Posted Date: July 2, 2009

Author: Daniel T. Madzelan, Office of Postsecondary Education

Subject: Change of Effective Date for the Exclusion of Federal Veterans Education Benefits as Estimated Financial Assistance for Purposes of the Title IV Student Assistance Programs

We posted a Dear Colleague Letter in December 2008 (GEN-08-12) that discussed changes made to the Higher Education Act (HEA) by the Higher Education Opportunity Act (HEOA). On page 82 of that Dear Colleague Letter, we noted that the HEOA amended section 480(j)(1) of the HEA to exclude Federal veterans education benefits from the definition of estimated financial assistance (EFA) for the Title IV student assistance programs. Federal veterans education benefits are defined in subsection (c) of section 480 of the HEA. GEN-08-12 also indicated that under the HEOA this change would be effective on July 1, 2010 (for the 2010-2011 award year and thereafter).

On July 1, 2009, President Obama signed H.R. 1777, a bill making technical corrections to the HEA. H.R. 1777 changes the effective date for the exclusion of veterans education benefits as EFA to July 1, 2009 (beginning with the 2009-2010 award year and thereafter). Therefore, institutions may not consider as EFA any Federal veterans education benefits, as defined in subsection (c) of section 480 of the HEA. This exclusion applies to all Federal veterans education benefits regardless of whether the benefits are received by the veteran, his or her spouse, or his or her dependent. As in the past, veterans education benefits are not considered as income in calculating the expected family contribution (EFC) for a student.

We realize that many institutions have already packaged students for the 2009-2010 award year. However, an institution must review 2009-2010 award year financial aid packages for students receiving Federal veterans education benefits to determine whether changes to any of the packages are necessary. That review may result in an increase in a student’s eligibility for a loan under the FFEL or Direct Loan programs.

We thank you for your help in providing the correct statutory treatment in awarding Title IV student assistance to students receiving Federal veterans education benefits, and we greatly appreciate your cooperation in implementing this new change.


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