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(GEN-95-21) (GEN-95-21) Clarification of the methods by which a student may apply for Federal student aid.

DCLPublicationDate: 4/1/95
DCLID: GEN-95-21
AwardYear:
Summary: Clarification of the methods by which a student may apply for Federal student aid.

APRIL 1995
GEN-95-21


SUBJECT: Clarification of the methods by which a student may
apply for Federal student aid.

PUBLICATION REFERENCE: This information supplements the
guidance provided in Part II of the Counselor's Handbook.

Dear Colleague:

We have been asked whether a student may apply for Federal
student assistance under Title IV of the Higher Education Act of
1965, as amended (HEA), using on-line software or diskettes
developed by organizations other than the U.S. Department of
Education. This question addresses a very important issue which
could have significant impact upon the eligibility of students
for Federal Title IV student assistance.

An institution may not award and disburse any Title IV, HEA
program assistance based upon data which is obtained from a
student on a form, including an electronic form, which the
Secretary does not develop and distribute.

Section 483(a)(1) of the HEA specifically states that the
Secretary of Education,

. . . shall produce, distribute, and process free of charge
a common financial reporting form to be used to determine
the need and eligibility of a student for financial
assistance under parts A, C, D, and E of this title (other
than subpart 4 of part A and to determine the need of a
student for the purpose of part B of this title.

Section 483(a)(2) of the HEA states:

The need and eligibility of a student for financial
assistance under parts A, C, D, and E of this title (other
than under subpart 4 of part A) and the need of a student
for the purpose of part B of this title, MAY ONLY BE
DETERMINED BY USING THE FORM DEVELOPED BY THE
SECRETARY PURSUANT TO PARAGRAPH (1) OF THIS
SUBSECTION [emphasis added]. NO STUDENT MAY RECEIVE
ASSISTANCE under parts A, C, D, and E of this title (other than
under subpart 4 of part A) or have the student's need established for
the purpose of part B of this title, EXCEPT BY USE OF THE FORM
DEVELOPED BY THE SECRETARY PURSUANT TO THIS
SECTION [emphasis added].

While the Secretary currently distributes several versions of the
application form to meet a variety of needs, he will continue to
review the need for additional versions to enhance the ease with
which students may apply for Title IV, HEA program assistance.
The Secretary may subsequently develop and distribute additional
versions of the approved form. At the present time the Secretary
is distributing only the nine following versions of the
application form by which a student may apply for and receive
Title IV, HEA program assistance:

(1) The paper Free Application for Federal Student Aid (FAFSA)
produced and distributed either by the Department or by one
of the Department's approved multiple data entry (MDE)
processors as provided by the HEA.

(2) The Correction FAFSA which is distributed by the Department
and is used for very limited purposes.

(3) The Spanish FAFSA distributed by the Department.

(4) The paper Renewal FAFSA sent to an applicant by the
Department or by an MDE processor.

(5) The Renewal FAFSA printed by an institution using the
Department's EDExpress software.

(6) The electronic student version of the FAFSA screen
distributed to an institution as a part of the Department's
EDExpress software.

(7) The electronic financial aid administrator version of the
FAFSA screen distributed to an institution as a part of the
Department's EDExpress software.

(8) The electronic student version of the Renewal FAFSA screen
distributed to an institution as a part of the Department's
EDExpress software.

(9) The electronic financial aid administrator version of the
Renewal FAFSA screen distributed to an institution as part
of the Department's EDExpress software.

THERE ARE NO OTHER METHODS BY WHICH STUDENTS
MAY LEGALLY APPLY FOR AND RECEIVE FEDERAL
STUDENT AID. For example, an institution that awards or disburses
Title IV, HEA program funds based on the application developed by
the Electronic Loan Management (ELM) Group is in violation of
section 483 of the HEA. The ELM Group is a private organization
that is marketing a computerized data collection process by which
students apply for aid. In such instances, the institution may be liable
for up to 100 percent of all such aid disbursed as well as for other
potential sanctions. In addition, any organization that processes such
applications on behalf of an institution may be considered a third-party
servicer and may also be jointly liable.

We hope that this clarification is helpful. As partners in our
efforts to provide Federal student aid to eligible students, we
want to make certain that there is no confusion on this very
important issue. If you need any additional information on this
topic, please contact Fred Sellers. He may be reached by letter
at the U.S. Department of Education, 600 Independence Avenue,
S.W., Washington, DC 20202-5447 or by fax at (202) 205-0786.

Sincerely,



David A. Longanecker

Last Modified: 03/31/1995