DOCUMENT RESUME

ED 307 837 HE 022 195

TITLE A Self-Instructional Course in Student Financial AidAdministration. Module 15: Internal Aid OfficeManagement and Institutional Quality Control. SecondEdition.

INSTITUTION Office of Student Financial Assistance (ED),Washington, DC.; Washington Consulting Group, Inc.,Wasnington, DC.

PUB DATE 20 Aug 88NOTE 89p.; For related documents, see HE 022 181-198.PUB TYPE Guides Non-Classroom Use (055) -- Tescs/Evaluation

Instruments (160)

EDRS PRICE MF01/PC04 Plus Postage.DESCRIPTORS Administrator Responsibility; Administrator Role;

Educational Finance; *Federal Aid; FederalGovernment; Federal Programs; Higher Education;*Office Management; *Program Administration;Programed Instructional Materials; *Quality Control;*Student Financial Aid; *Student Financial AidOfficers

IDENTIFIERS Department of Education; Higher Education Act TitleIV

ABSTRACT

The 15th in a 17-module self-instructional course onstudent financial aid administration (designed for novice financialaid administrators and other institutional personnel) focuses oninternal aid office management and institutional quality control. Thecourse provides a systematic introduction to the management offederal financial aid programs authorized by Title IV of the HigherEducation Act. The objectives of this module are to help the userdescribe the major functions of the aid office, recognize theelements that make up fund management, define the term "qualitycontrol" in relation to student aid administration, and outline theprocedural steps taken in developing an institutional quality controlplan. Two sections discuss the following: (1) financial aid officemanagement: roles, processes, and procedures (common factors in aidoffice operations, fund management, internal aid office management,determining student eligibility, file completion, need determination,and final preparation for packaging, award notification, awarddisbursement, changes in status, refunds, and repayments, and recordmaintenance and retention) and (2) institutional quality control(errors in the delivery of student financial aid, quality control,

institutional benefits from increasing quality, quality control in afinancial aid setting, procedures for developing and implementing aquality control program, and corrective artion: controlling criticalerrors). A pre-test, post-test, glossary, and acronyms are included.Contains five references. (SM)

************************************************************************ Reproductions supplied by EDRS are the best that can be made *

* from the original document. *

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U S DEPARTMENT OF EDUCATIONOffice of Educational Research ano .mproeement

EDUCATIONALED ATIONAL RESOURCES INFORMATIONCENTER (ERIC>

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This publication is one component of A Self-Instructional Course in Student Financial AidAdministration. This Second Edition of the course consists of the following modules:

1. Student Financial Aid Administration: Course Study Guide and Introduction to the Field2. Federal Student Financial Aid: History and Current Sources3. The Legislative and Regulatory Processes4. Roles and Responsibilities of the Financial Aid Office5. Title IV Institutional and Program Eligibility6. General Student Eligibility7. Calculating Cost of Attendance8. Need Analysis9. Award Packaging10. The Pell Grant Program11. The Stafford Loan, SLS, and PLUS Programs12. Campus-Based Programs: SEOG, CWS, and Perkins Loan13. Verification14. Authorization, Fiscal Operations, and Reportirc;15. Internal Aid Office Management and Institutional Quality Control16. Forms and Publications17. Evaluation of Student Aid Management: Self-Evaluation, Audit, and Program Review

The course includes a Support Booklet with the complete course glossary, acronyms, key resources,bibliography, and index, as well as adu'resses of publishers mentioned in the course. The SupportBooklet also offers guidelines for further study.

i,r

Dear Colleague:

UNITED STATES DEPARTMENT OF EDUCATIONWASHINGTON, D C 20202

October 1988

We are pleased to present the Second Edition of A Self-Instructional Course inStudent Financial Aid Administration. This updated version of the cour _originally published in 1986 incorporates provisions of the Higher EducationAmendments of 1986, with 1987 Technical Amendments and subsequent amendments.

The purpose of the cot-rse remains the same. It is designed to provideneophyte financial aid administrators (those with two years or less experiencein student aid) and other institutional personnel with a systematicintroduction to management of federal financial aid programs authorized byTitle IV of the Higher Education Act. Students of the course will gain afundamental understanding of the roles and responsibilities of participatinginstitutions and of student aid administrators. On completion of the course,they will be prepared to expand this knowledge with the use of training andreference materials, on-site training opportunities, and contacts with othermembers of the profession.

The materials were revised under a contract wi:h the Washington ConsultingGroup. The text was reviewed for technical accuracy by many staff members ofthe Office of Student Financial Assistance (OSFA). Special acknowledgement isdue to both project staff and OSFA specialists for accomplishing verywide-ranging modifications of the text during a period when much legislativeand regulatory activity affecting student aid was in progress.

Your comments and suggestions regarding any aspect of the materials arewelcome. OSFA is particularly interested in learning 1) the level ofexperience and job responsibilities of personnel at your institution using themodules; 2) the purposes for which they are being used (for example,self-study, training new staff, reference); and whether you feel that thispublication is among those that OSFA should coLitinue to update and disseminateannually. You may send your comments to the Training Branch, OSFA/ED, 400Maryland Avenue S.W., Washington, D.C. 20202.

itewey L. N

Deputy Assistant Secretary forStudent Financial Assistance

Sincerely,

aree,004,0.%_

Enclosure

%61/AlekDaniel R. LauDirector, Student FinancialAssistance Programs

The following non-OSFA participants contributed to the development of thisSecon2 Edition of the course:

David Wyatt, Project Director

Washington Consulting GrcupWashington, D.C.

Suzanne Thompson, Financial Aid SpecialistWashington Consulting Group

Washington, D.C.

Sarah Pratt Nesbitt, Financial Aid SpecialistWashington Consulting Group

Washington, D.C.

Carl EmerickMontgomery College

Rockville, MD

Vicki BakerGeorge Washington University

Washington, D.C.

Mary Kahn, Corporate Officer in ChargeWashington Consulting Group

Washington, D.C.

Itr GOVERN!,SIT PRINTING OFFICE . 1988 0 - 222-546 (Book 01)

MODULE 15

INTERNAL AID OFFICE MANAGEMENTAND INSTITUTIONAL QUALITY CONTROL

The technical information in this moduleis based on laws, regulations, policies,

and procedures in effect as of:

August 20, 1988

This is one component of A Self-Instructional Course in Student Financial Aid Administration ThisSecond Edition of the course has been prepared by The Washington Consulting Group, Inc., under acontract with the U.S. Department of Education.

The course consists of 17 modules and a support booklet. It provides an introduction and guide to theadministration of student financial aid programs authorized under Title IV of the Higher EducationAct of 1965, as amended. The titles or the modules are listed on the inside front cover of thispublication.

Institutions may freely reproduce the course for their own use. For more information on the course,contact one of the Department of Education offices listed on the inside back cover of this publication.

TABLE OF CONTENTS

Page

v Learning Objectives and Introduction

viii Pre-Test

1 Financial Aid Office Management: Roles, Processes, and Procedures

1 15.1 Common Fac.ors in Aid Office Operations

1 15.1.1 Federal and State Agency Guidelines1 15.1.2 Time Factors and the Master Calendar3 15.1.3 Common Aid Office Roles and Responsibilities

4 15.2 Fund Management

4 15.2.1 Preparation of an Institutional Budget for Managing Financial Aid Funds8 15.2.2 Development of an Award Packaging Policy8 15.2.3 Maintaining Student Aid Balances and Reconciling Fund Accounts8 15.2.4 Filing Required Fiscal Reports

9 15.3 Internal Aid Office Management

9 15.3.1 Steps in Processing10 15.3.2 Counseling12 15.3.3 Record Management16 15.3.4 Approaches to Document Tracking

18 15.4 Determining Student Eligibility

21 15.5 File Completion, Need Determination, and Final Preparation for Packaging

21 15.5.1 Financial Need Determination23 15.5.2 Award Packaging

25 15.6 Award Notification

27 15.6.1 Perkins Loan Awards27 15.6.2 College Work-Study Program28 15.6.3 Overawards30 15.6.4 Student Appeals

31 15.7 Award Disbursement

32 15.7.1 Evaluation of Student Eligibility33 15.7.2 Changes in Awards33 15.7.3 Authorization to Disburse

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Page

35 15.8 Changes in Status, Refunds, and Repayments

35 15.8.1 Developing an Institutional Refund Policy38 15.8.2 Status Change Before Classes Begin38 15.8.3 Change in Enrollment Level Before or Within a Payment Period38 15.8.4 Student Withdrawal or Expulsion After the First Day of Classes39 15.8.5 Refunds to Title IV Programs40 15.8.6 Repayments of Disbursements for Noninstitutional Costs

46 15.9 Record Maintenance and Retention

50 Institutional Quality Control

50 15.10 Errors in the Delivery of Student Financial Aid

51 15.11 What Is Quality Control?

52 15.12 Institutional Benefits from Increasing Quality

53 15.13 Quality Control in a Financial Aid Setting

54 15.14 Procedures for Developing and Implementing a Quality Control Program

54 15.14.1 The QC Team55 15.14.2 Determining Priorities for the Program56 15.14.3 Developing Standards57 15.14.4 Data Collection Procedures58 15.14.5 Output Documents58 15.14.6 Implementing a Quality Control System58 15.14.7 Data Collection, Analysis, and Monitoring Activities

59 15.15 Corrective Action: Controlling Critical Errors

60 Summary

62 Post-Test

67 Glossary

71 Acronyms

72 Key Resources and Bibliography

73 Index

Fifteen-iv 8/20/88

MODULE 15

INTERNA T, AID OFFICE MANAGEMENTAND INSTITUTIONAL QUALITY CONTROL

LEARNING OBJECTIVES

After completing this module, you will be able to identify and describe the elements thatmake up institutional student aid management. You will also understand how to design andimplement a quality control system to monitor and evaluate the accuracy and efficiency ofyour institution's management of the student aid programs. In particular, you will be able to:

.0. describe the major functions of the aid office;

.0. recognize the elements that make up fund management;

-4. outline the major procedural steps involved in document review and verification, filecompletion, need determination, award packaging, acceptance of awards and completionof other required documents, and award disbursement;

-4. identify the requirements and applicable data items and outline the procedural steps inconfirming student eligibility prior to award packaging and disbursement;

+ define an overaward and state the required procedural steps in handling overawards;

-4. describe the circumstances that necessitate a refund calculation and identify the stepsused in calculating refunds;

+ define the term quality control as it relates to student aid administration;

-4. identify the purposes and elements of institutional quality control in financial aidmanagement; and

-4. outline the procedural steps taken in developing an institutional quality control plan.

INTRODUCTION

In most of the modules so far, we have either presented major concepts that underlie thedistribution of aid--for example, calculating educational costs of attendance, need analysis,award packaging, and verification- -or focused on individual aid programs with their specificeligibility requirements, award amounts, and disbursement procedures. The sequence of major"concept" modules provided a basic framework to which the details of specific aid programswere added.

In a sense, you have. seen pieces of the whole. Now it is time to tie them together n. an overalloffice management perspective. Only after viewing the aid office operation can you tnAly

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3;-L.

Fifteen-v

understand the aid process from start to finish. Although the internal operations of an aidoffice differ in size, staff organization, and institutional philosophy, there are basic functionsand procedures shared by all aid offices. These are prescribed by regulation or areprofessIcrially recommended practices and generally accepted roles of the aid office. In thefirst part of this module, we will examine many of these functions and procedures, reviewingsome of the procedural variations you may find.

The second part of this module will deal with an important topic related to aid officemanagementquality control. Often the complexity of the aid programs and the level ofadministrative responsibility for participating institutions result in attention being focusedalmost exclusively on the day-to-day job of delivering aid to students. Questions of equity inthe aid distribution processespecially methods to ensure equity in measuring families'ability to contribute and in putting together award packagesreceive most of the attention.Other factors, such as regulatory changes and k -islative or funding changes, demand ongoingstaff training. This can result in crisis management rather than good management.

Review of institutional management of the aid programs should not be only a back-end,evaluative process. Self-evaluations, audits, and federal program reviews examine themanagement of a system after the processing year has concluded. Such a detailedexamination is revealing and instructive, but it does not measure the accuracy or quality of theongoing process. It identifies areas of corrective action only after the fact. Evaluation of theintermediate steps in the process--or of the entire system in the midst of a processing year--should be done frequently according to a well-designed plan.

There have been several federal initiatives over the last few years to improve the quality ofaid management at the front end of the process. Much of this has centered on checking theaccuracy of the applicant data that drives the system. The verification system, which nowapplies to the Pell Grant, campus-based, and Stafford Loan programs, was developed toidentify inaccurate or misreported data before funds are disbursed to a student. Anotherfederal initiative to improve the accuracy and overall quality of student aid management isthe Institutional Quality Control Pilot Project. The project focuses on a wide range ofinstitutional activities in student aid administration. This module will provide you with anoverview of the steps to take in developing a quality control system on campus and relate it tobasic processes and specific procedures in aid administration.

1

Fifteen-vi

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8/20/88

PRE-TEST

1. An award adjustment or a refund calculation might be required if a student: (circle allthat apply)

a.hcd.e.

receives an outside scholarship after the term has begunwithdraws, drops out, or is expelled after classes begintransfers to another institution at the end of the academic yeardiscontinues work-study employment at the mid-point of the payment periodenrolls for a full-time course load but drops to part-time status during the add/dropperiod

,.. Continuing students must have their academic records compared to standards for,..

satisfactory academic progress to continue to receive federal student aid. True or False?

3. A quality control program is intended to: (circle all that apply)

a.hcd.e.

evaluate the educational quality of an institution's eligible programssee if all available aid was distributedmonitor the accuracy of the institution's administration of student aidsurvey students for their reactions to aid office personnelaudit the student aid program

4. Student eligibility must be confirmed before financial aid is awarded. For eacheligibility item below, show which source document or documents might be examined.(More than one may apply.)

Eligibility Issue Source Document

a. Previous attendance at another 1. Application fot admissioninstitution 2 Signed statement of student

h Satisfactory academic progress 3. Admissions letterc Enrollment status 4. Aid applicationd. Citizenship status 5. Tax form of parentse. Selective Service registration 6. INS letter/document or passportf. Student admitted 7. Academic transcripts

8. Registrar's class attendance rosters orenrollment reports

5. The term "overaward" refers to:

a.hcd.

(circle all that apply)

awarding aid beyond regulated student loan borrowing limitsawarding aid beyond a student's documented needawarding aid to too many students (i.e. beyond the available funds)awarding aid for a program that runs more than one year

Fifteen-viii 138/20/88

6. Institutions must contribute their own money to Title IV student aid funds. Which of thefollowing refer to this obligation? (circle all that apply)

a. administrative cost allowanceh ?erkins Loan Institutional Capital Contributionc interest payments on Stafford Loans during in-school periods and defermentsd. College Work-Study matching funds

7. Procedures must be in place to ensure that an institution's other administrative offices andfaculty report all information that affects aid awards to the financial aid office (forexample, outside scholarships, employer tuition sponsorship, tuition waivers, studentnon-attendance in classes). True or False?

8. Refund calculation is necessary when a student withdraws before the start of classes, butnot once classes begin. True or False?

9. A student's aid file would not be complete without a signed statement of educationalpurpose each award year. True or False?

10. The following procedures are appropriate in an overaward situation: (circle all thatapply)

a. take no action mile _, the overaward is $500 or moreh ask the student to return any "excess" amount received for noninstitutional costsc take no action, if the overaward is caused by outside funding sourcesd. cancel unpaid grants and loans if there is no additional financial need and the

overaward is $200 or moree determine whether the student shows additional, unanticipated financial need

11. Award packaging of Title IV funds is a process that always takes place prior to financialneed determination. True or False?

12. Fund management in the financial aid office includes: (circle all that apply)

a. developing a packaging policy for student awardsb. developing an institutional budget for managing student aid fundsc filing required fiscal reportsd. disbursing funds (crediting accounts or writing checks) to studentse. monitoring expenditures and balances in federal accounts

8/20/:.:

14

Fifteen-ix

ANSWERS

1. a., b., and e. (15.6.3,15.8)t

2. True. (15.3.3, 15.4)

3. c. (15.11)

4. a: 1, 4, and 7.b: 7 and 8.c 8.d: 1, 4, and 6.e: 2 and 4.f: 3. (Section 15.4 has information on all these items.)

For scoring purposes in Question 4, treat each letter as a separate question. Awardyourself one point for each letter answered with all applicable numbers. The maximumscore on this question is 6 points.*

5. b. (15.6.3)

6. b. and d. (15.2.1)

7. True. (15.4 ,15.5.1.)

8. False. (15.8)

9. True. (15.3.3)

10. b., d., and e. (15.6.3)

11. False. (15.5.1)

12. a., b., c., and e. (15.2)

t For quick access to information on this question, see these sections.

Questions: 17* Your Score Percentage:

1t/

Fifteen-x 8/20/88

/(FINANCIAL AID OFFICE MANAGEMENT:

ROLES, PROCESSES, AND PROCEDURES

15.1 COMMON FACTORSIN AID OFFICE OPERATIONS

Student aid offices differ in size, staff organization, andinstitutional philosophy. However, since the majority ofstudent aid funding is from federal and state sources,there are some common factors that influence theoperation of all aid offices. In addition, generallyaccepted and recommended professional practices havebeen developed over the years, providing a framework ofsound procedures and systems.

15.1.1 Federal and State Agency Guidelines

All federal and state student aid dollars that institutionsreceive must be administered according to regulations andguidelines established by the funding source. Theseregulations, which detail procedural steps that must befollowed, provide a common denominator that influencesall aid office operations.

15.1.2 Time Factors and the Master Calendar

Two of the major external factors influencing theadministration of Title IV aid are the financial aidaward year and the financial aid processing period. Thefinancial aid award year runs from July 1 of one yearthrough June 30 of the following year. The financial aidprocessing period, which is a 24-month period, begins inJanuary and extends through December following theclose of the award year. To assure adequate notificationand timely delivery of Title IV aid, ED operates by amaster calendar. This calendar gives specific dates bywhich:

4 federal and Multiple Data Entry forms must bedistributed, and

4 campus-based and Pell Grant funds for art awardyear must be allocated.

These dates provide a cyclical framework for aid officeoperations.

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13

ED's Master Calendar

This gives specific dates by which EDand institutions must take someimportant actions, such as:

Development and distribution of AFSA(Application for Federal Student Aid )andMDE forms:

by March 1: proposed modificationsand updates published in the FederalRegisterby June 1: final modifications andupdates published in the FederalRegisterby August 15: AFSA and MDE dataelements and instructions approvedby August 30: final approved formsdelivered to servicers and printersby October 1: forms and instructionsprintedby November 1: forms, instructions,ane 'raining materials distributed

Allocation of campus-based and PellGrant funds:

by August 1: distribution of FISAP toinstitutionsby October 1: institutions submitFISAP to EDby November 15: institutions receiveedited FISAP and computer printoutby December 15: institutions returnedits to EDby February 1: institutions receivetentative award levels and final PellGrant payment scheduleby March 1: all appeals settledby April 1: final award notifications:-,- . to institutionsby June 1: Pell Grant authorizationlevels sent to institutions

(For the master calendar legislation, seeSection 482 of the Higher Education Actof 1965, as amended.)

Fifteen -1

SAMPLE FINANCIAL AID CALENDARS

Figure #I: Term Type Institutions

Year 1

Year 2

Year 3

\`' o`' cs* sv3 0.

1 2 3

.

4

.

5 6 7 8 9:::::::::: :::::::: :::::::::: :: . .:-:-,.: :. :- :::-:-::-.- :::: -:-:- -: :-.-::::

to 11

1. Resource planning begins 5. Award year begins 8. AcademicAcademic year ends;2. FISAP filed 6. Academic year begins summer terms begin3. Application processing begins 7. Second term beg is 9. Award year ends4. Packaging/Notifications begin 10. Fiscal Operators reports due

11. Final Pell Grant IPS deadline

Figure #2: Clock Hour Institution

0:4 C." ;P. s oYear 1

Year 2

Year 3

of-G *f55 08% cs'ik - 04f-2

. .

. 4

5/8 7 8 5 10 11 12

1,

13 14

Fifteen-2

Resource planning begins 6. Start date, July 1 10. Start date, March 1

FISAP filed 7. Start date, Sept. 1 11. Start date, May 1

Application processing begins 8. Start date, Nov. 1 12. Award year ends

Packaging/Notifications begin

Award year begins

9. Start date, Jan 1 13. Fiscal Operations

reports due

14 Final Pell Grant

IPS deadline

8/20/

Many institutions schedule 4 to 6 months of planning andpreparation time prior to the start of the processingperiod and award year. During these months, theinstitutional budget is planned and the federalapplication for campus-based funding (FISAP) issubmitted. Also, cost of attendance components for thePell Grant, campus-based, and Stafford/SLS /PLUSprograms are developed, the institutional financial aidapplication and other forms are updated, staff trainingsessions are held, and secondary school outreachcounseling takes place.

We can see from these time frames that there is asignificant period of overlap between two processingyears. While the aid office staff continues processing forthe current award year, they are also involved inactivities related to processing for the upcoming a' Iyear.

The bar charts on the opposite page illustrate theseoverlapping time frames. The solid bar shows a completecycle, from planning in July of Year 1 to the reports sub-mitted and Pell Grant IPS deadlines in October of Year 3.The overlap between this cycle and the next processingcycle (lightly shaded bar) is shown for Year 2 only.

15.13 Common Aid Office Roles and Responsibilities

In addition to major time cycles in student aid manage-ment, some major roles and functions are common to aidoffices. The basic functions include:

C. managing federal, state, and institutional funds,including initial budgeting; monitoring awards anddeclining fund balances; and preparing requiredfiscal reports in conjunction with the business office;

C. student counseling, including preparation anddissemination of required student consumerinformation;

+ collecting and managing confidential studentfinancial aid records and related documents;

C. verifying applicant data;

C. awarding available funds;

+ authorizing the payment of student awards for thedisbursement by the fiscal or business office; and

8/20/ Fifteen-3

4 monitoring changes in student status andauthorizing refunds.

There are procedures that arise out of these basicfunctions. We will focus the remainder of our discussion inModule 15 on these, suggesting some practical approaches.

13.2 FUND MANAGEMENT

Although the entire process of awarding and disbursingstudent aid funds may be referred to as fund management,we are using a narrower definition of the term. By fundmanagement, we mean:

4 preparing an institutional budget for managingfinancial aid funds;

+ developing an award packaging policy;

+ monitoring award totals and fund balancesthroughout the award year and reconciling fundaccounts; and

4 filing required fiscal reports in conjunction with thebusiness office.

15.2.1 Preparation of an InstitutionalBudget for Managing Financial Aid Funds

Preparing an institutional budget for student aid fundsand developing an award packaging policy generallytake place in the preparatory period before the start offinancial aid application processing and the award year.The preparations include:

4 determining the total amount of availablecampus-based funds based on the institutior'stentative or final award authorization letter;

4 calculating the required institutional matchingdollars and administrative allowances;

4 determining whether an SEOG/CWS funds transferor CWS carry forward/carry back funds transferwill be used;

1i

What: Preparing an institutionalfinancial aid budget and awardpackaging policy

Who: The director of financial aid or adesignated aid administrator

When: The preparatory period beforethe start of the processing year

Why: The institution needs a cam-plate picture of available fundsand guidelines for awardingthem to maximize use of fundsand to prevent overspending

Preparing an institutional budget formanaging financial aid funds is not thesame as preparing student expensebudgets. An institutional budgetreflects the total funds available forstudent aid awards for an award year.

Fifteen-4 8/20/88

4 projecting the amount of student loan collections andcancellation reimbursements that will be availablefor re-lending;* and

4 determining the amount of available institutionalaid funds.

In many institutions, preparation of a financial aidbudget overlaps with the institution's overall operatingbudget development process. As a part of that process,estimated and final figures are often shared with thepresident, chief executive officer or owner, and the boardof trustees. Bear in mind that the institution:

-0 must provide any required institutional matchingdollars for the federal CATS and Perkins Loanprograms (and SEOG beginning with 1989-90 awardyear); and

4 may conduct an annual re-examination of theamount available for institutional employment,grants, loans, and scholarships (academic andathletic).

In Modules 12 (Campus-Based Programs) and 14 (Authori-zation, Fiscal Operations, and Reporting), we discussedthe mechanism for awarding federal campus-baseddollars and the flexibility allowed in managing thesedollars. The following example shows the institutionalstudent aid budget of Hometown University for the up-coming award year. It was prepared by Marge Moore, thefinancial aid administrator whom we met in Module 7.

*This information is generally providedto the aid office by the fiscal &rico orstudent loan office.

Refer to Modules 12 and 14 forinformation on campus-based funds.

8/20/88 Fifteen-5

EXAMPLE 1: ESTIMATING FUNDS AVAILABLE FOR AWARDS

1988-89 Hometown University Financial Aid T!,,-. eget

Campus-Based Allocation Institutional Allocations

SEOG $125,000 Academic Scholarships $125,000CWS (federal portion) $420,000 Institutional Work Program $225,000Perkins Loan (FCC) $373,000 Graduate Fellowships $150,000

Hometown University Grants $56,000Graduate Merit Scholarships $85,000

To meet increased SEOG need, a 10% transfer of the CWS allocation to the SEOG program will bemade. (10% is the maximum allowable transfer.)

Supplemental Educational Opportunity Grant Program

SEOG Allocation 10% transfer from CWS Total SEOG Funds$125,000 + $42,000 = $167,000

Let S = SEOG funds available for awards.Hometown University will take the maximum 5% administrative cost allowance (ACA).Then SEOG administrative cost allowance = .05S

Total SEOG funds = S + .05S = 1.65S = $167,000

S = $167,000 = $159,048 = SEOG funds available for awards1.66

.05S = $7,952 = SEOG administrative cost allowance

In summary:

SEOG Allocation 10% Transfer from CWS 5% ACA Available for SEOG Awards$125,000 + $42,000 - $7,952 = $159,048

Fifteen-6 8/20/88

College Work-Study Program

CWS Allocation 10% Transfer to SEOG Available Federal CWS Funds$420,000 $42,000 = $378,000

Let C = gross CWS wages available.Federal CWS funds will pay up to an 80% portion of this, and up to 5% ACA.

Available federal CWS funds = .80C + .05C = .85C = $378,000

C = $378.000 = $444,706 = gross CWS wages availableS5

.85C = $378,000 = available federal CWS funds

.05C = $22,235 = CWS administrative cost allowance

80C = $355,765 = federal portion of payroll

.20C = $88,941 = institutional portion of payroll

In summary:

80% Federal Portion 20% Institutional CWS Gross Wagesof Payroll Portion of Payroll Available$355,765 + $88,941 = $444,706

Perkins Loan Program

Total Institutional Capital Projected Cash on Total PerkinsAllocation Contribution (ICC) Collections Hand Loan Funds$373,000 + $41,444 + $230,000 + $19,400 = $663,844

Let L = Perkins Loan funds available for awards.Hometown University will take the maximum 5% administrative cost allowance.Then Perkins Loan administrative cost allowance = .05L

Total Perkins Loan funds = L + .05L = 1.05L = $663,844

L = $663,844 = $632,232 = Perkins Loan funds available for loans1.05

.05L = $31,612 = Perkins Loan administrative cost allowance

In summary:

Total Perkins Loan Funds 5% ACA Available for Perkins Loans$663,844 $31,612 = $632,232

8/20/88 Fifteen-7

15.2.2 Development of an Award Packaging Policy

Another preparatory element of fund management is thedevelopment of an award packaging policy. This policyis generally updated annually and is based, to someextent, on the institutional financial aid budget for thatsame award year. For a detailed discussion, see Module 9,Award Packaging.

15.2.3 Maintaining Student AidBalances and Reconciling Fund Accounts

An important element of hind management is monitoringstudent aid fund balances and reconciling fund accounts.This includes monitoring:

4 the total of all award packages offered againstfunds available;

4 the total of award acceptances against awardoffers; and

4 the total of disbursements authorized by thefinancial aid office against actual disbursements,federal funds on hand, and federal authorizations.

Award and fund monitoring takes place on an ongoingbasis throughout the processing and award year, andrequires the cooperative efforts of the aid administratorand fiscal officer. Institutions with automated support forfinancial aid management may have the benefit ofreports that monitor fund balances and assist inreconciliation. Reconciliation between records ofauthorized awards, credits to student accounts, andexpenditures from federal accounts must take place atleast monthly. Such reconciliations are necessary tocomplete required fiscal reports.

15.2.4 Filing Required Fiscal Reports

The final topic in our discussion of fund management isreporting requirements. An introductory explanation ofrequired federal fiscal reports may be found in Module 14.In addition, there m'y be other federal, state, or institu-tional reports that the financial aid office or fiscal officestaff must complete.

Fiscal reports are generally completed either periodical-ly during the award year, as program reports of fundsspent to date, or at the close of the fiscal year, to report

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Wnat: Monitoring fund balances

Who: The director of financial aid or adesignated aid administrator

When: On an ongoing basis through-out the processing period

Why: To monitor spending and toprevent overspending

Reconciliation of authorized awards,disbursements, and expenditures fromfederal student aid accounts must takeplace at least monthly. (See 34 CFR674.19, 675.19, and 676.19.)

Module 14, Authorization, FiscalOperations, and Reporting.

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final expenditure totals. Most of these reports requireaccount reconciliations prior to their preparation. This isa joint financial aid/fiscal office effort. Failure tocomplete these reports results in a loss of further fundingand may eventually result in an institution's terminationfrom participation in Title IV student aid programs.Examples of Title IV student aid fiscal reports include theCampus-Based Fiscal Operations Report (Part 1 of theFISAP), Pell Grant Institutional Payment Summaries(IPS), and Federal Cash Transaction Reports. For moreinformation on the completion of these reports, seeModule 14.

15.3 INTERNAL AID OFFICE MANAGEMENT

Fund management includes the mechanism for obtainingprogram funds for your institution, and major administra-tive functions for institutional management of those funds.Delivering aid to individual students, however, isachieved through an efficient flow of records through thefinancial aid office.

We will refer to all of the procedural steps involved indocument collection, review, processing, and maintenance,as well as other aid office monitoring activities, asinternal aid office management.

15.3.1 Steps in Processing

Before we discuss the individual functions, it may behelpful to trace a student aid application through thegeneral steps of processing. The main steps are:

1. Intake counselingproviding information on thecompletion of applications (optional: materialsmay be submitted by mail)

2. Application trackingcollecting of requireddocuments and supporting material

3. Determination of student eligibility--checking ad-mission status (new students), academic status (con-tinuing students), enrollment (planned or actual),and other general student eligibility criteria

4. Application review and verification of applicationdata

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Module 14, Authorization, FiscalOperations, and Repotting.

Fifteen-9

5. Calculation of cost of attendance

6. Determination of financial need

7. Award packaging and coordination with otherresources

8. Award letters

9. Finalization of awards, which includes collectionof student acceptances, student loan promissorynotes and other required forms, and coordination ofCollege Work-Study job placement

10. Confirmation of eligibility for payment

11. Award disbursement

15.3.2 Counseling

Student aid counseling is an important function of afinancial aid office. Several different types of counselingare offered by the aid office.

Intake Counseling with New Students: In large part,this involves providing general information on federal,state, and institutional aid programs, the applicationprocess, and institutional policies. It may includeassistance with application materials and advice onreporting or documenting unusual family circumstances. Insmaller institutions, such in-person counseling of new orprospective students may involve a formal cooperativearrangement between the admissions and financial aidoffices in an effort to familiarize students with theinstitution and increase the likelihood of theirattendance. Trained student workers or peer counselorshave been used effectively in some institutions to providethis kind of counseling service.* Under federal law,students working under the College Work-Study programmay not hold employment positions within an institutionfor recruiting purposes.

Exit Interview/Exit CounselingRequired Counselingfor Stafford Loan, SLS, and Perkins Loan Borrowers:Special default prevention counseling is required forStafford, SLS, and Perkins loan borrowers before theycomplete their course of study or at the time theywithdraw or leave school. Counseling must includegeneral information on the average indebtedness of

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The institution must provide Staffordand SLS loan borrowers with informationon the availability of state grant assis-tance to both in-state and out-of-stateborrowers.

important: Commissioned salespeoplewho work as enrollment recruiters oradmissions counselors are prohibited byregulation from assisting students incompleting Title IV student aid applica-tions or promoting the availability ofStafford, SLS, or PLUS loans.

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students at the institution; a repayment schedule project-ing average monthly repayments at the student's interestrate; a review of options for repayment Goan consolida-tion, refinancing, etc.); and planning the management ofthe debt. This counseling may be in the form of a verbaldiscussion with the individual borrower or a group ofborrowers, or the required information may be provided inwritten form. If borrowers leave the institution withoutbenefit of this counseling, the information must be sent tothem at their last known address.

Counseling Sessions with Continuing Students: Thesemay take the form of individual or group sessionsinitiated by the aid office, or student-initiated sessions.Sessions initiated by the aid office are often used togather additional information required for applicationprocessing or to distribute information or applicationmaterials in a group setting. Student-initiated sessionsmay involve discussing the student's award package,financial aid office policies, or special familycircumstances affecting the student's ability to financeeducational expenses.

Group Counseling Sessions: These may be held forapplication distribution, Perkins Loan, Stafford Loan,and SI 5 exit interviews, advising on student budgets forschool and personal expenses, debt managementcounseling, and student employment orientation sessions.

Outreach Counseling in the Community: Manyinstitutions provide professional financial aid counselingservices to secondary schools and other career develop-ment programs in their area.

Regardless of the nature of tile counseling, there are somecommon sense guidelines you should consider.

+ Require student appointments. This is an effectivetime management tool for your office and assure:, thestudent of your undivided attention. If this is notpossible, assign this counseling responsibility tostaff on a rotating basis to allow others to workundisturbed. Another approach involves blockingout portions of the day or week when the office isopen for walk-in appointments.

+ Train counselors to provide information slowly andthoroughly, using "layman's" terms. Rememberthat many students approach your office with noprior information or understanding of the financialaid process.

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+ Do not use acronyms unless you explain what theymean. Refrain from using aid office jargon indiscussing the financial aid process.

4. Emphasize the need for accuracy in completion ofall application forms. Mention the existingverification process to emphasize the federalgovernment's concern for accurate data.

9 Encourage the applicant to keep photocopies of allimportant documents such as tax returns and studentaid applications.

+ Make a special effort to obtain information onchanged family circumstances that will affect afamily's ability to contribute to educationalexpenses.

+ Refer the student to other potential funding sources(such as state vocational rehabilitation, socialservices, and VA).

+ Refer the student to other available services andcounselors if there are academic or emotionalproblems, or other special needs.

+ Record the date of the meeting and the name of thecounselor handling the session. Provide a writtensummary of the meeting for the student's file.

+ Keep group sessions as small as possible to allow fora free exchange of information and ideas.

+ Make sure all counselors are well informed, cancommunicate effectively, and can explain aid officepolicy.

9 Emphasize to all counselors, through training andby example, that they must respect the confiden-tiality of student financial information.

15.3.3 Record Management

As application forms and supporting materials arrive inyour office, the first decisions regarding records manage-ment are made. How will application materials beprocessed and catalogued? How can documents betracked?

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Most aid office procedures involve date-stamping allmaterials as they are received. The process allows forthe documentation of all actions taken, or not taken, onindividual applications and helps to monitor the overallprocessing time.

The next step is establishing a student file. Mostinstitutions establish individual, cumulative student aidfiles. Such files usually contain all materials collected onthe student which are relevant to financial aid. The useof cumulative files is the most efficient and effectivemethod of file maintenance in a manual aid office. Thelistings below provide a general guide to what the fileshould contain.

A. Student Files for All Aid Applicants

+ Documents Collected Prior to Award Packaging:

P An institutional aid application (an institutionaloption, but widely used)

P A copy of the student's signed enrollment agreementor contract (primarily used by trade and technicalschools) or other documentation that confirms thatthe student has been accepted for admission as aregular student

P A signed statement of educational purpose andSelective Service registration status and acertification statement on student loandefault/grant repayment status (this isincorporated into the institutional aid applicationor an award letter at many institutions)

P Proof of eligible noncitizen/permanent residentstatus

P A Pell Grant SAR for eligible students*P A verification worksheet and documentation

collected as part of the verification processP A need analysis report from an MDE processor or

certified need analysis system used to awardcampus-based aid or determine eligibility forStafford and SLS loans (an institutional option)

P A Financial Aid Transcript (for all transfer studentsfrom all previously attended institutions)

P A satisfactory academic progress evaluation formfor continuing students

P A College Work-Study job application or placementform (an institutional option: information may beincluded in the institutional aid application, or theform may be collected later by the student employ-ment or job placement center)

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2 S

*An institution using the Pell Grant SARFC for campus-based awards ratherthan a need analysis report from an MDEor NAS processor will need to collectSARs from Pell Grant-eligible andineligible students. They must also becollected from ineligible studentsselectod for verification by verificationedits, and may be collected from allundergraduate students prior to StaffordLoan, SLS, or Perkins Loan applicationprocessing, for purposes ofdocumenting Pell Grant eligibility orineligibility.

Refer to Module 13 for a discussion ofthe verification process.

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4 Documentation of Pell Grant eligibility orineligibility

4 Tracking form for duration of Pell Grant eligibility,if any

4 A Stafford Loan or SLS/PLUS application (onlyneeded if the student applies for a Stafford or SLSloan, and/or a parent applies for a PLUS loan)

4 A copy of the parents' and/or student's (andspouse's) prior tax year income tax four. 1040, 1040A,or 1040EZ (applicable if required by the verifica-tion process)

4 Documentation for any professional judgmentadjustments made because of a student's specialcircumstances

+ Documents Resulting from Packaging and Awarding:

4 The institution's copy of the award letter4 The student's signed acceptance of the financial aid

awards4 Institutional copies of any revised award letters

+ In-House Control Documents:

4 A summary sheet summarizing all in-person ortelephone conversations with the student or aboutthe student

4 A document control card or checklist to monitor theapplicant's file contents against required documents(as a control system, a control card is usually keptoutside the aid folder)

4 A packaging worksheet (manual system) or datainput card (automated system)

4 A student aid master card containing information foreach award year

+ Miscellaneous Dch.uments:

4 Bureau of Vocational Rehabilitation (BVR)documents and vouchers

4 Correspondence4 An institutional copy of state grant /scholarship

notification4 An institutional copy of the lender's approval for a

Stafford, SLS, or PLUS loan4 A photocopy of Stafford or SLS check upon receipt

The above listing refers to individual students'cumulative files. There are other general aid documents,publications, and administrative records that may befiled separately in the aid office. (Please note that the

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In automated aid offices, some docu-mentation may be in a computer file.

Documents and vouchers from theBureau or Division of VocationalRehabilitation may be housed in thebusiness or fiscal office in manyinstitutions, since these sponsorsusually must be billed for payment.

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following is not a comprehensive list of all requiredstudent financial aid records, some of which may be keptin the business office or other institutional offices.)

B. Administrative Files

4 The institution's Program Participation Agreement4 Pell Grant ITS reports and end-of-year Student

Payment SummaryFISAP(s) with supporting documentationStafferd/SLS/PLUS Student Status ConfirmationReports

4 Auditors' reports (federal, state, and independentauditors)

4 Scholarship files (institutional and outside donors)4 Federal program review reports and institutional

responses4 Institutional self-evaluation of the financial aid

office4 State grant and scholarship award rosters and

payment reports

C. College Work-Study Files

4 Off-campus agency files containing off-campusagency agreements and correspondence, includingevidence of the agency's nonprofit or for-profitstatus

4 Individual student files for CWS containing thestudent's agreement to work, a copy of the jobplacement form, academic and work schedule forms,evaluation forms, and copies of all time sheets. In amanual system, the aid office may also maintain alog of the student's earnings and declining CWSaward balance in this file. (Institutional option:these documents could be included in the student'sfile, but they tend to make it too bulky.)

D. Perkins Loan Promissory Note Files

Individual student files containing:

4 The original signed promissory note4 A statement of the borrower's rights and

responsibilities4 A personal data sheet4 The entrance/exit interview check sheet4 Correspondence with the student or with Perkins

Loan billing and collection firms

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u

FISAP documentation includes:the source of data for the eligible ap-plicant grid (SARs or CM documents);the data and rationale used indetermining the institution's campus-based award request;the source of data on tuitionrevenues, institutionally fundedstudent assistance, and enrollment;award lists and/or expenditure reportssupporting Pell Grant and campus-based expenditures; andthe location of Perkins Loan billingand collection information and dataused in calculating the institution'sdefault rate.

tf a separate CWS student file is creat-ed, it may contain the following records:

a copy of the student's placementcontract or memorandum detailing thename of the hiring agency, the CWSsupervisor, the approved awardamount, work hours per week, wagerate, and length of employment;a copy of the student's academic andwork schedule for each academicsession;a copy of any evaluation forms for thestudent; andin manual office systems, a record ofstudent earnings and the decliningbalance of the student's award.

CWS files may be housed in a placementor student employment office ratherthan the aid office, depending upon yourinstitution's procedures.

You may find Perkins Loan files housedin the aid office, business or fiscaloffice, or student loan office, dependingupon the institution. By regulation,Perkins Loan promissory notes must behoused in lodwd, fireproof containers- -see 34 CFR 674.19(0'1 (I).

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+ A copy of a completed Form 553, if the student's loanhas been assigned to ED

Files containing Perkins Loan promissory notes must behoused in locked, fireproof containers.

E. Reference Materials

Title IV, Higher Education Act legislation*Federal regulationsFederal Student Financial Aid HandbookThe Pell Grant Formula, 1988-89The Congressional Methodology, 1988-89"Dear Colleague" lettersOSFA Question and Answer ("Q & As") circularsThe Verification GuideThe aid office policies and procedur's manualThe student employment handbook

153.4 Approaches to Document Tracking

A large volume of application forms and supportingmaterial flows into the aid office, especially during peakprocessing periods. The aid office must have a systemthat allows it to:

4- track documents;

4. identify the status of a file for award packaging orother processing; and

-4- allow for timely, routine follow-up for missingdocuments in student files.

Systems will vary depending upon staff size, officeorganization, and level of automated support.

Automated Application Tracking

For the office with automated support, any requireddocument tracking, status reports, and follow-up requestsmay be compiled and generated by computer. There areseveral software packages available to perform thesefunctions. In many systems, a computer file on eachstudent is created as soon as the student's first documentarrives in the aid office. A tracking form, sometimescalled a data input card or record, is created along withthe student's file to record items entered into the computerand their entry dates.

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Refer to Module 12 for a discussion ofthe Perkins Loan program.

and other legislation affecting federalstudent aid programs

For the purpose of our discussion, adata entry form on a student will bereferred to as a data input card. Coredocuments are those documentsrequired for application processing.

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As further documents are received, they are entered intothe system. The computer monitors these documentsagainst a list of core documents specified as necessary forfile completion. Periodic reports identify completed filesor missing documents for follow-up. Those student filesidentified as complete are pulled for preparation forpackaging. Those students identified as having missingdocuments are sent follow-rp request notices with thedate of the request log,g :!:.i into the system. In somesystems, the follow-up letter can be computer-generatedfrom the information in the data base.

Manual Application Tracking

A manual system performs the same tracking job as anautomated one. Generally, a document checklist or atracking sheet is used to record incoming documents and toissue follow-up requests for missing documents. Thissystem relies upon staff members to determine whichdocuments are missing and send follow-up requests, and toperform need determination and award packaging when afile is complete.

File Organization to Support Application Tracking

Many institutions use a system of file organization thatsupports application tracking and processing. This isespecially important in a manual system. In most institu-tions, once student files are created they are maintainedin an alpha order file system. In an automated officethere may be no further need to identify the status ofstudents or their applications. If data are entered on atimely basis, the computer system identifies files thatare either incomplete or complete and ready for packag-ing. This is not the case in a manual setting. As a result,you may find the following organizational techniques inplace to assist the aid administrator in monitoringapplication status and ensuring efficient processing:

t. Color coding (file tabs or colored files): You maywish to color code academic level (freshman,sophomore, undergraduate, graduate), award year,and academic or special programs

4 Grouping of files by application status: Your filesystem may be divided into alpha order sectionsthat follow processing steps. Sections could beestablished for:

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IncompleteComplete Files Awaiting PackagingPackaged and Awaiting a Second Review orFinal ApprovalAwaiting Acceptance/DeclinationFinalized Awards (awards accepted, PerkinsLoan promissory notes and other formscompleted, j'oly referral ar placement completed)

Each file drawer or the entire file system could bedivided in this manner, with files moved as the student'sstatus changes. In effect, the file physically movesthrough the processing steps with its current positionindicating the status of the application.

15.4 DETERMINING STUDENT ELIGIBILITY

The determination of student eligibility for Title IVstudent aid and other programs is another pr -packagingprocess. It starts as soon as the aid office begins to receiveinformation on the student. Information contained in astudent's application forms and supporting materials isreviewed for completeness and consistency. It is cross-checked with:

4- Other institutional records.

4- Other application materials from the sameapplication year requesting the same information.

4- Previous years' application materials, in the case ofcontinuing students. Conflicting information onstudent dependency status and changes in familysize, income, and assets are often uncovered in thiskind of comparative review of data.

If the repeated, or "duplicate", information agrees, thereis no problem. If questions are not answered or "duplicate"data items contain conflicting information, the missinginformation must be supplied and conflicting data itemsresolved before further processing can take place. For areview of the general Title IV student eligibilityrequirements, see Module 6. The chart of source documentsand crosschecl documents on the next page may help youto determine student eligibility and to check theconsistency of applicant-supplied data.

33

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See Module 6, General StudentEligibility.

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Student Eligibility Item

Admission status

Citizenship status

Academic program and level(degree vs. nondegree;graduate vs. undergraduate)

Previous attendance atanother postsecondaryinstitution; previous degrees

Prior loan default orrepayment owed at youinstitution or anypreviously attendedinstitution

Dependency status

Prior attendanceat your institution

Outside resources

Enrollment status

Duration of Pep eligibility

Amual and aggregateloan limits

IDETERMINING STUDENT ELIGIBILRY 11

Possible Source Documents

Registrars office recordsLetter of admission

Admissions office status reportor data base

Enrollment contract

Institutional aid applicationPell Grant SAR

Need analysis documentINS documentation

Institutional aid applicationRegistrars office recordsLetter of admission

Institutional aid applicationPeN Grant SAR

Need analysis reportFinancial Aid Transcript(s)

Perkins Loan billing/collection recordsLetter from Stafford Loanlender or guarantee agencyFinancial Aid Transcript(s)

Student certification statementFinancial aid file or data base

Pell Grant SAR

Need analysis reportParents' 1040 (if requested)Institutional aid application

Financial aid data baseMaster card fileInstitutional aid application

Institutional aid applicationNeed analysis reportNotification from avonEmliuyorganization (e.g. employer, statevocational rehabilitation program)

Registration records

Financial Aid Transcript(s)

Financial Aid Transcript(s)

Sources of Crosscneck

N/A

Application for admissionSecondary school transcriptForeign student advisor

Letter of admission

Permanent academic file in registrar's office

Application for admissionPermanent academic file

Registrars office for 'hold* notice onacademic records

Admissions office for *hold' notice onacademic transcripts from previouslyattended institution(s)

Application for admission

Registration form to verify parents' andstudents' addressesStudent account records

Registrars office data baseStudent accounts or business office recordsAlumni office records

Veterans' counselor or office recordsAdmissions office recordsStudent accounts or business office recordsAthletic and academic departmentsDevelopment office

Glass attendance rosters

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Since much of the information your office receives isstudent-initiated data submitted on financial aidapplications, it is important that the financial aid officecrosscheck data with all other available sources. Theaid office should regularly receive manually prepared orcomputer-generated reports from other administrativeoffices in order to review items critical to aid eligibility.

There are three other important areas of eligibilitydetermination that were discussed in detail in earliermodules. They are:

4- Verification of applicant data. This review isrequired by ED (see Mod Lle 13).

4- Determination that the student has not exceeded:duration limits on Pell eligibility; andapplicable loan limits.

4- Determination that the student is makingsatisfactory academic progress (see Module 6).

Verification cases selected by the central processor areidentified by an asterisked Student Aid Index (SAI) andFamily Contribution (FC) on Student Aid Reports (SARs).Other Title IV verification cases are identified by editcomments on the need analysis reports from the MDE andcertified need analysis system processors.

The verification process requires review of specific dataitems against acceptable documentation, such as federalincome tax returns. Incorrect data must be corrected andstudent eligibility recalculated. Changes of data thatresult in changes in a student's expected family contribu-tion (EFC) generally require reprocessing.

In the case of the Pell Grant program, reprocessing meansreturning Part 2 of the SAR to the central processor. Thestudent then submits the valid, corrected SAR to the aidoffice. Verification of campus-based and Stafford Loanapplicant data allows the aid administrator to recalcu-late the expected family contribution with corrected datato determine changes in student eligibility for thoseprograms.

For a detailed discussion of the verification processrequired data items, required and acceptable documenta-tion, tolerance options, and correction proceduresseeModule 13, Verification.

3 6

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See Module 13 for a discussion ofverification requirements.

See Module 6 for a discussion ofsatisfactory academic progressrequirements.

On the federal Student Aid Report,Title IV verification cases are identifiedby an asterisk adjacent to the SAI andFC.

The aid administrator as the option ofrequesting that the student makecorrections and obtain a revisedcampus -based need analysis reportfrom the MDE or NAS processor (if theinstitution uses one) rather than doingan in-house recalculation.

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Satisfactory academic progress is another major area ofeligibility determination for continuing applicants.Institutional standards must meet the statutoryrequirement that a student must be making satisfactoryacademic progress to be eligible for aid under the Title IVfinancial aid programs.

Satisfactory academic progress policies must be appliedconsistently to all students within identifiable categoriesof students and must include both qualitative andquantitative measures of the student's academic progress.The aid administrator must determine, prior to awardingfurther aid (or di: nursing further aid), that students aremaking satisfactory academic progress. This determina-tion of progress may be made by another administrativeoffice, in which case the eid administrator would benotified about those students not inaking satisfactoryprogress. In an institution with a separate standard ofsatisfactory academic progress for aid recipients, the aidadministrator generally performs this review.

Regardless of the office determining satisfactoryacademic progress, students not meeting this eligibilityrequirement must be notified of their ineligibility forfurther aid by the aid administrator. Their status wouldbe indicated in their files, and their applications wouldbe removed from processing at this point in the cycle. Fora discussion of regulatory requirements for standards ofsatisfactory academic progress, see Module 6 on studenteligibility and Chapter 2 of the Federal StudentFinancial Aid Handbook.

15.5 FILE COMPLETION, NEED DETERMINATION,AND FINAL PREPARATION FOR PACKAGING

We have now reached the stage in processing where allrequired documents have been received, reviewed forcompetenssle, accuray, and consistency, and reprocessedwith any necessary corrections. All facets of studenteligibility for Title IV and/or institutional aid have beenchecked and other outside financial resources noted. Thenext important step is determining financial need.

15.5.1 Financial Need Determination

Financial need determination for campus-based andinstitutional Funds, as discussed in Modules 7, 8, and 9, is

Institutions often have an academicprobation policy. This policy describesthe circumstances under which astudent will be placed on probation, andis usually based on grade point average.The institution's satisfactory academicprogress policy may be separate fromits academic probation policy. If so,students who aro placed on academicprobation may still be considered to bemaking satisfactory academic progress.See Module 6 for further information.

See Module 7, Calculating Cost ofAttendance.

See Module 8, Need Analysis.

See Module 9, Award Packaging.

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based on the difference between a student's cost ofattendance (COA) and expected family contribution(EFC). The aid administrator must select the appropri-ate cost of attendance components for the student, makingdocw,tented adjustments if individual circumstanceswarrant them. Also, modifications are made for less thana full academic year of attendance. At the same time, theaid administrator will also select the correct Pell Grantcost of attendance (cost of education) for determining thestudent's Pell Grant award.

In a manual system, the student budget is entered on thestudent's award packaging worksheet. In an automatedsystem, it is recorded on a data input card or form for laterdata entry into the computer.

The expected family contribution (EFC) is recorded orentered from either the Pell Grant SAR or a need analysisreport (if an MDE processor or other certified needanalysis system processor is used by the institution). TheEFC and cost of attendance must be adjusted to -orrespondto the student's anticipated period of attendance.

Need for campus-based federal funds and institutionalfunds administered by the aid office is still notestablished until the aid administrator reviews otherresources available to the student to cover these sameeducational expenses. These include:

+ Pell Grant awards

+ State grants and scholarships

.0- Institutional scholarships, fellowships, and studentemployment not administered by the aid office

+ Scholarships from outside private donors

+ Processed Stafford, SLS, or PLUS loans

+ Other non-Title IV federal financial aid programs

Information on other institutional funds awarded oradministered by other offices (such as the admissionsoffice, athletic department, and academic departments)must be available to the aid administrator to preventoverawarding.

Subtracting the total of these awards from the initial or"gross need" figure results in a student's "net need" forcampus-based and institutional funds. These outside

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COA - EFC Financial Mod

COA - EFC - Gross Wad

COA - EFC - Other Financial ResourcesNet Mod

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resources are entered on the packaging worksheet or onthe data input card for entry :.'to the computer. Theinstitution determines the level of net need the studentmust show to receive further aid. This level is specifiedin the institution's written award packaging policy.

The determination that a student shows "no need" can bemade at two different points in the need determinationprocess:

4 no "gross need" is established after subtracting theEFC from the student's cost of attendance; or

4 no "net need" for campus-based and institutionalfunds is found, because aid the student will receivefrom other sources meets the student's need.

Student files are removed from the processing cycle atthese two points', and students are notified of their statusby the aid office. As with all written notifications ofineligibility, the students must be informed of the reasonsfor their ineligibility and of other non-need sources of aidthat may be available. Students who are eligible for PellGrants or other forms of assistance should receive anaward letter for those awards along with their notices ofineligibility for further Title IV aid.

15.5.2 Award Packaging

Once net financial need is determined, the process ofawarding funds begins. The institution's packaging policyprovides the guidelines for the distribution of funds. Thesteps in developing an award packaging policy werecovered in Module 9, Award Packaging. If properlydeveloped, the packaging policy serves to distributefunds equitably to meet the needs of students andmaximizes the use of available federal and institutionalfunds. Award packages are generally determined for anacademic year. Students who attend for less than acomplete academic year receive a prorated portion of anacademic year's award.

Award packaging in a manual setting means completingthe student's packaging worksheet according to theaward packaging policy. The aid administrator:

4 reviews students' application data according toprogram-specific eligibility criteria to see if theyare excluded from any types of aid (for example,graduate students are ineligible for Pell Grant and

Students who have no net need forfurther campus-based or institutionalfunding, but with Pell Grant or otherforms of aid eligibility, should receive anAward Notification for those awardsalong with their notices of ineligibility forfurther aid.

See Module 9, Award Packaging.

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3I

SEOG) or are eligible for any restrictedinstitutional grants or scholarships;

+ calculates eligible students' Pell Grant awards;

+ determines the amount of Stafford and SLS loanfunds borrowed by each student, and PLUS loanfunds borrowed by the parent for the award year;

+ reviews Perkins Loan, Stafford Loan, SLS, andPLUS borrowing in relation to academic levelborrowing maximums and overall debt load;

+ examines student preferences in self-help assistance(student employment versus student loans); and

+ documents on the packaging worksheet or data inputcard any special circumstances that have resulted invariations from standard policy in packaging astudent's award.

The date and signature of the aid administratorpackaging the awards should appear on the worksheet.As a crosscheck, many aid offices require a second reviewand the authorizing signature of another financial aidadministrator before preparation of the student's awardnotification.

In an ailiomated financial aid office, the awardpackaging policy is translated into a computer programalmost as soon as it is developed. Testing and refinementof the program follow. Computer edits allow the programto identify specially coded students who are ineligible forcertain types of aid, who do not meet other packagingpolicy conditions, or who require special packagingtreatment. In many offices a complete computer file onthe student has been created as a result of data entered atthe various points in processing. When the system isprovided with an authorizing code, the student's file (ora group of student files becoming complete at the sametime) will be entered into the packaging program foraward packaging.

Some highly automated offices use computer tapes froma need analysis processor containing student budgets,expected family contributions, and gross need in theiraward packaging program. This eliminates significantamounts of data entry and reduces the likelihood of dataentry errors.

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3J

:':

Output from any award packaging computer run should beexamined carefu"y by the aid office before award lettersare mailed to students.

15.6 AWARD NOTIFICATION

Institutions must provide award recipients with writtennotification of their awards. The award letter sent to astudent should include:

O the types and amounts of aid being awarded;

O anticipated dates and method(s) of awarddisbursement;

O the terms and conditions of the awards and for thestudent's continuing receipt of aid;

O deadlines and instructions for accepting or decliningawards;

-4 information on finalizing Perkins Loan (or otherstudent loan) and CWS (or other student employ-ment) awards; and

.4 provisions for appeals.

In a manual aid office operation, award letters may betyped from award packaging worksheets. Preprinted,multiple-copy forms are the most effective meat 7 ofproducing a large number of letters in a short period oftime. They provide the aid office with a student filecopy, two copies for mailing to the studentone to bereturned to accept or decline the awards and another forthe student's recordsand, if necessary, a copy to forwardto the student accounts or Jusiness office for registration

ana.e.

In an automz;ec, office, the end product of automate'award packaging is a similar preprinted, multiplecopyaward letter. To generate award letters, the computerprints information from the master file (such as name,address, and Social Security number), from award files,and possibly from other files to generate award letters.As with the manual system, multiple-copy forms aregenerally used.

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4 0

Financial aid offices must also notifystudents of revisions to awards. Arevised award letter is usually mailed tothe student, with a copy retained in thestudent's file.

0 9 9 9 9 9 9 9 Q 99 G 9 9 0 0 0 9 9 9 C9 9 9 0 9 0 9 9 9" 9 Q 9 9 9 9 9 CI

Q 9 9

.T7.7'rra,s-rzZ-7,-

Fifteen-25

Because most institutions want to maximize the use ofavailable funds, most award letters contain strictdeadline dates for student responsesusually two to threeweeks. Some offices send one follow-up warning requestfor a student response, or allow a one-week grace periodafter the deadline before cancelling a student's award.

As acceptances are received, they are placed in thestudents' files. In a file system organized by studentstatus, the file also physically movesprobably to a"finalized" section of the files. Declination (declining anaward) requires that the student's file be pulled and thedeclination recorded on the packaging worksheet or datainput card for data entry. Declinations in a manualoperation must also be recorded on a cumulative awardrecord maintained by the aid office. Data entry ofdeclinations in an automated system generally updatessimultaneously both the student's file and theinstitutional award file.

Automated systems allow the aid office to produce lists ofstudents with upcoming deadline dates for easy retrievaland cancellation of awards. Manual or partiallyautomated offices without this capability may choose touse a system of file organization to monitor this. Studentfiles containing an award letter file copy are placed in a"Pending Student Response" or "Awaiting Acceptance/Declination" section of the file system until the deadlinedate has passed.

For those awards avzaiting a response, grouping studentfiles or flagging award letters by computer are importantrecords management tools. Student awards represent acommitment of institutional funds, funds that areunavailable for re-awarding while the student's responseis pending. This is an important aspect of any fundmanagement system. An aid office needs to identify andefficiently monitor student awards (accepted, declined, orcancelled), maintain ab., accurate picture of its fundingsituation, and to re-award newly available funds. Whilethe automated office can effectively monitor this byflagging student records, manual offices must rely uponfile organization or similar tools to do the same job.

For the Perkins Loan and CWS programs, there areadditional steps involved in the completion of studentawards after the receipt of a student's acceptance. Therequired steps are described in the following sections.

4Fifteen-26 8/20/88

15.6.1 Perkins Loan Awards

Students accepting Perkins Loan awards must completerequired documents and receive special counselingregarding their loan obligations.

In Module 12, we used the term entrance interview forthese loan counseling sessions. As part of the session,student borrowers must

+ read and sign a Perkins Loan Statement ofBorrower's Rights and Responsibilities;

9 complete a Personal Data Sheet containingbackground information on themselves; and

+ sign their Perkins Loan Promissory Note.

These sessions, as well as the required Perkins Loan exitinterviews with borrowers, may or may not be theresponsibility of the aid office. They are often scheduledprior to the start of an academic term or program as groupsessions for new borrowers. If the aid office is responsiblefor holding these sessions, it must:

+ notify the borrowers of the Perkins Loan entranceinterview requirement;

+ schedule and hold the sessions;

O establish Perkins Loan promissory note files to holdthe materials completed at the sessions; and

O forward information on new borrowers to theinstitutional office responsible for Perkins Loanbilling (such as the fiscal or business office orstudent loan office) or to the Perkins Loan billingservice (if the institution uses one).

15.6.2 College Work-Study Program

Finalizing College Work-Study awards involves thefollowing steps in the aid office:

O developing CWS jobs;

O placing students in CWS positions or referring themto a student employmen. )ffice for job placement;and

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See Module 12, Campus-BasedPrograms: SEOG, CWS, and PerkinsLoan.

Perkins Loan entrance interviews arerequired only for new borrowers.Continuing borrowers may simply reportto sign for their next Perkins Loanadvance after accepting their awards.

Fifteen-27

4. processing the CWS time sheets for payroll.

As discussed in Module 12, the level of aid officeinvolvement in these aspects of the program oftendepends upon the size of the institution and its CWSprogram. At a minimum, the aid office refers eligiblestudents to a separate student employment office for jobplacement. At many institutions, the aid office may beresponsible for

4. developing jobs on campus and with eligibleoff-campus employers, including the collection ofsuitable job descriptions and documentation of:

the reliability of off-campus employers;the relevance of jobs to student educational andvocational goals;

4 ensuring that the proportion of CWS funds used forstudent employment at private, for-profitorganizations does not exceed the 25% limit;

4 developing CWS forms including time sheets,off-campus agency agreements, placement funds,and evaluation forms;

a

a

a

placing students in CWS positions;

maintaining off-campus agency files and CWSstudent files;

collecting, reviewing, and initial processing ofCWS time sheets prior to merging them with theinstitutional payroll; and

4. monitoring individual student earnings and totalCWS expenditures.

15.6.3 Overawards

Earlier in the discussion, we stressed that the financialaid office needs to receive information routinely on allsources of student assistance awarded or managed by otheradministrative offices. Regulations prohibit aninstitution from awarding financial aid in excess of astudent's documented need. Coordination amonginstitutional offices involved in providing assistance tostudents prevents this kind of overaward situation fromdeveloping in the award packaging process. However,this does not address the problem of assistance which theaid office was unaware of during packaging, or assistance

4 3Fifteen-28

Time sheets are usually retained by theoffice that processes payroll. However,some aid offices collect, review, andretain a copy of CWS timesheets beforeforwarding them to the payroll orbusiness office.

See Module 12, Campus-BasedPrograms: SEOG, CWS, and PerkinsLoan.

Overawards are referred to asoverpayments in the Pell Grantprogram.

Refer to 34 CFR 674.14, 675.14, and676.14 for the regulatory provisions foridentifying and handling overawards.

8/20/88

that the student received after packaging. These otherstudent resources may include late state grants orscholarships awards or other privately funded loans orscholarships.

The aid office has an ongoing responsibility to maximizeits use of available student aid funds by equitabledistribution of them. This includes revising awards andredistributing funds to other needy students shouldstudents receive any funds that would exceed theirdocumented financial need by $200 or more

Title N regulations specify that the institution isresponsible for collecting overpayments from students or,failing that, repaying them to program accounts withinstitutional funds.* The following are recommendedsteps to accomplish this:

Step 1. Examine the student's need to see if he or she hasadditional need that was unanticipated at thetime the original awarding took place. If there isadditional need, document the nature and amountof this need. The aid administrator shouldmodify the student's budget (COA) and resultingneed by this amount.

Step 2. If there is no additional need, or the overawardis still in excess of $200, cancel any loans or grantsnot yet paid to the student or the student's account(other than a Pell Grant) that would cause needto be exceeded by more than $199.

Step 3. If Steps 1 and 2 are not applicable, or the amountof the overaward is still $200 or 'more, bill thestudent for the amount of the overpayment andrefund any money collected to the appropriatefederal student aid account. (If unsuccessful incollecting the overpayment, the institution maybe required to repay these accounts.)

Step 4. If the overaward still exceeds the student's needby $200 or more after Steps 1 and 2 and theoveraward is from excess student earnings, theinstitution must determine if the student will beenrolled during the next academic year. If theaid administrator can document the student'sintention to enroll during the next academic year,the amount that exceeds $199 should be treatedas a resource to pay the student's cost of atten-dance for the following year. If the student willnot be enrolled, no further action is necessary.

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4 4

Examples of students' resources mayinclude but are not limited to:

Pell Grant fundswaivers of tuition and feesscholarships or grants, includingROTC and athletic scholarshipsfellowships and assistantshipsinsurance programs for educationalpurpose'slong-term loans made by theinstitutionVA vocational rehabilitation benefits

This list does not include resourcesincluded in determining the EFC.

'Pell Grant regulations (34 CFR 690.79)state that the student is liable for anyoverpayment of Pell Grant funds. Theinstitution is liable if it rails to follow thePell Grant procedures for recovery ofoverpayments outlined in 34 CFR690.79. The institution must repay thePell Grant account if it is unable tocollect the overpayment from thestudent.

Fifteen-29

However, an institution may not use CWS funds topay a student after he or she has earned $200over his or her financial need.

15.6.4 Student Appeals

One of the student's rights in the financial aid process isthe right to appeal. This may include appeal of anineligibility determination based on lack of financialneed or failure to make satisfactory academic progress, orappeal of the student's packaged award amounts. Aidoffices must develop procedures for dealing with studentappeals. Most institutions provide information on appealprocedures with their award notifications and in theirpublished consumer information. Appeal procedures willdiffer from one institution to another. For example,appeals may be:

+ directed to and evaluated by the director offinancial !--.1; or

evaluated by a group of financial aid office staffmembers; or

-O. directed to the aid office and evaluated by afinancial aid committee.

The following procedural approaches should beconsidered when establishing policies for studentappeals:

O Appeals should always be written, with supportingdocumentation attached.

O Appeals should be reviewed as soon as possibleafter they are received. If there is a large volume,appeals should be heard on a regularly scheduledbasis (for example, weekly or every two weeks).

-O. Written responses to appeals should be preparedand mailed to students as soon as administrativelypossible after the decision on an appeal is made.

-O. The appeal, any supporting documentation, and acopy of the written response should be included inthe student's financial aid file.

+ Students making appeals should be provided withthe opportunity to meet personally with theindividual or committee evaluating the appeal.

4,)Fifteen-30

At some institutions, procedures forfinancial aid appeals may be outlinedunder overall institutional grievancepolicies. New aid administrators shoulddetermine if such policies exist anddevelop appeal procedures inaccordance with these policies.

i,nancial Aid Committee: This isgenerally made up of financial aid officestaff, other administrators, and studentrepresentatives. It also assists the aidoffice in the development of majorfinancial aid policies.

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4 Decisions on appeals should be consistent withfinancial aid office policy and must not violatefederal regulations when Title IV funds areinvolved.

15.7 AWARD DISBURSEMENT

Disbursing awards represents the last phase of theapplication processing cycle we have been tracing.Federal regulations state that the office awarding aid tostudents must not also disburse funds. The separation ofresponsibilities requires coordination between thefinancial aid and business or fiscal offices.

Disbursement does not simply mean that the businessoffice prepares checks or credits student accounts. Itinvolves aid office determination that students areeligible for payments followed by its authorization to thebusiness office to disburse. This process is complicated bychanges in student enrollment status and withdrawalsthat necessitate award adjustments by the aid office.

Disbursement procedures have been discussed inModules 10,11, and 12. Awards are paid each paymentperiod. Disbursements may be paid directly to thestudent by check or credited to the student's account.Credit to the student's account for a Pell Grant may notexceed the amount due the school for tuition, fees, and aroom and board contract (if any), unless the studentrequests in writing that an additional amount be held.Institutions are required to inform students of thedisbursement amounts, method of payment, andapproximate scheduled dates of payment.

Stafford and SLS loan funds must be sent directly to theinstitution. Stafford Loans, and SLS loans made afterOctober 1, 1988, must be disbursed In two or moreinstallments (multiple disbursement) if the loan is for$1,000 or more and the period of enrollment is more than 6months, 1 semester, 2 quarters, or 600 clock hours. If amultiple disbursement is required on a Stafford or SLSloan, no disbursement may exceed one-half of the loanamount. In addition, at least one-third of the totalenrollment period for which the loan was borrowed mustpass before a second disbursement may be made.

The earliest point at which an institution may disbursefunds depends upon the method of disbursement:

For regulations on award disbursement,see: Perkins Loan 674.16; SEOG676.16; CWS 675.16; Stafford Loan/SLS Subpart D, 682.604.

Direct Payment by Check

Some institutions prepare co-payablechecks to the student and the schoolup to the amount that the studentowes the institution. These checksrequire the student's endorsementbefore crediting to a student'saccount can take place.

Other institutions prepare checkspayable to the institution on behalf ofthe student up to the amount owed theinstitution.

In both cases, any excess funds aredelivered to the student.

If cumulative checks are used ratherthan an individual check for each typeof aid, the aid sources and amountsmaking up the total should appear onthe check. Credits to studentaccounts should clearly show eachaid source and amount (for auditpurposes).

8/20/88 Fifteen-31467

4 10 days before the first day of classes of a paymentperiod, for registered students who are paid bycheck.

4 3 weeks before the first day of classes of a paymentperiod, for registered students whose funds arecredited to their accounts.

15.7.1 Evaluation of Student Eligibility

Before payment may be made, the institution must haveprocedures in place to:

confirm student eligibility;

make necessary award adjustments;

authorize payment; and

modify payments already authorized. (This maybe necessary if the institution disburses aid prior tothe beginning of classes.)

This involves asking the following questions on enroll-ment and other student status factors:

4 Enrollment:Does the student meet the minimum enrollmentstatus requirements?Is the student actually in attendance?Is there a change in the level of enrollment,and therefore in costs, which requires awardmodifications?

9 Other Student Status Factors:Is the student making satisfactory academicprogress?Is the student a degree/certificate-seekingstudent?Is a continuing student repeating courses undercircumstances in which program funds cannot beused?Has a continuing student reached his or herlimit of financial aid for remedial coursework?

Confirming student status, registration, and attendancerequires the review of institutional records usually com-piled by a registrar's or student records office. Dependingupon the institution's registration system and level ofautomation, these might be:

Fifteen-324/

Records used to verify enrollment orother student status factors must beretained by the institution and madeavailable to auditors and otherauthorized officials.

Repetition of CoursesPell GrantRecipients: If a student repeats acourse in which an "incomplete" gradewas given, then the repeated hours maynot be included in enrollment status.

Limits on Remedial Courseworic Allowedunder Me 1V Regulations: Students arelimited to payment for the equivalent ofone academic year of noncredit orreduced credit remedial work, except forcourses in English as a secondlanguage (ESL).

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+ copies of individual registration forms or classattendance rosters;

+ class attendance lists;

+ computer print-outs of registration records; or

+ on-line computer access to registration files.

15.7.2 Changes in Awards

The aid office's eligibility review will determine whichstudent awards may be authorized for payment andwhich must be cancelled or modified. Award changes andcancellations require the following steps:

Step 1. Retrieve the student's file.

Step 2. Manual Systems-- Modify or cancel the award onthe packaging worksheet. Record the change andthe reason for it. Sign and date the worksheet.Automated Systems--Record the change and thereason for it in the student's file. Sign and datethe file entry. Record the change on the datainput card for entry into the computer system.

Step 3. Generate a revised award letter or notice ofcancellation and mail it to the student.

Step 4. Manual Systems-- Instruct the business or fiscaloffice to change the student's account. Updatethe award record sheet or similar listing of allawards in the aid office.Automated SystemsNo action is necessary,because changes the aid office enters in theaward file will be reflected on student accountswhen the aid office or business office initiates amerging of those computer files.

15.7.3 Authorization to Disburse

Following verification of student eligibility and awardmodifications, awards may be authorized for crediting tostudent accounts or for making direct payments to students.This involves coordination with the business or fiscaloffice, since the financial aid office authorizes paymentsbut the fiscal or business office is responsible for actualdisbursement.

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Distribution of Responsibilities: Aninstitution must administer the Title IVprograms with adequate checks andbalances in its system of internalcontrols. This includes dividing thefunctions of authorizing payments anddisbursing funds so that no office hasresponsibility for both functions withrespect to any particular student aidedunder the programs. 34 CFR 568.14.

Fifteen-33

Methods of authorizing and disbursing award paymentsand tracking total expenditures vary from institution toinstitution. It is largely dependent upon the level ofautomation the institution employs. You may find one ofthe following r ethods in place at your institution.

Manual Systems

Step 1. Lists of authorized awards for each type of aid orfor each student are prepared for each paymentperiod. These generally contain the student'sname, Social Security number, and award amountsand sources being authorized for the paymentperiod.

Step 2.

Step 3.

Step 4.

Step 1.

Step 2.

The authorizing aid administrator signs anddates this award list, retaining a copy for aidoffice records.*

A signed copy of the list is forwarded to thebusiness or fiscal office.

The business or fiscal office credits studentaccounts with these amounts, or checks areprepared in these amounts for crediting or directpayment.

Automated Systems

Awards and changes to awards are entered in thecomputer award file during the awarding andverification processes.

Variation 1 - -The financial aid office computerprograms are not integrated with the studentaccounts system. Therefore, the aid office printsa list of awards authorized for payment andforwards it to the business or fiscal office in thesame manner as in a manual system. Awardtotals from these lists document the amount offederal funds that may be transferred intoinstitutional accounts.Variation 2Ti1ere is an integrated data base.The aid office authorizes a merging of thecomputer award file and student accounts file andaccounts are credited. Summary reports of thetotal award credits by type of aid are usuallyavailable. This provides back-up documentationfor the transfer of funds from federal student aidaccounts into institutional accounts.

Fifteen-3443

*Preprinted, multiple-copy carbonlessforms are useful for this purpose. Aidoffice copies should be stored in readilyaccessible binder notebooks or files foreasy reference. For easy reference,organize the authorization lists by typeof aid, payment period, and date ofauthorization.

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15.8 CHANGES IN STATUS,REFUNDS, AND REPAYMENTS

You have verified student eligibility and authorized aidpayments based on current student status. What happensif that status changes? What if that enrollment changeis the student's complete withdrawal? What steps mustan institution take to recover funds that have beendisbursed for an entire payment period when a studentwithdraws? These issues bring us to a discussion of awardchanges and refunds to Title IV accounts.

Remember that SEOG, Perkins, and Pell funds are paid tostudents by payment period. For refund purposes, StaffordLoan, SLS, and PLUS funds are also apportioned or earnedaccording to those same payment periods.

15.8.1 Developing an Institutional Refund Policy

Each institution that participates in Title IV programsmust establish and publish a general refund policy thatstates how much money will be returned to the"purchaser" of education for the periods of education notcompleted. A school's refund policy is used to refundunearned tuit'on, fees, and room and board charges when astudent does not enroll for a period of attendance or doesnot complete the rraod of attendance. The refund policymust

+ be fair and equitable;

:). meet the requirements of applicable state laws; and

4 meet refund standards established by the institu-tion's nationally recognized accrediting agency. Ifno such refund standards exist, institutionalstandards must meet the refund policy standardspublished in Title IV program regulations.

Some examples of institutional refund policies areprovided on the next page.

8/20/88 3 0

See 34 CFR 682, Appendix A, forguidance on the development of aninstitutional policy if no accreditingagency standard exists.

Fifteen -35

EXAMPLES OF INSTITUTIONAL REFUND POLICIES

Example: Credit-Hour, Term-Based Institutions

Refunds of Tuition and Fees

A student who withdraws for personal or medical reasons, is suspended, or is dismissed, will receive arefund of tuition and fees according to the following schedule:

O Prior to the end of the first three weeks of classes-80% refund.4. During the fourth or fifth week of classes-40% refund.4. After the fifth week of classes--no refund.

Refunds of Other Expenses

On- and off-campus room and board expenses will be prorated for a 15-week semester (according to thenumber of weeks in the semester). Refunds will be calculated based on the number of weeks the studentattended and the corresponding prorated expenses.

Books, supplies, and miscellaneous expense allowances will be considered to be expended at thebeginning of each semester.

Example: Clock- or Credit -Hour, Nonterm Institutions

Refunds of Tuition and Fees

For a student who officially withdraws from the institution or terminates attendance in a course oftraining, the following schedule will be used to calculate tuition refunds:

O Within the first week of classes-90% of the course contract price will be refunded. (Finalcharges to the student may not exceed $350.00,)Within the first 25% of the course-75% of the course contract price will be refunded.

O After 25% course cor.pietion, but before 50%-50% of the course contract price will be refunded.O After 50% course completionno refund.

Refunds of Other Expenses

Living expense allowances calculated for the student's entire academic program will be proratedaccording to the student's period of attendance. Attendance for a pkirtion of a week is calculated as anentire week. Books, supplies, and miscellaneousexpense allowance are assumed to be expended inequal amounts at the beginning of each payment period.

Fifteen-36 8/20/88

An institution is responsible for developing its own refundpolicy, for publishing the policy, and for implementingprocedures that ensure that the following steps are taken:

4 Identification of students who are subject to a refundcalculation. (Most institutions have specificdeadline dates and withdrawal procedures.)

4 Identification of cases in which Title IV funds areunclaimed. (Institutions must have a reliablesystem to identify aid recipients who havewithdrawn and to notify the aid office of studentwithdrawals.)

Calculation of a total institutional refund amount.

Application of the distribution formula(established by regulation) to determine howmuch of the institutional refund must be returned tothe Title IV programs. This formula is shown onpage 39.

Application of the institution's Title IV refundallocation policy. The allocation policyestablishes the order in which the various Title Nprograms will be refunded. An example of aninstitutional allocation policy is shown below.

EXAMPLE OF AN INSTITUTION'S ALLOCATION POLICY FOR TITLE IV REFUNDS

Allocation Policy for Title IV Refunds

The institution will apply the following priorities in refunding to Title IV programs:

0 1st to SEOG 4 5th to Pell Grant

4. 2nd to Perkins Loan 4 6th to State Grant (including SSIG)

0 3rd to Stafford Loan 7th to Institutional Scholarship*

4 4th to SLS :r 8th to Student*

If a student received aid from non -Title IV programs or madea cash payment for institutional charges, the institution'spolicy may include refunds to these sources. The studentmay be repaid only after 100% of the Title IV refund (otherthan CWS) has been returned to the Title iV programs.

8/20/ Fifteen-37

15.8.2 Status Change Before Classes Begin

We have already stated that a student must be registeredand in attendance to receive an award payment. If, beforethe first day of classes, the student officially or unoffi-cially withdraws or is expelled, the institution must:

4 make a full refund to Pell Grant, SEOG, and PerkinsLoan program accounts; and

4 send a full refund to the lender for Stafford and SLSloans.

These full refunds must include all payments made forinstitutional and noninstitutional costs.

15.8.3 Change in Enrollment LevelBefore or Within a Payment Period

If students change their enrollment level, the action to betaken depends on when the change occurs:

Before a Payment Period

Pell GrantAwards

Campus-BasedAwards (SEOG,Perkins Loan,

and CMS;

Award amounts must be moc',died.Module 10 for details on Pell Grant changes.

Students must remain enrolled at least half -timeto be eligible for a Pell Grant.

Award modifications depend uponinstitutional policy and changes infinancial need. Reduced need due toreduced costs following a change in enrollmentmay require award revision or cancellation.

Within a Payment Period

Pell Grant

AwardsAn institution may modify an award, butthis is not required.

Campii Based An institution may change a student'sAward award, but this is not required.

15.8.4 Student Withdrawal orExpulsion After the First Day of Classes

If a student withdraws, drops out, or is expelled on orafter the first day of classes, and if the student receivedTitle IV funds, the institution must determine whetherall or part of the funds must be refunded to Title I"accounts.

Fifteen-38

A full refund of Title IV program funds tothe institution's federal student aidaccounts must take place if a registeredstudent never actually begins classattendance. In the case of a loanpayment, all the money is due back tothe lender, even funds paid to a studentfor noninstitutional costs.

Any Stafford or SLS loan checkreceived (either before or during apayment period) for a student who is nolonger enrolled at least half-time must bereturned to the lender.

If an institution elects to change studentawards within a payment period, thismust be done consistently for allstudents.

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The regulations governing the administration of Title IVfunds describe the circumstances under which a refundmust be made to the Title IV programs when a studentleaves school. Formulas provided in the regulations showinstitutions how to determine what portion of a refundmust be returned to Title IV accounts.

It is important to distinguish between two categories ofrefunds which may be due to Title IV accounts or thestudent

Institutional Refunds: These are refunds of paymentsmade by students for institutional charges (tuition, fees,and contracted room and board expenses) out of financialaid or other funds. The refund equals the amountoriginally paid for a payment period minus the amountretained by the institution to cover the portion of thepayment period while the student was in school. Inaddition to refunding the Title IV program accounts, aportion of the refund may be payable to the student.

Repayments of Disbursements for NoninstitutionalCosts: These are repayments of financial aid disburse-ments to students for education-related, noninstitutionalcosts for the payment period.* Once a student withdraws,all or part of these funds may represent an overpaymentsince they will no longer be used for education-relatedexpenses. The student is asked to repay these Pell Grant,SEOG, and Perkins Loan funds to the institution's studentaid accounts.

15.8.5 Refunds to Title IV Programs

Regulations specify the distribution formula whichinstitutions must use to determine the portion of aninstitutional refund that must be refunded to Tiile IVaccounts. For the payment period, the minimum amount tobe refunded to Title IV programs is the lesser of:

4. the amount of Title IV money (other than CWS)received for the payment period, or

0 the amount calculated with this formula:

total amount of Title IV aid (minus CWSamount of x earnings) awarded for the paymeloriod =

refund total amount of all aid (minus all worts earnings)

awarded for the payment period

8/20/88 54

Refer to 34 CFR 668.21-22, Subpart S,for regulations on institutional refunds.

The term refund is used in regula-tions to refer specifically to refundsby Institutions of payments madeto them for Institutional charges.Institutional charges are tuition, fees,and room and board expenses if theyare contracted with the institution.

The term ropsymont refers to thereturn of funds paid to the student fornoninstitutional costs. Noninstitution-al educational costs may include, butare not limited to, room and board (ifnot contras ,d with the institution),books and s. lies, transportation,and miscellaneous expenses.

The original disbursements to studentsfor noninstitutional, education-relatedexpenses are sometimes referred to inthe aid community as "student refunds."A student who withdraws may need topay back all or part of the "studentrefund" to the institution.

amount to be returnedto Trtle IV accounts

Fifteenteen -39

StaffordISLSIPLLIS Loan Refund Procedures

For Stafford, SLS, and PLUS loans, the formula includesonly the portion of the total loan that is attributed to thepayment periods) for which the student attended, whichmay not be the total amount of the loan disbursement(s)that the lender has sent to the school prior to thestudent's withdrawal. Example 1 illustrates this point.

Example 1: Loan Refund Procedures

Anne Smith's contracted tuition and fee cost for a businessschool program is $5,000. She is awarded the followingaid:

Pell Grant $1,000Perkins Loan 500Stafford Loan 2,625SLS 1,500

She is enrolled in a 6-month program which begins onSeptember 1. The midpoint of her program will beDecember 1. The lender sends the school disbursements of$1,250 for the Stafford Loan ($1,312 minus the originationfee and insurance premium) and $700 ($750 minus fees) forthe SLS on August 20, and Anne pays the school $2,700toward her tuition.

Anne withdraws from the program on November 15.Meanwhile, the lender has sent the second disbursementsof her Stafford and SLS loans (checks of $1,250 and $700)to the school, and the school has credited this $1,950toward the $2,300 remaining on Anne's tuition bill.

On November 30, the school verifies that Anne is nolonger enrolled. Anne is therefore not eligible to receivethe second disbursements of the loans, which areattributable to the second payment period of Anne'sprogram. The school must now withdraw the $1,950 fromAnne's account and return the loan funds to the lender,even though Anne still owes $2,300 on her contractedtuition. This is because Stafford and SLS awards areapportioned by payment period. The total amount ofStafford and SLS loans awarded for the first paymentperiod, without considering any fees subtracted($1,312 + $750 = $2,062) is the figure to be included in thedistribution formula on the previous page.

An institution may hold disbursementchecks for Stafford or SLS loans for upto 45 days before delivering them to thestudent. This practice may help toreduce the administrative work involvedin refunding loan funds not earned forsubsequent payment periods butreceived while the student is stillenrolled.

L)0Fifteen -40

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The case study on page 43 illustrates refund calculationsfor a credit-hour, term-based institution. It uses theterm-based institutional refund policy and Title IVdistribution policy shown on previous pages.

15.8.6 Repayments of Disbursementsfor Noninstitutional Costs

Students who receive cash disbursements ("studentrefunds") for noninstitutional costs, and who withdrawbefore the first day of classes, must make a repayment tothe institution. For students who do not attend a singleday of the loan period for which a Stafford, SLS, or PLUSloan is intended, all loan funds paid for both institutionaland noninstitutional costs must be returned to the lender.

For students who withdraw, are expelled, or drop outafter the start of classes, the institution must determinewhether a repayment of Title IV funds (other than CWS,Stafford Loan, SLS, and PLUS) is due. The student isrequired to repay that portion of the disbursement that isnow considered an overpayment. The institution isexpected to:

.0. calculate the repayment amount and bill thestudent for it; and

4 use its allocation policy in returning funds to TitleIV accounts.

To calculate the amount of the overpayment, theinstitution must:

4 document the student's date of withdrawal or iithe student dropped out, the last recorded date ofattendance (if the institution is unable to documentthat date, all Pell Grant, SEOG, and Perkins Loanprogram funds paid to the student for noninstitution-al costs are an overpayment);

4 identify the aid sources that made up thedisbursement; and

4 determine the amount the student received as a cashdisbursement for noninstitutional costs and subtractthe portion of these costs that the student couldreasonably have incurred for the actual period ofattendance.

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When figuring the amount of theoverpayment, do no count any aid fromthe CWS, Stafford Loan, SLS, or PLUSprograms in the cash disbursement.Aid from these programs is excludedfrom the repayment formula.

If the school finds that the student'sliving expenses incurred up to the timeof withdrawal exceed the amount ofcash disbursed, the student has notbeen overpaid. However, if the cashdisbursement was greater than thestudent's living expenses up to thewithdrawal date, the excess amount isan overpayment.

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The portion of the overpayment that must be returned toTitle IV programs is the lesser of:

-0 the amount of assistance received under Title IVprogram's other than CWS, Stafford Loan, PLUS, orRS; or

4. the amount calculated using the following formula:

amount of total amount of Title IV aid (minus CWS earnings andoverpayment x Stafforci/SLS/PLUS loans) awarded for payment period = amount to be returned(determined total amount of aid (minus all work earnings and Stafford/ to Title IV accountsby institution) SLS/PLUS loans) awarded for the payment period

For an example of this calculation, see the second part ofthe following case study.

J'

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CASE STUDY : INSTITUTIONAL REFUNDS ANDREPAYMENTS OF FUNDS FOR NONINSTITU7 TONAL COSTS

Henry Wong withdraws from the institution after the fourth week of classes in the first semester of hisjunior year. He had received student financial aid as follows:

Student Aid Received for the Payment Period

Pell GrantSEOGPerkins LoanStafford LoanState ScholarshipTotal Non-CWS Aid

CWS Earned to Dateof WithdrawalTotal Aid

$1,050300250

1,250*350

3,200

300$3,500

Institutional Costs (One Semester)

TuitionFeesTotal Costs

$1,45075

$1,525

Cash Disbursement for the Payment Porind

Henry resides off campus. The institution uses a semestersystem with 2 payment periods in the academic year.

Total Non-CWS Aid- Institutional CostsCash Disbursement

$3,2001,525

$1,675

One half of a $2,650 loan

minus S150 insurance and

origination fees

DETERMINING THE TITLE IV PORTION OF THE INSTITUTIONAL REFUNDAND APPLYING THE INSTITUTION'S ALLOCATION POLICY

According to the institution's refund policy, 40% of the institutional costs are refundable.

$1,525 x .40 = $610 total institutional refund

What portion of this refund is payable to Title IV accounts, and what is payable to Henry?

Applying the refund distribution formula un page 38, the portion of the total $610 institutional refundto be refunded to Title IV accounts is:

$1,050 + $300 + $250 + $1,325 (no CWS or state schol.*) x $610$1,050 + $300 + $250 + $1,325 +$350 (no CWS; includes state schol )

$2,925 x $610 = $545 institutional refund to Title IV programs$3,275

$610 - $545 = $65 institutional refund payable to Henry**

"These funds might be repaid tothe state scholarship program,

depending on state requirements

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55

'State semlarships containingTitle IV SSIG funds would be

included in the total amount ofTitle IV aid

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Applying the institution's allocation policy (see page 37) for refunds to Title IV programs:

1st to SEOG2nd to Perkins Loan3rd to Stafford Loan4th to Pell Grant5th to State Scholarship6th to Institutional Scholarship7th to StudentTotal Institutional Refund

$300 (full refund of original award)245 (partial refund of original award)

000

N/A0

$545

DETERMINING THe: OVERPAYMENT OF TITLE IV FUNDS FOR NONINSTITUTIONAL COSTSAND APPLYING THE INSTITUTION'S ALLOCATION POLICY

Henry Wong withdrew after the fourth week of classes. To determine the amount Henry received in acash disbursement for the semester's noninstitutional costs, the following steps must be followed:

Step 1. Determine the amount the student received as a cash disbursement for noninstitutional costs.From the previous page, the cash disbursement for the payment period $1,675.

Step 2. Identify the sources of aid that made up the cash disbursement.The institution has a policy of crediting Pell Grant and StaffordLoan funds to student accounts before other aid. For thisreason, it is able to identify the aid sources that paid forinstitutional costs and those that made up the cash disbursement.

Total Institutional Costs: $1,525

Paid By: Pell Grant:Stafford Loan

Institutions must develop a methodfor identifying the sources of aidthat make up cash disbursementsto students for noninstitutionalcosts

$1,050 (all used to pay for institutional costs)$ 475 (portion of the loan used to pay for institutional costs)

Therefore. the sources of the cash disbursement were:

Stafford LoanSEOGPerkins LoanState ScholarshipTotal Cash Disbursement

$775 (portion of the loan left after paying institutional costs)300250350

$1,675

Subtract the Stafford portion of the refund, since the formula excludes Stafford/SLS/PLUS funds in arevised cash disbursement figure for determining the overpayment:

Total Cash Disbursement $1,675Stafford Portion -775

'Net Cash Disbursement $900(for calculating overpayment)

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Step 3. Calculate the noninstitutional costs that the student could reasonably have incurred during theattendance period. The institution's refund policy states that noninstitutional expenses areprorated for the 15 week semester. To determine the expenses Henry reasonably incurred for his4 weeks of attendance, perform the following calculations:

Room and Board

Transportation

$1525 per semester x 4 weeks = $40815 weeks

$300 per semester x 4 weeks = $8015 weeks

Books, Supplies, & Miscellaneous = $150

$408 + $80 + $150 = $638 = total costs incurred by the student

The overpayment is the difference between the $900 net cash disbursement and the total costsincurred of $638:

Overpayment to student = $900 - $638 = $262Henry must therefore repay $262 to the institution.

Step 4. Calculate the portion of the overpayment that the institution must refund to Title IV accounts.This is done by applying the following formula:

total amount of Title IV aid (minus CWS earningsoverpayment x and Stafford/SLS/PLUS loans) for the payment period

total amount of aid (minus work earnings and Stafford/SLS/PLUS loans) for the payment period

$262 x 1050 (Pell Grant) + 300 (SEOG) + 250 (Perkins Loan)1050 (Pell Grant) + 300 (SEOG) + 250 (Perkins Loan) + 350 (State Schol.)

= $215 minimum refund to Title IV

Refund amounts to specific Title IV programs using the institution's allocation policy (remember thatsome programs have already received payments through the institutional refund):

1st SEOG2nd to Perkins Loan3rd to Stafford Loan4th to Pell Grant5th to State Scholarship6th to Institutional Scholarship 0Total Refund from Overpayment $262

$0 (SEOG already fully refunded)5 ($245 of original $250 award already refunded)

N/A210 (completes minimum $215 refund to Title IV)

47

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15.9 RECORD MAINTENANCE AND RETENTION

It should be clear from our discussion of records manage-ment that for every year an institution participates inTitle N programs, it collects and internally generates asignificant volume of documentation. Regulations specifywhich of these records must be maintained and theirretention period. The requirements for record maintenanceand retention encompass more than the financial aidoffice's operations. They are institution-wide and includefinancial aid office, fiscal, and general institutionalrecords.

The following general institutional records must beestablished and maintained on a current basis:

+ records on each student's admission to theinstitution, enrollment status, academic program,and courseload;

+ records that document that the student ismaintaining satisfactory academic progress; and

+ records on the educational qualifications of eachregular student the institution admits and on theapplicable admission standards, even if the studentreceived no Title N funds.

Financial aid office and fiscal office requirements includeaid application, administrative, reporting, program-specific, and fiscal records, such as:

Application/Administrative Records:

+ student applications for financial aid, and needanalysis documentation for all eligible aidapplicants, whether or not the applicant receivedany financial aid;

+ documents establishing a student's eligibility forspecific aid programs (e.g. Pell Grant SARs andneed analysis reports), and documents showing howand to what extent the student's financial need wasmet;

+ data used to construct each individual's cost ofattendance (COA);

0 I

For regulations on the institution'sretention and maintenance of Title IVrecords, see:

Campus-based programs-34 CFR 674.19, 675.19, and 676.19Pell Grant program- -34 CFR 690.82Stafford/SLS/PLUS programs- -34 CFR 682.610

Current regulations require an institutionto maintain on file all campus-basedprogram aid applications to supportFISAP data.

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O identification of the aid administrator(s) whodetermined the student's financial need;

O verification worksheets and supporting documents;

4 a record of Stafford, SLS, and PLUS loans, includingthe name of the borrower, name of the lender,amount of the loan, and enrollment period for whichthe loan was borrowed;

O data usea to establish full- or part-time enrollmentstatus and the period of enrollment;

;. applications of students who applied for and wereawarded SEOG, Perkins Loan, and CWS funds; and

O records of any refunds due or paid to the student, toTitle N program accounts, or to a student'sStafford/SLS/PLUS lender.

Reporting Records:

O copies of all required reports such as the FISAP,Pell Grant Institutional Payment Summaries UPS)and Statements of Account (SOA), ED PaymentSystem (ED/PMS) cash requests, ED/PMS series 272quarterly reports, and Stafford/SLS/PLUSConfirmation Reports; and

4 records supporting data which appear on allrequired reports.

Program-Specific Records:

4 PELL:Pell Grant SARs; anda record of the amount and date of each grantpayment.

4 Stafford /SLS /PLUS:a record of the date the student pays his or hertuition and fees; anda record of the date the institution receiveseach loan check, endorses it, and credits it tothe student's account, if it is co-payable, or thedate it gives each check to the student.

4 Perkins Loan:promissory notes in locked, fireproof containers;repayment history for each borrower, whichincludes dates and amounts (interest and

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principal) of each payment due for the life ofthe loan;history of borrower contacts (date, nature ofcontact, results) in the collection of overdueloans;copies of all correspondence to and from theborrower;copies of all loan cancellations and requests forloan deferment; andcollection firm reports.

CWS:payroll vouchers supporting payroll checks ordisbursements; andcertification statements signed by the student'ssupervisor (or other institutional or off-campusagency official) affirming that the student hasworked and earned the amount being paid.

General Fiscal Records:

+ a record of all program transactions;

.0 bank statements of accounts containing Title IVfunds;

0 student account records, including the amount oftuition and fees paid by aid recipients for eachenrollment period; and

4 general ledger (control accounts) and relatedsubsidiary ledgers that identify each programtransaction and separate those transactions fromthe institution's other financial transactions.

All of these records are subject to audit and must besystematically organized and available for review at thelocation where the student received a degree or certifi-cate. With the exception of loan records and unresolvedaudit or program review questions, all records for aparticular award year must be retained for 5 years after:

4 the institution submits its FISAP

4 the institution submits its final Pell Grant IPS for anaward year

-0 the institution's completion of reports and otherforms used by the school which are related toStafford, SLS, and PLUS loans

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63

Perkins Loan records must be retained for at least 5 yearsfrom the date of the loan's final repayment, cancellation,or assignment to the Department of Education.

Records involved in program review and audit questionsmust be maintained until these questions are resolved.

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[( INSTITUTIONAL QUALITY CONTROL

i

15.10 ERRORS IN THE DELIVERYOF STUDENT FINANCIAL AID

Although the Department of Education is committed toimproving quality in the delivery of the major Title IVstudent financial assistance programs, there are manyproblems it cannot address without the help ofinstitutional aid administrators. Until recently, theemphasis in student aid management was placed on theaccuracy of data entering the system and evaluation atthe close of the processing cycle. Less attention wasfocused on assisting institutions in evaluating their aidoffice operations during the processing cycle.

In 1985, the Department of Education began a managerialexperiment to test the proposition that deregulation ofdata verification activities can be linked with theestablishment of a fair and workable system ofaccountability at the institutional level to ensure theproper expenditure of Title IV funds. Approximately 60participating postsecondary institutions are:

'4)* assessing their financial aid office managementpractices;

'4)* identifyng error points and weaknesses; and

:::- developing corrective actions.

Institutions in the project are exempt from regulatoryverification procedures. Listead, they develop and usetheir own quality control programs. This is not intendedto exempt an institution from gathering valid data;rather, it is intenaed io enable an institution to define themeans most effective for its population avid to permit theinstitution to target scarce resources toward the effortsmost likely to produce valid information.

In the QC Pilot, an institution selects a small sample ofstudents and completes a series of very detailed proce-dures to reconfirm data used in thy process of awardingaid. The participants formulate hypotheses regardingdata that are relatively sound, as contrasted withstudent data that the institutional aid administratorfeels may be more error-prone. The methodology permits

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6 o

a focus on the data suspected of being unsound, andminimizes effort on the data believed to be valid. Forexample, if an aid administrator feels that "number inhousehold" tends to be reported correctly but "number incollege" is questionable, she might discontinue checking"household size" for the whole population, but verifydirectly with other institutions the family members'enrollment status.

The procedures also al.,rt institutions to previously uni-dentified problem areas. These problems may involve asmall number of studentseven one student in thesamplebut if the institutional standard requires zeroerrors in that area, the aid administrator may considerthe problem significant enough to warrant proceduralaction.

QC supports professional development in two ways:

4 the elimination of data collection activities thatare not yielding results frees time for staff training

4 staff participation in the analysis of problems andconstruction of solutions creates a sense of pride andsuccess among star: members

Financial aid administration relies heavily on topmanagement's support at an institution, and managers towhom aid offices report have been favorably impressedby the pilot project's placement of resources.

15.11 WHAT IS QUALITY CONTROL?

Quality control (QC) is a set of interrelated procedures(a system) for ensuring that products meet specificqualitative standards (for example, ensuring that aidawards meet standards for accuracy). It is an internalevaluation of performance. The system includes:

4 routine, ongoing control procedures to ensure thatestablished standards are met. Control proceduresidentify and correct errors, and systematicallyprevent the recurrence of errors. An example of sucha contre'_ procedure is the verification of studentenrollment status before disbursing aid.

4 procedures for measuring the degree to which stan-dards are met, and for identifying areas requiring

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66Fifteen-51

corrective action. An example of such a measurementprocedure is the periodic verification of awardcalculations to determine the error rate and itsrelationship to the standard the institution has set.

44° corrective action when existing controls areinadequate. For example, missing documentationfrom student files may require the use of a trackingsystem.

These quality control procedures should be periodicallyverified, audited, and evaluated by an independent thirdparty to ensure that they are adequate and effective. Theindependent review function is called quality assurance,and may be conducted by an independent internal orexternal auditor, including personnel from a state agencyor the Department of Education.

Your institution already performs some of these types ofquality control procedures, although they may not beformally recognized as quality control systems.

15.12 INSTITUTIONAL BENEFITSFROM INCREASING QUALITY

The ongoing evaluation system that a quality controlprogram establishes is of wide-scale benefit to theinstitution. Quality control:

4. leads to cost-effective improvements in theefficiency of aid administration;

4. assists the institution in ensuring that federal andinstitutional student aid is distributed equitably tostudents who are eligible and in need of financialassistance;

4. supports the mission of the institution;

+ allows more staff time for individual studentcounseling as well as staff training and professionaldevelopment; and

4. helps ensure that an institution's aid operationsmeet federal statutory, regulatory, and administra-tive requirements.. Such compliance reduces the riskof incurring liabilities, fines, limitation, suspension,or termination of eligibility for Title IV programs. 6 t

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15.13 QUALITY CONTROL INA FINANCIAL AID SETTING

A system of quality control for student aid at a schoolfocuses on the activities of the financial aid and fiscaloffices. The primary check points to be monitored are:

0 financial aid office management practices;

+ the student eligibility review process;

O data used to award aid;

+ award calculation; and

+ award disbursement.

However, implementing a quality control system involvesthe development of formalized, institution-wideprocedures. It allows the institution to identify and focuson error-prone areas, since it monite its own activities asthey take place. This makes the determination ofcorrective actions easier and more effective. It improvesthe institution's capability for detecting, preventing, andcorrecting errors.

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8. IMPLEM'iNT

CORRECTIVE ACTION

/)%

TIE QC CYCLE

1. DEFINE GOALS/2. ESTABLISH A STANDARD

OF PERFORMANCE

7. TEST PROPOSEDCORRECTIVE ACTION

3. CREATE MEASUREHNT/ANALYSISPLAN

16. DECIDE CORRECTIVE 4. MEASURE/ANALYZE

ACTION NEEDED PERFORMANCE

N5 . COMPARE ACTUAL. /PERFORMANCEWITH STANDARDS

O3

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15.14 PROCEDURES FOR DEVELOPING ANDIMPLEMENTING A QUALITY CONTROL PROGRAM

In developing and implementing a quality control sy, ,em,an institution must:

+ establish a commitment to develop a quality controlsystem It the level of top administrators (theinstitution's president, owners, chief executiveofficer, provost, etc.)

+ form a quality control team which includesrepresentatives from the financial aid, business,and registrar's offices, as well as the dataprocessing department, to help:

coordinate quality control procedures withinand among institutional offices;disseminate information on the institution'squality control program;solicit the required commitment of resources forthe design and implementation of specificcorrective actions;

+ develop a training program for financial aid officepersonnel;

+ determine priorities for the program and atimetable for development and implementation;

+ develop a QC plan, stating:the functions to be monitored;operational standards of performance that willbe considered acceptable;measurement systems;data collection techniques;sampling techniques;output requirements;specifications for quality control files;

+ implement the QC plan; and

+ determine corrective actions and implementprogram changes.

15.14.1 The QC Team

When the focus of a quality control program is student aidmanagement, the QC team should be made up of represen-

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tatives from offices involved in day-to-day studentaid-related activities. The QC team should includemembers of

the financial aid office;the student body;

.0. the fiscal or business office;the admissions office;

4 the registrar's office;.0 the counseling and/or special support services

offices;the data processing department (if applicable);

O the internal auditors (if applicable);4 the veterans office (if applicable); and4 the foreign student advisor's office (if applicable).

15.14.2 Determining Priorities for the Program

Representatives from these offices will determinepriorities for the program. This involves:

assessing the current level of quality in themanagement of student aid by examining:

the independent or external auditors' reports;program review reports; andfinancial aid office management practices.

4 determining which areas need attention, such asstudent eligibility determination;institutional verification procedures;monitoring student withdrawals and computinginstitutional refunds;determining the distributional effects of aiddisbursements; anddeciding what level of quality is acceptable.

Once the QC priorities are determined, a detailed QCplan can be developed. This involves:

4 writing down goals and objectives;0 developing a schedule for putting the plan into

effect;0 determining the personnel and institutional

resources needed; and4 assigning QC program responsibilities to members of

the team.

The QC team may want to incorporate all of theactivities in the QC plan into a flow chart. The flowchart documents the QC activities, the person responsible

8/20/88 Fifteen-55

for completing the activities, and the target completiondate for each activity.

15.14.3 Developing Standards

Standards in a quality control system are evaluative toolsand fall into two categories:

+ overall program standardsan acceptable overalllevel of performance; and

+ operational standardsspecific rules for evaluatingparticular procedures or outcomes.

The ultimate goal is to achieve and maintain overallprogram standards. Operational standards allowmeasurement of the functional units that make up theoverall standard. The illustration below shows a sampleof standards and measures for evaluating financial aidprocedures.

INSTITUTIONAL QUALITY CONTROL SYSTEMSAMPLE STANDARDS AND MEASURES

Function: Proper Determination of Pell Grant Award.

Measurement Calculation of Cost of Attendance.Points: Computation of Award Amount.

Determination of Enrollment Status.

Standards: "X"% of error-free Pell Grant awards (the reference point selectedby the institution for its quality improvement activities).

Measures: + Number of erroneous awards due to improper calculation of costattendance;

+ Dollar error attributable to improper calculation of cost ofattendance;

+ Number of erroneous awards due to improper computation ofaward amount;

+ Dollar error attributable to improper computation of awardamolmt;

+ Number cf erroneous awards due to ims:roper enrollment statusdeterminations;

+ Dollar error attributable to improper enrollment statusdeterminations.

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' ,....

71 8/20/ :1

Standards in student financial aid are generally set bylaw and regulations. Financial aid administrators, fiscalofficers, and accountants establish minimum standards ofperformance in administering the aid programs. Otherstandards, known as base-line error rates, are establishedafter measuring existing errors in specific procedures andprojecting the impact of those errors on the aid operation.The steps involved in setting standards are:

4 estimating existing error rates for a given procedure;

4 determining tentative standards based on estimatederror rates; and

4 revising tentative standards on the basis ofcontinuing measurement and evaluation.

15.14.4 Data Collection Procedures

Once you have standards and measurement systems inplace, you need to develop a means of collecting data. Inaddition, you must decide on the output documents to beused. Output documents in most systems are printedreports.

Before data collection can begin, the following steps arenecessary:

4 Identify sources of data, such as:any .:cadent documentation requested by theinstitution to verify data items which may bein conflict on the student's application;financial aid data files;computer printouts; andtelephone logs and student traffic in the aidoffice (walk-in and scheduled).

4 Develop data collection procedures:standard forms should be developed to recordall pertinent data and the results of the reviewof collected documentation;data collectors, either independent observersnot responsible for the process or financial aidstaff members, must be designated; andprocedural steps in the review process must beidentified and documented. These shouldinclude procedures for case selection, casereview and recording of data, and review andevaluation of output aocuments.

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+ Select a valid statistical sample of cases forreview. T1 re are many ways to select a sample.However, there are two simple approaches tosampling:

systematic random sampling, which isparticularly useful for a small sample; andsimple random sampling, which is very usefulin selecting from a lengthy sampling list.

15.14.5 Output Documents

Output documents in most systems are printed reports.Those identified as report recipients (for example,high-level administrators, QC team members, andparticipating organizational units) must submitinformation requests to the QC team. From these requests,report formats are developed. In an automated setting,programmers assigned to the project write programsaccording to these report specifications. Reports shouldbe designed to provide enough information to allowevaluation to focus on specific causes of error.

The QC reports provide valuable management informa-tion which describes the extent and nature of the causes oferror. Additionally, the QC reports provide focus anddirection for the development and implementation ofcorrective actions.

15.14.6 Implementing a Quality Control System

A szhedu/e for implementation is developed and stafftraining session, held. Case review procedures, datacollection forms and report formats, and guidelines forreport review should be included in the training.

15.14.7 Data Collection, Analysis,and Monitoring Activities

Data collection using the forms developed for the QCproject is coordinated with routine procedures within theoffice. A monitoring activity generally follows theoperational cycle. For example, monitoring thecalculation of Pell Grant cost of attendance cannot takeplace until that processing step is completed.

Data collected from monitoring a particular function orunit of processing is then compared to the performancestandard established earlier. If the results are outside

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tolerance limits, problem areas may be pinpointed andcorrective action taken.

15.15 CORRECTIVE ACTION:CONTROLLING CRITICAL ERRORS

The process of monitoring activities, collecting data, andanalyzing the results provides information necessary totake corrective action. These activities help to identifyprobable causes and potential corrective actions forerror-prone areas at an institution. Errors are dividedinto two types:

+ institutional errors

+ student error`.

The technique of "sampling," in which a representativeselection of the total pool of cases is selected for review,may be used 'or both a quality control evaluation ofongoing act' titles and an annual end-of-year errormeasurement. You may sample your applicants at variouspoints in the aid delivery process, and check the workcompleted to date. The results will help you to determinewhether a particular processing step is in need of minorimprovements or whether error rates are high enough torequire checking the relevant data for all applicants andtaking major corrective actions.

Improvement, or corrective action, may mean:

+ better control, so that student aid managementpersonnel attempt to identify and prevent depar-tures from accepted standards of performance; or

structural changes to the system. This approachrecognizes a situation where improved staffperformance is not the solution. Instead,fundamental changes to the system are required,such as automating a process that is particularlyerror-prone when completed manually, sinceautomation poses a lower risk of error.

This cycle of monitoring, evaluating, and implementingcorrective action is an ongoing cycle. It provides the aidadministrator with a systematic, highly organizedapproach to managing the aid student functions.

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SUMMARY )This module has been devoted to an overview of studentaid office management. We have taken you inside theaid office operation to review the flow of work from thepoint of collecting initial documents to the retention andmaintenance of records at the close of the award year.This sequential review of the aid process should increaseyour practical understanding of how the varied aspects ofstudent aid management fit together.

Our overview provided us with an opportunity to reviewthe roles and responsibilities of aid administrators andtheir interaction with other institutional officials. Majorfunctions such as managing federal student aid funds,confirming student eligibility, verifying applicant data,calculating cost of attendance, determining financialneed, developing award packages, and authorizing thedisbursement of student aid funds, were viewed withinthe context of the aid office's operations.

Our second chapter dealt with evaluating your institu-tion's management of student aid as the processing takesplace. This requires the establishment of a qualitycontrol program to measure the quality and accuracy ofthe major functions that make up the institution'smanagement of the student financial aid programs. It is acampus-wide evaluative system that encompasses all ofthe institutional offices involved in aid management. Weoutlined the steps an institution must take to develop andimplement a quality control program to improve themanagement of student financial aid.

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POST-TEST

1. Procedures must be in place to ensure that an institution's other administrative offices andfaculty report all information that affects aid awards to the financial aid office (forexample, outside scholarships, employer tuition sponsorship, tuition waivers, studentnon-attendance in classes). True or False?

2. Award packaging of Title IV funds is a process that always takes place prior to financialneed determination. True or False?

3. A student's aid file would not be complete without a signed statement of educationalpurpose each award year. True or False?

4. Continuing students must have their academic records compared to standards forsatisfactory academic progress to continue to receive federal student aid. True or False?

5. Refund calculation is necessary when a student withdraws before the start of classes, butnot once classes begin. True or False?

6. A quality control program is intended to: (circle all that apply)

a. audit the student aid programh survey students for their reactions to aid office personnelc see if all available aid was distributedd. evaluate the educational quality of an institution's eligible programse. monitor the accuracy of the institution's administration of student aid

7. The term "overaward" refers to: (circle all that apply)

a. awarding aid for a program that runs more than one yearh awarding aid to too many students (i.e. beyond the available funds)c awarding aid beyond a student's documented needd. awarding aid beyond regulated student loan borrowing limits

8. The following procedures are appropriate in an overaward situation: (circle all thatapply)

a. cancel unpaid grants and loans if there is no additional financial need and theoveraward is $200 or more

h ask the student to return any "excess" amount received for noninstitutional costsc determine whether the student shows additional, unanticipated financial needd. take no action unless the overaward is $500 or moree. take no action, if the overaward is caused by outside funding sources

7 0

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9. Fund management in the financial aid office includes: (circle all that apply)

a.hcd.e.

filing required fiscal reportsmonitoring expenditures and balances in federal accountsdisbursing funds (crediting accounts or writing checks) to studentsdeveloping an institutional budget for managing student aid fundsdeveloping a packaging policy for student awards

10. Institutions must contribute their own money to Title IV student aid funds. Which of thefollowing refer to this obligation? (circle all that apply)

a.hcd

Perkins Loan Institutional Capital ContributionCollege Work-Study matching fundsadministrative cost allowanceinterest payments on Stafford Loans during in-school periods and deferments

11. An award adjustment or a refund calculation might be required if a student: (circle allthat apply)

a.b.c

de.

discontinues work-study employment at the mid-point of the payment periodreceives an outside scholarship after the term has begunenrolls for a fuil-time course load but drops to part-time status during the add/dropperiodtransfers to another institution at the end of the academic yearwithdraws, drops out, or is expelled after classes begin

12. Student eligibility must be confirmed before financial aid is awarded. For eacheligibility item below, show which source document or documents might be examined.(More than one may apply.)

Eligibility Issue Source Document

a. Student admitted 1. Admissions letterb. Citizenship status 2. INS letter/document or passportc Previous attendance at another 3. Application for admission

institution 4. Aid applicationd. Enrollment status 5. Registrar's class attendance rosters ore. Satisfactory academic progress enrollment reportsf. SeleciivP Service registration 6. Academic transcripts

7. Tax form of parents8. Signed statement of student

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1. True. The financial aid office is expected to coordinate all available funding for studentsto prevent overawards. Other administrative offices which either administer forms ofstudent assistance (such as departmental scholarships and stipends) or receiveinformation on outside sources of assistance (such as employer or agency sponsorship,outside scholarships, etc., handled by the business or fiscal office) must routinely reportthis information to the aid office. Procedures for collecting and forwarding thisinformation to the aid office must be in place for the institution to be in regulatorycompliance. Other institutional officials who collect information that also affects aideligibility (for example, faculty monitoring student class attendance and academicperformance, registrar's office processing student withdrawals and enrollment changes)must also have a system for sharing this information with the aid office. (For moreinformation, see Sections 15.4 and 15.5.1.)

2. False. Since the majority of student aid funds, including Title IV funds, are awarded onthe basis of financial need, an aid t-..dministrator must establish a student's financial needbefore packaging awards. An exception to this would be the packaging of scholarship orother funds where financial need is not an eligibility factor. (15.5.1)

3. True. A signed statement of educational purpose is required from recipients of Title IVaid. The statement must be collected each award year. In this statement, students certifythat they will use any student aid funds received for education-related purposes. (15.3.3)

4. True. Satisfactory academic progress is an eligibility factor for students to continue toreceive aid. Institutions must develop and implement a satisfactory academic progresspolicy for Title IV recipients that meets federal regulatory and statutory standards, andprocedures must be in place to ensure the students' compliance. (15.3.3,15.4)

5. False. A full refund of 1 itle IV funds to federal accounts must take place if a studentofficially or unofficially withdraws or is expelled before the first day of classes. Inaddition, student withdraws, drops out, or is expelled after the first day of classes,and the studer' .-ece'ved Title TX funds, the institution must determine whether a refundof institutional charges is due, and whether the student received an overpayment ofstude7.: aid fo- _-;ninst'iutional expenses, in which case all or part of the funds must berefunded to Title IV accounts. This includes funds applied to cover institutional costs andany cash disbursement, the student received for education-related expenses (such asbooks, transportation, and off-campus living expenses) for the payment period. Federalregulations provide formulas for aid administrators to use to determine what portion ofthe award must be refunded. Institutions must develop written policies to allocaterefunds to the various Title IV programs. (15.8)

6. e. A quality control program for student financial aid is an important e iluation systemwhen applied on a campus-wide basis. Such a program monitors policies and proceduresused by the institution in administering student aid while at the same time evaluatingoverall accuracy and effectiveness. Important operational aspects evaluated includeverification of the accuracy of applicant data; internal controls that allow for requiredchecks and balances; monitoring processes; reporting processes; and the ability of thesystem to identify problems and to take corrective actions. (15.11)

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2 3

7. c. Overaward and overpayment are terms used to describe a situation in which aninstitution provides Title IV student aid to a student which, in combination withnonfederal sources of aid, exceeds the student's documented need. Aid administrators areresponsible for coordinating all available student aid resources at an institution toprevent overaward situations. (15.6.3)

8. a., b., and c. All three correct options describe major procedural steps that institutions arerequired by regulation to follow in handling overawards. After identifying theoveraward situation, the aid administrator first determines whether there is anyadditional financial need that can be documented. If there is none, or if there is but theoverawacd is still $200 or greater, unpaid grants and loans must be cancelled. If anoverpayment situation exists, the institution bills the student for the amount concerned.Student repayments are then refunded to appropriate Title IV accounts. (15.6.3)

9. a., b., d., and e. An important internal control in student aid management requires thatseparate individuals or offices award and disburse funds. To maintain this separation offunctions, the aid office, which makes awards, is not allowed to disburse funds. Thisresponsibility is generally handled by the business or fiscal office. (15.2)

10. a. and b. For the 1988-89 award year, two student aid programs require an institutionalcontribution of funds. The Perkins Loan program requires a contribution equal to one-ninthof the insticution's Federal Capital Contribution (FCC) for that award year. The CWSprogram requires that the institution contribute a minimum of 20% of the CWSgrosswages paid during the award year. (15.2.1)

11. b., c., and e. The circumstances that may require award adjustment, cancellation, or refundcalculation are circumstances that affect student eligibility and financial need. A changefrom full- to part-time enrollment during the add/drop period may require awardadjustment if it reduces a student's financial need, or may require award cancellation ifthe student drops to less than half-time enrollment status (see Section 15.8.3). Studentwithdrawal or expulsion after classes begin generally requires refund calculations andrepayments to Title IV accounts based on the institution's policy for reallocation of fundsto federal accounts (see Sections 15.8.1, 15.8.4, and15.8.5). Students receiving additionalfunding from outside sources may require award adjustment or cancellation if theadditional funds result in an overaward. (15.6.3, 15.8)

12. a: 1. Admission status is generally verified through the institution's copy of the student'sletter of admission or contract or periodic reports from the admissions office.

b: 2, 3, and 4. Citizenship status is ultimately documented for permanent residents andother eligible noncitizens through documents provided to the student by the Immigrationand Natwalization Service (INS). An institution's application for admission andfinancial aid generally collects this same information and should be compared forconsistency; however, they do not satisfy the requirement for collection of INS documentsfor eligible noncitizens. High school transcripts and the foreign student advisor's recordsshould also be checked.

c: 3; 4, and 6. Previous attendance at another institution may be verified throughstudent-submitted data on the institution's application for admission and financial aid.Academic transcripts which are evaluated for admission and transfer credits alsoindicate previous attendance.

8/20/88 Fis tcm-65

-!: 5. Enrollment status can be verified through class attendance rosters or enrollmentreports generated from the Registrar's Office.

e: 5 and 6. Satisfactory academic progress can be verified using academic transcripts orgrade reports. These records are often compared to enrollment records.

h 4 and 8. Selective Service registration status is usually certified by a statementincluded on the institution's aid application or the student's Pell Grant SAR. A separatesigned statement may also be used.

(For information on all these items, see Section 15.4)

For scoring purposes in Question 12, treat each letter as a separate question. Awardyourself one point for each letter answered with all applicable numbers. The maximumscore on this question is 6 points.*

Ouestions: 17*

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Your Score: Percentage:

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academic year

award adjustment orrevision

award letter

GLOSSARY

(a) A period of time in which a full-time student is expected tocomplete at least the equivalent of 2 semesters, 2 trimesters, or 3quarters at an institution measuring in credits and using a semester,trimester, or quarter system; (b) 24 semester hours or 36 quarterhours at an institution using credit hours and not using a semester,trimester, or quarter system; (c) at least 900 dock hours at aninstitution using clock hours.

An action by the financial aid office resulting in an increase,decrease, program substitution, or cancellation of a recipient'saward. This may be necessitated by factors such as a change in thestudent's dependency status, or a change in the financialcircumstances of the family or student.

Notifies student financial aid applicants that they havequalified for federal financial aid and informs them of theassistance being offered. The award letter usually givesinformation on the types and amounts of aid offered, as wellasspecific program information, student responsibilities, and theconditions which govern the award. Generally, the award lettergives students the opportunity to accept or decline the aid offered.Also referred to as award notification.

award packaging See packaging.

business office

corrective action

cost of attendance (COA)

The office ic:ponsible for financial accounting for an institution,including Title IV program activity. This office disburses awardpayments to students and student accounts and processes loanchecks. It is sometimes referred to as the fiscal office, financeoffice, comptroller's office, bursar's office, or the student accountsoffice.

Changes in procedures to improve the quality of a given product orservice, e.g. to control error rates. Corrective action also refers to arequirement imposed by an ED official, administrative law judge,or the Secretary to cause an institution to take re-sonable andappropriate action to remedy a violation of applicable laws,regulations, special arrangements, agreements, or limitations.

Those charges and allowances established by the institution thatare applicable to students for atten" ince for one academic year.Generally, the COA includes tuition and fees; allowances for roomand board, books, supplies, transportation and miscellaneousexpenses, child care, dependent care, and certain handicap-relatedexpenses. There are significant differences between thesecomponents in the Pell Grant and campus-based/GSL programs. SeeSections 411F and 472 of the Higher Education Act of 1965, as

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81

amended, for provisions on establishing institutional costs ofattendance. The term cost of attendance is often usedinterchangeably with cost of education.

departmental An award of gift assistance that is specifically designated for ascholarship recipient in a particular department within the school, college, or

university. It may or may not be a need-based award.

disbursement The process by which financial aid funds are made available tostudents.

documentation Written statements explaining the logic and/or the steps followedwhich resulted in a specific action taken, given the particular setof circumstances. (See accep' ble documentation.)

edit checks

enrolled

enrollment status

financial aid package

grant (programs)

Institutional PaymentSummary (H'S)

A series of data tests run by an automated processing system onfinancial aid applications. These tests look for and reportincomplete or inconsistent data on the app'i.:ation. Edit checks(also known as edits) are one mechanism used to select applicationsfor verification. Edit checks are also part of the processing of an;:restitution's FISAP.

The completion of registration requirements at the institution thestudent is attending and commencement of the attendance period. Acorrespondence school student must be accepted for admission andmust complete and submit one lesson to be considered enrolled.

At those institutions using semesters, trimesters, quarters, or otheracademic terms and measuring progress by credit hours, enrollmentstatus equals a student's credit-hour courseload categorized aseither full-time, three-quarter time, or half-time. Clock-hourschools and schools using credit hours but not standard terms mustensure that Pell Grant and Stafford Loan recipients meet the mini-mum half-time enrollment requirement, but these schools are notrequired to determine three quarter or full-time enrollment status.

An offer by an educatioi , Institution to a student aid applkant ofone or more forms of financial aid (loans, grants and/orscholarships, employment).

Gift aid programs which require neither repayment nor that workbe performed. Federal Tithe IV grant programs include the PellGrant, SSIG, and SEOG.

A transmittal form which accompanies each individual batch ofinstitutionally completed Pell Grant Payment Documents. The IPSmust be submitted at least once in each quarter, even if it is notaccompanied by Payment Documents.

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loan

overaward

overpayment

packaging

payiatent period

program review

promissory note

quality assurance

quality control

8/2D/88

An advance of funds which is evidenced by a promissory noterequiring the recipient to repay the specified amount(s) underprescribed conditions.

The condition which exists when an institution provides financialassistance to a student which, in combination with all of theresources made availabie to that student from federal andnonfederal sources, exceeds the difference between the student'sCost of Attendance and the expected family contribution. Whilethe above defines an overaward, an institution is not in violation ofcampus-based program regulations which prohibit 'verawards if:(a) the student receives funds after the institution awards aid andthe total resources exceed his/her financial need by $200 or less; or(b) the student earns more money from employment than theinstitution anticipated when A made the award and it treats theearnings in accordance with program requirements.

Any amount paid to a student in excess of the amount which thestudent is entitled to receive. This situation may arise due to achange in enrollment status, withdrawal, or a change in financialsituati on. In ai y of these instances, the student would be requiredto repay excess funds received unless adjustments could be made tothe student's aid during subsequent payment periods within thesame award year.

The process of assembling one or more financial aid awards ofloans, grants and/or scholarships, and employment for students.

An institutionally defined length of time for which financial aidfunds ,. ill be paid to a student. For programs using academic terms,the payment period is the term itself. For programs not usingacademic terms, institutions must designate at least two paymentperiods within an academic year.

The process in which the activities of one or more of the financialaid programs of an institution are reviewed by the Department ofEducation to assess compliance with federal la,' and regulationsand institutional policy. The review may also include a review ofmanagement and administrative capabilities.

The legal document the borrower signs when obtaining a loan. Itlists t. conditions under which the loan is made and the termsunder which the borrower agrees to pay back the loan.

The periodic verification, audit, or evaluation of a quality controlsystem by an independent third party to ensure that it is adequateand effective.

A process by which the institution establishes a system forchecking the overall quality and accuracy of its campus-widestudent aid administration.

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refund A refund by an institution means the amount paid for institutionalcharges for a payment period minus the amount retained by theinstitution for the portion of the payment period that the studentwas actually enrolled at the

refund policy The policy which determines the conditions under which a studentis entitled to a refund of payments.

resources

scholarship

For purposes of determining awards and overpayments in thecampus-based programs, resources include, but are not limited to,(a) any funds the student is entitled to receive from a Pell Grant,regardless of whether the student applies for it; (b) waiver oftuition and fees; (c) scholarship or grant, including an SEOG orathletic scholarship; (d) fellowship or assistantship; (e) insuranceprograms for the student's education; (f) SLS, PLUS, state-sponsorz.1, or private loan proceeds not used as a substitute for theEFC; (g) long-term loans, including Perkins Loans but excludingStafford Loans, SLS, and PLUS, made by the institution; (h) netearnings from need-based employment ("net earnings" means grossearnings minus taxes and job related costs); and (i) veterans andSocial Security benefits (except that part included in thecalculation of the student's EFC).

A form of financial assistance which does not require repayment oremployment. A "merit-based" scholarship may be made to astudent who demorstrates or shows potential for distinction,usually in academic performance, at the institution. The term isalso frequently used to refer to need-based state grant ("sta:scholarship") programs. Scholarships may require both academicproficiency and demonstrated financial need.

separation of functions In administering federal student aid programs, an institution mustestablish and maintain an internal control system of checks andbalances that ensures that no office can both authorize paymentsand disburse funds to students.

Statement of EducationalPurPose

Student Aid Report(SAR)

The student must sign this statement in order to receive federalstudent aid. By signing, the student agrees to use the Title IVstudent aid solely for education expenses. The 1988-89 SARcontains such a statement. The student must sign the statement onthe SAR or a similar statement prepared by the student's school,and the statement included on a Stafford er SLS loan application.

The official 3-part notification of the results of processing thestudent's Fell Grant application that is sent directly to the studentby the central processor. The report shows the Student Aid Index(SAI). All three parts of the SAR must be submitted by an eligiblestudent to the financial aid office at the institution for the studentto receive payment under the Pell Grant program.

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b

Student ConfirmationReport

verification

The report (in printed or magnetic tape format), usually sent toeducational institutions twice per year, which lists all StaffordLoan borrowers from that institution presumed to be currentlyenrolled. The institution is required to provide certain enrollmentstatus information about each borrower. The report is used to assistthe lenders in monitoring enrollment status of student borrowers forrepayment purposes.

Technical and administrative procedures for detecting andresolving inaccuracies in the data that a student has given whenal plying for federal financial aid. ED publishes a VerificationGuide each year setting forth guidelines and procedures.

ACRONYAIS

ACA Administrative Cost Allowance.

AGI Adjusted Gross Income.

COA Cost of Attendance.

EFC Expected Family Contribution.

FAT Financial Aid Trar-"4.7,L %.

FC Family Contribution (calculated with the Congressional Methodology).

FCC Federal Capital Contribution.

ICC Institutional Capital Contribution.

QC Quality Control.

SAI Student Aid Index.

SAR Student Aid Report.

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LIMMIMMEEMMMIIMOMMNIMM=MPounoup.------

KEY RESOURCES

1. U.S. Department of Education, Office of Student Financial Assistance, Federal StudentFinancial Aid Handbook, Washington, D.C., OSFA/ED, 1968.

Chapter 2, "General Program Requirements," includes information on student records,program records, and fiscal records which each participating institution must maintain.The administrative capability of the institution and the responsibilities of the financialaid administrator are also addressed.

2. National Association of College and University Business Officers, Financial Self-Assessment for Colleges and Universities, Washington, D.C., NACUBO, 1987.

3. ----, Overview of Student Financial Aid for Business Officers, Washington, D.C.,NACUBO, 1988.

4. National Association of Trade and Technical Schools, Financial Aid Tool Kit,Washington, D.C., NATTS, 1988.

In addition to specific program requirements, the Tool Kit includes sections on thefinancial aid calendar and changes in student status (withdrawals, refunds, andrepayments).

BIBLIOGRAPHY

1. Hart, Natala, "Unexpected Benefits from Quality Control," Student Aid Transcript,Spring 1988.

The references listed above can be obtained by contacting the publishing organization. ForU.S. Department r r Education addresses, see the inside back cover or the Support Booklet. Forall other addresses, see the Support Booklet.

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I

INDEX

Aadministrative files 15.3.3appeal procedures (student), in award packaging

15.6.4authorization to disburse 15.7.3award changes 15.7.2award letter 15.6award packaging 155.2

Ccalendar, financial aid 15.1.2changes in student status 15.8College Work-Study program (CWS) files 15.3.3,

15.6.2

ID

declination (of an award) 15.6disbursement 15.7

authorization to disburse 15.7.3

Eeligibility (student) 15.4estimating funds available for awards 15.2.1expulsion 15.8, 15.8.4

Ffund management 152

administrative cost allowance 15.2.1

award packaging 15.2.2, 15.5.2disbursement 15.7estimating funds available for awards 15.2.1fiscal reports 15.2.4institution .: budget 15.2.1

monitoring fund balance:, 15.2.3

packaging policy 15.2.2

II

institutional offices (other than financial aid)15.4

participation in quality control program 15.14.1

Nneed analysis 15.5.1

need determination, in Stafford/SLS/PLUS 15.5.1

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PPerkins Loan program files 15.3.3, 15.6.1

Qquality control

approaches/priorities 15.13, 15.14.2benefits 15.12corrective acb. n 15.15data collection 15.14.4defin:don 15.11

errors in delivering aid 15.10plan 15.14procedures 15.14QC cycle 15.13QC Pilot 15.10

reports 15.14.5sampling 15.14.4standards 15.14.3team 15.14.1

Rrecord maintenance 15.;,.3,15.9record retention requirements 15.9reference materials 15.3.3refunds (by institution) 15.8

distribution formula 15.8.1institutional allocation policy 15.8.1institutional charges 15.8.4institutional refund policy 15.8.1

o: loans 15.8.5policies 15.8.1

repayments by student, due to status change 15.8.4,15.8.6

noninstitutional costs 15.8.4

Ssatisfactory academic progress 15.4

student counseling, by financial aid office 15.3.2,15.6.1

student eligibility. See eligibility (student)student- files 15.3.3, 15.3.4, 15.4student status, change in 15.8.2-15.8.4

8 PiFifteen-73

Ttracking systems, files 15.3.4, 15.6

automated 15.3.4, 15 5.2, 15.6, 15.7.3manual 153.4, 15.5.2, 15.6, 15.73

Vverification

policies and procedures 15.4

Wwithdrawal 15.8, 15.8.4

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REGIONAL OFFICES OF STUDENT FINANCIAL ASSISTANCE

REGION I(CT, ME, MA, NH, RI, VT)

Office of Student Financial AssistanceU.S. Department of EducationJ.W. McCormack Post Office and Courthouse5 Post Office Square, Room 510Boston, Massachusetts 02109(617) 223-9338

REGION II(NJ, NY, PR, VI, CANAL ZONE)

Office of Student Financial AssistanceU S. Department of Education26 Federal Plaza, Room 3954New York, New York 10278(212) 264-4426

REGION III(DE, DC, MD, PA, VA, WV)

Office of Student Financial AssistanceU.S. Departrieht cf Education3535 Market Street, Roum 16200Philadelphia, Pennsylvania 19104(215) 596-0247

REGION IV(AL, FL, GA, KY, MS, NC, SC, TN)

Office of Student Financial AssistanceU.S. Department of Education101 Marietta Tower, Suite 2203Atlanta, Georgia 30323(404) 331-4171

REGION V(IL, IN, MI, MN, OH, WI)

Office of Student Financial AssistanceU.S. Department of Education401 South State Street, Room 700-DChicago, 'ilinois 60605(317) 353-8103

Sd

REGION VI(AR, LA, NM, OK, TX)

Office of Student Financial AssistanceU.S. Department of Education1200 Main Tower Building, Room 2150Dallas, Texas 75202(214) 767-3811

REGION VII(IA, KS, MO, NE)

Office o tudent Financial AssistanceU.S. Department of Education10220 North Executive Hills Blvd., 9th FloorP.O. Box 901381Kansas City, Missouri 64190(816) 891-8055

REGION VIII(CO. MT, ND, SD, UT, WY)

Office of Student Financial AssistanceU.S. Department of Education1%1 Stout Street, 3rd FloorDenver, Colorado 80294(303) 891-3676

REGION IX(AZ, CA, HI, NV, AS, GUAM, PACIFIC ISLANDS)

Office of Student Financial NssistanceU.S. Department of Education50 United Nations Plaza, Room 270San Francisco, California 94102(415) 556-5689

REGION X(AK, ID, OR, WA)

Office of Student Financial AssistanceU.S. Department of Education2901 Third Avenue, Room 100Seattle, Washington 98121(206) 442-0493