October 2009

Compliance Questions & Answers

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.