Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

1997-1998 Federal Student Aid Handbook in PDF Format

The Federal Student Financial Aid Handbook explains the policies and procedures required in the proper administration of the Student Financial Assistance (SFA) Programs. Defined in law, in regulation, or as guidance from the U.S. Department of Education (ED), these policies and procedures facilitate the effective operation of the federal processing system and of the reporting systems for individual programs. The Introduction for Chapter 1 lists the SFA Programs and contains a brief discussion of the contents and structure of this handbook. Chapter 1 contains two sections: General Program Information and References and Resources.

Loans under the Federal Perkins Loan Program include Federal Perkins Loans, National Direct Student Loans (NDSLs), and National Defense Student Loans (Defense Loans). (No new Defense Loans were made after July 1, 1972, but a few are still in repayment.) Perkins Loans and NDSLs are low-interest, long-term loans made through institutional financial aid offices to help needy undergraduate and graduate students pay postsecondary educational costs. The school must give priority to students with exceptional financial need as defined by the school. (See Section 1 of this chapter.) The current interest rate is 5%.

This chapter of The Federal Student Financial Aid Handbook describes the student eligibility requirements that affect the Student Financial Assistance (SFA) Programs. The calculation of financial need, a key determinant of student eligibility, is examined here, as are the details that pertain to documenting citizenship status and other eligibility criteria. Documentation necessary for proving citizenship status, information on eligibility matches, and the Selective Service's Status Information Letters appear in the appendices

The William D. Ford Federal Direct Loan Program (also known as the Direct Loan Program and Direct Loans) was authorized under Title IV of the Higher Education Act with passage of the Student Loan Reform Act of 1993. The program began operation in the 1994-95 award year. A major source of federal student assistance, the Direct Loan Program provides loans to eligible borrowers to cover postsecondary education costs. The program uses loan capital the federal government provides, requires only one aid application (the Free Application for Federal Student Aid), and makes loans available directly through participating schools rather than through private lenders and guaranty agencies.

This chapter covers the State Student Incentive Grant (SSIG) Program, the Robert C. Byrd Honors Scholarship (Byrd) Program and the National Early Intervention Scholarship and Partnership (NEISP) Program. The SSIG, Byrd, and NEISP programs are authorized under Title IV of the Higher Education Act of 1965, as amended (HEA).

The Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS) programs are called "campus-based" programs because each school is responsible for administering them on its own campus. A school applies for and receives program funds directly from the U.S. Department of Education by submitting an application, the Fiscal Operations Report and Application to Participate (FISAP), each award year. (See page 5-5.) The school's financial aid administrator is responsible for ensuring that eligible students at the school receive program funds according to the provisions of the law, the Regulations, the Program Participation Agreement (PPA) signed by both the Secretary of Education and the school's chief administrative officer, and other criteria the Department may establish.

The purpose of this chapter is to describe how a school becomes eligible to participate in the Student Financial Assistance (SFA) Programs, and to explain the administrative and fiscal requirements of SFA Program participation. In addition, this chapter discusses refund calculations, proper documentation and recordkeeping, disclosure requirements, and other issues relevant to the general administration of the SFA Programs.

The Federal Work-Study (FWS) Program encourages the part-time employment of undergraduate and graduate students who need the income to help pay for their cost of education, and encourages FWS recipients to participate in community service activities. Since the beginning of the 1994-95 award year, schools have been required to utilize money from their FWS Program funds to compensate students employed in community service jobs.

Part B of Title IV of the Higher Education Act of 1965 (HEA), as amended, created the guaranteed student loan programs. The Higher Education Amendments of 1992 (P.L. 102-325) reauthorized the HEA and renamed the guaranteed student loan programs the Federal Family Education Loan (FFEL) Program, which now comprises Federal Stafford Loans (formerly Guaranteed Student Loans), Federal PLUS Loans, and Federal Consolidation Loans. The FFEL Program makes these long-term loans available to students attending institutions of higher education; vocational, technical, business, and trade schools; and some foreign schools.

The purpose of the Federal Supplemental Educational Opportunity Grant (FSEOG) Program is to encourage schools to provide grants to exceptionally needy undergraduate students to help pay for their postsecondary education. This provision is in Section 413C(c)(2) of the Higher Education Act of 1965, as amended. Giving priority to applicants with exceptional financial need, schools selecting FSEOG recipients must use the selection criteria discussed in Section 1 of this chapter.

This chapter of The Federal Student Financial Aid Handbook describes how a school calculates and pays Federal Pell Grant (Pell) awards to eligible students and how it reports those payments to the U.S. Department of Education (the Department).

The discussion covers what the school must do to process an eligible student's Pell award after the school has received documentation of the student's eligibility. This chapter covers the basic steps in the Pell award process at the school: confirming student eligibility, calculating the award, making a disbursement, recalculating the award, collecting overpayments, and reporting expenditures to the Department.