Federal Student Aid - IFAP
   
DCLPublicationDate: 4/1/96
DCLID: 96-L-187
AwardYear:
Summary: Guidance for helping Title IV participants affected by flooding in Idaho, Maryland, New York, Ohio, Oregon, Pennsylvania, Vermont, Virginia, Washington, and West Virginia.


APRIL 1996

GEN-96-10
96-L-187
96-G-288


SUBJECT: Guidance for helping Title IV participants
affected by flooding in Idaho, Maryland,
New York, Ohio, Oregon, Pennsylvania,
Vermont, Virginia, Washington, and West
Virginia.

REFERENCE: This information supplements the guidance given
in Chapters 2-10, Federal Student Financial Aid
Handbook.


Dear Colleague:

The Secretary recognizes the severe impact the recent flooding has
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 hurricanes in the Commonwealth of Puerto Rico,
the U.S. Virgin Islands, Florida, Alabama, Georgia, and North
Carolina in 1995), the Secretary wishes to assist the victims of the
floods 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 1995-96 award period (July 1, 1995 to
June 30, 1996). However, if specifically indicated, relief may be
extended into the next award year (July 1, 1996 to June 30, 1997)
and is taken 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 Idaho, Maryland,
New York, Ohio, Oregon, Pennsylvania, Vermont, Virginia,
Washington, 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 flooding.
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
January 25 and 30, 1996 and February 5 and 13, 1996 letters 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 student withdrew.

-- 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.
[Note: may apply to the 1996-97 award year.]

-- 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 1996-97 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 1996-97 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 the CPS.

-- SATISFACTORY ACADEMIC PROGRESS (34 CFR 668.7(c)
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 1996-97 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 disaster.

-- 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 1996-97 award year.]


Campus-Based Programs

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 1995-96 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. 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
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 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 repayment.

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
disaster-related nonattendance.

-- 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:

Jeffrey Baker, Director
Policy Development Division
Student Financial Assistance Programs
U.S. Department of Education
600 Independence Avenue, SW (ROB-3)
Washington, DC 20202-5345
Telephone: (202) 708-9967 FAX: (202) 708-7196

We hope that these options for regulatory relief will be of use to you
in assisting students whose families have been affected by the
disaster.

Sincerely,


Elizabeth M. Hicks
Deputy Assistant Secretary
for Student Financial Assistance

Enclosure


COUNTIES DESIGNATED BY PRESIDENT CLINTON
AS FLOOD DISASTER AREAS IN JANUARY AND
FEBRUARY 1996


IDAHO

Benewah Bonner Boundary Clearwater
Kootenai Latah Lewis Nez Perce
Shoshone

Nez Perce Indian Reservation


MARYLAND

Allegany Cecil Frederick Garrett
Washington


NEW YORK

Albany Allegany Broome Cattaraugus
Cayuga Chemung Chenango Clinton
Columbia Cortland Delaware Dutchess
Essex Greene Herkimer Montgomery
Orange Otsego Rensselaer Saratoga
Schenectady Schoharie Steuben Sullivan
Tioga Tompkins Ulster Warren


OHIO

Belmont Clermont Columbiana Hamilton
Jefferson Lawrence Meigs Monroe
Washington


OREGON

Benton Clackamas Clatsop Columbia
Hood River Lane Lincoln Linn
Marion Multnomah Polk Sherman
Tillamook Umatilla Union Wasco
Yamhill

Warm Springs Reservation


PENNSYLVANIA

All counties.



VERMONT

Addison Bennington Chittenden Franklin
Lamoille Orange Orleans Rutland
Washington Windham Windsor


VIRGINIA

Alleghany Augusta Bath Bland
Botetourt Frederick Giles Grayson
Highland Loudon Page Rappahanock
Rockbridge Rockingham Shenandoah Warren
Washington Wyeth


City of Covington
City of Harrisonburg


WASHINGTON

Asotin Clark Columbia Cowlitz
Kittitas Klickitat Lewis Pierce
Skamania Thurston Walla Walla Whitman
Yakima


WEST VIRGINIA

Berkeley Brooke Grant Greenbriar
Hampshire Hancock Hardy Jefferson
Marshall Mason Mercer Mineral
Monroe Morgan Nicholas Ohio
Pendleton Pleasants Pocahontas Preston
Randolph Summers Tucker Tyler
Webster Wetzel Wood