Summary: Change to Late Disbursement Regulations and Discontinuation of "Late" Late Disbursement Approval Request Process Effective July 1, 2008

Publication Date: May 20, 2008

Author: William Leith, Acting General Manager, Application, Operations and Delivery Services, Federal Student Aid

Summary: Change to Late Disbursement Regulations and Discontinuation of "Late" Late Disbursement Approval Request Process Effective July 1, 2008

Posted on 05-20-2008

As explained below, final regulations that were published on November 1, 2007 amended the provisions that allow schools to make late disbursements of Federal student aid authorized under Title IV of the Higher Education Act of 1965, as amended (HEA). As a result of these changes, which take effect July 1, 2008, we will be discontinuing the process outlined in Dear Colleague Letter GEN-05-13 by which schools may request approval to make late disbursements beyond the regulatory late disbursement period. Late disbursements beyond the regulatory late disbursement period have commonly been referred to as "late" late disbursements.

The purpose of this communication is to remind schools and third party servicers of the upcoming regulatory change and to provide information about the schedule for discontinuing the "late" late disbursement approval request process.

We provide information in the following order:

• Current Regulations - Through June 30, 2008

• New Regulations - Effective July 1, 2008

• Schedule for Discontinuing "Late" Late Disbursement Approval Request Process

• Contact Information

Current Regulations - Through June 30, 2008

Under the regulations, a student or parent generally becomes ineligible to receive Title IV funds on the date that the student is no longer enrolled for the award year for which a Title IV grant or Federal Perkins Loan award was intended, or, for a loan under the Federal Family Education Loan (FFEL) Program or the William D. Ford Federal Direct Loan (Direct Loan) Program, on the date the student is no longer enrolled at least half-time for the loan period.

If certain regulatory requirements are met, the current late disbursement regulations allow a school to make a late disbursement of Title IV funds within a 120-day period after the date that the student ceases to meet the enrollment eligibility requirements for receiving Title IV aid. Current regulations allow a school to make a late disbursement beyond this 120-day period only with the approval of the U.S. Department of Education (the Department), and only if the reason the late disbursement was not made within the 120-day period was not the fault of the student. See 34 CFR 668.164(g). The Department issued guidance on the process for requesting approval to make a late disbursement beyond the 120-day period in Dear Colleague Letter GEN-05-13 posted on the Information for Financial Aid Professionals (IFAP) Web site.

New Regulations - Effective July 1, 2008

The Department issued new regulations on November 1, 2007 (72 FR 62014) that made two changes to the late disbursement requirements described above. The new regulations, which take effect July 1, 2008, modify the late disbursement provisions in 34 CFR 668.164(g) as follows:

1) The period for making a late disbursement is increased from 120 days to 180 days.

Effective July 1, 2008, a school may make a late disbursement of Title IV funds up to 180 days after the date that a student ceases to be enrolled at the school for the award year for which the aid was intended, or, for a loan made under the FFEL Program or the Direct Loan Program, up to 180 days after the date the student ceases to be enrolled at least half-time for the loan period. The school does not need approval from the Department to make a late disbursement within this 180-day period. All of the current requirements for making a late disbursement, as specified in 34 CFR 668.164(g)(2) and in Volume 4, Chapter 2 of the Federal Student Aid Handbook, continue to apply.

2) The provision that allows schools to request approval from the Department to make late disbursements beyond the late disbursement period is eliminated.

Effective July 1, 2008, a school may no longer request approval from the Department to make a late disbursement beyond the late disbursement period specified in the regulations, regardless of the reason why the late disbursement was not made within that period. All late disbursements must be made within the 180-day late disbursement period described above.

Note: In our experience with the current "late" late disbursement approval request process, we have found that many situations involving late disbursements beyond the 120-day period arise because the school's financial aid office does not become aware that a disbursement was not made until after the late disbursement period has ended. For example, a school may learn that a disbursement was not made when a student attempts to register for a subsequent period or when the school is pursuing a student for payment of institutional charges that should have been paid with Title IV aid.

Because the new late disbursement regulations that take effect July 1, 2008 do not allow for the Department to approve late disbursements beyond the 180-day late disbursement period, it is particularly important for schools to have adequate coordination of information among the financial aid, business, and registrar's offices so that they can identify, in a timely manner, disbursements that were not made.

Schedule for Discontinuing "Late" Late Disbursement Approval Request Process

Currently, schools and third party servicers follow the process outlined in Dear Colleague Letter GEN-05-13 to request approval to make a "late" late disbursement-a disbursement beyond the current 120-day late disbursement period. Schools and third party servicers may continue to follow the "late" late disbursement approval request process through Monday, June 30, 2008; however, beginning Tuesday, July 1, 2008 (the effective date of the new late disbursement regulations), we will discontinue the "late" late disbursement approval request process.

We will accept and process "late" late disbursement approval requests received by fax through midnight (ET) on Monday, June 30, 2008. All of the current requirements for submitting such requests continue to apply. Specifically:

• A school or third party servicer must include all of the required information for a "late" late disbursement approval request outlined in Dear Colleague Letter GEN-05-13.

• Dear Colleague Letter GEN-05-13 does not specifically reference the Academic Competitiveness Grant (ACG) and National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) programs; however, the information outlined for Federal Pell Grant (Pell Grant) requests must be provided for ACG and National SMART Grant requests.

• The number to which a "late" late disbursement approval request must be faxed is 202/275-5522.

We will not accept or process "late" late disbursement approval requests received on or after Tuesday, July 1, 2008:

• If we receive a "late" late disbursement approval request on or after July 1, 2008, the request will not be processed.

• Any request associated with the discontinued process that is received on or after July 1, 2008 will be disposed of in a manner that protects the confidentiality of the personally identifiable information included in the request.

Contact Information

If you have any questions about the information in this announcement, you may e-mail fsalldprocessing@ed.gov or call Nicki Meoli at 202/377-4031.