January 20, 2010

Negotiated Rulemaking Update

The Department of Education (ED) released proposed language to be discussed next week at its rulemaking on program integrity issues regarding high school diplomas and the ability to benefit provisions.

In previous discussions, negotiators seemed to reach a conclusion that ED should assume a primary role in determining the validity of high school diplomas and create a database to record that information. Drafted rules stated that a new question should be added to the FAFSA to collect this type of information.

Concerning the ability to benefit, there was discussion about ability to benefit testing and additions to the statutory definition. The testing issues focused on administrative duties such as the certification/decertification of testers, what happens when problems exist and how to accommodate students with disabilities. Additions to the statutory definition of ability to benefit would more specifically define “6 credit hours” and indicate that the hours would have to be applicable to a degree program at the institution, even though the student wouldn’t be required to declare interest in a specific program.

Return of Title IV Funds (R2T4) Rule Changes

ED released proposed rule language that would change two parts of the Return of Title IV Funds (R2T4) rules. The proposed changes include modification of the definition of a “school that is required to take attendance,” and the determination of withdrawal from modular programs and payment periods that are made up of mini-sessions.

Under current rules, an institution is only required to take attendance if its accrediting agency required it. Under the proposed rules, an institution would be required to take attendance if the institution itself has that requirement or if institution or outside entity has a requirement that can only be met by taking attendance or a comparable process. Currently, there is no language to clarify how an institution should perform that process.

In regards to the modules and mini-sessions, currently, a student who completes at least one module within a payment period that has multiple modules is not considered to be withdrawn even if he or she does not complete every module and aid might have to be recalculated, but R2T4 does not apply. Current negotiation language considers a student to have withdrawn from a payment period if the student does not complete all the days or clock hours in the payment period prior to withdrawing. The rationale is that if a student receives aid for three modules, but only attends one module, he/she has not incurred living expenses for the entire three modules.

Credit Balance Changes

ED released proposed language for its rulemaking on program integrity issues that would require institutions to pay at least a portion of expected Title IV credit balances to students within the first seven days of a payment period. This amount would be the lesser of the expected credit balance or the allowance for books and supplies used in the student’s Title IV cost of attendance.

The proposed regulations are to ensure that a student has access to his/her funds to buy books and supplies. This rule would not apply if the institution has provided another way for the student to purchase books and supplies, such as vouchers. However, the institution would be required to pay the student directly at his/her request. Regulations further hold the student, rather than the school, liable for possible overpayments of these funds.

These regulations would not replace the current requirement to disburse credit balances within 14 days of creation (or 14 days after classes start if disbursements were made prior to the first day of class).