Summary of Federal Laws

 

Financial Aid Programs

 

Higher Education Act of 1965 as amended                                           

Compliance Partners

Director of Financial Aid

General Counsel

Senior Associate Director of Financial Aid

20 U.S.C. §§ 1070-1099; 34 C.F.R. § 668.1 et seq.

(click here for accounting and reporting requirements not specifically about the financial aid program)

 

General Information on the Higher Education Act

The 1976 amendments require the university to give all students and prospective students information about the academic program and standards that must be met, as well as accreditation information.  Costs and refund policies must be listed.  Detailed information about financial aid must be provided, including information on how to contact the university's financial aid officer.  Exit counseling must be made available to those who have incurred student loans.  In 1991, Congress deleted the six-year statute of limitations for collecting student loans.  See 20 U.S.C. § 1091a.   If an institution causes a Federal Stafford, Federal SLS, or Federal PLUS Loan to be disbursed to an ineligible student or Federal PLUS Loan borrower for which it is not liable in accord with 34 C.F.R. § 668.138, it shall assist the Secretary in recovering the funds by notifying the lender that the student has failed to establish eligibility.  See 34 C.F.R. § 668.139.

 

Per the 1998 amendments, if a student is convicted of a federal or state offense involving possession or sale of a controlled substance, the student will be ineligible to receive student aid for specified periods of time.  Beginning in academic year 2000-01, the Department of Education will collect information from each school regarding costs incurred by the university in providing education, the cost of attendance, the amount of financial assistance received, and the number of students receiving the same.  Information collected will be made available to parents and students.  Federal financial aid is not subject to garnishment. See 20 U.S.C. § 1095(a) (Section 490 of the Higher Education Amendments of 1998, 112 Stat. 1753); 34 C.F.R. § 668.161(b).

 

NCES and OPE Announce Release of the HEOA Net Price Calculator

The net price calculator is a template that schools can use to create the net price calculator that schools must have on their websites by Oct. 29, 2011. Schools may use the Department's template, or develop their own as long as it uses the data elements in the DOE template. Schools are encouraged to make this tool available sooner if possible. The net price calculator uses both student entered and school provided data to come up with an estimated price of attendance, which uses the formula of prince of attendance minus grant aid. Schools might want to note when posting that these estimate are not binding upon the institution, but rather a good faith estimate based upon price of attendance and financial aid provided to students in a given income category in a given year.

 

 

 

Final Regulations, Federal Perkins Loan Programs, Federal Family Education Loan Program, and Wm. D. Ford Federal Direct Loan Program, 74 Fed. Reg. 55972 October 29,2009

These final rules are effective July 1, 2010, but lenders, guarantee agencies and loan servicers may at their discretion implement then Nov. 1, 2009. There are no differences between final and proposed resulting from public comments. 

Final Regulations;  Institutional Eligibility Under the Higher Education Act of 1965, as Amended, and the Secretary's Recognition of Accrediting Agencies, 74 Fed. Reg. 55413 Oct. 27, 2009
Effective July 1, 2010. The Secretary amends its regulations governing institutional eligibility and the Secretary's recognition of accrediting agencies. These regs implement changes resulting from
enactment of the Higher Education Reconciliation Act of 2005 (HERA), and the Higher Education Opportunity Act (HEOA), and  clarify, improve, and update the current regulations.

Final Regulations; Institutions and Lender Requirements Relating to Education Loans, Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program, 74 Fed. Reg. 55625 Oct. 28, 2009
Effective July 1, 2010, some of the provisions may be implemented sooner by the institutions.

 

The Higher Education Opportunity Act II: Student Lending Related Reporting and Disclosure Requirements, NACUANOTE Sept. 16, 2008 by NACUA member Kate Tromble (Drinker Biddle).

 

HEA Blackline of Higher Ed Opportunity Act: Shows how text currently reads, with changes.

 

Additional Certification Requirement Under Higher Education Opportunity Act:

20 USC § 1011m  Certification regarding the use of certain Federal funds. Effective August 14, 2008 each institution must annually “demonstrate and certify” to the Secretary of Education that it has not used any funds under the Higher Education Act to attempt to influence a member of Congress in connection with any federal grant, contract, loan, or cooperative agreement. No student aid funding under HEA may be used to hire a registered lobbyist or to pay for securing an earmark. See the NAICU Quick Guide on this new provision.

 

Student Loan Sunshine Provisions in the HEOA (Effective August 14, 2008)
A number of changes to the statute (45 pages) were made by this law that are intended to prevent conflicts of interest. Issues include prohibitied inducements, new disclosures to students, and a requirement for a code of conduct. Schools can be held liable for actions of the institution affiiated organizations, such as an alumni org, an athletic org, a professional organization, etc. See the NAICU HEA Quick Guide for more on this issue, and complete statutory text. Note that to the extent the new law conflicts with the November 2007 final regulations in this area the regulations are superseded by the new law.

 

May 9, 2008 Dept. of Education Guidance on Preferred Lender Lists:

This letter addresses the changing credit market since the final regulations were published Nov. 1, 2007 (see below) and gives schools some flexibilty on preferred lender lists and the requirement for listing at a minimum three lenders.  A school that can't id three lenders may give the parents/students names of lenders that will make FFEL loans to borrowers, with clarification that the school is not endorsing the lenders. The school must state a student can choose any FFEL Lender. The school, if it can't find three lenders, can also give students a comprehensive list of lenders that have made loans in the past, with a clear statement that the borrower can choose any lender. Upon review, the Dept. has determined that the Nov. 2007 regulations, which are effective July 1, 2008, only require that three lenders on the school's preferred lender list must be unaffiliated. As a best practice, schools should id, as part of any preferred lender list disclosures, any affilations among the lenders on the preferred lender list.

 

 

72 Fed. Reg. 62013, (Nov. 1, 2007) Final Rule effective July 1, 2008 on electronic disbursement of Title IV Funds. Regulates the use of bank debit cards to disburse financial aid, along with other items. The final rule also amends the definition of full time student, academic year, graduate or professional student, and undergraduate student, among other terms. Section 668.164(b)(1)(ii) is amended to make clear that an institution may disburse Perkins Loan funds, within each payment period, at such time and in such amounts as it determines best meets the student's needs. Another change requires the use of the payment period that ends later for Return of Title IV Funds calculations for a student who withdrew from a credit hour program that is measured in nonstandard terms that are not substantially equal in length, when the student received aid under both payment period definitions--one for Title IV grant and Perkins Loan funds, and one for FFEL and Direct Loan funds.

 

These regulations require an institution to disburse directly to a student, as soon as possible, but no later than 45 days after the date of the institution's determination that the student withdrew, any amount of a post-withdrawal disbursement of grant funds that is not credited to the student's account. An institution may not delay its disbursement processes in order to ascertain whether a student wishes to receive the grant funds to which the student is entitled. However, while the institution is processing the disbursement it may, at its discretion, notify the student that it may be beneficial to turn down all or a portion of the grant funds to preserve the student's grant eligibility for attendance at another institution. Of course, if a student independently contacts the institution and declines receipt of a grant disbursement, the institution is not required to make the disbursement.

 

NB: This is not a full summary of the new rule. A summary of the proposed rule can be found on the NACUBO web site. Check the NASFAA cite for a Q and A on the rules.

 

72 Fed. Reg. 61959 (Nov. 1, 2007) Final Rule to Strengthen and improve the administration of the Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program. These final regulations, effective July 1, 2008, address preferred lender lists, prohibited inducements, and permissible activities. For a complete summary of the ways in which the regulations differ from the proposed rule (summarized below) read Final Regulations on Loans Include Some Surprises from NASFAA.

 

Selected Case law

 

United States ex rel. Jeffrey E. Main v. Oakland City University, No. 05-2016 Amicus Brief of American Council on Education (ACE) filed in support of the Defendant/Appellee Oakland City University's petition for rehearing and rehearing en banc of the October 20, 2005 Seventh Circuit Court of Appeals opinion in this case. The case involves an alleged violation of the Title IV rules prohibiting incentive compensation. As the case was brought as a qui tam action, the holding by the court in favor of Main greatly increases the chance that universities accused of breaking one of the incentive compensation prohibition  rules could also be accused of making a false claim against the government. See the ACE summary dated Nov. 10, 2005 for more on this issue.

 

Resources

 

The Higher Education Opportunity Act of 2008

 

 ACE Analysis of Higher Education Act Reauthorization: This document contains a concise summary of the many new reporting, disclosure and other compliance requirements included in the Higher Education Equal Opportunity Act. (HR 4137) See also Section 1098 of the law as revised, which contains text requiring the Advisory Committee on Student Financial Assistance to develop and maintain an information clearinghouse to help institutions of higher education understand the regulatory impact of the Federal Government on institutions of higher education from all sectors, in order to raise awareness of institutional legal obligations and provide information to improve compliance with, and to reduce the duplication and inefficiency of, Federal regulations.

 

April 2007 ACE Paper: Background Information for Presidents and Chancellors on the Recent Controversy Involving Student Loans and Chart on the New York Code of Conduct and Federal Regulations.

NACUA Resource Page on Preferred Lender Program Investigations and Practices (password protected)

IFAP Library: Information for Financial Aid Professionals for Dear Colleague Letters  and presentations from the annual NASFAA Conference.

 

Federal Student Aid training for Financial Aid Professionals on HERA.