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

Institutional Eligibility and Administrative Requirements - Agreements Between Schools

AwardYear: 1997-1998
EnterChapterNo: 3
EnterChapterTitle: Institutional Eligibility and Administrative Requirements
SectionNumber: 5
SectionTitle: Agreements Between Schools
PageNumbers: 135-138

Two or more institutions may enter into a consortium or contractual
agreement so that a student can continue to receive SFA funds while
studying at a school or organization other than his or her "home"
institution. (The home school is the one that will grant the student's
degree or certificate.) The specific requirements for such agreements
are discussed below.

Under a consortium or contractual agreement (including those for
study abroad programs), the home school must give credit for the
courses taken at the other school(s) on the same basis (in terms of
instructional time) as if it provided that portion itself. The underlying
assumption of the agreement is that the home school has found the
other school's or organization's academic standards to be equivalent
to its own, and a completely acceptable substitution for its own

However, the Department has issued new guidance which permits a
home school to decline to give credit for courses in which a student
earns a grade of "D" at the other school. Previously, Department
guidance required a home school to treat credits earned through
contracted coursework in exactly the same manner as those earned at
the home school. For example, a home school was required to accept
grades of "D" even if the school had a policy of not accepting grades
below a "C" when a student transfers from another school.

Under the new guidance, although a home school has a policy of
accepting grades of "D" or above earned at the home school, it does
not have to accept credits earned for courses at the other school for
which a student earns a "D."

As in the past, grades received through contracted coursework do not
have to be included in the calculation of the student's grade point
average (GPA).


A consortium agreement, which can exist between eligible schools
only, can apply to all the SFA Programs. Under such a written
agreement, students may take courses at a school other than the
"home" institution (the school where the student expects to receive a
degree or certificate) and have those courses count toward the degree
or certificate at the home school.

[[Elements of a consortium agreement]]
There is no limit on the portion of the eligible program that may be
provided by eligible schools other than the home school. Agreement
contents can vary widely and will depend upon the interests of the
schools involved and the accrediting or state agency standards. The
Department does not dictate the format of the agreement (which can
be executed by several different offices) or where the agreement is
kept. However, certain information should be included in all
agreements, such as which school will grant the degree or certificate,
what the student's tuition, fees, and room and board costs are at each
school, and what the student's enrollment status will be at each
school. The agreement should also specify which school will be
responsible for disbursing aid and monitoring student eligibility and
should include the procedures for calculating awards, disbursing aid,
monitoring satisfactory progress and other student eligibility
requirements, keeping records, and distributing SFA refunds.
Usually, the home institution is responsible for disbursements, but if
the student is enrolled for a full term or academic year at the host
institution, it may be easier for the host institution to monitor the
student's eligibility and make payments. The school paying the
student must return SFA funds if required (for example, in refund or
overpayment situations). For details on how agreements affect
Federal Pell Grant calculations, see Chapter 4.

[[Effective date of the agreement]]
The agreement becomes effective for the payment period in which it
is signed; however, it can be retroactive to a previous payment
period if the payment period is in the same award year. Thus, if an
agreement is signed in the middle of the spring semester, the student
can be paid for the entire award year, including the preceding fall


A contractual agreement is between eligible and ineligible
schools*1* or organizations, as defined in Section 1 of this chapter.
Under such an agreement, the ineligible school or organization
provides, under written contract, a portion of the eligible school's
educational program.

[[Portion of program provided by ineligible school]]
There is a limit on the portion of the program that can be given at the
ineligible school. If both the home and ineligible schools are owned
or controlled by the same individual, partnership, or corporation, no
more than 25% of the educational program can be provided by the
ineligible school. If the two schools are separately owned or
controlled, the ineligible school can provide up to 50% of the
educational program. However, in the case of separately owned
schools, if the contracted portion is more than 25% of the program,
the home school's accrediting agency or state agency (in the case of a
public postsecondary vocational institution) must determine AND
CONFIRM IN WRITING that the agreement meets its standards for
contracting out education services.

[[Home school maintains all records]]
Under a contractual agreement, the eligible school is always the
home school. The home school performs all the aid processing and
delivery functions for its students attending the ineligible school or
organization. The home school is responsible for maintaining all
records necessary to document student eligibility and receipt of aid.
(See Section 7 of this chapter for record requirements.)

[[Examples of contractual agreements]]
"Contracted portion of an educational program" covers situations
ranging from a "junior year abroad" program to a portion of a
cosmetology program given by an ineligible cosmetology school
under contract with an eligible community college or vocational-
technical school. In the traditional academic community, a
baccalaureate institution does not jeopardize its eligible programs if
no more than one academic year is spent by students at an ineligible
institution, such as a foreign institution under the junior year abroad
concept. At schools that predominantly grant associate degrees,
eligible programs are not jeopardized if students spend no more than
one semester or one quarter studying under contract at an ineligible
school. (Of course, students may exceed these limits and take up to
50% of the program at a separately owned school if the school's
accrediting agency has approved the contractual agreement.)


Students usually participate in study abroad or domestic exchange
programs in one of two ways:

- by paying tuition and fees directly to the school the student is
temporarily attending (for example, through an out-of-state tuition
waiver system), or

- by paying tuition and fees at the home school, while taking
courses at another school.

[[Study abroad students are SFA-eligible]]
Some students have had problems receiving SFA Program funds for
study abroad or domestic exchange programs, because neither the
student's home school nor the school the student is temporarily
attending considers the student enrolled in an eligible program of
study. These circumstances have caused otherwise eligible students
to be denied financial assistance at both schools.

The law states that a student participating in a study abroad program
is eligible for SFA funds, regardless of whether the program is
required for the student's regular, eligible program of study, as long
as the student is an eligible regular student enrolled in an eligible
program at the home school. The study abroad program must be part
of a written contractual agreement between the two schools, and the
program must be accepted for credit by the home institution. (The
program does not have be required for the eligible program in which
the student is enrolled at the home institution for it to be accepted for
credit.) The law also includes this item in the Program Participation

*1* An eligible school may not contract with an ineligible school
that has been terminated from SFA participation or has withdrawn
from SFA participation while under a termination, show-cause,
suspension, or similar type proceeding by a state licensing agency,
accrediting agency, guaranty agency, or the Department.

Last Modified: 07/28/1998