Department of Higher Education
MDHE Digest Online
Printable Version
October 2009


Q: We have a prospective 18-year old, first-time student who does not possess a high school diploma or its equivalent (e.g., GED, home school, etc.) and has not taken an Ability-to-Benefit test. Are there any other options available for this student to receive financial aid?

A: The 2008 HEOA expanded the Ability To Benefit (ATB) provision to allow for students who have satisfactorily completed six credit hours or the equivalent that apply toward a degree or certificate at your institution. Once a student satisfactorily completes six credit hours, the student then is considered to have the ability to benefit and is eligible to receive federal Title IV student aid. The student is not eligible to receive Title IV funds for the six credit hours taken to prove ATB.

DCL GEN-08-12, page 93

http://ifap.ed.gov/fsahandbook/attachments/0910FSAHbkVol1.pdf

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Compliance Tidbit: R2T4

Is your institution properly returning aid from a resulting "Return to Title IV" (R2T4) calculation? Federal regulations specify the order in which Title IV funds should be returned. Per 34 CFR 668.22(i), aid should be returned in the following order:

  1. Unsubsidized Stafford Loans (FFEL)
  2. Subsidized Stafford Loans (FFEL)
  3. Unsubsidized Stafford Loans (Direct)
  4. Subsidized Stafford Loans (Direct)
  5. Perkins Loans
  6. PLUS Loans (FFEL)
  7. PLUS Loans (Direct)
  8. Grants
    1. Pell
    2. AGC
    3. SMART
    4. FSEOG
    5. TEACH

If your institution is not currently returning funds in the above-mentioned order, it is important to revise your institutions policies and procedures. Returning the funds in this order not only ensures compliance with federal regulations, but provides the greatest benefit to your students.
In the Spotlight: St. Louis College of Health Careers

St. Louis College of Health Careers' (SLCHC) default prevention plan is built on the philosophy that schools must prevent "high risk" students from becoming entrapped in debt. SLCHC views it as their responsibility to educate students in successful ways of budgeting, managing debt, and ultimately in completing their educational goals and being financially stable.

After extensive profiling of previous years' defaulted borrowers, changes are made to the default prevention plan each year, as needed. New initiatives are developed to address the specific needs of their student population. The College has now partnered with a consumer credit counseling organization to provide free services to their students. The organization also conducts a four-hour financial literacy workshop reviewing not only credit, but consumer rights, insurance needs, and investing. This workshop is mandatory for all students requesting a loan increase above their direct tuition cost, but is available to all interested students.

By utilizing community resources outside of the school, SLCHC is able to provide their students with a wide variety of services and tools which foster program completion and loan repayment.

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Economic Tidbit courtesy of the MDHE Default Prevention Team: Saving Is the New Spending

If the recession has hindered your ability to save money, it's time to evaluate your spending patterns. With some expert advice from Jason Alderman, director of Practical Money Skills for Visa Incorporated, you'll be well on your way to rebuilding your savings account before the economy rebounds.

One small silver lining from the recent economic downturn is that people have begun saving again. For decades personal savings rates hovered around 10 percent of after-tax income, but beginning in the late 1980s, rates steadily declined.

As the stock market soared, so did home values and 401(k) balances. Many people felt richer - at least on paper - and the lessons learned during the Great Depression about saving for hard times faded into distant memory.

But today, as usually happens during severe recessions, the average savings rate has begun rising again. Why this turnaround? Financial experts cite many reasons:

  • People fear losing their jobs and want a financial safety net.
  • Those approaching retirement need to boost their net worth slashed by plummeting home values and retirement accounts.
  • Costs for high-ticket items like medical expenses, college and retirement have far outpaced the rate of inflation.
  • Many fear future funding for government-provided benefits like Social Security and Medicare is at risk.
  • Lending standards have become much more stringent, so qualifying for loans and credit is more difficult.

Although increasing savings during tough times would seem to be much more difficult than during prosperous times, clearly many people have figured out how. Here are a few strategies for building your savings:

  • Track spending. Write down every cent you spend for a month on food, gas, clothes, entertainment - everything. Review the list and see what you could live without or at least reduce. For example, brown-bagging once a week would save 20 percent on your lunch budget - hundreds of dollars a year.
  • Shop for better rates. Compare checking and savings account interest rates at www.bankrate.com/checking.aspx. Also, the Credit Union National Association can help you find credit unions you may be eligible to join (www.creditunion.coop/cu_locator).
  • Reduce fees. Banking and credit card fees for things like overdrafts and late payments can quickly erode interest earnings, so carefully monitor your balances and account activity. Bouncing one less check a month could save hundreds of dollars a year.
  • Pay down debt. Earning 2 percent on savings is quickly offset by interest paid on credit card balances carried forward, so always try to pay more than the minimum amount due.
  • Review insurance policies. Shop around for better car and homeowner's insurance rates; you can always ask your current carrier to match better rates found elsewhere. And consider raising deductibles, which can save hundreds of dollars.
  • Avoid "retail therapy." Before hitting the mall, shop your own closet for "had-to-have" outfits still on their original hangers. Check your pantry for duplicate products as well.
  • Save energy. Visit www.energystar.gov for tips on reducing home energy consumption and to learn about relevant rebates and tax credits.
  • Drive your car an extra couple of years - you'll save thousands of dollars on depreciation and reduce your insurance premium.

For additional savings strategies, as well as links to other helpful sites, visit America Saves (www.americasaves.org). Another good resource is Practical Money Skills for Life, Visa Inc.'s free personal financial management program (www.practicalmoneyskills.com), where you'll find a comprehensive guide to saving, budgeting and much more.

By Robert Powell, MDHE Policy Analyst

Robert Powell

A brief summary of financial aid related national news items is listed here, along with links for further information.

SAFRA passes in House, now in the hands of the Senate

On Sept. 17, 2009, the U.S. House of Representatives passed H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009 (SAFRA)  by a vote of 253 Ayes to 171 Nays. The bill is currently awaiting action with the Senate Health, Education, Labor and Pensions (HELP) Committee. The House version of this bill would enact major changes to the Pell, Perkins, FFEL and Direct Loan programs.

Volumes 3 & 6 of the 2009-2010 FSA Handbook released

In September and October, The USDE released the final two volumes of the 2009-2010 Federal Student Aid (FSA) Handbook. These volumes incorporate the recent statutory changes from the Higher Education Opportunity Act of 2008 (HEOA).

Volume 3 - Calculating Awards & Packaging
Volume 6 - Managing Campus-Based Programs

The USDE also released in October, the 2009-2010 Counselors and Mentors Handbook on Federal Student Aid.

FY 2007 Official Cohort Default Rates released

The FY 2007 official cohort default rates were released on Sept. 14, 2009.  In conjunction with this, the USDE also released a briefing on the national default rates and announced the availability of the Electronic Cohort Default Rate Appeals Process Release 2.2.

USDE announces establishment of negotiated rulemaking committees

On Sept. 9, 2009, the USDE published a notice regarding the establishment of two negotiated rulemaking committees.  The first team will deal program integrity issues while the second team will address foreign school issues.

Department issues guidance regarding minor prior year charges

On Sept. 8, 2009, the USDE issued Dear Colleague Letter GEN-09-11 regarding minor prior year charges. The letter is in response to questions regarding compliance with regulatory changes made to the minor prior year provision effective July 1, 2008. The change increased from $100 to $200 the maximum amount of prior year charges that may be paid with current year funds, but removed the provision that allowed an institution to pay for prior year charges above that amount under certain circumstances.

Revised Perkins MPN released

The revised version of the Perkins Master Promissory Note and Addendum is now available, and the implementation deadline for the revised MPN is Dec. 31, 2009. More information is available in the following Dear Colleague Letters:  CB-09-05, CB-09-06  and  CB-09-07

Draft FAFSA and SAR available for public comment

The USDE has released draft versions of the 2010-2011 Free Application for Federal Student Aid (FAFSA) and Student Aid Report (SAR) for public comment.
Fall Workshop Wrap-up and Q&A

The MDHE's annual fall workshops present an opportunity for Missouri's financial aid community to take advantage of free trainings in addition to learning more about how financial aid offices across the state are meeting the demands of postsecondary students. With looming industry changes on both the state and national levels, more than 200 financial aid professionals traveled from near and far to participate in workshops held in Columbia, Kansas City, Springfield, and St. Louis.

Fall workshop participants attended a variety of sessions designed to help increase their knowledge of state scholarship and grant programs, federal and state regulations, financial literacy practices, and Missouri's strategic plan for higher education, Imperatives for Change. Session topics covered during this year's fall workshops included:

For your convenience, all slideshows and handouts from the presentations are available on the MDHE Web site.

Thanks to the feedback acquired through workshop evaluation forms, we have a very helpful tool to help us determine future session topics. Thank you to all who returned the form. The evaluations also allow us to gauge our performance and, therefore, assist us in delivering even more effective, useful events in the future. The goal of any MDHE training is to provide you with the most relevant information, so your comments and suggestions are always welcomed and given due consideration.
We were appreciative of positive comments like these from you, our valued customers:

  • "All presenters were great - very knowledgeable."
  • "Thank you for the session on creating digital forms!"
  • "I had no idea the MDHE conducted school program reviews...good information."
  • "Thank you for offering the workshops for free!"
  • "I love the MDHE's financial literacy ladies."
  • "Thank you for the broad range of session topics."

Questions and Answers
We've highlighted a few of the questions presented by attendees at the various workshop locations. If you have additional questions, please contact your client service representative.

Q: Can you edit fields once a scanned document has been converted to a fillable PDF?
A: Yes, you can edit fields once a scanned document has been converted to a fillable PDF. In fact, once you import the scanned document and use the Forms Wizard to make it fillable, Adobe will take you straight to the form view. This action allows you to manipulate the form and add any necessary information.

Q: Can I inactivate more than one student at a time on FAMOUS?
A:  Inactivation occurs on the individual student record so it is necessary to inactivate students one at a time as each student is retrieved. However, the MDHE will consider adding the capability to inactivate multiple students at once as a future enhancement.

Q: Will the Imperatives for Change Plan focus on regional gaps in education?
A: Yes, the MDHE is working with the various sectors (public/independent/two and four-year) to see what gaps are present in the system and to determine strategies to address these issues. The Missouri P-20 Council has also directed attention towards this initiative by developing regional councils to address the individual needs of a region, along with the resources that are relative and available to that area. To date, regional councils have been established in the northeastern, southeastern and southwestern portions of the state. Discussions are underway to establish additional regional councils in central Missouri. The MDHE will continue to work with the various P-20 regional councils and institutions across the state to address any areas of concerns that may strengthen and produce a more efficient higher education system.

Q: How often should we update policies and procedures?
A: Policies and procedures should be updated as changes are made within your institution and as changes in federal law and/or regulations are mandated. It is a good practice to have one person assigned in each office to periodically and routinely update or coordinate all financial aid policies and procedures. All offices involved in the administration of Title IV programs should be included in the development and maintenance of an institution's policies and procedures. As stated on a Policies and Procedures template page found on IFAP, it is also suggested that a review of all policies and procedures be completed on an annual basis. The MDHE suggests utilizing the management enhancement worksheet located on IFAP at management enhancement worksheet and the FSA Assessment tools at FSA Assessment. Schools should follow recent guidance issued by DE via Electronic Announcement dated 09-10-09.

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College Goal Sunday 2010

The Missouri Association of Student Financial Aid Personnel (MASFAP) has managed the College Goal Sunday (CGS) program in Missouri for the last five or six years. Beginning with the 2010 CGS program, the MDHE is partnering closely with MASFAP to offer an expanded program in Missouri. Some of the exciting changes to CGS include:

  • Three dates will be offered. Historically, CGS has occurred on the first Sunday following the Super Bowl. For instance, in 2009 the date fell on Sunday, February 8. Although this is early enough to be before most Missouri institutional aid deadlines, which typically are scheduled for late February through March, most families have not yet completed their tax returns this early. The three dates tentatively selected for 2010 are Sunday, February 21, Saturday, March 6, and Sunday, March 21. Each 2010 site will be allowed to select which of the three dates to offer. Dates and sites will be finalized soon and officially announced at the Fall MASFAP conference as well as in the November Digest.
  • The name will be changed. Because not all CGS events will be on Sundays, it may be confusing to use the name "College Goal Sunday." The MDHE and MASFAP discussed naming options with the MDHE's high school counselor advisory committee, and decided to use the name "FAFSA Frenzy" for 2010. This term has been used by the Missouri Western CGS site for the last several years, and counselors agreed that using "FAFSA" in the title was critical. (Note: The CGS logo, colors, and branding will continue to be used on all promotional materials.)

As in past years, volunteers will drive the success of the 2010 CGS program. Missouri's financial aid community will be of critical importance, and more information will be available soon regarding how you can sign up to help at a CGS site near you.

If you have any questions regarding FAFSA Frenzy/CGS in Missouri, you may contact Julie Meyer, Angie Beam (MASFAP Early Awareness Committee co-chair), or your MDHE client service representative.
SAT Fee Waivers Available for Qualifying Students

With recent changes in the nation's economy, high school counselors may see an increase in the number of students who are struggling to pay registration fees for the Scholastic Assessment Test (SAT). Thanks to a fee-waiver service provided by the College Board, students facing economic hardships are receiving the assistance they need to pursue a postsecondary education.

Since its enactment in 1969, the SAT Program Fee Waiver Service has helped hundreds of thousands of low-income students each year, with the College Board providing approximately $30 million in SAT and SAT-related services free of charge to low-income students who are interested in taking one of the following tests:

Fee waivers for both the SAT and the SAT Subject Tests are available for high school students in the U.S., U.S. territories, and U.S. commonwealths. Fee waivers may be granted to nationals of countries other than the U.S. who live and test in the U.S., U.S. territories, or U.S. commonwealths, and who meet the eligibility requirements.

In addition, fee waivers for the SAT are available for juniors and seniors only, while eligible high school students in any grade can qualify for SAT Subject Test fee waivers. Students interested in obtaining a waiver must inform their high school counselor of the date in which they intend to take the SAT. When determining eligibility for SAT fee waivers, the College Boards advises high school counselors to combine their knowledge of individual student circumstances with its test-specific guidelines. Based solely on household size and family income, the test specific guidelines are in accordance with the United States Department of Agriculture's Income Eligibility chart, which is used to determine eligibility for the Federal Free and Reduced Lunch Program.

For additional information regarding SAT fee waivers, education professionals should visit the "For Professionals" section of www.collegeboard.com.

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Updates to the Eligible Lender List

Contact: Jill Wilson
(573)526-7356

ADDITIONS: None

CHANGES: None

DELETIONS:

US Bank, OE 804609, 822908, 802844, 814548, 834368
On Sept. 26, 2009, U.S. Bank suspended the origination of FFELP loans until further notice. U.S. Bank will continue to support students and schools by processing school certifications received no later than Sept. 25, 2009. Funding will continue as scheduled for all approved loans. However, loans must be fully disbursed by Sept. 15, 2010.  

Key Bank, OE
On Oct. 8, 2009, Key Bank announced it will suspend its origination of new FFELP loans beginning Dec. 5, 2009. This means that a completed application must be guaranteed, school certified, credit approved, and have a valid MPN on file by 5:00 p.m. EST on Dec. 4. Additionally, all loans must be fully disbursed by March 31, 2010.
Missouri Department of Higher Education
3515 Amazonas Drive, Jefferson City, MO 65109
(573) 751-2361 - www.dhe.mo.gov