AwardYear: 1996-97 EnterChapterNo: 5 EnterChapterTitle: Campus-Based Programs: Common Elements SectionNumber: 2 SectionTitle: Resources and Overawards PageNumbers: 11-15 NEED-ANALYSIS FORMULAS The Higher Education Act of 1965 (HEA), as amended, provides a single methodology for determining the Expected Family Contribution (EFC) and cost of attendance (COA) for all Student Financial Assistance (SFA) Programs. Need-analysis and COA are discussed in Chapter 2, Section 2. If the students COA exceeds his or her EFC, the student has need. Before awarding aid from campus-based programs, the financial aid administrator must take into account aid the student will receive from other SFA Programs. The administrator must also take into account other resources that the school makes available to its students, resources about which he or she knows, or resrouces that the administrator can reasonably anticipate at the time aid is awarded to the student. An aid administrator may not award or disburse aid from a campus-based program if that aid, when combined with all other resources, would exceed the students need. [[The formula on page 5-11 is currently unavailable for viewing. Please reference your paper handbook for additional information.]] If, AT ANY TIME DURING THE AWARD PERIOD, the student receives additional resources that were not considered in calculating the students eligibility for aid and if these resources combined with the expected financial aid will exceed the students need, the amount in excess of the students need is considered an overaward. RESOURCES Resources, as defined by the campus-based regulations, include but are not limited to - the amount of a Federal Pell Grant the student is entitled to receive, whether or not the student applies for the grant, - Federal Family Education Loans (FFELs), - William D. Ford Federal Direct Loans (Direct Loans), - waivers of tuition and fees, - grants, including FSEOGs, state grants, and ROTC living allowances, - scholarships, including athletic scholarships and ROTC scholarships, - fellowships or assistantships, - income from insurance programs that pay for the students education, - veterans educational benefits, - long-term loans made by the school, including Federal Perkins Loans and NDSLs (short-term emergency loans are not considered to be a resource), - the amount of Federal PLUS Loans and state-sponsored or private loans that is in excess of the EFC when these loans are substituted for the students EFC, and - net income from need-based employment. The school may treat an unsubsidized Stafford Loan (FFEL or Direct Loan), a PLUS Loan (FFEL or Direct Loan), a state-sponsored loan, or a private loan as a substitute for a students EFC. However, if the sum of the loan amounts received exceeds the students EFC, the excess is a resource. In the above list of resources, the term "need-based employment" means employment that is awarded by the school itself or by another entity to a student who demonstrates a financial need for those funds for the purpose of defraying educational costs of attendance for the award year. Only income from NEED-BASED employment may be considered as a resource. [[Treatment of non-need-based earnings]] NON-NEED-BASED earnings are not to be considered as a resource for the current award year because they will be reported as income on the Free Application for Federal Student Aid (FAFSA) for the subsequent award year and will be used to calculate the EFC for that award year. [[Treatment of veterans educational benefits]] Veterans EDUCATIONAL benefits are not included in the EFC formulas; therefore, these benefits must be treated as a resource when determining the amount of a students financial need from the campus-based programs and must be treated as estimated financial assistance in the FFEL Program and the Direct Loan Program. The veterans educational benefits to be treated as a resource/estimated financial assistance are listed in Chapter 2, Section 2. NONEDUCATIONAL veterans benefits are not counted as a resource or estimated financial assistance, as they are already counted in the EFC formula as nontaxable income. Noneducational veterans benefits include Death Pension and Dependency and Indemnity Compensation (DIC) benefits. OVERAWARDS A financial aid administrator may not award or disburse aid from a campus-based program if that aid, when combined with all other resources, would exceed the students need. If a student who has already been awarded a financial aid package later receives additional resources that cause his or her financial aid package to exceed his or her need, the amount in excess of the students need is considered an overaward. There is now a $300 overaward threshold for all campus-based programs. The $300 threshold is allowed only if an overaward occurs after campus-based aid has been packaged. The threshold does not allow a school to deliberately award campus- based aid that, in combination with other resources, exceeds the students financial need. STEPS TO TAKE IF THE RESOURCES EXCEED NEED If a school learns that a student has received additional resources that were not included in calculating the students eligibility for aid from the Federal Perkins Loan or FSEOG Program and if there is no FWS in the aid package, the school must determine whether there is an overaward. If there is an overaward, the school must take the following steps: [[Overaward with FFEL or Direct Loan in the aid package]] 1. If the students aid package includes a loan under the FFEL or Direct Loan Program, the school must first follow the overaward requirements that are presented in Chapter 10 or Chapter 11, respectively. Also, a school may attempt to reduce or eliminate the overaward by changing the function of an unsubsidized loan (a Stafford Loan, a nonfederal loan, or the parents PLUS Loan) from covering need to replacing the EFC. [[Recalculate need]] 2. If there is no FFEL or Direct Loan in the students aid package or if the school eliminates the FFEL or Direct Loan overaward and if in either case, the students total resources still exceed the students need by more than $300, the school must recalculate the students need to determine whether he or she has increased need that was not anticipated when the school awarded aid to the student. If the students need has increased and if the total resources do not exceed the increased need by more than $300, the school is not required to take any additional action. [[If need has not increased]] 3. If the school recalculates the students need and determines that the students need has NOT increased or that his or her need has increased but that the total resources still exceed his or her need by more than $300, the school must cancel any loan or grant (other than a Pell Grant) that has not already been disbursed. If the school takes these steps and the students total resources still exceed his or her need by more than $300, the amount that exceeds the need by more than $300 is an overpayment. [[Treatment of FWS in aid package]] If a school learns that a student earning FWS wages has received additional resources that were not included in calculating the students FWS eligibility and if the total resources now exceed the students need, the actions the school must take vary somewhat from the actions discussed here. These other actions are discussed in Chapter 7, Section 2. OVERPAYMENTS [[Liability for overpayment]] A student is liable for any overpayment of a loan or grant; the school is also liable for any overpayment that was caused by the failure of the school to follow the procedures outlined on the previous page in awarding and disbursing aid. If the school makes a campus-based overpayment for which it is liable, it must restore to its campus- based fund an amount equal to the overpayment plus any administrative cost allowance claimed on that amount. [[Recovering overpayment of Perkins Loan advances]] If the school makes an overpayment of Perkins Loan advances for which it is not liable (for example, when a student has made a mistake on the application), the school must make a "reasonable effort" to recover the amount. This effort comprises a written demand to the student to repay the amount of the overpayment and a notice that failure either to repay the overpayment or to make arrangements satisfactory to the holder of the debt to repay the overpayment will render the student ineligible for additional SFA funds. [[Collecting an FSEOG overpayment]] If the school makes an FSEOG overpayment for which it is NOT liable, the school must promptly try to recover the overpayment by sending to the student a written notice to the student requesting payment in full. Failure either to repay the overpayment or to make arrangements satisfactory to the holder of the debt to repay the overpayment renders the student ineligible for additional SFA funds. If a student claims that the school has made a mistake in determining the FSEOG overpayment, the school must consider any information provided by the student and determine whether the objection is warranted before referring the overpayment to the U.S. Department of Education (ED) for collection. If the federal share of the overpayment is $25 OR MORE AND, after determining that the students objection is not warranted, either the school fails to collect the FSEOG overpayment or the student fails to make arrangements satisfactory to the school to repay the overpayment, the school must refer the overpayment case to EDs Student Receivables Division for collection. In doing so, the school must identify the federal share of the overpayment; the students name, most recent address, and telephone number; and other relevant information. See the Verification Guide for additional information. After referring the overpayment case to ED for collection, the school is not required to make any further attempt to collect the FSEOG overpayment. If the school is unable to collect the overpayment and the federal share is LESS THAN $25, the school is not required to make any further attempt to collect the overpayment. COORDINATION WITH BUREAU OF INDIAN AFFAIRS GRANTS To determine the amount of campus-based aid for a student who is or may be eligible for a Bureau of Indian Affairs (BIA) grant, a school must first develop a financial aid package without considering any BIA funds. If the total aid package--after BIA funds are added--does not exceed the students need, no adjustment may be made to the aid package. If the total package plus the BIA grant does exceed need, the school must eliminate the excess in the following sequence: loans, work-study awards, and grants other than Pell Grants. (The school may NOT reduce a Pell Grant or BIA grant.) The school may alter this sequence of reductions upon the students request if the school believes the change would benefit the student. In determining the amount of financial need for a student eligible for a BIA grant, a financial aid administrator is encouraged to consult with area officials in charge of BIA postsecondary financial aid. |