Do You Need an Improved Approach? Timing and Frequency …...Student Example •16 week term •All...
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Do You Need an Improved Approach? Timing and Frequency of Title IV Student Financial Aid (SFA) Disbursements
Transcript of Do You Need an Improved Approach? Timing and Frequency …...Student Example •16 week term •All...
Do You Need an Improved Approach?
Timing and Frequency of Title IV
Student Financial Aid (SFA) Disbursements
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Presenters
Presenter
Valerie K. Steinbock
Consultant
Transcend Education Group, LLC
Transcendedgroup.com
Valerie has over 25 years of experience in student financial aid
administration, compliance and systems management;
consistently leveraging technology to drive efficiency and
ensure compliance at significant scale for financial aid
administration and shared services in higher education.
She has served as the financial aid administrator for several
large school groups with online and campus-based operations.
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Today’s Discussion
• A change in approach for scheduling Title IV financial aid disbursements
• Impact
• Improvement to bad debt
• Potential improvement to student retention
• Potential improvement to student loan default
• Tool to help the student budget their finances
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• Single disbursement per Title IV SFA fund source
• Single disbursement per term
• Single stipend per term
Conventional Approach
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• Multiple disbursements per fund source
• Multiple disbursements per term
• Monthly scheduled stipends over the length of the term
Different Approach
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• 34 CFR 668.164(B) indicates that Title IV federal financial aid funds are required to be disbursed by payment period as defined in 34 CFR 668.4. This approach fits within these guidelines.
• ED has indicated in the Handbook that multiple disbursements within a payment period are acceptable provided that students receive funds in a timely manner to best assist them in paying educational expenses.
• References: • Federal Student Aid Handbook, 2016/17, vol.3, chapter 1, p. 26
• Federal Register, U.S. Department of Education, Washington, D.C.
https://www.federalregister.gov/articles/2014/07/31/2014-18075/notice-inviting-postsecondary-educational-institutions-to-participate-in-experiments-under-the#h-17, July 31, 2014.
Regulatory: Do the Regulations Permit This Approach?
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Student Example
• 16 week term
• All courses begin concurrently
• Student is registered for 12 credits in each term
• Student withdraws at the end of the 4th week
Student Awarded:
• Unsubsidized Stafford (Net = $20,281)
• Grad PLUS (Net = $8,000)
Direct Costs:
• Tuition, books and fees = $8,000
Stipend request:
• $6,140 (student needs $1,535 monthly for living expenses)
What Do Multiple Disbursements Per Term Look Like?
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Single DisbursementStudent Ledger for Student Who Completes The Term
Transaction Date Description Amount Balance9/5/16 Tuition, Books, Fees Term 1 $8,000 $8,000
9/19/16 16/17 Unsub Stafford Term 1 $10,141 <$2,141>
9/19/16 16/17 Grad PLUS Term 1 $3,999 <$6,140>
9/22/16 Stipend Term 1 $6,140 $0
Student receives a single stipend for the term of $6,140
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Multiple DisbursementsStudent Ledger for Student Who Completes The Term - Multiple Stipends
Transaction Date Description Amount Balance
9/5/16 Tuition, Books, Fees Term 1 $8,000 $8,000
9/19/16 16/17 UnSub Stafford Term 1 -$8,000 $0
9/19/16 16/17 Unsub Stafford Term 1 -$1,535 <$1,535>
9/22/16 Stipend 1 $1,535 $0
10/4/16 16/17 Unsub Stafford Term 1 -$606 <$606>
10/4/16 16/17 Grad PLUS Term 1 -$929 <$1,535>
10/6/16 Stipend 2 $1,535 $0
11/4/16 16/17 Grad PLUS Term 1 -$1,535 <$1535>
11/6/16 Stipend 3 $1,535 $0
12/4/16 16/17 Grad PLUS Term 1 -$1,535 <$1,535>
12/6/16 Stipend 4 $1,535 $0
Student receives monthly stipends for the term of $1,535 each
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Single DisbursementStudent Ledger for Student Who Earns 25% of Title IV Aid
Transaction Date Description Amount Balance9/5/16 Tuition, Books, Fees Term 1 $8,000 $8,000
9/19/16 16/17 UnSub Stafford Term 1 $10,141 <$2,141>
9/19/16 16/17 Grad PLUS Term 1 $3,999 <$6,140>
9/22/16 Stipend 1 $6,140 $0
9/26/16 Student Withdrawal R2T4 16/17 Unsub Stafford
$10,141 $10,141
9/26/16 Student Withdrawal R2T4 16/17 Grad PLUS
$363 $10,504
Students owes the institution $10,504
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Student Ledger – Multiple DisbursementsStudent Doesn’t Complete the Term - Earns 25% of Title IV Aid
Transaction Date Description Amount Balance9/5/16 Tuition, Books, Fees Term 1 $8,000 $8,000
9/19/16 16/17 UnSub Stafford Term 1 -$8,000 $0
9/19/16 16/17 Unsub Stafford Term 1 -$1,535 <$1,535>
9/22/16 Stipend 1 $1,535 $0
9/26/16 R2T4 16/17 Unsub $5,899 $5,899
Student owes the institution $5,899
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• According to refund policy, no refund due
• 25 % of Title IV SFA earned
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Same Student Withdraws the Last Day Of Week 4
Amount of Title IV Aid Earned
Total Aid Disbursed or Could Have Been Disbursed
Single Disb. Method - Funds To Be Returned
Multiple DisbursementMethod –Funds To Be Returned
Student Ledger Card Balance –Single Disbursement
Student Ledger Card Balance –Multiple Disbursements
$ 3,636 $ 14,140 $10,141 Unsub $5,899 Unsub $ 10,504 $ 5,899
$ 363 Grad Plus
If multiple disbursement method is used, the institution returns $4,605 less to the federal financial aid programs
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• Improvement to bad debt
• With either method, direct costs are funded
• Returning less federal Title IV aid improves cash flow because
fewer funds are returned if the multiple disbursement method
is applied
• Potential improvement to student retention
• Potential improvement to student loan default
• Tool to help the student budget their finances
Summary – Benefits of Multiple Disbursements
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• If stipends are a large percentage of aid disbursed, it will have a
significant impact on bad debt
• Improvements in bad debt expense as a percentage of revenues could
range between 0.5% and 4.0% (rough estimates) based on the unique
demographics of a school
• Increases future availability of funding for some students who re-enter
• Helps students to budget their finances
• Helps with cash flow because institutions will return fewer funds to the
Title IV SFA programs
Benefits
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• CampusNexus supports the change in approach
• CampusNexus® system accommodates and automates this approach
• Disbursement rules, Financial aid workflow
• Workflow and Forms Builder
Will My System Accommodate This Approach?
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• Socialization of the new approach
• Best practices
• Change management
• System solution
Implementation Considerations
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Transcend Education Group, LLC
• Project Plan
• Socialize the change
• Prepare for implementation
Campus Management Corp.
• CampusNexus®
• Configuration
• Workflow and forms builder
Who Can Help Me Implement This Change?
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Transcend Education Group, LLC
Valerie K. Steinbock, Consultant
480-535-3350
Transcendedgroup.com
Campus Management Corp.
Regional Sales Manager
Tom Arra [email protected] | Phone: 949.466.9728
Rob Butler [email protected] | Phone: 561.400.1852
Christian Rossetti [email protected] | Phone: 404.556.1357
Where can I find out more?
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Questions?
