In accordance with sections 413D(d)(2) and 442(d)(2) of the Higher Education Act of 1965 as amended (HEA), if a school returns more than 10 percent of its Federal Supplemental Educational Opportunity Grant (FSEOG) or Federal Work-Study (FWS) allocations in a given award year, the allocation for the second succeeding award year is reduced by the dollar amount returned unless the Secretary waives this provision. The deadline to request a waiver of the 2020–21 Award Year penalty of FWS and FSEOG for the underuse of 2018–19 Award Year funds is February 3, 2020. This deadline was announced in the “2019–2020 Award Year Deadline Dates for Campus-Based Programs,” published in the Federal Register on January 24, 2019 (84 FR 352).
A school can determine if it is subject to an underuse penalty by reviewing its most recent Fiscal Operations Report and Application to Participate (FISAP) or Campus-Based Tentative Funding Worksheet for 2020–21 (see sections below). The school may submit an underuse penalty waiver request if the school is able to explain that the underuse was due to circumstances beyond its control and why those circumstances are not expected to recur.
The request and justification for the waiver of the underuse penalty must be submitted electronically by 11:59 p.m. Eastern time (ET) on February 3, 2020.The transmission must be completed and accepted by 11:59 p.m. ET to meet the deadline.
Paper waiver request submissions will not be accepted.
How to determine if there will be an Underuse Penalty prior to receiving the Tentative Funding Worksheets
To determine if a school is subject to an allocation reduction in its 2020–21 FSEOG or FWS funds, review the 2020–21 FISAP that was due October 1, 2019.
For FSEOG – Determine the underused percentage by dividing the unexpended 2018–19 funds in Part IV, Section E, Item 18 by the school's 2018–19 FSEOG allocation in Part IV, Section A, Item 1. If that quotient is more than 10 percent, the 2020–21 FSEOG allocation will be reduced by the total amount of unexpended 2018–19 FSEOG funds (Part IV, Section E, Item 18).
For FWS – Determine the underused percentage by dividing the unexpended 2018–19 funds in Part V, Section E, Item 19 by the school's 2018–19 FWS allocation in Part V, Section A, Item 1. If that quotient is more than 10 percent, the 2020–21 FWS allocation will be reduced by the total amount of unexpended 2018–19 FWS funds (Part V, Section E, Item 19).
Include Funds Returned through Reallocation
Schools that returned 2018–19 FWS and/or FSEOG program funds to the Department of Education during the reallocation process in August, must include those funds among the total unexpended and allocation amounts by program to determine your underuse percentage (this amount is not reported on the school’s FISAP).
How to determine if there is an Underuse Penalty based on the Tentative Funding Worksheets
The Campus-Based Tentative Funding Worksheets for 2020–21 will be posted to the Common Origination and Disbursement (COD) website by February 1, 2020. If the school failed to expend more than 90 percent of its 2018–19 program allocation(s), the underuse penalty will be applied to the tentative 2020–21 award allocations.
Schools may access their Tentative Funding Level worksheets from the COD website, and from the School tab, select the link for Campus-Based. Once directed to Campus-Based, select “Self-Service”. The percentage of underused FSEOG funds is shown in the FSEOG Tentative Funding worksheet at Item 32. Underused Percentage, and the tentative FSEOG Allocation Reduction amount is shown at Item 33. Allocation Reduction. The percentage of underused FWS funds is shown in the FWS Tentative Funding worksheet at Item 35. Underused Percentage, and the tentative FWS Allocation Reduction amount is shown at Item 36. Allocation Reduction. The full explanation of all the fields in the Tentative Funding worksheet will be provided in an attachment to a forthcoming Electronic Announcement posted on the Information for Financial Aid Professionals (IFAP) website.
How to Request an Underuse Penalty Waiver
Once logged in to the COD website:
| 1) | navigate to the “Forms and Waivers” page, |
| 2) | click on “Manage Application,” |
| 3) | click on the option to “Create” or “Edit” the underuse waiver |
| 4) | submit the waiver (if a school did not already complete the underuse waiver via the FISAP submission process, it must use the “Forms and Waivers” page to create or edit the underuse waiver.) |
In the comment box, the school must explain the following, in detail:
- the circumstances that caused the underuse of the allocation
- why those circumstances were beyond the school's control
- why those circumstances are not expected to recur and/or how the school plans to prevent future underuse
- indicate that the entire underused portion of the allocation has been returned to the Department through G5
Note: Schools should not attempt to submit or edit the underuse waiver by accessing their most recently submitted FISAP.
What Happens Next
The Department will review the penalty waiver requests and justifications and will notify the school in an email to the school’s Financial Aid Administrator whether the request has been granted or denied.
If the waiver request is granted the underuse penalty for that program will not be applied when final awards for 2020–21 are made.
If the waiver request is denied the underuse penalty for that program that displayed on the tentative award worksheet will remain when final awards for 2020–21 are made.
Contact Information
For questions regarding an underuse penalty waiver justification, contact the COD School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.