered or is
exempt from registration. Selective Service does not provide letters
for females because they are not required to register.

[[Students who are beyond the permissible age to register]]
In recent years, a number of students have been denied aid because
they failed to register with the Selective Service before their
26th birthday. (The Selective Service will register only males age 18
through 25, leaving older students with no way to remedy their earlier
failure to register.) The Military Selective Service Act was amended
to require a school to pay an otherwise eligible student who is 26 or
older and did not register when required if the student demonstrates
that he did not knowingly and willfully fail to register. The
Department of Education's regulations also allow such students to
receive aid if the student served on active duty with the Armed Forces.
This is because it is presumed that a person who has actually served in
the Armed Forces is not trying to avoid registering for duty. For these
students, the financial aid administrator should obtain a copy of the
student's DD Form 214, "Certificate of Release or Discharge from
Active Duty," showing military service with other than the reserve
forces, Delayed Entry pool, and the National Guard.

For those students who have not served on active duty, the financial
aid administrator must determine whether the student knowingly
and willfully failed to register. In other words, did the student know of
the registration requirements and, nevertheless, choose not to
register? The procedures that a financial aid administrator uses in
making the determination follow. The aid administrator's decision is
final and cannot be appealed to the U.S. Department of Education.

Unless the aid administrator can document that the student meets one
of the allowable exemptions to registration or has served on active
duty in the Armed Forces, the first step is for the student to write to
the Selective Service System for a Status Information Letter
concerning his failure to register. The student should provide as
complete a description about his situation as possible: where he was
living during the period, whether he was incarcerated or
institutionalized, his citizenship status during the period, if applicable,
and so on.

In January 1995, the Selective Service began using revised versions
of the Status Information Letters. Copies of the revised letters are
included in Appendix B. Each of these letters has a code in the
lower left-hand corner that indicates the type of letter. The revised
letter types and codes are:

[[General exemption]]
- E1-E7
Letters with one of these codes indicate that the student was not
required to register or was exempt for the entire time he could
have registered (age 18 through 25).

[[DOB before 1960]]
- NR
A student will receive this letter if he was born before 1960 and is
therefore not required to register.

[[Required to register, no record of attempt]]
- RR
The student will receive this letter if he indicates that he
attempted to register but Selective Service has no record that he
did register..

[[Military service: noncontinuous]]
- NM
The student will receive this letter if he was on active duty with
the Armed Forces but only for a portion of the time when he could
have registered (age 18 through 25) and was, therefore, required
to register but did not.

[[Required compliance letter sent]]
- RL
The student will receive this letter if he was required to register,
the Selective Service has no record that he registered, and
Selective Service records indicate he was sent one or more letters
requesting his compliance with the registration requirement
during the period he was required to be registered.

[[Required, no valid exemption]]
- RD
A letter with this code indicates that the student provided a reason
for not registering or documentation indicating that he was
exempt and the Selective Service determined that the reason or
documentation was not valid; therefore, this code indicates that
the student was required to register but did not.

If the student receives a "general exemption letter" (codes E1-E7) or
"DOB before 1960" letter (code NR), the student is exempt from
registration and may receive aid. If the student receives any of the
other letters, the school must determine, based on all relevant
evidence, whether the student knowingly and willfully failed to
register. The letter from Selective Service is part of the relevant
evidence. For example, if the student received a letter indicating a
compliance letter had been sent (code RL), this would be considered a
negative factor in making the determination. On the other hand, if the
student received a "Military Service: Noncontinuous" letter (code
NM), the aid administrator could determine that the student had not
knowingly and willfully avoided registration (see the discussion of
military service on page 2-30).

Most of the letters state that the final decision about the student's
eligibility rests with the agency awarding funds; for the purposes of the
SFA programs, the decision is made by the financial aid administrator,
who represents the Department. When making the decision as to
whether the student had knowingly and willfully failed to register, the
financial aid administrator should consider the following factors:

- where the student was living during the period when he was ages
18 to 26. For example, if a student was living abroad, it is more
plausible that he would not come into contact with the
requirement for registration.

- whether the student claims that he thought he was registered.
Mistakes in recordkeeping can occur. Correspondence indicating
an attempt to register could form a basis for determining that the
student did not knowingly and willfully fail to register. On the
other hand, a letter from Selective Service stating that it had
received no response to correspondence sent to the student at a
correct address would be considered a negative factor.

- why the student was not aware of the widely publicized
requirement to register when he was ages 18 through 25.

If the school determines that the failure to register was knowing and
willful, the student is ineligible for all SFA programs. The
school's decision as to whether the student has willfully failed to
register CANNOT be appealed to the Department of Education.*7*

BORROWING IN EXCESS OF LOAN LIMITS

A student who inadvertently borrows more than the annual loan limits
under the SFA loan programs loses his or her eligibility for further
SFA assistance until the excess funds have been repaid in full.
Borrowing more than the cumulative loan limits results in in
eligibility for further SFA funds until the student's relevant cumulative
loan limit once again exceeds the amount he or she has borrowed.

Borrowing in excess of annual limits should be relatively rare because
the school that certified the loan should have verified compliance
before certifying. However, the student may have exceeded the
allowable annual limit if he or she borrowed from multiple schools and
the aid administrator did not receive the financial aid transcripts
before certifying the new loan, if the student used different names
when borrowing, or if the student failed to disclose the names of other
schools he or she had attended.

Cumulative limits could be exceeded for the same reasons or because
of confusion over amounts borrowed versus amounts outstanding.
If a student inadvertently borrows in excess of the loan limits, he or
she may regain eligibility for SFA funds by repaying the excess
amount.

The charts on the next two pages show the maximum annual and
cumulative loan and grant limits. Note that for PLUS loans and Direct
PLUS loans, the annual loan limit for parents equals the student's cost
of attendance minus any other financial aid the student receives.
There is no other borrowing limit under this program.

**[The charts on annual and aggregate loan limits from pages 2-34
and 2-35 are currently unavailable for viewing. Please reference
these pages in the Handbook for further information.]**

MEMBERS OF A RELIGIOUS ORDER

Because members of a religious order are not considered to have
financial need, such a student may not receive a subsidized FFELP
loan, a Direct Subsidized Loan, a Federal Pell Grant, or
campus-based aid if he or she is a member of a religious community,
society, or order that directs the student's course of study or provides
subsistence support to the student. Members of religious orders
are eligible for unsubsidized FFELP loans and Direct Loans.

INCARCERATED STUDENTS

If a student is incarcerated, he or she is ineligible for an SFA loan.
Incarcerated students are eligible for FSEOG and FWS. The Violent
Crime Control and Law Enforcement Act of 1994 recently amended
the HEA to state that a Federal Pell Grant may not be awarded
to any individual who is incarcerated in any federal or state penal
institution. This amendment is effective for periods of enrollment
beginning on or after September 13, 1994. For 1995-96, the student is
eligible for a Pell Grant only if he or she is incarcerated in a local
penal institution.*8*

CORRESPONDENCE AND TELECOMMUNICATION COURSES

Students enrolled in correspondence courses are ineligible for aid from
the SFA programs unless the courses are part of a program leading to
an associate, bachelor, or graduate degree. Students in courses of
instruction offered in whole or in part through telecommunications are
not considered to be enrolled in correspondence courses if the
telecommunications program leads to an associate, bachelor, or
graduate degree from that school and telecommunications and
correspondence courses at the school total less than 50 percent of the
courses offered. See Chapter Three, Section One for more information
on telecommunications courses.

STUDENT CERTIFICATIONS AND STATEMENTS

In order to receive aid from the SFA programs, a student must sign
certain statements, most of which relate to the various eligibility
requirements that have been discussed elsewhere in this chapter.
These statements are combined into a single block and printed
for the school's convenience on the back of Part 1 of the SAR.
However, the school may instead decide to collect the statements
elsewhere. If the school collects them on a form of its own design, the
form must include the student's Social Security Number. (The SSN is
not needed on the statement as it appears on the SAR because the
student's SSN appears elsewhere on the form.) An institution may not
require a student to submit a SAR only for the purpose of collecting
these statements; that is, if a school has a valid federal output
document for which it must make payment, it cannot require the
student to submit a SAR.

The following are the required statements:

1. Statement of Registration Status,

2. Statement of Educational Purpose, and

3. Certification on Refunds and Default.

Although the Statement of Updated Information has been removed
from the SAR, three items still may need to be updated if they change,
unless those changes were the result of a change in the marital status
of the student. A student's dependency status must be updated if it
changes any time during the award year. If a student is selected for
verification, he or she must also update household size (items 46 or
51) and number in postsecondary education (items 47 or 52) if they
change after the SAR has been submitted.

Changes in household size and number in postsecondary education
that are the result of a change in the dependent applicant's parents'
marital status should be reported. Remember also that because
Correction Applications are not being used, corrections or updates
that change the applicant's dependency status are now made on the
SAR.

[[Statement of Registration Status]]
If a student's registration status is confirmed through the match with
the Selective Service, he is not required to sign a Statement of
Registration Status. Completion of the Statement of Registration
Status is also not required if the school knows that the student meets
one of the exceptions to required registration, such as being born
before 1960 or being female. However, since some schools wish to
certify loan applications before the matches are completed, they
routinely have all students complete the statement. The school may
also use the statement as documentation in a case in which the
student qualified for an exception to the registration requirement. The
student must check off the criterion that applies to his or her
circumstances and sign in the place below.

[[Statement of Educational Purpose]]
In the Statement of Educational Purpose, the student certifies that he
or she will use any SFA funds received only for educational
expenses. In the case of the FFEL Program, the statement must be
filed with the lender. For this reason, the Statement of Education
al Purpose is included on the loan application. For the Federal Pell
Grant, campus-based, and Direct Loan programs, the statement must
be filed with the school the student is attending. Completion is
required once every award year.

[[Certification on Refunds and Default]]
The Certification on Refunds and Default is no longer combined with
the Statement of Educational Purpose. It now appears above the
Statement of Educational Purpose on Part 1 of the SAR. This
certification states that the student does not owe a repayment on any
SFA grant and either is not in default on any SFA loan or has made
satisfactory repayment arrangements on any defaulted SFA loan in
his or her name. This certification also states that the student has not
borrowed in excess of the loan limits under the SFA programs at any
school. The school may rely on this statement only until confirmation
is received from the financial aid transcripts. Remember that a student
who is in default or owes a repayment is generally not eligible for SFA
funds (the exceptions were discussed earlier in this chapter under
Loan Defaults and Grant Overpayments).

The school must keep the signed statement(s) on file for the duration
of the record retention period. (See Chapter Three, Section Eight.)

SPECIFIC PROGRAM REQUIREMENTS

In addition to these general requirements, some programs have
additional eligibility rules. For instance, the Pell Grant Program
requires that the school receive a valid federal output document or
valid electronic record while the student is still enrolled and eligible
for payment. The specific program requirements for each program
are discussed in Chapters Four through Ten.

*1* Except where noted, the term SAR means either a Student Aid
Report or any other official output document (that is, Institutional
Student Information Report [ISIR] or electronic ISIR). Because some
ISIRs do not contain the certification statements that a student may
be required to sign, these statements must be separately obtained.

*2* In the case of parents who want to take out a Federal PLUS loan
for a dependent undergraduate student, both the parent(s) and
the student must meet the general requirements for a citizen or
eligible noncitizen (that is, categories 1-4 above).

*3* In the case of a school with branch campuses, the process must
have been approved by the state in which the branch the student
is attending is located.

*4* Federal SLS Loans include Auxiliary Loans to Assist Students
and PLUS Loans to students, former names of SLS loans.

*5* Whether a person is a male or female is a matter for medical
determination. If a school needs to determine whether a student
is male or female for Selective Service purposes, the school should tell
the student to write to Selective Service for a Status Inf
ormation Letter.

*6* The student can be registered with Selective Service as early as
30 days before his 18th birthday; if the student is too young Selective
Service will hold the registration under the student is within 30 days of
his 18th birthday. Students 26 and older can not be registered.

*7* However, if the student is claiming that he is in compliance with
the registration requirements (i.e., that he is registered or is exempt
from registration), the denial of aid by the school can be appealed to
the Department).

*8* Students incarcerated by jurisdictions that are defined as a state
in the HEA and that have no state government, such as the District of
Columbia, are considered incarcerated in a state penal institution and
are thus not eligible to receive Federal Pell Grants.