Federal Student Aid - IFAP
   
DCLPublicationDate: 3/1/98
DCLID: GEN-98-6
AwardYear: 1998-1999
Summary: Implementation of the NSLDS/CPS Post-Screening process during March of 1998 and reminder of institutional responsibility to monitor student eligibility.


Action Letter #4
March 1998



GEN-98-6

Summary: Implementation of the NSLDS/CPS Post-Screening process during March of 1998 and reminder of institutional responsibility to monitor student eligibility.

References: Student Assistance General Provisions Regulations - 34 CFR 668.19
Dear Colleague Letter GEN-96-13
Federal Student Aid Handbook, Chapter 2, Section 2


Dear Colleague:

Introduction

As you are aware, one of the data matches that is performed prior to the completion of the processing of any federal student aid application is with the National Student Loan Data System (NSLDS). This process, called Pre-Screening, is driven by the submission to the Central Processing System (CPS) of any original application, correction transaction, or request for duplicate transaction. The NSLDS/CPS match provides important federal student aid history information to applicants and schools on the resultant SARs and ISIRs. In fact, the regulations were changed for the 1996-97 award year to allow institutions to use the results of the NSLDS/CPS match to meet most of the financial aid transcript regulatory requirements [See 34 CFR 668.19(a)(2)(ii)]. This change was followed up by the publication of a Dear Colleague Letter [GEN-96-13], in July of 1996, that provided additional information on the use of NSLDS data for determining the eligibility of students for Title IV student assistance funds.

Issue

Because the period of time between when an application is filed and matched with the NSLDS (Pre-Screening) and when the actual disbursement of funds occurs could be several months, it is possible that an applicant’s eligibility for Title IV aid may change. The applicant may, during the interim, have defaulted on a Title IV loan or have been determined to owe an overpayment on a grant.1 Conversely, an applicant whose earlier Pre-Screening showed a default or overpayment status may have subsequently resolved that eligibility issue. And, in both instances the relevant data in the NSLDS may have been updated. However, unless the CPS had processed a transaction for another reason, schools would not be informed of the possible change in eligibility status resulting from the new NSLDS data.

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1 Another possibility is that an earlier default or overpayment was not recorded in the NSLDS when Pre-Screening was performed, but has since been entered into the system.


1998-99 Action Letter #4
Page 2

Focus Groups

In order to assess how best to address this issue, we held a focus group meeting with members of the financial aid community. At that meeting, the school representatives agreed that our systems should inform institutions of possible changes in an applicant’s eligibility whenever they occur. They also discussed and considered several options that could be used to meet this objective. Their final recommendation was that we should produce new CPS transactions (ISIRs and SARs) that include the updated NSLDS information whenever there are changes in the NSLDS that could affect an applicant’s eligibility for Title IV student aid. The focus group’s reason for this recommendation was that schools were familiar with the ISIR process and had already developed programs and procedures for using NSLDS information that is included on an ISIR.

Solution

Based upon the recommendations of the focus group, we have developed a Post-Screening process. On a regular basis (every two weeks initially) the NSLDS will be scanned to determine if any applicant has moved into or out of a default or overpayment status since the last time Pre-Screening (or a previous Post-Screening) had occurred for that applicant.2 If there has been a default or overpayment change, NSLDS will request that CPS create a new transaction with an incremented transaction number. As is true for all CPS transactions, this system generated transaction will produce SARs and ISIRs that will include the most current NSLDS information. New ISIRs will be sent to each school currently included on the applicant’s record as one of the six selected by the applicant to receive data. The SARs and ISIRs produced will include a comment (Comment Code #004) identifying them as having been produced as a result of a change in NSLDS information. Although the ISIRs produced by the Post-Screening process will be included in the same batch as other ISIRs sent to schools, the System Generated Indicator (ISIR Field #206) in the School Use Only section of the ISIR will include an ‘N ‘ to show that the transaction was produced because of NSLDS Post-Screening.

We will begin the implementation of Post-Screening during the week of March 16, 1998, and will continue every two weeks thereafter. During the first year of Post-Screening the process will create 1998-99 CPS transactions only and not 1997-98 transactions. However, in future years Post-Screening will create new CPS transactions for both of the processing years that are operational in the CPS.

We expect relatively few Post-Screening transactions to be produced. Our estimate is that throughout the year and across all institutions there will be somewhat less than 75,000 transactions created. Since more than 9 million students apply for federal student aid each year, we do not expect any one school to receive more than a few dozen of these transactions during a full processing year. In fact, many schools will not receive any.

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2 Although an applicant’s eligibility for aid may also be affected by changes in the amounts of loan or Pell Grant funds provided, the initial implementation of Post-Screening is limited to changes in default and overpayment status.



1998-99 Action Letter #4
Page 3

School Responsibilities

Each School must access and review any ISIR transaction it receives as a result of the Post-Screening process. It must then determine if the change in default or overpayment status that created the transaction affects the applicant’s eligibility for Title IV aid. Schools are referred to pages 4 through 6 and Questions 12 through 17 of the July 1996 Dear Colleague Letter (GEN-96-13) for information regarding the treatment of an applicant’s eligibility for Title IV aid when a change in financial aid history is reported. The school is also responsible for monitoring any other changes reported to it on the ISIR (loan annual or aggregate amounts, changes in the EFC, etc.).


Monitoring of Student Eligibility

It is critically important that schools carefully monitor student eligibility data that is included on ISIRs and SARs regardless of the reason for the creation of the transaction. If the ISIR indicates a default or overpayment, the school may not disburse Title IV funds until it either receives an updated ISIR that clears the problem or it obtains other documentation that the eligibility issue has been cleared. Failure to carefully monitor the eligibility of applicants can result in ineligible students receiving federal aid. In such cases, the school will be responsible for repaying those funds to the Department or FFEL lender, as appropriate. In addition, such a school may be assessed fines or other penalties including the possibility of the initiation of a Limitation, Suspension, and Termination (L,S,&T) action.

If you have further questions on the NSLDS you may call the NSLDS Customer Service Center at 1-800-999-8219, Monday through Friday between the hours of 7:00 AM and 7:00 PM (Eastern Time), Federal holidays excluded.

The Department's SFA Customer Support Inquiry Service staff is available to answer questions related to the use of data from the NSLDS. 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.

Thank you for your continued support of our efforts to improve the delivery and integrity of the Title IV student financial assistance programs.

Sincerely,


Diane E. Rogers
Acting Deputy Assistant Secretary
Student Financial Assistance Programs