Posted Date: September 21, 2016

Author:  Sue O'Flaherty, Service Director, Program Management, Federal Student Aid

Subject: Important Operational Information for Schools Processing Title IV Aid for Transfer Students Who Have Been Affected by a School Closure

In this announcement, we provide important information to assist schools in using National Student Loan Data System (NSLDS®) and Common Origination and Disbursement (COD) System information as it relates to transfer students who attended a school that has closed.

Generally, when students who previously attended a school that has closed transfer to another school, the new school should determine the student’s Title IV aid eligibility as it would for any other transfer student. This Electronic Announcement includes information about enrollment reporting to NSLDS for the transferring students. We also provide some important information about calculating Direct Loan and Pell Grant awards for such students.

Reporting Transfer Students to NSLDS

Schools should report enrollment information for any student who is transferring to the institution from another school, regardless of whether the student receives Title IV aid at the receiving school. Failure to report enrollment information for these students could result in a student entering repayment or losing interest subsidy prematurely, or retaining an interest subsidy when he or she should not, so we encourage schools to report to NSLDS even if the transfer student does not appear on an NSLDS reporting roster of the school.

Important Information for Direct Loan Awards

Pending Disbursements – As noted earlier, a school should determine a student’s Title IV aid eligibility as it would for any other transfer student. However, because it can take some time for Direct Loan disbursement data from the former (closed) school to be completely updated in both the COD System and in NSLDS, there are additional considerations that must be taken into account when the new school is awarding Direct Loan funds to a student who is transferring from a school that has closed.

If the former school has closed, it may not make any Direct Loan disbursements with disbursement dates that are after the school’s closure date. Thus, pending disbursements of a Direct Loan awarded at the closed school with disbursement dates after the school’s closure date (a school can view the closure date in NSLDS) will not be made. Accordingly, the new school can ignore any pending disbursement amounts when determining the transfer student’s Direct Loan eligibility at the new school. Also, the new school does not have to wait for the pending disbursements to be reduced to zero before submitting a Direct Loan origination to the COD System. We note however that in some cases, a Direct Subsidized Loan origination may be rejected by the COD System due to a 150% Subsidized Usage Limit calculations until those calculations are updated (see more information below).

150% Subsidized Usage Limit Calculation Adjustments – For students who transfer from a closed school, the 150% Subsidized Usage Limit calculations may be inaccurate until any necessary adjustments have been made to records associated with Direct Loans that were awarded at the closed school. Specifically, the new school may receive COD Reject Edit 206 (The Remaining Subsidized Eligibility Period is less than zero for this award). We are working closely with recently closed schools to make the necessary award and disbursement adjustments so that 150% Subsidized Usage calculations can be updated.

Important Information for Pell Grant Awards

Pell Grant Scheduled Award Amounts – For transfer students, remaining Pell Grant eligibility is determined as a percentage of the student’s Scheduled Award, not the dollar amount. Specifically, it is the difference between 100% and the percentage of the Scheduled Award used at the former (closed) school.

Total Eligibility Used (TEU) and Potential Overaward Project (POP) – Until Pell Grant disbursement updates can be made to records of a transfer student’s former (closed) school, the Pell Grant Total Eligibility Used (TEU) calculations may be inaccurate. As with the 150% Subsidized Usage calculations, we are working closely with recently closed schools to make the necessary award and disbursement adjustments so that Pell Grant TEU calculations can be updated. Schools may receive subsequent Pell POP notifications and should review Pell POP reports carefully.

Lifetime Eligibility Used (LEU) - The COD System will have the most current Pell Grant LEU information for students, but schools should also carefully review the weekly Pell LEU reports (message class PGLE17OP) for Pell-eligible applicants who have a Pell Grant LEU greater than or equal to 450%.

References

Additional guidance on processing aid for transfer students can be found in the 2016-2017 Federal Student Aid Handbook.

  • Pell Grants – Volume 3, Chapter 3 (pages 62-64)

  • Direct Loans – Volume 3, Chapter 5 (pages 115-119)

Contact Information

If you have questions about this announcement, contact the COD School Relations Center at 800/474-7268 for Grants and 800/848-0978 for Direct Loans. You may also email CODSupport@ed.gov.

   

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