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Summary: HERA Operational Implementation Guidance (CPS, COD System, EDExpress Suite)--High-Level Overview

Publication Date: May 5, 2006

Author: G. Kay Jacks, General Manager, FSA Application, School Eligibility and Delivery Services

Summary: HERA Operational Implementation Guidance (CPS, COD System, EDExpress Suite)-High-Level Overview

Posted on 05-05-2006

Federal Student Aid has been evaluating and finalizing the operational changes that we must make to our student aid processes and procedures to implement the provisions of the Higher Education Reconciliation Act of 2005 (the HERA), Pub. L. 109-171. We appreciate the financial aid community's patience and understanding over the past few months as we completed this work.

Communications related to the HERA will be posted on the Information for Financial Aid Professionals (IFAP) Web site (www.ifap.ed.gov). These communications include policy and operational guidance that impacts all of our programs, systems, and processes. Several communications have been posted to date, including guidance for participants in the Federal Family Education Loan (FFEL) Program. All participants in the student aid programs should refer to the IFAP Web site for applicable guidance and information. To assist users in easily locating HERA-related communications, they are available under the "Higher Education Reconciliation Act of 2005 (HERA) Information" link on the home page of the IFAP Web site.

This announcement is the first in a series of communications intended to focus on the operational implementation of the HERA changes that will affect the Central Processing System (CPS), Common Origination and Disbursement (COD) System, and EDExpress Suite. In this announcement, we provide, with one exception, an overview of the operational changes that we will implement and the key dates associated with these changes. In subsequent communications, we will explain these changes in more detail and provide additional and technical information. The operational change that we do not cover in this announcement is the Direct PLUS Loan for graduate and professional students (Grad PLUS). We will issue a separate comprehensive Grad PLUS communication.

As you are aware, there is a very short period of time within which we must make and implement the operational changes for the 2006-2007 Award Year. In developing an implementation plan and schedule, we have had to consider and balance the complexity of the new requirements, the effort required by our school/third party servicer/software provider partners to make and adjust to the changes, the impact on students, and the challenge of minimizing risk to the functioning of existing systems.

With all considerations in mind, we have developed a plan for implementing the HERA operational changes. A summary of the plan and key dates associated with the changes follow below. For each provision, we list the key dates for activities/actions in chronological order. As a reminder, this is a high-level overview. We will provide additional details and dates related to the implementation of these changes in forthcoming communications.

Need Analysis Changes--Expected Family Contribution (EFC) Calculation--For the 2006-2007 Award Year, the CPS will reprocess certain Free Application for Federal Student Aid (FAFSA) data to accommodate some of the need analysis changes in the HERA. These changes include eliminating the consideration of a dependent student's type of tax return for the simplified needs test (SNT) and automatic zero EFC, and increasing the income threshold to $20,000 to qualify for an automatic zero EFC. In a separate communication, we will describe how we will handle remaining need analysis changes for the 2006-2007 Award Year that will not be handled through reprocessing.
Activity/Action Implementation Date
May 8, 2006
  • Federal Student Aid posts updated 2006-2007 CPS test files on FSAdownload Web site (FSAdownload.ed.gov).
May 19, 2006
  • CPS reprocesses certain FAFSA data to accommodate changes to SNT and auto-zero EFC eligibility.

    Note: After reprocessing occurs, all new FAFSAs will be processed in accordance with new provisions.

May 19, 2006

Student Eligibility Requirement Regarding Active Duty Military Members as Independent Students--The HERA modified the student eligibility provision so that a student who is currently serving on active duty in the U.S. Armed Forces for purposes other than training is considered independent. For all 2006-2007 FAFSAs reprocessed on May 19, 2006, as well as for all applications and corrections processed on and after the May 19th reprocessing, Federal Student Aid will include a comment on Student Aid Reports (SARs) for dependent students that announces the new provision. There will be no change to the Institutional Student Information Record (ISIR).
Activity/Action Implementation Date
  • For 2006-2007 FAFSAs processed from this date forward, Federal Student Aid includes comment on SARs for dependent students that announces new provision.
May 19, 2006

Student Eligibility Requirement Regarding Drug-Related Offenses--The HERA modified the student eligibility provision so that a student only loses eligibility if the drug-related offense for which he or she was convicted occurred while the student was receiving Federal student aid. For the 2006-2007 Award Year, Federal Student Aid will identify students who answered "Yes" to question #31 on the FAFSA (indicating full or partial eligibility) or who did not answer the question and send them an e-mail or paper notification and a revised Drug Conviction Worksheet. Students will complete the revised worksheet and update the CPS as appropriate.
Activity/Action Implementation Date
  • CPS sends notice and revised Drug Conviction Worksheet to all applicants who applied for aid prior to July 1, 2006 and answered "Yes" (either 2-partial ineligibility or 3-full ineligibility) to question #31 on FAFSA or who did not answer the question.
  • Federal Student Aid rewords question #31 on FAFSA on the Web (FOTW) and updates Drug Conviction Worksheet that students complete via online application.
  • Federal Student Aid updates Federal Student Aid Information Center (FSAIC) automated response system to reflect revised Drug Conviction Worksheet questions.
June 30, 2006

Return of Title IV Funds (R2T4)--For the 2006-2007 Award Year, Federal Student Aid will update R2T4 on the Web for schools to use when calculating R2T4 for all students who withdraw on or after July 1, 2006. The R2T4 PC product will not be updated. Schools may not use the R2T4 PC product for withdrawals that occur on or after July 1, 2006.

Note: The time period that schools have to calculate the earned and unearned amounts of Title IV funds and return the unearned portion that the school is responsible for has been increased from 30 days to 45 days.

Activity/Action Implementation Date
  • Schools may not use R2T4 PC product to calculate R2T4 for students who withdraw on or after July 1, 2006.
July 1, 2006
  • Federal Student Aid updates R2T4 on the Web for R2T4 calculations for students who withdraw on or after July 1, 2006.
  • Schools use R2T4 on the Web to calculate R2T4 for all students, including those who withdraw on or after July 1, 2006.
August 6, 2006

Academic Competitiveness Grant (ACG) and National SMART Grant--These two new grant programs will be implemented July 1, 2006. Initially, for ACG, students will enter data on Web screens or provide it to the FSAIC to assist schools in identifying eligible students. Schools will be able to draw down funds for these grants beginning the first week of August 2006; however, they will not be able to submit award and disbursement information for either grant to the COD System until December 2006.
Activity/Action Implementation Date

ACG

  • CPS sends notice to students who already have applied for aid for 2006-2007 and appear to be potentially eligible for ACG. Notice directs students to new Web screens or FSAIC to answer questions about "rigorous" high school programs

    Students who complete FOTW on and after July 1, 2006 and who are potentially eligible for ACG will complete new Web screens as part of online process.

  • Students receive SAR informing them that follow up information about eligibility will come from their financial aid offices.
  • Schools receive comment code(s) on ISIR notifying them of student responses. In addition, schools receive flat files containing these responses through Student Aid Information Gateway (SAIG) and may view responses via FAA Access Web site (www.fafsa.ed.gov/FOTWWebApp//faa/faa.jsp). Schools may use this information to assist in validating student eligibility for ACG.
July 1, 2006

ACG and National SMART Grant

  • Schools receive initial authorizations for applicable grant programs in Grant Administration and Payment System (GAPS).
  • COD System begins sending to schools Electronic Statement of Account (ESOA) reports reflecting authorizations.
  • Schools are able to draw down funds via GAPS beginning first week of August 2006.
July 29, 2006

ACG and National SMART Grant

  • Schools that use EDExpress are able to enter and store awards and disbursements. Software will hold awards and disbursements until COD System is ready to receive.
  • Schools are able to import ESOAs.
September 1, 2006

ACG and National SMART Grant

  • All schools (including EDExpress users) are able to submit awards and disbursements to COD System via Web and Extensible Markup Language (XML) Common Record.
December 16, 2006

ACG and National SMART Grant

  • Schools receive COD reports that reflect new grants.
April 14, 2007

Single Loan Disbursement/30-Day Delay Exemptions for Low Cohort Default Rate--For disbursements made on or after February 8, 2006, schools with low cohort default rates are exempt from certain multiple disbursement and delayed disbursement requirements as explained in Dear Colleague Letter GEN-06-02.
Activity/Action Effective Date
  • Eligible schools can disburse per the guidance in Dear Colleague Letter GEN-06-02.
February 8, 2006

Direct Loan Master Promissory Notes, Addenda, and Plain Language Disclosures--Federal Student Aid will explain changes to the terms and conditions of Direct Loans made by the HERA through the use of addenda to the MPNs and revised Plain Language Disclosures (PLDs). There will be an addendum and revised PLD for use with the Direct Subsidized/Unsubsidized MPN. There will be an addendum and revised PLD for use with the Direct PLUS MPN. The Direct PLUS MPN (and accompanying documents) will be used for both parent and student borrowers.
Activity/Action Implementation Date

Subsidized/Unsubsidized and PLUS

  • Schools include applicable addendum with MPN and Borrower's Rights and Responsibilities when they print and provide MPN to borrower.

We are finalizing addenda and will post guidance and documents as soon as possible.

Note: Schools should continue to use Direct Subsidized/Unsubsidized MPN (with a 10/31/05 expiration date) and Direct PLUS MPN (with a 1/31/2006 expiration date) for subsidized/unsubsidized loans for student borrowers and PLUS loans for parent borrowers, respectively. While these MPNs do not include changes to terms and conditions of Direct Loans made by HERA, completed/signed MPNs will not need to be replaced at a later date. Federal Student Aid will provide borrowers with additional information about loan terms and conditions.

In a subsequent communication, Federal Student Aid will provide guidance related to MPNs for graduate and professional students who are eligible for Direct PLUS Loans.

Subsidized/Unsubsidized and PLUS

  • Schools include applicable revised PLD with Disclosure Statement for a second or subsequent loan under an MPN when they print and provide Disclosure Statement to borrower.

We are finalizing PLDs and will post guidance and documents as soon as possible.

Note: Schools should continue to use Direct Subsidized/Unsubsidized PLD and Direct PLUS PLD. As explained above, Federal Student Aid will provide borrowers with additional information about loan terms and conditions.


Hopefully, this high-level overview is helpful in setting the stage for the work we will complete over the next several months to operationally implement the HERA changes that will affect the CPS, COD System, and EDExpress Suite. Please check the IFAP Web site regularly for the additional communications that will provide more details and implementation date information, technical reference/document updates, Web site/software/system release information, and other important reminders. As a reminder, all HERA-related communications will be available under the "Higher Education Reconciliation Act of 2005 (HERA) Information" link on the home page of the IFAP Web site (www.ifap.ed.gov).

Thank you in advance for your assistance in completing this important work. If you have any questions about this announcement, contact:

  • CPS/SAIG Technical Support at 800/330-5947 (TDD/TTY 800/511-5806). You may also e-mail CPSSAIG@ed.gov.
  • COD School Relations Center at 800/4PGRANT for Pell Grant or 800/848-0978 for Direct Loan. You may also e-mail CODSupport@acs-inc.com.

Last Modified: 05/04/2006