Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Campus-Based Programs: Common Elements - Resources and Overawards

AwardYear: 1997-1998
EnterChapterNo: 5
EnterChapterTitle: Campus-Based Programs: Common Elements
SectionNumber: 2
SectionTitle: Resources and Overawards
PageNumbers: 13-18


NEED-ANALYSIS FORMULAS

The Higher Education Act of 1965 (HEA), as amended, provides a
single methodology for determining the Expected Family
Contribution (EFC) and cost of attendance (COA) for all Student
Financial Assistance (SFA) programs. Need-analysis and COA are
discussed in Chapter 2, Section 3. If the student's COA exceeds his
or her EFC, the student has need.

Before awarding aid from campus-based programs, the financial aid
administrator must take into account aid the student will receive from
other SFA Programs. The administrator must also take into account
other resources that the school makes available to its students,
resources about which he or she knows, or resources that the
administrator can reasonably anticipate at the time aid is awarded to
the student. An aid administrator may not award or disburse aid from
a campus-based program if that aid, when combined with all other
resources, would exceed the student's need.

Maximum aid from campus-based programs =
Financial need - Aid from other SFA programs & resources

If, AT ANY TIME DURING THE AWARD PERIOD, the student
receives additional resources that were not considered in calculating
the student's eligibility for campus-based aid and if these resources
combined with the expected financial aid will exceed the student's
need, the amount in excess of the student's need is considered an
overaward.

RESOURCES

Resources, as defined by the campus-based regulations, include but
are not limited to

- funds a student is entitled to receive from a Federal Pell Grant,

- William D. Ford Federal Direct Loans (Direct Loans),

- Federal Family Education Loans (FFELs),

- long-term loans made by the school, including Federal Perkins
Loans (short-term emergency loans are not considered to be a
resource),

- grants, including Federal Supplemental Educational Opportunity
Grants (FSEOGs), state grants, and ROTC living allowances,

- scholarships, including athletic scholarships and ROTC
scholarships,

- waivers of tuition and fees,

- fellowships or assistantships,

- veterans educational benefits,

- income from insurance programs that pay for the student's
education, and

- net income from need-based employment.

[[Determine FWS net earnings]]
To determine the net amount of a student's Federal Work-Study
(FWS) earnings that will be available to help pay for his or her COA,
the school must subtract estimated taxes and job-related costs from
the student's gross FWS earnings (discussed in Chapter 7, Section 2).

Any portion of the above resources that is included in the calculation
of the student's EFC is not considered to be a resource.

The school may treat a Federal PLUS Loan, Direct PLUS Loan,
unsubsidized Federal Stafford Loan, Direct Unsubsidized Loan,
state-sponsored loan, or a private loan as a substitute for a student's
EFC. However, if the sum of the loan amounts received exceeds the
student's EFC, the excess is a resource.

In the above list of resources, the term "need-based employment"
means employment that is awarded by the school itself or by another
entity to a student who demonstrates a financial need for those funds
for the purpose of defraying educational costs of attendance for the
award year. Only income from NEED-BASED employment may be
considered as a resource.

[[Treatment of non-need-based earnings]]
NON-NEED-BASED earnings are not to be considered as a resource
for the current award year because they will be reported as income
on the Free Application for Federal Student Aid (FAFSA) for the
subsequent award year and will be used to calculate the EFC for that
award year.

[[Treatment of veterans educational benefits]]
Veterans EDUCATIONAL benefits are not included in the EFC
formulas; therefore, these benefits must be treated as a resource
when determining the amount of a student's financial need from the
campus-based programs and must be treated as estimated financial
assistance in the FFEL Program and the Direct Loan Program. The
veterans educational benefits to be treated as a resource/estimated
financial assistance are listed in Chapter 2, Section 3.

NONEDUCATIONAL veterans benefits are not counted as a
resource or estimated financial assistance, as they are already
counted in the EFC formula as nontaxable income. Noneducational
veterans benefits include Death Pension and Dependency and
Indemnity Compensation (DIC) benefits.

OVERAWARDS

[[Consolidated overaward provisions--34 CFR 673.5]]
A financial aid administrator may not award or disburse aid from a
campus-based program if that aid, when combined with all other
resources, would exceed the student's need. If a student who has
already been awarded a financial aid package later receives
additional resources that cause his or her financial aid package to
exceed his or her need, the amount in excess of the student's need is
considered an overaward. There is now a $300 overaward threshold
for all campus-based programs. The $300 threshold is allowed only
if an overaward occurs after campus-based aid has been packaged.
The threshold does not allow a school to deliberately award campus-
based aid that, in combination with other resources, exceeds the
student's financial need.

STEPS TO TAKE IF THE RESOURCES EXCEED NEED

If a school learns that a student has received additional resources that
were not included in calculating the student's eligibility for aid from
the Perkins Loan, FWS, or FSEOG Program that would result in the
student's total resources exceeding his or her financial need by more
than $300, the school must take the following steps:

[[Overaward with FFEL or Direct Loan in the aid package]]
1. If the student's aid package includes a loan under the FFEL or
Direct Loan Program, the school must first follow the overaward
requirements that are presented in Chapter 10 or Chapter 11,
respectively. Also, a school may attempt to reduce or eliminate
the overaward by changing the function of an unsubsidized loan
(a Stafford Loan, a nonfederal loan, or the parents' PLUS Loan)
from covering need to replacing the EFC.

[[Recalculate need]]
2. If there is no FFEL or Direct Loan in the student's aid package
or if the school eliminates the FFEL or Direct Loan overaward
and if, in either case, the student's total resources still exceed the
student's need by more than $300, the school must recalculate the
student's need to determine whether he or she has increased need
that was not anticipated when the school awarded aid to the
student. If the student's need has increased and if the total
resources do not exceed the increased need by more than $300,
the school is not required to take any additional action.

[[If need has not increased]]
3. If the school recalculates the student's need and determines that
the student's need has NOT increased or that his or her need has
increased but that the total resources still exceed his or her need
by more than $300, the school must cancel any loan or grant
(other than a Pell Grant) that has not already been disbursed.

4. If the student's total resources still exceed his or her need by
more than $300 and his or her resources include a Perkins Loan
and/or FSEOG, the amount that exceeds the student's need by
more than $300 is a Perkins Loan or FSEOG overpayment.

[[Treatment of FWS in aid package]]
For a student employed under the FWS Program, if the school
recalculates the student's need and determines that the student's need
has increased and if the total resources do not exceed that increased
need by more than $300, the school may use FWS funds to pay the
student until the FWS award has been earned or until the student's
increased need has been met. In addition, the school may continue
employing the student under FWS after the full amount of the FWS
award has been earned and the student's financial need has been met;
however, the school may pay the student with FWS funds only up to
the time the income from NEED-BASED employment exceeds the
student's financial need by more than $300. At that point, FWS funds
may no longer be used to pay the student. The school may continue
to employ the student, but funds other than FWS funds must be used
to pay the wages.

OVERPAYMENTS

[[Liability for Perkins Loan or FSEOG overpayment]]
A student is liable for any overpayment of a Perkins Loan or
FSEOG; the school is also liable for any overpayment that was
caused by the failure of the school to follow the procedures in 34
CFR Part 668, Part 673, Part 674, Part 675, or Part 676. If the school
makes a Perkins Loan or FSEOG overpayment for which it is liable,
it must restore an amount equal to the overpayment plus any
administrative cost allowance claimed on that amount to its Perkins
Loan fund for a Perkins Loan overpayment or to its FSEOG account
for an FSEOG overpayment.

[[Recovering overpayment of Perkins Loan advances or FSEOG]]
If the school makes an overpayment of Perkins Loan advances or
FSEOG for which it is not liable (for example, when a student has
made a mistake on the application), the school must promptly
attempt to recover the overpayment by sending a written notice to the
student requesting the repayment of the amount of the overpayment.
The notice must state that, if the student fails to repay the
overpayment, or fails to make arrangements satisfactory to the holder
of the overpayment debt to repay the overpayment, the student is
ineligible for additional SFA funds until final resolution of the
overpayment.

If a student claims that the school has made a mistake in determining
the Perkins Loan or FSEOG overpayment, the school must consider
any information provided by the student and determine whether the
objection is warranted.

[[Collecting an FSEOG overpayment]]
If the school made an FSEOG overpayment for which it is not liable,
and the federal share of an FSEOG overpayment is $25 OR MORE,
the school may be required to refer the overpayment to the U.S.
Department of Education for collection. A school must refer the
FSEOG overpayment case to the Department's Student Receivables
Division for collection if all of the following conditions apply to the
overpayment:

- the school has sent the required notice to recover the
overpayment,

- the school determines that the student's objection (if any) is not
warranted,

- either the school has failed to collect the FSEOG overpayment or
the student has failed to make arrangements satisfactory to the
school to repay the overpayment, AND

- the federal share of an FSEOG overpayment is $25 OR MORE.

If the school is required to refer the FSEOG overpayment to the
Department for collection, the school must identify the Federal share
of the overpayment; the student's name, most recent address, and
telephone number; and other relevant information. See the
Verification Guide for additional information. After referring the
overpayment case to the Department for collection, the school is not
required to make any further attempt to collect the FSEOG
overpayment. If the school is unable to collect the overpayment and
the federal share is LESS THAN $25, the school is not required to
make any further attempt to collect the overpayment.

COORDINATION WITH BUREAU OF INDIAN AFFAIRS
GRANTS

Regulations that apply to the coordination of campus-based aid with
Bureau of Indian Affairs (BIA) grants, formerly in 34 CFR 674.15,
675.15, and 676.15, are now consolidated in the new 34 CFR 673.6.
To determine the amount of campus-based aid for a student who is or
may be eligible for a BIA grant, a school must first develop a
financial aid package without considering any BIA funds. If the total
aid package--after BIA funds are added--does not exceed the
student's need, no adjustment may be made to the aid package. If the
total package plus the BIA grant does exceed need, the school must
eliminate the excess in the following sequence: loans, work-study
awards, and grants other than Pell Grants. (The school may NOT
reduce a Pell Grant or BIA grant.) The school may alter this
sequence of reductions upon the student's request if the school
believes the change would benefit the student. In determining the
amount of financial need for a student eligible for a BIA grant, a
financial aid administrator is encouraged to consult with area
officials in charge of BIA postsecondary financial aid.

Last Modified: 07/01/1998