ERIC ED345637: The Federal Student Financial Aid Handbook, 1992-93.

716 Pages·1992·18.2 MB·English

by  ERIC

DOCUMENT RESUME
ED 345 637
HE 025 532
The Federal Student Financial Aid Handbook,
TITLE
1992-93.
INSTITUTION
Office of Student Financial Assistance (ED),
Washington, DC.
PUB DATE
92
NOTE
722p.
AVAILABLE FROM
Division of Training and Dissemination, ROB-3, Room
4051, Office of Student Financial Assistance, U.S.
Department of Education, 400 Maryland Ave., S.W.,
Washington, DC 20202.
PUB TYPE
Guides - General (050)
MF04/PC29 Plus Postage.
EDRS PRICE
DESCRIPTORS Educational Finance; Eligibility; Federal Aid;
Federal Legislation; *Federal Programs; *Federal
Regulation; Federal State Relationship; Higher
Education; Need Analysis (Student Financial Aid);
Program Administration; *Student Financial Aid;
Student Loan Programs; Work Study Programs
Carl D Perkins Voc and Appl Techn Educ Act 1990; Pell
IDENTIFIERS
Grant Program; Stafford Student Loan Program; State
Student Incentive Grants; Supplemental Educational
Opportunity Grants
ABSTRACT
This handbook, consisting of an introduction and ten
chapters, explains the 19992-93 procedures that higher education
institutions must follow in administering the federal government's
Student Financial Assistance (SFA) programs. Chapter One describes
the organizational structure for areas of the Department of Education
directly involved in the administration of the SFA programs as of
March 1992. Chapters Two and Three cover general requirements that
apply to all the SFA programs. Chapter Two also discusses the federal
processing system. Chapter Three explains how schools and programs
are determined to be eligible and general requirements for a school
to participate in the SFA programs. The remaining chapters address
specific program requirements. Chapter Four, on the Pell Grant
program, explains how to calculate a payment and how to report the
payment to the Department. Chapter Five provides general information,
such as the funding process that applies to all three of the campus
based programs. The specific requirements for each of these programs
are covered in the next three chapters (Chapter Six: Perkins Loans;
Chapter Seven: College Work-Study; Chapter Eight: Supplemental
Educational Opportunity Grants). State grant programs are covered in
Chapter Nine, and the Guaranteed Student Loan Programs are covered in
Chapter Ten. Throughout the text recent changes to existing law and
regulations are identified by a special graphic. (JB)
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Reproductions supplied Ly EDRS are the best that can be made
*
*
from the original document.
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United States
Office of
Department of
Student Financial
Education
Assistance
The Federal Student Financial
Aid Handbook, 1992-93
Introduction
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he Federal Student Financial Aid
Handbook explains the procedures that
schools must follow in administering the
Student Financial Assistance programs
(Which we will refer to as the "SFA
programs"). Some of these procedures are
required by law and regulation, while other
procedures are necessary for the operation of
the Federal processing system and the
various reporting systems for each program.
In this Introduction, we will give an
overview of the SFA programs and the
Handbook, review recent changes to the law
and regulations, and provide a basic glossary
of financial aid terms and acronyms.
INTTRODUCTIONT
The SFA Programs
as explained below. Similarly, the Stafford
We use the term "SFA programs"
Loan, Supplemental Loans for Students, and
throughout this Handbook to refer to the
the PLUS Loan programs are grouped as
student financial aid programs administered
"guaranteed student loan programs."
by the Office of Postsecondary Education
within ihe U.S. Department of Education.
The Pell Grant is generally
(All bu.t one of these programs are
considered the first
authorized by Title IV of the Higher
source of assistance to
Education Act of 1965, thus they are
the student. Despite
frequently referred to as the "Title IV
changes in recent years,
programs.")
the Pell Grant is still a
relatively centralized aid program.
In general, these programs provide funds to
Payment is based on the Pell Grant Index
meet students' educational costs at the
determined by the Federal central
postsecondary level. Most of the programs
processing system. The student must
are based on some form of financial need.
submit a valid Student Aid Report (SAR) to
The major reason for the differences in
the school to receive payment. The Pell
program requirements is the way the
Grant is said to be "portable" because the
programs are structured. For instance, the
student may submit the SAR at any
programs differ in the type of aid given
participating school and be assured of
(grants, loans, or work-study). Thus, many
payment (if the student's SAR has an
of the regulatory requirements for Perkins
eligible Pell Grant Index). That is to say,
Loans concern the use of promissory notes
Pell Grant payments are not limited to the
and repayment schedules, while the College
available funds at the school. The
Work-Study program uses time cards to
Department provides an initial
document the hours worked by the student.
authorization to all schools that participate
Another difference is the way that funds are
in the Pell Grant program, and increases
provided to the student. Because of the
that authorization (if necessary) to allow the
similarities in funding arrangements, the
school to pay awards for all eligible SARs
Perkins Loan, College Work-Study, and
that are submitted to the school during the
Supplemental Educational Opportunity
award year.
Grant programs are usually discussed
together as the "campus-based" programs,
tit
INTRODUCTION
with the other SFA programs, there are
The maximum Pell Grant is expected to be
statutory limits on the amount of campus-
$2,400 for 1992-93, and is limited by law to
based aid an individual student may
no more than 60% of the student's costs.
receive. Most students who have remaining
Thus, the Pell Grant by itself is insufficient
unmet need will be eligible for aid from one
to meet a student's financial need.
or more of the guaranteed student loan
However, additional funds will usually be
programs (see below).
available from one of the following sources.
Some schools that participate in the Pell
There are three "campus-
Grant Program choose not to participate in
based" programs, so
the campus-based programs because of the
named because each
administrative responsibilities involved.
school is allocated funds
For instance, when a school acts as a lender
for the award year based
in the Perkins Loan Program, or as an
on the anticipated financial
employer for the College Work-Study
need of its student body. The three
Program, it must comply with many of the
programs consist of low-interest loans
same legal requirements (such as the Fair
(Perkins), grants (Supplemental Educational
Debt Collection Practices Act and the Fair
Opportunity Grants
SEOG), and part-
Labor Standards Amendments of 1989) that
time employment administered through the
apply to a bank or a business.
school (College Work-Study). In the fall
preceding the award year, the school
The Department also
submits to the Department a fiscal report for
provides funds to State
the past year and an application for funds
agencies for three other
for the coming year (FISAP). The school is
programs. The State
allocated campus-based funds based on the
Student Incentive
data on the FISAP.
Grant (SSIG) is a
matching-funds
Campus-based funding was never intended
program that encourages States to develop
to completely satisfy the financial need of all
student aid programs. Many of the
the school's students. In many cases, the
eligibility criteria are established by the
campus-based programs complement
State agency, although SSIG recipients must
already-existing aid programs at the school.
also meet the same basic eligibility criteria
The school is responsible for selecting the
as for the other SFA programs.
recipients of campus-based aid, and
deciding the amount to be awarded. As
INTRODUCTION
The Office of Student Financial Assistance
school (in the case of a PLUS loan, the check
also administers two scholarship programs
is sent to the parent), and the school releases
(the Byrd Scholarship and the Paul Douglas
the proceeds to the student.
Congressional Teacher Scholarship). These
scholarship programs have different
For Stafford Loans, the Federal government
pays interest to the lender while the student
eligibility criteria than the other SFA
is in school. In addition, the Federal
programs, and are not based on financial
need, but on merit. While the Federal
government pays a "special allowance" to
requirements for these programs are
the lender that makes up the difference
between the interest rate charged to the
described in this Handbook, you should refer
student (8 or 10%) and the prevailing
to materials provided by your State agency
market rate. The special allowance
for its requirements concerning student
payments continue for the life of the loan.
eligibility, program eligibility, and funding
procedures.
Additional guaranteed loan funds are
available through the SLS and PLUS
The guaranteed student loan
programs, though at variable interest rates.
programs (Stafford, SLS, and
The SLS is for independent students, and
PLUS) all have a similar
funding arnngement. The
the PLUS loan is for the parents of
dependent students. Loans from these
principal for the loan is
programs can be considered part of the
provided by private
"expected family contribution," but cannot
lenders.* These loans
exceed the student's remaining need (cost of
are "guaranteed" in the
attendance minus other aid).
sense that the lender is
reimbursed in the event of
While the Department does not provide the
default or cancellation. The school
actual loan funds to the student or parent
certifies that a student is eligible for a loan
borrower, the interest and special allowance
amount on the loan application, which is
costs for Stafford Loans are substantial. The
then sent to the State guarantee agency for
Department also provides funds to the State
approval. If the loan is guaranteed by the
guarantee agencies to cover the cost of
agency and the lender approves the loan,
defaulted loans.
the lender sends the loan amount to the
* In addition to banks and other traditional lending
institutions, some schools act as lenders in these
programs. In some cases, the guarantee agency can
act as a "lender of last resort."
INTRODUCTION
The overall cost of the guaranteed loan
costs. Because lenders provide the principal
programs to the Federal government for the
that is used to make loans to students, the
current fiscal year (FY 1992) is estimated to
guaranteed student loan programs are the
be $4.8 billion, making it the second-largest
largest SFA programs in terms of actual aid
SFA program in terms of appropriations.
provided to students (see chart below). The
Only the Pell Grant Program is larger
Federal budget for FY 1992 projects that
(approximately $5.4 billion).
nearly $13.4 billion will be provided to
students in the form of Stafford, SLS, and
The Federal costs for the guaranteed loan
PLUS loans.
programs are limited to interest and special
allowance payments, and other maintenance
14
12
10
8
6
4
2
0
FY 92 Appropriations
Compared to Awards
Note difference for GSL between amount
(for
appropriated
interest, special allowance, and other expenses) and the amount
projected for actual
(capital supplied by lenders).
awards
-5
INTRODUCTION-
The Handbook and
Other Publications
Chapters Two and Three cover general
The Federal Student Financial Aid Handbook
requirements that apply to all the SFA
consists of ten chapters, covering the SFA
programs. Most of these requirements are
programs from the point of view of the
based on the General Provisions regulations
school's financial aid administrator.
(34 CFR Part 668). Student eligibility
requirements, such as citizenship,
The first chapter describes the
satisfactory progress, and financial need are
organizational structure for
covered in Chapter Two. Chapter Two also
those areas in the
discusses the Federal processing system,
Department of
including the Federal and non-Federal
Education that are
applications and the Student Aid Report
directly involved in the
that is sent to students who are applying for
administration of the SFA
Federal student aid. Chapter Three explains
programs. Please note that
how schools and programs are determined
this chapter is describes the
to be eligible (based on the Institutional
organization as of March 1992.
Eligibility regulations, 34 CFR Part 600), as
A major reorganization of the Office of
well as the general requirements for a school
Student Financial Assistance is being
such as
to participate in the SFA Programs,
planned and will be announced later in
the use of the financial aid transcript, refund
1992.
Chapter Nine
Chapter Five
Chapter One
State Grant Programs
Campus-based Programs
Organizational Structure
(Common Elements)
Chapter Ten
Chapter Two
Stafford, SLS, and PLUS
Chapter Six
Student. Eligibility and
Programs
Perkins Loan Program
Financial Need
Chapter Seven
Chapter Three
Institutional Eligibility and
College Work-Stuuy
Administrative Requirements
Chapter Eight
Supplemental Educational
Chapter Four
Opportunity Grant Program
Pell Grant Program
INTRODUCTION
and repayment procedures, recordkeeping
the Guaranteed Student Loan Programs
and administrative procedures, and
so forth.
(Stafford, SLS, and PLUS) are covered in
Chapter Ten.
The remaining chapters of the Handbook
(Four through Ten) are devoted to specific
The Handbook summarizes most of the
program requirements. The Pell Grant
regulatory and statutory requirements for
Chapter explains how to calculate a
the SFA programs, but there are several
payment, and how to report the payment to
related publications that address special
the Department using Part 3 of the Student
topics of interest to financial aid
Aid Report.
administrators. The Pell Grant Formula and
the Congressional Methodology booklets
Chapter Five provides general information,
explain how the Pell Grant Index and the
such as the funding process, that applies to
Family Contribution are calculated. The
all three of the programs known
as
Counselor's Handbook discusses the
"campus-based" programs. The specific
application process and explains how to
requirements for each of the campus-based
make corrections or other changes to
programs are covered in the next three
application information. The Verification
chapters (Chapter Six
Perkins Loans,
Guide describes the procedures to be used in
Chapter Seven
College Work-Study,
verifying student and parent information on
Chapter Eight
Supplemental Educational
the application. These publications are
Opportunity Grants).
developed by the staff of the Development
Section in the Division of Training and
State grant programs (SSIG, Byrd, and
Dissemination.
Douglas) are covered in Chapter Nine, and
Note: If you have questions or comments about one of these chapters, please feel free to contact the
writer-editor who prepared the chapter, as listed below. Please do not call the writer-editors to
request copies of the Handbook or other publications. A limited additional supply of these
publications is kept for distribution by the Federal Student Information Center. (Toll-free number:
(800)4 FED AID)
Chapters One and Nine
Dave Rives [phone]
Chapter Two (and Pell Formula Book,
Counselor's Handbook)
Dena Choice [phone]
Chapter Three (and Verification Guide)
Tamela Booze [phone]
Chapter Four (and Student Guide)
Lynn Trundle [phone]
Chapters Five through Eight
(and Congressional Methodology)
;oyce Bowen [phone]
Chapter Ten
Molly Connally [phone]
7-
INTRODUCTION-
reporting procedures for schools
Other reference materials for the SFA
participating in the SFA programs. The
programs include a compilation of
Department's Payment Management System
regulations affecting the SFA programs, and
provides a User's Manual for the Automated
indexes of the publications. These
Clearinghouse/Electronic Funds Transfer
publications are prepared through contract
system, a "direct deposit' system which
by the Informafion Section of the Division of
provides SFA funds to participating schools.
Training and Dissemination.
(The current User's Manual is dated April
1989.)
While the Handbook and other related
publications serve as comprehensive
Finally, the Office of Inspector General
reference documents for financial aid
periodically revises its Audit Guide for the
administrators, there are other resources
SFA programs. The Audit Guide gives an
that serve more specialized needs. Several
overview of the SFA programs from an
organizational units develop and distribute
auditor's perspective, and identifies areas of
manuals or other materials describing
Federal program compliance that must be
operating procedures for the Recipient Data
reviewed by the auditor. The most recent
Exchange (RDE), the Electronic Data
Audit Guide was issued in March of 1990.
Exchange (EDE), the Electronic FISAP
(report and application for campus-based
program funds), and the Electronic DRAP
(default reduction assistance for Perkins/
NDSL). If you participate in one of these
automated data systems, you will
automatically receive these materials.
Updates on changes in procedures and
policy are provided to the financial aid
community in the form of "Dear Colleague"
letters throughout the award year.
Two publications covering procedures for
fiscal officers were distributed to schools in
1989. The Blue Book (dated December 1988)
i
describes accounting, recordkeeping, and