Selective Service and FA (Part 1)

Your Financial Aid may be complicated in relation to Selective Service. Males are required to register between the ages of 18-25. If you don't register before age 26, then you cannot register. The Selective Service registration is a very well-known procedure for men, and claiming "I didn't know" isn't a good reason anymore, especially in the information age we are currently in.

But you have to register with Selective Service to be eligible for Financial Aid. What if you didn't register? There are certain situations where a person is exempt from registration. These reasons are:

• males currently in the armed services and on active duty (this exception does not apply to members of the Reserve and National Guard who are not on active duty)
• males who are not yet 18 at the time that they complete their applications (an update is not required during the year, even if a student turns 18 after completing the application)
• males born before 1960
• citizens of the Republic of Palau, the Republic of the Marshall Islands, or the Federated States of Micronesia (unless being a citizen of the Republic of the Marshall Islands or the Federated States of Micronesia and you live in the US for more than a year for any reason other than being a student or employee of your homeland government, then you do have to register)
• noncitizens who first entered the U.S. after they turned 26
• noncitizens who entered the U.S. as lawful nonimmigrants on a valid visa and remained in the U.S. on the terms of that visa until after they turned 26

There are a few odd scenarios that can occur where registration isn't required. The problem with the following is that you have to have had these scenarios occur the entire time between your age of 18-25:

unable to register due to being hospitalized, incarcerated, or institutionalized

enrolled in any officer procurement program at The Citadel, North Georgia College and State University, Norwich University, Virginia Military Institute, Texas A&M University, or Virginia Polytechnic and State University

commissioned Public Health Service officers on active duty or members of the Reserve of the Public Health Service on specified active duty

Confused yet? That's understandable. The government has tried to come up with every possible scenario that could occur. Some of these change a little from year to year. The information above is from the 2012-13 FSA Handbook.

Check back next week, as we dive a little more deeply into what happens if you don't register as well as some documentation.

IBR and Other Repayment Options (Video)

Here is a recently made video from FedLoan Servicing (PHEAA) about IBR. IBR stands for Income-Based Repayment, which has become a great and helpful option for students in repayment to help avoid default. At first IBR might seem a bit complicated, but the simplest way to explain it is basing your repayment on your income. The video will explain much more detail about this, as well as a quick overview of the other payment plans available.

Plans for the 2013-14 Verification

I've said many times that the FA rules from year to year are very much like a new car: each year a new model that comes out and sometimes resembles the previous model, but sometimes is very different. It seems there are plans in the works for the new Verification procedures for next year. Originally, the plan was for the 2012-13 year to be one that had a simplified Verification procedure in which if one item had to be verified, then you only had to verify that one item (and not all the items). That didn't exactly happen. But with the IRS Data Retrieval System, a sharp decrease of verifications have occurred, and if the IRS Data Retrieval System had been used correctly, then only a few things would have to be verified.

So, progress has been made. The goal then was to make 2013-14 the year which would make individual items only be verified. However, it doesn't look quite like that will happen again. The Dept of Ed is transitioning into a new kind of Verification, and 2013-14 will be the hybrid year. As of right now, FAFSAs that come back to be verified will fit into one of five verification categories (V1-V5), with each one carrying a certain amount of items that would have to be verified. It could only be one item (V2 is Food Stamps, V3 is Child Support Paid), and it could be many items (V1 is Household Size, # in College, Child Support Paid, Food Stamps (SNAP), Income Earned from Work, AGI, Tax Paid, Untaxed Individual Retirement Account Distributions, Untaxed Pensions, Education Credits, IRA Deductions, and Tax-Exempt Interest). As of right now, it looks like the Verification requirements could be different in some cases for tax filers and non filers.

On top of the changes in Verification, it appears as though the FAFSA could have new questions like High School Completion Status and Statement of Educational Purpose/Identity. We have a lot of time before the new FAFSA takes over next July, and even before it becomes available in early 2013. Hopefully there will be more available before then.

Free Financial Literacy on Repayment Webinar

Nelnet is one of the federal student loan servicers handling the workload of the federal Direct Loan Program. They often have good and helpful information. In fact, in September there is a series of financial literacy webinars that Nelnet is offering.

On Monday September 10 and Monday September 24, Nelnet is offering free webinars that are focusing on student loan repayment. They are being offered at 1:00 Central Time and at 3:30 Central Time on both of those days.

Some of the information that will be provided include helpful tips to managing your loan repayment, developing a financial plans like a budget, helping you find your servicer, how to avoid delinquency or default, and learning about repayment plans.

To find out more information about these free webinars, click here. There will be some great information presented, so I'm sure you'll learn a lot!

NSLDS and the PELL Lifetime Limit

Back when Congress finally agreed on how much the 2012-13 Pell Grant would be, they had to cut some corners in other areas in order to maintain the amount. One of the corners that was cut was the Lifetime Limit of Pell a student could receive.

The Lifetime Limit is exactly what it sounds like: the total amount of Pell Grant a person could receive in their lifetime. This limit isn't based on a dollar amount, but instead a percentage amount. Before July 1, the lifetime percentage was 900% (or 18 semesters/24 quarters). During the short time when more than 100% could be received (called a 'year-round pell'), that extra is figured into the lifetime eligibility also.

The unusual thing about the lifetime eligibility is that since it's based on percentage, if you could only receive a $500 pell for the year, and the maximum that year was $4700, and if all $500 came in, then you were at 100%. This is the confusing part of this rule, but it tries to ensure that even though the amounts may not be the same for every student, the number of times you can receive pell is the same. If you applied for pell and weren't eligible, then your pell percentage would be 0% for that year. Keep in mind, they only count pell that actually was disbursed. Also keep in mind that unless 100% of your yearly pell came in for a year, then it's somewhat rare that your pell will be an even percentage; some who have withdrawn, were in shorter payment periods could, or were attending a clock hour program could have strange amounts like 37.061% of 67.776%.

So now that we're passed the July 1 change of rules, the Lifetime Limit for pells has been reduced to 600% (or 12 semesters/18 quarters). The rule is also effective immediately and no one is grandfathered in. This is difficult to keep track of because NSLDS doesn't always calculate the total percentages. However, it's actually worse than that: NSLDS doesn't keep track of the entire Pell Grant history! It only goes back so far. So this means that there are students were are being denied Pell Grants or having Pell Grants reduced because of hitting this threshhold but the schools aren't knowing how close the students actually are.

For the FA Administrators, to get a complete understanding of how much Pell Grant a student has had in their lifetime, you have to look on COD for the most accurate information.

For the students, please let your FA people know if you went to school longer than what shows on NSLDS. This is help to avoid the FA office being left in the dark and help to give you the most accurate information.

NSLDS is still a fabulous resource and a great tool, but when it comes to Pell Grants, it's not as effective as it is for loans.

What If? Scenario 4

What if I am owed excess funds from my Financial Aid? Why can't I pick it up on a day I don't attend?

This is a very simple answer. You must be in school and currently attending classes to receive your excess funds. If you normally pick up your check on Thursday, but you are absent Thursday, then you have to wait for your next day of attendance to pick it up. You are not in school and attending if you miss that day.

The reason for this rule is because if your last day of attendance is Wednesday, and you pick up a check Thursday, and you drop out on Friday, then you weren't entitled to that money. Your account summary will show you received funds after your last day of attendance, and you will most likely owe most (if not all) of that money back (depending on how far through the payment period you are). The school is then in serious trouble with the Dept of Ed for giving you money you weren't entitled to. Like I said above, you have to be in school and attending, and just because you received the money before you dropped, you weren't actually attending.

Schools aren't in business to give students money (after all, the money is more often than not a loan which the student has to repay), they are in business to give knowledge to students. The rules involving the money is taking into account the academic side. I've had students call and ask if they could pick up their check, and the student would be asked why they weren't at school that day. The most common answer is that they were sick. Because of the rules of the Dept of Ed, schools have to take the stance of "if you're too sick for class, then you're too sick for your check." You have to be able to be marked present for some time in the day when your check is available or else no one can prove that you were actually attending that day.

Once again, rules are rules, and this isn't one that can really bend.

The Temporary Fate of Gainful Employment

This posting is more for the FA administrators than anyone else. There has been a lot of talk lately as to what is and isn't still required, and there seems to be confusing answers that seem to contradict what's out there. So, what's really going on?

There are four main points to discuss: disclosures, reporting, new programs, and the metrics.

1. The Metrics. These were a series of figures that came out from the Dept this year for the first time. They were based partly on the massive report (explained below) from last October/November and partly on information from the Social Security Administration. This information translated to if a school was meeting expectations on three areas for programs: repayment rate and two debt-to-earnings ratios. If a school failed all three for three out of four years, then they would lose Title IV eligibility for that program (failures once and twice had varying degrees of severity and sanctions). The court ruling in June stated that the Dept had failed to accurately define where their rates came from. For example, the court didn't understand where the students' payments couldn't be above 30% of their discretionary income. In other words, the rates seemed to have been picked simply for the sake of knowing that roughly 25% of schools couldn't pass these rates chosen, as opposed to any actual evidence of why these rates were beneficial. So the Metrics were thrown out as being legal.

2. The Report. Beginning last year, schools had to submit a massive report each October with information on the previous year's student's enrollments (last year's actually dated back five years). This massive report wanted to know things like name, SSN, enrollment dates, enrollment status at the end of the year, and information of what happened to the student after they left school. If schools didn't have any kind of a computerized database, this turned into a disaster to complete. The purpose of this report was to partially create the metrics, but since the metrics were thrown out, so was the report.

3. New Programs. Another component of the rules was the new programs rule. The fear from the Dept was that schools would create a new program that was identical to a failing program, so to stop this, schools had to jump through all sorts of new hoops for programs to be approved. Part of this included having to submit the program information to the Dept at least 90 days before the first day of the new program (and this had to be after the program had obtained approval from the accrediting agency). Since there won't be failing programs, then there is no need for this part of the rule, so this was thrown out.

4. The Disclosures. The judge ruled that the wording of 'gainful employment' in the original HEA of 1965 was vague enough that the Dept could make rules on the gainful employment of schools, so a requirement to disclose information about those programs was within the rights of the Dept. So the disclosures part of the rule was upheld, and schools still have to disclose information about the programs, such as on-time graduation rate, placement rate, median loan debt, SOC codes for potential jobs, etc.

The future of the Gainful Employment rules are up in the air for the time being. The Dept has 60 days from the date of the ruling to appeal, which would be the end of August. However, it is expected that the Dept won't appeal and instead focus more on re-creating the rules for next year or the year after. It is generally agreed that a lot of the future of the rules depend a lot on who is elected President. We will see what the future holds!