Summary: Guidance for helping Title IV participants affected by Hurricane Fran in Maryland, North Carolina, Pennsylvania, Virginia, and West Virginia and Hurricane Hortense in Puerto Rico.
SUBJECT: Guidance for helping Title IV participants affected by
Hurricane Fran in Maryland, North Carolina,
Pennsylvania, Virginia, and West Virginia and
Hurricane Hortense in Puerto Rico.
REFERENCE: This information supplements the guidance given in
Chapters 2-10, Federal Student Financial Aid
The Secretary recognizes the severe impact that Hurricanes Fran and
Hortense have had on Title IV participants located in Presidentially
declared natural disaster areas. As he has done on similar occasions
in the past (for example, after the flooding in Idaho, Maryland, New
York, Ohio, Oregon, Pennsylvania, Virginia, Washington, and West
Virginia earlier this year), the Secretary wishes to assist the victims
of the hurricanes in their recovery by providing certain regulatory
relief to students, schools, lenders, and guaranty agencies in their
administration of the student financial aid programs under Title IV
of the Higher Education Act of 1965, as amended (HEA). This
relief is generally applicable to the 1996-97 award period
(July 1, 1996 to June 30, 1997). However, if specifically indicated,
relief may be extended into the next award year (July 1, 1997 to
June 30, 1998). Relief is provided in anticipation of a Notice to be
published in the Federal Register.
This regulatory relief applies to individuals (and their families)
who, at the time of the disaster, were residing in, employed in, or
attending a school located in, a designated county in Maryland,
North Carolina, Pennsylvania, Puerto Rico, Virginia, or West
Virginia, and to schools, lenders, and guaranty agencies that were
unable to maintain their normal participation and interactions with
Title IV participants because of the hurricanes. Please refer to the
enclosed list of the counties currently declared as disaster areas.
[Note: updates to the list may be obtained by calling the
Department's toll-free number at 1-800-433-7327, Monday
through Friday from 9:00 a.m. to 5:30 p.m. Eastern time.]
This letter also supplements the guidance provided in the
September 17, 1996 letter to guaranty agencies and lenders in the
Federal Family Education Loan (FFEL) Program. A Title IV
participant that deviates from otherwise required actions in its
administration of the Title IV programs on the basis of guidance
offered within this letter must document the action being taken.
The Secretary provides the following guidance and enforcement
relief from regulatory requirements. [Note: discussions are presented
alphabetically by topic within each of the program areas.]
GENERAL PROVISIONS (ALL TITLE IV PROGRAMS)
- Agreements to Permit Study at Another School (§600.9). If a
school is unable to continue to provide a student's eligible program
because of the disaster, the Secretary strongly encourages the
school to establish a contractual or consortium agreement with
another school to enable the student to continue to receive Title
IV aid while studying at the second school. The requirements for
such an agreement are found in §600.9 of the Institutional
Eligibility regulations. Generally, an eligible "home institution"
following these requirements will not face potential liabilities
concerning written agreements if the school enters into an
agreement with another eligible school for this purpose.
- Determining the Date of a Student's Withdrawal (§668.22(j)(3))
The Secretary will not enforce the regulatory deadlines for
complying with the requirement that a school determine the
withdrawal date for a student if the school is unable, because of
the disaster, to make that determination within the required
timeframe. The school will be required to determine that the
student has withdrawn WITHIN 60 DAYS (instead of 30 days)
after the expiration of the earlier of the period of enrollment for
which the student has been charged, the academic year in which
the student withdrew, or the educational program from which the
- Institutional Eligibility, Financial Responsibility, and
Administrative Capability (§600.40(a), §668.15, and §668.16).
If, in future program reviews or audits, the Secretary finds that a
school temporarily failed to meet the standards of fiscal and
administrative capability and the school indicates that this failure
was the result of the disaster, the Secretary will carefully consider
those circumstances described by the school. He will examine
each situation on a "case-by-case" basis and make a determination
as part of the audit or program review resolution process. A
short-term, temporary closure of a school will not, in itself, cause
the school to lose its eligibility.
- Lost Student Records (§668.23). The Secretary recognizes that,
because of the disaster, records and documentation schools in the
disaster area are required to keep on file may no longer be
available or legible. Affected schools are required to attempt to
reconstruct financial aid application data and award data lost
because of the disaster but will not be held responsible for
records and documentation that, because of disaster damage,
cannot be reconstructed. The school must document that the
records were lost due to the disaster.
- Need Analysis. No special aid received by victims of the disaster
from the Federal Government or the State for the purpose of
providing financial relief will be counted as income for the
purposes of calculating a family's expected family contribution
(EFC). This aid may take the form of grants or low-interest loans.
[Note: may apply to the 1997-98 award year.]
- Other Resources. No special aid received by the victims of the
disaster from the Federal Government or the State for the purpose
of providing financial relief will be counted as other resources or
estimated financial assistance for the purposes of determining
need. This aid may take the form of grants or low-interest loans.
[Note: may apply to the 1997-98 award year.]
- Professional Judgment. Section 479A of the HEA specifically
gives the financial aid administrator (FAA) the authority to use
professional judgment to make adjustments on a "case-by-case"
basis to the cost of attendance or to the values of the items used in
calculating the EFC toward meeting the student's cost of
attendance to reflect the student's special circumstances. The use
of professional judgment in Federal needs analysis is discussed in
Chapter 2 of the Federal Student Financial Aid Handbook and
in Part II of the Counselor's Handbook for Postsecondary Schools.
For THE CAMPUS-BASED, DIRECT LOAN, AND FEDERAL
FAMILY EDUCATION LOAN (FFEL) programs, the Secretary
is encouraging FAAs to use their professional judgment in
determining whether to make adjustments to the data used to
calculate a student's EFC in order to reflect more accurately his or
her financial need and provide some relief to a student whose
need requirements may have changed due to the economic losses
caused by the disaster. An FAA still must make adjustments on a
"case-by-case" basis and clearly document the student's file with
the reasons for any adjustment.
For the FEDERAL PELL GRANT PROGRAM, there are no
special conditions on which to "adjust" a student's EFC when the
student suffers, or the student's family suffers, economic loss
through a natural disaster. Instead, as in the case with the other
Title IV student financial aid programs, to provide relief for
disaster area victims, the Secretary is encouraging FAAs to use
their professional judgment to determine whether adjustments
to a student's data will more accurately reflect a student's
personal circumstances. An FAA must make adjustments on
a "case-by-case" basis and clearly document the student's file with
the reasons for any adjustment.
If the FAA makes adjustments to a student's data, the SAR must
be returned to the Central Processing System (CPS), or reported
to the CPS through the Electronic Data Exchange. The adjusted
data will then be processed through the CPS, and a new EFC
will be calculated. Please note that if a student is not eligible and
is unlikely to become eligible for a Federal Pell Grant, a school
need not resubmit professional judgment adjustments through
- Satisfactory Academic Progress (34 CFR 668.34 and §668.16(e)).
The Secretary will not enforce satisfactory academic progress
standards in the situation in which a student fails to meet the
school's satisfactory academic progress standards due to the
disaster. In this situation, the Secretary encourages the school to
refrain from applying its satisfactory academic progress
standards, at least where their application would disqualify a
student from receiving Title IV aid. The school must, in this case,
document in the student's file that the student's failure to maintain
satisfactory academic progress was due to the natural disaster.
- Transfer Students (§668.19). The school to which a student is
transferring must make an effort to obtain the records and
documentation required to disburse or deliver Title IV aid. If this
information is not available as a result of damage caused by the
disaster, the school to which the student transferred will not be
held responsible for collecting the information nor will the
student be held responsible for providing the information. Any
school affected by this situation should document that the
information is unavailable due to the disaster. [Note: may apply
to the 1997-98 award year.]
- Tuition Refunds or Credits (§668.22 and Appendix A). The
Secretary strongly encourages a school to provide a full refund of
required tuition and fees or a credit in a comparable amount
against future tuition and fees to a student who has been unable to
complete course requirements because he or she is a victim of the
- Verification (34 CFR 668 Subpart E). The Secretary will not
enforce the verification requirements during the award year for
those applicants selected for verification whose records were lost
or destroyed because of the disaster. A school must document the
student's file when it does not perform verification for this reason.
For these students, Verification Status Code "S" may be used to
report a Federal Pell Grant disbursement. [Note: may apply to
the 1997-98 award year.]
FEDERAL WORK-STUDY (FWS) PROGRAM
- Community Services (§675.2). The Secretary encourages
schools to employ their FWS students in the cleanup and relief
efforts for the communities affected by the disaster. These efforts
would be considered part of the school's community services
activities under the FWS Program.
FEDERAL PERKINS LOAN PROGRAM
- Borrowers in an "In-School" Status (§674.31). The Secretary
will consider that any borrower who was in an "in-school" status
at the time of the natural disaster and was unable to complete
course requirements or enroll in classes will continue to be in an
"in-school" status until such time as the borrower withdraws, or
until the end of the 1996-97 award period, whichever is earlier.
The school should document this reason for continued "in-school"
status in the student's file.
- Borrowers in Initial or Post-Deferment Grace Periods (§674.42).
The Secretary will not require a school to comply with
§674.42(b) requiring a school to make contact with
the borrower during an initial or post-deferment grace period. A
school must document the reason for suspension of these
activities in the borrower's file.
- Borrowers in Default-Due Diligence. The Secretary will not
enforce the billing and collection activities required under 34 CFR
674 Subpart C - Due Diligence. A school may suspend the
collection activities for borrowers already in default at the time of
the natural disaster. A school must document the reason for
suspension of these activities in the borrower's file.
- Borrowers in Repayment (§674.33). The Secretary authorizes the
school to grant a forbearance to a borrower who is in repayment
at the time of the natural disaster but is unable to continue to
repay the loan due to the disaster. The legislation governing the
Perkins Loan Program requires that interest will accrue during
any period of forbearance. A borrower may request this
forbearance orally, or in writing, and will not be required to
submit documentation to be considered eligible for this
forbearance. This period of forbearance is counted toward the
3-year maximum limit on the number of years of forbearance that
may be granted to a borrower. A school must document this
forbearance in the borrower's file.
FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM
- Converting the Borrower to Repayment §682.209(a) and
§682.210). The Secretary believes that it is in the best interest
of the FFEL Program to consider each Federal Stafford loan that
has not entered repayment and that was not in a default status on
the date the borrower's attendance at the school was interrupted
due to the disaster to be (or have been) in an "in-school" status
and to continue in that status until the school resumes normal
operations. This period of disaster-related nonattendance should
not require a borrower to enter or use any of his or her grace
Each Federal Stafford loan that had entered repayment status and
that was not in a default status on the date the borrower's
attendance at the school was interrupted due to disaster conditions
is to be considered as in an "in-school" deferment status during
the period of disaster-related nonattendance. This interim period
of nonattendance should not force a borrower back into
A borrower whose FFEL loan was in an "in-school" deferment
status on the date the disaster conditions interrupted normal
operations at the school shall be treated as if the loan continues in
an "in-school" deferment status during this same period of
- Guaranty Agency and Lender Disbursement of Loan Proceeds.
The Secretary authorizes lenders not to disburse loan proceeds to
schools in the affected area according to the originally established
disbursement schedules as required under §682.207(b)(1)(i)(B) if
they have been informed that a school has delayed opening for a
scheduled term or has ceased operations for an undetermined
period of time. Lenders should await revised disbursement
schedules from the affected schools. Schools are also urged to
request revised disbursement dates.
The Secretary instructs guaranty agencies and lenders to revise
information on loan periods, graduation dates, and so forth, on the
loan applications related to these disbursements as the
information becomes available. This instruction means that a
borrower need not reapply for the loan. This also will allow a
student to receive his or her loan proceeds according to a schedule
that fits the school's new academic schedule.
WAIVERS APPLICABLE TO FFEL SCHOOLS LOCATED IN
A DISASTER AREA.
- Payment of a Refund to a Student or to a Lender (§668.22 and
§682.607). The Secretary will not enforce the deadlines by which
an affected school must pay a refund that is due to a student or to
a lender after the student's withdrawal as determined under
§668.22(j)(3). Instead, the Secretary will require the school to
pay a refund to the student WITHIN 90 DAYS (instead of 30
days and to the lender WITHIN 120 DAYS (instead of 60 days)
after the student's withdrawal.
- School's Delivery of Loan Proceeds (§682.604). The Secretary
will not enforce the requirement in §682.604 that loan proceeds
be delivered to the borrower within 45 days of the school's receipt
of the funds, but will instead permit the school to deliver loan
proceeds to the borrower up to 120 days from the school's receipt
of the loan proceeds.
- Submission of Student Status Confirmation Reports (682.610(c)).
The Secretary will not enforce the deadline that a school complete
and submit required student status confirmation reports to the
Secretary or guaranty agency within 30 days of the school's
receipt of the report but will instead require completion and
submission of these reports WITHIN 90 DAYS. Reports of
changes of borrower status if the school does not expect to
submit its next report within the next 60 days may also be
submitted WITHIN 90 DAYS (instead of 30 days).
FEDERAL PELL GRANT PROGRAM
- Reporting Deadlines (Notices of Deadline Dates). The Secretary
will consider carefully, on a "case-by-case" basis, the effect of the
disaster on any school's ability to meet required Federal Pell
Grant reporting deadlines.
WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
- Payment of a Refund to a Student or to the Secretary (§668.22
and §685.305). The Secretary will not enforce the deadlines by
which an affected school must pay a refund that is due to a
student or to the Secretary after the student's withdrawal as
determined under §668.22(j)(3). Instead, the Secretary will
require the school to pay a refund to the student WITHIN 90
DAYS (instead of 30 days) and to the Secretary WITHIN 120
DAYS (instead of 60 days) after the student's withdrawal.
- Repayment of Direct Subsidized and Direct Unsubsidized Loans
(§685.204 and §685.207). The Secretary believes that it is in the
best interest of the Direct Loan Program to consider each Direct
Subsidized and Direct Unsubsidized loan that has not entered
repayment and that was not in a default status on the date the
borrower's attendance at the school was interrupted due to the
disaster to be (or have been) in an "in-school" status and to
continue in that status until the school resumes normal operations.
This period of disaster-related nonattendance should not require a
borrower to enter or use any of his or her grace period.
Each Direct Subsidized and Direct Unsubsidized loan that had
entered repayment status and that was not in a default status on
the date the borrower's attendance at the school was interrupted
due to disaster conditions is to be considered as in an "in-school"
deferment status during the period of disaster-related
nonattendance. This interim period of nonattendance should not
force a borrower back into repayment.
- Submission of Student Status Confirmation Reports
(§685.309(b)). The Secretary will not enforce the deadline that a
school complete and submit required student status confirmation
reports to the Secretary within 30 days of the school's receipt of
the report but will instead require completion and submission of
these reports WITHIN 90 DAYS. Reports of changes of
borrower status, if the school does not expect to submit its
next report within the next 60 days, may also be submitted
WITHIN 90 DAYS (instead of 30 days).
For additional information or if you have any questions please
contact the Department's SFA Customer Support Inquiry Service
staff. Staff members are available Monday through Friday
between the hours of 9:00 AM and 5:00 PM (Eastern Time) at
1-800-433-7327. After hours calls will be accepted by an automated
voice response system. Callers leaving their name and phone
number will receive a return call the next business day. You may
FAX an inquiry to the Customer Support Inquiry Service at
(202) 260-4199, or E-mail the staff at CSB@ed.gov.
We hope that these options for regulatory relief will be of use to you
in assisting students whose families have been affected by the
Elizabeth M. Hicks
Deputy Assistant Secretary
for Student Financial Assistance
COUNTIES DESIGNATED BY PRESIDENT CLINTON
AS HURRICANE DISASTER AREAS IN SEPTEMBER 1996
Alamance Beaufort Bertie Bladen
Brunswick Carteret Chatham Columbus Craven
Cumberland Duplin Durham Edgecombe
Franklin Granville Greene Guilford Halifax
Harnett Henderson Hoke Johnston Jones
Lee Lenoir Moore Nash
New Hanover Onslow Orange Pamlico Pender
Person Polk Richmond Robeson
Rutherford Sampson Vance Wake Warren
Huntingdon Juniata Mifflin Montgomery
Arroyo Bayamon Canovanas Carolina
Cayey Ceiba Guayama Guaynabo
Gurabo Las Piedras Loiza Maunabo
Ponce Rio Grande Salinas San Juan
San Lorenzo Santa Isabel Toa Baja
Augusta Clarke Danville (City) Halifax
Harrisonburg (City) Madison Martinsville (City)
Mecklenburg Nelson Page
Pittsylvania Rappahannock Rockbridge
Rockingham Shenandoah Staunton (City)
Warren Waynesboro (City)
Berkeley Grant Hampshire Hardy
Jefferson Mineral Morgan Pendleton