DCLPublicationDate: 9/1/96 DCLID: GEN-96-18 AwardYear: Summary: Guidance for helping Title IV participants affected by Hurricane Fran in Maryland, North Carolina, Pennsylvania, Virginia, and West Virginia and Hurricane Hortense in Puerto Rico. September 1996 GEN-96-18 96-L-190 96-G-292 SUBJECT: Guidance for helping Title IV participants affected by Hurricane Fran in Maryland, North Carolina, Pennsylvania, Virginia, and West Virginia and Hurricane Hortense in Puerto Rico. REFERENCE: This information supplements the guidance given in Chapters 2-10, Federal Student Financial Aid Handbook. Dear Colleague: The Secretary recognizes the severe impact that Hurricanes Fran and Hortense have had on Title IV participants located in Presidentially declared natural disaster areas. As he has done on similar occasions in the past (for example, after the flooding in Idaho, Maryland, New York, Ohio, Oregon, Pennsylvania, Virginia, Washington, and West Virginia earlier this year), the Secretary wishes to assist the victims of the hurricanes in their recovery by providing certain regulatory relief to students, schools, lenders, and guaranty agencies in their administration of the student financial aid programs under Title IV of the Higher Education Act of 1965, as amended (HEA). This relief is generally applicable to the 1996-97 award period (July 1, 1996 to June 30, 1997). However, if specifically indicated, relief may be extended into the next award year (July 1, 1997 to June 30, 1998). Relief is provided in anticipation of a Notice to be published in the Federal Register. This regulatory relief applies to individuals (and their families) who, at the time of the disaster, were residing in, employed in, or attending a school located in, a designated county in Maryland, North Carolina, Pennsylvania, Puerto Rico, Virginia, or West Virginia, and to schools, lenders, and guaranty agencies that were unable to maintain their normal participation and interactions with Title IV participants because of the hurricanes. Please refer to the enclosed list of the counties currently declared as disaster areas. [Note: updates to the list may be obtained by calling the Department's toll-free number at 1-800-433-7327, Monday through Friday from 9:00 a.m. to 5:30 p.m. Eastern time.] This letter also supplements the guidance provided in the September 17, 1996 letter to guaranty agencies and lenders in the Federal Family Education Loan (FFEL) Program. A Title IV participant that deviates from otherwise required actions in its administration of the Title IV programs on the basis of guidance offered within this letter must document the action being taken. The Secretary provides the following guidance and enforcement relief from regulatory requirements. [Note: discussions are presented alphabetically by topic within each of the program areas.] GENERAL PROVISIONS (ALL TITLE IV PROGRAMS) - Agreements to Permit Study at Another School (§600.9). If a school is unable to continue to provide a student's eligible program because of the disaster, the Secretary strongly encourages the school to establish a contractual or consortium agreement with another school to enable the student to continue to receive Title IV aid while studying at the second school. The requirements for such an agreement are found in §600.9 of the Institutional Eligibility regulations. Generally, an eligible "home institution" following these requirements will not face potential liabilities concerning written agreements if the school enters into an agreement with another eligible school for this purpose. - Determining the Date of a Student's Withdrawal (§668.22(j)(3)) The Secretary will not enforce the regulatory deadlines for complying with the requirement that a school determine the withdrawal date for a student if the school is unable, because of the disaster, to make that determination within the required timeframe. The school will be required to determine that the student has withdrawn WITHIN 60 DAYS (instead of 30 days) after the expiration of the earlier of the period of enrollment for which the student has been charged, the academic year in which the student withdrew, or the educational program from which the student withdrew. - Institutional Eligibility, Financial Responsibility, and Administrative Capability (§600.40(a), §668.15, and §668.16). If, in future program reviews or audits, the Secretary finds that a school temporarily failed to meet the standards of fiscal and administrative capability and the school indicates that this failure was the result of the disaster, the Secretary will carefully consider those circumstances described by the school. He will examine each situation on a "case-by-case" basis and make a determination as part of the audit or program review resolution process. A short-term, temporary closure of a school will not, in itself, cause the school to lose its eligibility. - Lost Student Records (§668.23). The Secretary recognizes that, because of the disaster, records and documentation schools in the disaster area are required to keep on file may no longer be available or legible. Affected schools are required to attempt to reconstruct financial aid application data and award data lost because of the disaster but will not be held responsible for records and documentation that, because of disaster damage, cannot be reconstructed. The school must document that the records were lost due to the disaster. - Need Analysis. No special aid received by victims of the disaster from the Federal Government or the State for the purpose of providing financial relief will be counted as income for the purposes of calculating a family's expected family contribution (EFC). This aid may take the form of grants or low-interest loans. [Note: may apply to the 1997-98 award year.] - Other Resources. No special aid received by the victims of the disaster from the Federal Government or the State for the purpose of providing financial relief will be counted as other resources or estimated financial assistance for the purposes of determining need. This aid may take the form of grants or low-interest loans. [Note: may apply to the 1997-98 award year.] - Professional Judgment. Section 479A of the HEA specifically gives the financial aid administrator (FAA) the authority to use professional judgment to make adjustments on a "case-by-case" basis to the cost of attendance or to the values of the items used in calculating the EFC toward meeting the student's cost of attendance to reflect the student's special circumstances. The use of professional judgment in Federal needs analysis is discussed in Chapter 2 of the Federal Student Financial Aid Handbook and in Part II of the Counselor's Handbook for Postsecondary Schools. For THE CAMPUS-BASED, DIRECT LOAN, AND FEDERAL FAMILY EDUCATION LOAN (FFEL) programs, the Secretary is encouraging FAAs to use their professional judgment in determining whether to make adjustments to the data used to calculate a student's EFC in order to reflect more accurately his or her financial need and provide some relief to a student whose need requirements may have changed due to the economic losses caused by the disaster. An FAA still must make adjustments on a "case-by-case" basis and clearly document the student's file with the reasons for any adjustment. For the FEDERAL PELL GRANT PROGRAM, there are no special conditions on which to "adjust" a student's EFC when the student suffers, or the student's family suffers, economic loss through a natural disaster. Instead, as in the case with the other Title IV student financial aid programs, to provide relief for disaster area victims, the Secretary is encouraging FAAs to use their professional judgment to determine whether adjustments to a student's data will more accurately reflect a student's personal circumstances. An FAA must make adjustments on a "case-by-case" basis and clearly document the student's file with the reasons for any adjustment. If the FAA makes adjustments to a student's data, the SAR must be returned to the Central Processing System (CPS), or reported to the CPS through the Electronic Data Exchange. The adjusted data will then be processed through the CPS, and a new EFC will be calculated. Please note that if a student is not eligible and is unlikely to become eligible for a Federal Pell Grant, a school need not resubmit professional judgment adjustments through the CPS. - Satisfactory Academic Progress (34 CFR 668.34 and §668.16(e)). The Secretary will not enforce satisfactory academic progress standards in the situation in which a student fails to meet the school's satisfactory academic progress standards due to the disaster. In this situation, the Secretary encourages the school to refrain from applying its satisfactory academic progress standards, at least where their application would disqualify a student from receiving Title IV aid. The school must, in this case, document in the student's file that the student's failure to maintain satisfactory academic progress was due to the natural disaster. - Transfer Students (§668.19). The school to which a student is transferring must make an effort to obtain the records and documentation required to disburse or deliver Title IV aid. If this information is not available as a result of damage caused by the disaster, the school to which the student transferred will not be held responsible for collecting the information nor will the student be held responsible for providing the information. Any school affected by this situation should document that the information is unavailable due to the disaster. [Note: may apply to the 1997-98 award year.] - Tuition Refunds or Credits (§668.22 and Appendix A). The Secretary strongly encourages a school to provide a full refund of required tuition and fees or a credit in a comparable amount against future tuition and fees to a student who has been unable to complete course requirements because he or she is a victim of the disaster. - Verification (34 CFR 668 Subpart E). The Secretary will not enforce the verification requirements during the award year for those applicants selected for verification whose records were lost or destroyed because of the disaster. A school must document the student's file when it does not perform verification for this reason. For these students, Verification Status Code "S" may be used to report a Federal Pell Grant disbursement. [Note: may apply to the 1997-98 award year.] CAMPUS-BASED PROGRAMS FEDERAL WORK-STUDY (FWS) PROGRAM - Community Services (§675.2). The Secretary encourages schools to employ their FWS students in the cleanup and relief efforts for the communities affected by the disaster. These efforts would be considered part of the school's community services activities under the FWS Program. FEDERAL PERKINS LOAN PROGRAM - Borrowers in an "In-School" Status (§674.31). The Secretary will consider that any borrower who was in an "in-school" status at the time of the natural disaster and was unable to complete course requirements or enroll in classes will continue to be in an "in-school" status until such time as the borrower withdraws, or until the end of the 1996-97 award period, whichever is earlier. The school should document this reason for continued "in-school" status in the student's file. - Borrowers in Initial or Post-Deferment Grace Periods (§674.42). The Secretary will not require a school to comply with §674.42(b) requiring a school to make contact with the borrower during an initial or post-deferment grace period. A school must document the reason for suspension of these activities in the borrower's file. - Borrowers in Default-Due Diligence. The Secretary will not enforce the billing and collection activities required under 34 CFR 674 Subpart C - Due Diligence. A school may suspend the collection activities for borrowers already in default at the time of the natural disaster. A school must document the reason for suspension of these activities in the borrower's file. - Borrowers in Repayment (§674.33). The Secretary authorizes the school to grant a forbearance to a borrower who is in repayment at the time of the natural disaster but is unable to continue to repay the loan due to the disaster. The legislation governing the Perkins Loan Program requires that interest will accrue during any period of forbearance. A borrower may request this forbearance orally, or in writing, and will not be required to submit documentation to be considered eligible for this forbearance. This period of forbearance is counted toward the 3-year maximum limit on the number of years of forbearance that may be granted to a borrower. A school must document this forbearance in the borrower's file. FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM - Converting the Borrower to Repayment §682.209(a) and §682.210). The Secretary believes that it is in the best interest of the FFEL Program to consider each Federal Stafford loan that has not entered repayment and that was not in a default status on the date the borrower's attendance at the school was interrupted due to the disaster to be (or have been) in an "in-school" status and to continue in that status until the school resumes normal operations. This period of disaster-related nonattendance should not require a borrower to enter or use any of his or her grace period. Each Federal Stafford loan that had entered repayment status and that was not in a default status on the date the borrower's attendance at the school was interrupted due to disaster conditions is to be considered as in an "in-school" deferment status during the period of disaster-related nonattendance. This interim period of nonattendance should not force a borrower back into repayment. A borrower whose FFEL loan was in an "in-school" deferment status on the date the disaster conditions interrupted normal operations at the school shall be treated as if the loan continues in an "in-school" deferment status during this same period of disaster-related nonattendance. - Guaranty Agency and Lender Disbursement of Loan Proceeds. The Secretary authorizes lenders not to disburse loan proceeds to schools in the affected area according to the originally established disbursement schedules as required under §682.207(b)(1)(i)(B) if they have been informed that a school has delayed opening for a scheduled term or has ceased operations for an undetermined period of time. Lenders should await revised disbursement schedules from the affected schools. Schools are also urged to request revised disbursement dates. The Secretary instructs guaranty agencies and lenders to revise information on loan periods, graduation dates, and so forth, on the loan applications related to these disbursements as the information becomes available. This instruction means that a borrower need not reapply for the loan. This also will allow a student to receive his or her loan proceeds according to a schedule that fits the school's new academic schedule. WAIVERS APPLICABLE TO FFEL SCHOOLS LOCATED IN A DISASTER AREA. - Payment of a Refund to a Student or to a Lender (§668.22 and §682.607). The Secretary will not enforce the deadlines by which an affected school must pay a refund that is due to a student or to a lender after the student's withdrawal as determined under §668.22(j)(3). Instead, the Secretary will require the school to pay a refund to the student WITHIN 90 DAYS (instead of 30 days and to the lender WITHIN 120 DAYS (instead of 60 days) after the student's withdrawal. - School's Delivery of Loan Proceeds (§682.604). The Secretary will not enforce the requirement in §682.604 that loan proceeds be delivered to the borrower within 45 days of the school's receipt of the funds, but will instead permit the school to deliver loan proceeds to the borrower up to 120 days from the school's receipt of the loan proceeds. - Submission of Student Status Confirmation Reports (682.610(c)). The Secretary will not enforce the deadline that a school complete and submit required student status confirmation reports to the Secretary or guaranty agency within 30 days of the school's receipt of the report but will instead require completion and submission of these reports WITHIN 90 DAYS. Reports of changes of borrower status if the school does not expect to submit its next report within the next 60 days may also be submitted WITHIN 90 DAYS (instead of 30 days). FEDERAL PELL GRANT PROGRAM - Reporting Deadlines (Notices of Deadline Dates). The Secretary will consider carefully, on a "case-by-case" basis, the effect of the disaster on any school's ability to meet required Federal Pell Grant reporting deadlines. WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM - Payment of a Refund to a Student or to the Secretary (§668.22 and §685.305). The Secretary will not enforce the deadlines by which an affected school must pay a refund that is due to a student or to the Secretary after the student's withdrawal as determined under §668.22(j)(3). Instead, the Secretary will require the school to pay a refund to the student WITHIN 90 DAYS (instead of 30 days) and to the Secretary WITHIN 120 DAYS (instead of 60 days) after the student's withdrawal. - Repayment of Direct Subsidized and Direct Unsubsidized Loans (§685.204 and §685.207). The Secretary believes that it is in the best interest of the Direct Loan Program to consider each Direct Subsidized and Direct Unsubsidized loan that has not entered repayment and that was not in a default status on the date the borrower's attendance at the school was interrupted due to the disaster to be (or have been) in an "in-school" status and to continue in that status until the school resumes normal operations. This period of disaster-related nonattendance should not require a borrower to enter or use any of his or her grace period. Each Direct Subsidized and Direct Unsubsidized loan that had entered repayment status and that was not in a default status on the date the borrower's attendance at the school was interrupted due to disaster conditions is to be considered as in an "in-school" deferment status during the period of disaster-related nonattendance. This interim period of nonattendance should not force a borrower back into repayment. - Submission of Student Status Confirmation Reports (§685.309(b)). The Secretary will not enforce the deadline that a school complete and submit required student status confirmation reports to the Secretary within 30 days of the school's receipt of the report but will instead require completion and submission of these reports WITHIN 90 DAYS. Reports of changes of borrower status, if the school does not expect to submit its next report within the next 60 days, may also be submitted WITHIN 90 DAYS (instead of 30 days). For additional information or if you have any questions please contact the Department's SFA Customer Support Inquiry Service staff. Staff members are available Monday through Friday between the hours of 9:00 AM and 5:00 PM (Eastern Time) at 1-800-433-7327. After hours calls will be accepted by an automated voice response system. Callers leaving their name and phone number will receive a return call the next business day. You may FAX an inquiry to the Customer Support Inquiry Service at (202) 260-4199, or E-mail the staff at CSB@ed.gov. We hope that these options for regulatory relief will be of use to you in assisting students whose families have been affected by the disaster. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance Enclosure COUNTIES DESIGNATED BY PRESIDENT CLINTON AS HURRICANE DISASTER AREAS IN SEPTEMBER 1996 MARYLAND Allegany Frederick NORTH CAROLINA Alamance Beaufort Bertie Bladen Brunswick Carteret Chatham Columbus Craven Cumberland Duplin Durham Edgecombe Franklin Granville Greene Guilford Halifax Harnett Henderson Hoke Johnston Jones Lee Lenoir Moore Nash New Hanover Onslow Orange Pamlico Pender Person Polk Richmond Robeson Rutherford Sampson Vance Wake Warren Wayne Wilson PENNSYLVANIA Huntingdon Juniata Mifflin Montgomery Perry PUERTO RICO Arroyo Bayamon Canovanas Carolina Cayey Ceiba Guayama Guaynabo Gurabo Las Piedras Loiza Maunabo Ponce Rio Grande Salinas San Juan San Lorenzo Santa Isabel Toa Baja Yabucoa VIRGINIA Augusta Clarke Danville (City) Halifax Harrisonburg (City) Madison Martinsville (City) Mecklenburg Nelson Page Pittsylvania Rappahannock Rockbridge Rockingham Shenandoah Staunton (City) Warren Waynesboro (City) WEST VIRGINIA Berkeley Grant Hampshire Hardy Jefferson Mineral Morgan Pendleton Randolph Tucker |