| DCLPublicationDate: 5/1/97 DCLID: GEN-97-2 AwardYear: Summary: Guidance for institutions of higher education, guaranty agencies, and lenders concerning the recent flooding in North Dakota, South Dakota, and Minnesota. May 1997GEN-97-2 97-S-76 97-L-193 97-G-297 SUMMARY: Guidance for institutions of higher education, guaranty agencies, and lenders concerning the recent flooding in North Dakota, South Dakota, and Minnesota. REFERENCE: This information supplements the guidance given in Chapters 2-10, Federal Student Financial Aid Handbook. Dear Colleague: The Secretary recognizes the impact the severe weather and flooding has had on Title IV participants located in Minnesota, North Dakota, and South Dakota. The Secretary wishes to assist the victims of the flooding in their recovery by providing 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). In September 1996, the Department issued Dear Colleague Letter (DCL) GEN-96-18, 96-L-190, 96-G-292 providing regulatory relief to victims in Presidentially declared natural disaster areas. All of the provisions in that DCL are now applicable to the most recent disasters declared in April 1997 for the entire states of North Dakota and South Dakota, and the 47 counties designated by the Federal Emergency Management Agency (FEMA) as disaster areas in the state of Minnesota. The guidance provided in this letter is in addition to the January 14, April 8, 9, and 17, 1997 letters to guaranty agencies that provided guidance on servicing loans for borrowers who are in repayment under the Federal Family Education Loan (FFEL) programs. 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, North Dakota or South Dakota, or in a designated county in Minnesota, and to schools, lenders, and guaranty agencies that were unable to maintain their normal participation and interactions with Title IV participants because of the severe winter weather and flooding. This relief is generally applicable to the 1996-97 and 1997-98 award years. A Title IV participant that deviates from otherwise applicable requirements in its administration of the Title IV programs on the basis of guidance offered within this DCL must document the reason for the action taken. DCL GEN-96-18 is available for viewing and/or downloading from the Student Financial Assistance Bulletin Board System (SFA BBS). The letter can be found on the SFA BBS at the following path: SFA Publications and Letters>Dear Colleague Letters>1996 Dear Colleague Letters>(GEN) General Title IV Participants Distribution. If you are not currently an SFA BBS user but would like to be, contact the SFA Customer Support Branch (CSB) at 1-800-433-7327. The CSB will be happy to send you free SFA BBS software or fax you a copy of the DCL. Alternately, you can gain access to the SFA BBS at http://sfa.ed.gov through the Internet. You may also obtain copies of the DCL by calling the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). Additional Guidance Federal Pell Grant Program o Deadline for Reporting Student Payment Data (§690.83). For the 1996-97 award year, the Secretary has changed the period for reporting student Payment Data to the Department. Reporting periods are not fixed but are based on the date an institution pays a Federal Pell Grant to a student. Currently, an institution must submit to the Department Payment Data for a student not later than 30 calendar days after the institution makes a payment to the student. In addition, if the institution becomes aware that previously made reports of payments or expected payments for a student are no longer accurate, the institution must submit accurate Payment Data for that student to the Department not later than 30 calendar days after becoming aware of the need to make the change. For institutions impacted by the severe weather and flooding the following conditions will apply: (1) The Secretary will not enforce the deadline that an institution submit student Payment Data within 30 days, but will instead require submission of this data within 90 days after the institution makes a payment to the student. (2) If an institution finds it impossible to meet this 90-day requirement, the Secretary will consider a further extension on a "case-by-case" basis. (3) Currently, 34 CFR §690.83 requires that institutions submit the student's Payment Data for the 1996-97 award year to the Secretary by September 30, 1997. The Secretary will consider an extension of this September 30, 1997 date on a "case-by-case" basis. Campus-Based Programs o Allocation Reduction Due to Underutilization (§673.4(d)(3)). The HEA requires that if an institution returns more than 10 percent of its 1996-97 allocation under the Federal Perkins Loan, Federal Work-Study (FWS), or Federal Supplemental Educational Opportunity Grant (FSEOG) program, the institution's allocation for that program for the 1998-99 award year will be reduced by that amount unexpended. The HEA authorizes the Secretary to waive this reduction for an institution if enforcing the reduction would be contrary to the interest of the program. The Secretary would consider the failure of an institution to expend funds due to these disasters as an appropriate waiver criterion. A deadline date for submission of this waiver request will be published at a later date. An institution must submit a request for a waiver of the underutilization penalty along with a statement that explains the reason for failure to comply with the requirement. o FWS Community Service Expenditure Requirement (§675.18(h)). The HEA requires an institution to use at least 5 percent of the total amount of its FWS Federal funds granted for an award year to compensate students employed in community service, except that the Secretary may waive this requirement if the Secretary determines that enforcing it would cause hardship for students at the institution. The Secretary would consider failure of an institution to expend at least 5 percent for community service due to these disasters as an appropriate waiver criterion. An institution must submit a request for a waiver along with a statement that explains the reason for failure to comply with the requirement. A notice published in the FEDERAL REGISTER on April 10, 1997, gives June 20, 1997, as the established closing date for an institution to submit a request for a waiver of this requirement for the 1997-98 award year. William D. Ford Federal Direct Loan Program o Submission of Promissory Note, and Loan Origination and Disbursement Records (§685.301(d)). This section requires that a school that originates a loan must submit the promissory note, loan origination record, and initial and subsequent disbursement records to the Secretary no later than 30 days following the date of disbursement. This section also requires that schools participating under standard origination must submit loan disbursement records to the Secretary no later than 30 days following the date of disbursement. The schools affected by the severe weather and flooding will be required to submit these records within 90 days of the date of disbursement. If an institution finds it impossible to meet this 90-day requirement, the Secretary will consider a further extension on a "case-by-case" basis. The following list of counties reflects the information regarding the flood-affected States and counties we have obtained from the Federal Emergency Management Agency (FEMA) as of the date of this letter: Minnesota: Aitkin, Anoka, Becker, Benton, Big Stone, Blue Earth, Brown, Carver, Chippewa, Clay, Dakota, Goodhue, Grant, Hennepin, Houston, Kandiyohi, Kittson, Lac Qui Parle, Lake of the Woods, Le Sueur, Lincoln, Mahnomen, Marshall, Morrison, Nicollet, Norman, Pennington, Polk, Ramsey, Red Lake, Redwood, Renville, Roseau, Scott, Sherburne, Sibley, St. Louis, Stearns, Stevens, Swift, Traverse, Wabasha, Washington, Wilkin, Winona, Wright, and Yellow Medicine. North DakotaEntire State South Dakota Entire State 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 5:00 p.m. Eastern time. This letter has also been sent to each Case Management Team of the Department, plus the National Council of Higher Education Loan Programs, Inc., the Consumer Bankers Association, and the National Association of Student Financial Aid Administrators. We hope that these options for regulatory relief will be of use to you in assisting students and families who have been affected by the disaster. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance |