Title IV Aid - Valencia College

USA Funds University
Fall 2009 Financial Aid Workshop

Special Note
This publication is for the benefit of financial aid administrators. It is intended to provide current
information and is not intended to be legal advice. This manual contains material related to Federal
Title IV student aid programs. This manual has neither been reviewed nor approved by the U.S.
Department of Education. USA Funds® disclaims all responsibility for any claim arising from reliance
on the information provided.
© Copyright 2009 United Student Aid Funds, Inc. All Rights Reserved.
Questions regarding the content of this publication should be addressed to USA Funds University
(M482), 11100 USA Parkway, Fishers, Indiana 46037 or by calling (317) 806-4994.
Information in this training manual is current as of Sept. 22, 2009.

Fall 2009 Financial Aid Workshop Agenda
8 a.m. Registration.
8:30a.m.
Welcome and introductions.
8:45 a.m. Federal update.
Professional judgment in today’s economy.
USA Funds ® update.
Life cycle of a stafford loan.
12:30 p.m. Adjournment.

Federal Update

Federal Update
Many events have shaped and reshaped the financial aid landscape over the past several years. This
has been a time of extraordinary change that extends far beyond the financial aid office: wars in Iraq
and Afghanistan, financial disruptions throughout the world, economic uncertainty and a new U.S.
administration.
Within this context, the financial aid community continues to deal with change due to the effects of
Reauthorization, the 2010 budget process and negotiated rulemaking. This update will examine how
this recent legislation and these pending provisions will affect students and their families, military
veterans and their dependents, borrowers in repayment, financial aid offices and postsecondary
educational institutions in general.
Numerous laws, regulations and rules have formed institutional policies and procedures over recent
years.
Date Legislation/Regulation Citation
Published by Nov. 1, 2009. Final Regulations: Spring 2009 Negotiated Rulemaking. N/A
Issued July 15, 2009. Student Aid and Fiscal Responsibility Act of 2009. H.R. 3221
Enacted July 1, 2009. Higher Education Act Technical Corrections Bill. P.L. 111-39
Published May 1, 2009.
Interim Final Rule: Teacher Education Assistance for College
and Higher Education Grant; Federal Pell Grant; Academic
Competitiveness Grant and National Science and
Mathematics Access To Retain Talent Grant.
74 FR 20210
Enacted June 24, 2009. 2009 Supplemental Appropriations Bill. P.L. 111-32
Issued Feb. 26, 2009. Administration's Fiscal Year 2010 Budget. N/A
Enacted Feb. 17, 2009. American Recovery and Reinvestment Act of 2009. P.L. 111-5
Published Dec. 9, 2008. Family Educational Rights to Privacy Act Final Rule. 73 FR 74806-74855
Published Oct. 23, 2008. Final Regulations: Title IV Loan Provisions. 73 FR 63232–63259
Enacted Oct. 7, 2008.
Ensuring Continued Access to Student Loans Act of 2008
Extension.
P.L. 110-350
Enacted Aug. 14, 2008. Higher Education Opportunity Act of 2008. P.L. 110-315
Enacted June 30, 2008. Supplemental Appropriations Act of 2008. P.L. 110-252
Enacted May 7, 2008. ECASLA of 2008. P.L. 110-227
Enacted Dec. 21, 2007.
College Cost Reduction and Access Act Technical
Amendments.
P.L. 110-153
Published Nov. 1, 2007. Final Rule; Federal Student Aid Programs. 72 FR 62014–62034
Enacted Sept. 30, 2007.
Higher Education Relief Opportunities for Students Act of
2003 amended.
P.L. 110-93
Enacted Sept. 27, 2007. College Cost Reduction and Access Act of 2007. P.L. 110-84
Enacted Feb. 8, 2006. Higher Education Reconciliation Act of 2005. P.L. 109-171
1

Legislation Watch
During 2009, all eyes have been focused on three
primary pieces of legislative and regulatory
activity: the HEA Technical Corrections Bill, the
Administration's budget proposal for FY 2010
and the U.S. Department of Education's
negotiated rulemaking process. The outcomes
forecast even more change in the financial aid
industry.
HEA Technical Corrections Bill
P.L. 111-39.
When a law like the HEOA totals more than 1,000
pages, it is highly likely that minor changes,
clarifications and updates will be necessary.
Congress passed the HEA Technical Corrections
bill in June 2009, which the President signed into
law on July 1, 2009. While parts of this law simply
corrected typos and citations, several important
provisions are summarized below, along with
applicable action items for schools. The effective
date of these provisions corresponds to the
original HEOA enactment date, unless otherwise
specified.
Private Loan Certification
Section 1021(b).
Amends HEA Section 155(a).
Effective: Aug. 14, 2008.
ED and the Federal Reserve System developed a
self-certification form for private loans, to meet
the requirements of the Truth-in-Lending Act. The
school must make available to the applicant the
standardized form, upon request. The Technical
Corrections Bill excludes the requirement to
provide the Expected Family Contribution on the
form.
Action:
Train appropriate staff members on
helping students with this selfcertification
form.
Free Application for Federal
Student Aid Simplification
Section 407.
Amends HEA Section 483(a), (c) and (f).
Effective: Aug. 14, 2008.
Delays the implementation of the "EZ FAFSA," a
simplified format for use in applying for federal
student aid, until after the 2010-2011 award year.
Action:
Watch for requests for comments to
ensure important institutional and state
required questions are not eliminated.
Loan Counseling
Section 402.
Amends HEA Section 485(1).
Effective: Aug. 14, 2008.
Guarantors and lenders are permitted to provide
entrance counseling for students.
Action:
Review entrance counseling policies and
procedures.
Rehabilitated Loans
Section 402 and 404.
Amends HEA Section 428F(a).
Effective: Aug. 14, 2008.
When students default on FFEL loans held by
private lenders, guaranty agencies work with
those defaulted borrowers in an attempt to reestablish
loan repayment. Once students have
made nine consecutive, voluntary, on-time
monthly payments of a reasonable and
affordable amount, they are considered to have
“rehabilitated” their loans. The final step in the
rehabilitation process is for these rehabilitated
loans to be sold either to FFEL lenders or in
secondary markets, thereby allowing the default
status to be removed from the borrowers’ credit
reports. However, in recent months, buyers for
rehabilitated loans have been in short supply due
to current market conditions. The Technical
2

Corrections bill authorizes ED to purchase these
rehabilitated loans in those instances where the
guaranty agencies are unable to locate lenders
willing to purchase those loans.
Trainer’s Tidbit
Rehabilitated loans are defaulted loans
returned to full repayment status, as
defined under federal rules. Borrowers with
rehabilitated loans are eligible to have their
credit ratings restored.
Action:
No action required by school.
Prohibited Inducements
Section 402.
Amends HEA Section 487(e).
Effective: Aug. 14, 2008.
Every institution must develop and publish a
code of conduct. The institution must require
that all of the organization’s agents with loanrelated
responsibilities are annually informed of
and comply with the provisions of the code of
conduct. Last year's enactment of the HEOA
significantly amended the inducement
prohibition narrowing its scope to only prohibit
payments made to schools and their employees.
The Technical Corrections Bill expands the reach
of the provision to include lender payments "to
any institution of higher education, any
employee of an institution of higher education,
or any individual or entity in order to secure
applicants for FFELP loans."
Action:
Develop and publish a code of conduct
on the institution's Web site, if applicable.
Communicate code of conduct
requirements to appropriate parties.
Experimental Sites
Section 407.
Amends HEA Section 487A.
Effective: Aug. 14, 2008.
Extends the current operation of experimental
sites that have not been deemed "successful" to
June 30, 2010.
The experimental sites initiative provides eligible
schools the opportunity to develop and test
different ways to meet federal student aid
program requirements with the goals of
providing better service to students and
reducing administrative burden. No additional
schools are allowed to become an experimental
site at this time.
Action:
Currently participating financial aid
offices may continue using experimental
approaches when administering financial
aid.
3

Veterans Educational Benefits
Section 406.
Amends HEOA Section 473(c).
Amends HEA Section 480(j)(l) and 480(c).
Effective: July 1, 2009.
The Technical Corrections Bill updated the
definition of veterans educational benefits and
revised the effective date for the exclusion of
benefits from estimated financial assistance to
July 1, 2009.
Montgomery GI Benefits (Ch. 30) already were
excluded from EFA for subsidized Stafford loans.
The following VA educational benefits as defined
in Part F of the HEA are excluded from the
definition of EFA:
Chapter 103 of title 10, United States Code
(Senior Reserve Officers’ Training Corps).
Chapter 106A of title 10, United States Code
(Educational Assistance for Persons Enlisting
for Active Duty).
Chapter 1606 of title 10, United States Code
(Selected Reserve Educational Assistance
Program).
Chapter 1607 of title 10, United States Code
(Educational Assistance Program for Reserve
Component Members Supporting
Contingency Operations and Certain Other
Operations).
Chapter 30 of title 38, United States Code (All-
Volunteer Force Educational Assistance
Program, also known as the Montgomery GI
Bill-active duty).
Chapter 31 of title 38, United States Code
(Training and Rehabilitation for Veterans with
Service-Connected Disabilities).
Chapter 32 of title 38, United States Code
(Post-Vietnam Era Veterans’ Educational
Assistance Program).
Chapter 33 of title 38, United States Code
(Post-9/11 Educational Assistance).
Chapter 35 of title 38, United States Code
(Survivors’ and Dependents’ Educational
Assistance Program).
Section 903 of the Department of Defense
Authorization Act, 1981 (10 United States
Code 2141 note) (Educational Assistance Pilot
Program).
Section 156(b) of the “Joint Resolution
making further continuing appropriations
and providing for productive employment for
the fiscal year 1983, and for other purposes”
(42 United States Code 402 note) (Restored
Entitlement Program for Survivors, also
known as “Quayle benefits”).
The provisions of chapter 3 of title 37, United
States Code, related to subsistence
allowances for members of the Reserve
Officers Training Corps.
Trainer’s Tidbit
This exclusion applies regardless of whether
the benefits are received by veterans, their
spouses or their dependents.
Action:
Include updated list of excludable
veterans educational benefits in policies
and procedures.
Consider the effect this change in
eligibility may have on packaging policies
and procedures.
Revise financial aid packages for 2009-
2010, as necessary.
Adjust financial aid management system,
if applicable.
4

Example
Andy Perez is a fourth-year, independent undergraduate student at Private University. His cost of
attendance is $23,570 and he has an Expected Family Contribution of $455. His Pell Grant is $4,900
and his Chapter 31 benefits total $5,200.
Example – Old EFA Guidelines
Fourth-Year, Independent Undergraduate
Chapter 31 Benefits of $5,200
Subsidized
Loan Eligibility
Unsubsidized
Loan Eligibility
COA $23,570 COA $23,570
EFC -455 Pell -4,900
Need 23,115 FSEOG -2,000
State Aid -7,505
Pell -4,900 Scholarship -2,250
FSEOG -2,000 Chapter 31 -5,200
State Aid -7,505 Subsidized -1,260
Scholarship -2,250 455
Chapter 31 -5,200
Unmet Need 1,260
Subsidized $1,260 Unsubsidized $455
Total EFA = $23,570
Example – New EFA Guidelines
Fourth-Year, Independent Undergraduate
Chapter 31 Benefits of $5,200
Subsidized
Loan Eligibility
Unsubsidized
Loan Eligibility
COA $23,570 COA $23,570
EFC -455 Pell -4,900
Need 23,115 FSEOG -2,000
State Aid -7,505
Pell -4,900 Scholarship -2,250
FSEOG -2,000 Chapter 31 0
State Aid -7,505 Subsidized -5,500
Scholarship -2,250 1,415
Chapter 31 0
Unmet Need 6,460
Subsidized $5,500 Unsubsidized $1,415
Total EFA = $23,570
570*
*Total aid available to the student = $28,770
What are some unintended consequences of this change?
NOTES
5

Automatic-Zero EFC for
Qualifying Students
Section 401.
Amends Section 401 HEOA.
Amends HEA Section 401(f)(4).
Effective: July 1, 2009.
The EFC for a Pell-eligible student will be set to
zero if a parent or guardian died as a result of
military service in Iraq or Afghanistan after
Sept. 11, 2001, if the student was either under 24
years of age or enrolled in an institution of higher
education. This amendment clarifies that
students must have a calculated EFC in the Pelleligible
range to qualify for the reduction to zero.
This change eliminates any confusion that would
have resulted from one EFC for Pell and another
for other Title IV programs.
Action:
Communicate this change to interested
parties.
Consider the effect this change in
eligibility may have on packaging policies
and procedures.
Contact ED for assistance with selfidentified
students:
Dr. Thurman McClain, thurman.mcclain@ed.gov.
Adjust financial aid packages for selfidentified
students.
Watch for additional guidance from ED
regarding automated processing,
beginning with the 2010-2011 award year,
based on information from the U.S.
Department of Defense and the VA.
Iraq and Afghanistan
Service Grants
Section 401.
Amends HEA Section 401.
Effective: July 1, 2010.
A new Title IV grant program will be available to
undergraduate students pursuing a first
baccalaureate degree who are not Pell-eligible,
but whose parents or guardians died as a result
of military service in Iraq or Afghanistan after
Sept. 11, 2001. To qualify, the students must have
been either under 24 years of age or enrolled in
an institution of higher education at the time of
their parents' or guardians' death.
Financial need is not required and the grant
award will not count as part of the EFA. Award
amounts will be based on the maximum Pell
Grant award for each year, including adjustments
for less than full-time enrollment, and cannot
exceed the cost of attendance. Funding will be
subject to the federal appropriations process.
Action:
Communicate this change to interested
parties.
Consider the effect this change in
eligibility may have on packaging policies
and procedures.
Watch for additional guidance from ED
regarding automated processing,
beginning with the 2010-2011 award year,
based on information from the DoD and
the VA.
NOTES
6

Federal Budget Process for Fiscal Year 2010
The federal budget sets priorities, levels of spending and ways to finance government spending. The
budget reflects the goals and priorities of the President and Congress. On Feb. 26, 2009, President
Obama submitted his $3.45 trillion budget proposal to Congress, which included a request for $46.7
billion for education.
After the President's submission of his budget proposal, Congress prepared a budget resolution.
Drafted by House and Senate Budget Committees, the resolution is an agreement between the two
chambers and governs any Congressional activity and procedures related to the budget process. The
resolution passed on April 29, 2009, and Congress agreed to use the budget reconciliation process as
a way to pass significant legislation related to the FY 2010 budget. On May 7, 2009, the President
submitted details regarding the proposed budget.
President
President submits initial
budget request to
Congress.
Congress
Budget resolution
process.
March and April 2009.
Appropriations
Committees
Budget Conference
Report passed by
Congress.
President submits
detailed budget
request to Congress.
May 7, 2009.
Appropriation
Committees draft bills.
By Oct. 15, 2009.
Appropriations bills
voted on and passed.
Date: TBD.
Trainer’s Tidbit
The budget reconciliation process improves the odds of the budget being adopted because only a
simple majority vote, or 51 percent, is needed in the Senate to adopt a budget resolution that calls
for the reconciliation process. It often is proposed as a way to consider major shifts in federal policy.
Congress used reconciliation legislation in 2007 to adopt the CCRAA.
There are three major changes proposed in the 2010 budget related to federal student aid: expansion
of the Pell Grant program, the shift from FFELP to Direct Lending by 2010 and the restructuring of the
Perkins loan program.
7

Expansion of Pell Grant Program
By law, the Federal Pell Grant program relies on the annual budgeting and appropriations process for
funding. The proposed budget would make Pell Grant funding mandatory and eliminates the yearly
discretionary appropriation of funds, ensuring a regular stream of funding. This is intended to make it
easier for schools to make earlier determinations of awards so students and families will be able to
make better decisions about postsecondary education plans.
Federal Pell Grant Program
Proposed Provisions
Pell Grant funding changes from discretionary to
mandatory.
Pell Grant maximum indexed to the Consumer Price
Index plus one percent.
Maximum amount for 2010-2011 is $5,550.
Potential Action
Determine earliest possible date to notify
students and parents of eligibility.
No action required by school.
Anticipate increases or decreases based on
economic conditions.
Make adjustments in FAM system.
Update packaging policies accordingly.
Federal Student Loans
The federal government began guaranteeing student loans provided by banks and non-profit
lenders in 1965, creating the program that is now called the Federal Family Education Loan Program.
In 1993, Congress passed a budget reconciliation bill that was intended to phase in the Federal Direct
Loan Program, starting with colleges that volunteered to participate. The budget proposal would
require that, as of June 30, 2010, loans no longer would be made under FFELP.
NOTES
8

Proposed Provisions
Federal Student Loans
Potential Action
Beginning July 1, 2010, all Stafford (subsidized and
unsubsidized), PLUS and Consolidation loans will be
made from the William D. Ford Federal Direct Student
Loan Program.
As of June 30, 2010, loans no longer will be made
under FFELP.
Existing loans will continue to be serviced by
previous servicer and guaranteed by the same
guarantor.
Any FFELP loans purchased by ED under ECASLA will
be serviced by one of the four private sector servicers
selected: Sallie Mae, Nelnet, Great Lakes Higher
Education Corporation and Pennsylvania Higher
Education Assistance Agency. Borrowers will be
contacted by the new servicer and ED. Toll free
numbers for borrowers and schools are available at
www.ed-servicing.com.
As of Aug. 1, 2010, private-sector servicers perform
origination, servicing, loan collections and related
services through performance-based contracts with
ED.
The Common Origination and Disbursement System
will be used to process all loans. This is the same
electronic system used for Pell Grant processing.
ED provides Web-based entrance and exit
counseling.
Review internal policies, business processes and
systems to determine what changes are needed
for conversion to FDLP. Modify if necessary.
Request to activate participation in FDLP at
www.eligcert.ed.gov.
Participate in training for implementing the new
program.
Determine the last date to accept FFELP
applications.
Continue relationships with servicers and
guarantors.
Inform financial aid staff and other campus
departments of changes.
Compile contact list for financial aid office and
students.
Compile contact list for financial aid office and
students.
Sign up for COD access at www.cod.ed.gov.
Redirect students to ED's Web site for these
services, as appropriate.
NOTES
9

Restructured Perkins Loan Program
The proposed restructuring of the Perkins loan program would provide $6 billion in loan volume each
year, six times the previous $1 billion in funding. The number of colleges in the program is expected
to increase from 1,800 to 4,400, with no currently participating schools losing their ability to
participate. Funds would be distributed to schools based on the need-based aid provided to students,
reasonable costs compared to other schools in their peer group and graduating low-income students.
Previously, the formula for distributing Perkins loans was weighted by a formula that included tuition
costs.
Proposed Provisions
Federal Perkins Loan Program
Potential Action
The last day a Perkins loan can be disbursed under
the existing program is June 30, 2010.
Using its existing systems, ED would be responsible
for making, servicing and collecting new Perkins
loans.
Loans made on or after July 1, 2010, are unsubsidized.
Most of the terms and conditions of the new Perkins
loans would be similar to those that apply to Stafford
loans made under the FDLP.
The five percent interest rate, annual and aggregate
loan limits and school-match requirements remain
the same.
Make adjustments to school's FAM system.
Update policies and procedures.
Inform financial aid staff and other campus
departments of change.
Discontinue making, servicing and collecting new
Perkins loans.
Continue to allocate Perkins loans to students.
Update publications and Web site indicating
changes to program.
No action required by school.
Action Required:
Continue to monitor progess of proposal.
NOTES
10

Other Title IV Aid Programs
Like Perkins loans, the Federal Supplemental Educational Opportunity Grant and Federal Work-Study
programs are referred to as "campus-based" programs. Funds for these programs are made directly to
participating institutions and financial aid offices have flexibility in packaging these awards. Though
the proposed budget increased funding for Perkins loans, FSEOG and FWS funding for FY 2010 are
scheduled to remain level with FY 2009 amounts.
HERA authorized two grant programs for Pell recipients: ACG and National SMART Grant. The budget
reflected a proposed increase in these programs for FY 2010 due to accounting adjustments, but the
administration has indicated no plans to extend the programs beyond the June 30, 2011, expiration
date.
Action:
Watch for announcements about the future of these programs.
Negotiated Rulemaking
New laws related to higher education funding, such as HEOA, may require ED to create new and
update existing regulations. During 2009, ED is involved in two rounds of negotiated rulemaking:
spring and summer/fall.
Section 492 of the HEA requires ED to follow a specific process when making substantive new
regulations. Through a series of meetings, representatives from various interest groups attempt to
reach consensus with ED negotiators on proposed regulatory language. After negotiations have
ended, if consensus is achieved, ED uses the proposed regulatory language in its Notice of Proposed
Rulemaking. If consensus is not achieved, ED may use the proposed regulatory language developed
during the negotiations or may develop its own regulatory language for all or a portion of the NPRM.
The NPRM is published in the Federal Register and includes a request for public comment as well as a
deadline for submitting those comments — normally 30-60 days. ED will review comments and
suggestions, amend the proposed rules and publish final rules no later than Nov. 1, for most
provisions to become effective the following July 1. If early implementation is permitted it is noted in
the final rule.
Comments can be submitted through the Federal e-Rulemaking Portal at www.regulations.gov, or by
postal mail, commercial delivery or hand delivery. Comments by fax or by e-mail will not be accepted.
Trainer’s Tidbit
The National Association of Student Financial Aid Administrators has produced a guide, entitled
"How to Communicate With the Department of Education: Responding to a Notice of Proposed
Rulemaking." For more information, visit www.nasfaa.org. Membership may be required.
11

The Regulatory Process at a Glance
U.S. Department of
Education
Negotiated Rulemaking
Committee
Higher Education
Community
Solicit comments
regarding issues to be
regulated.
Determine topics for
negotiated rulemaking
committees.
Nominate negotiated
rulemaking committee
members.
Appoint committee
members to represent
stakeholders such as
students, schools, lender,
guarantors and ED.
If consensus is reached,
ED is required to abide
by the consensus in
NPRM. If consensus is not
reached, ED is free to
draft proposed
regulations as it sees fit.
Committees meet to
discuss topics, with the
goal of consensus.
Committees present
findings (with or without
consensus) to ED.
NPRM published in
Federal Register for
public comment.
After comment period,
ED publishes final
regulations, addressing
any substantive public
comments.
12

2009 Negotiated Rulemaking — Spring
During the spring 2009 negotiated rulemaking session, five committees worked from February to
May to develop the regulatory language that will determine how legislation reauthorizing the HEA
will be implemented. After a public comment period, final regulations must be published in the
Federal Register no later than Nov. 1, 2009, for the provisions to become effective no later than July 1,
2010. In some cases, the provisions may become effective on the publication date, which means that
institutions may need to adjust policies and procedures once the final regulations are published.
Committee
Consensus
Reached
NPRM
Release
Date
Comment
Period Ends
Final Rule
Published
Loans — Lender/General Loan Issues. Yes July 23, 2009 Aug. 24, 2009
Loans — School-Based Loan Issues. Yes July 28, 2009 Aug. 27, 2009
Accreditation. Yes Aug. 6, 2009 Sept. 8, 2009
Discretionary Grants.
No
General and Non-Loan Programmatic Issues. No Aug. 21, 2009 Sept. 21, 2009
There were two loan committees during the spring round of negotiated rulemaking. In July, ED
published two NPRMs in the Federal Register. Both NPRMs proposed changes to the regulations for
the Title IV student loan programs. One, published July 23, 2009, covers lender and guarantors. The
other, dated July 28 includes school-based issues.
Loans — Lender/General Loan Issues
The Lender/General Loan Issues committee reached consensus on all issues. One of the topics was
added to the committee agenda at the request of negotiators: Income-Based Repayment. IBR is a new
repayment option — effective July 1, 2009 — created by the CCRAA. Under this repayment plan an
eligible borrower's monthly federal loan payments cap at 15 percent of income above 150 percent of
the poverty level based on the borrower’s family size. The program covers nearly all federal education
loans made to undergraduate and graduate students, past, present or future. The remaining debt and
interest owed after 25 years of payments may be forgiven.
In the formula used to determine eligibility for IBR, existing rules penalize married individuals who file
joint tax returns by counting both spouses' incomes but not their combined loan debt. This has made
it more difficult for married borrowers to qualify for this new repayment plan. The negotiated
rulemaking team discussed this inadvertent disparity and ED agreed to publish language that would
allow married borrowers to combine their loan debts when applying for IBR. ED indicates that a
borrower must have a "partial financial hardship" to qualify for IBR.
13

Estimate eligibility using calculators provided by www.studentaid.ed.gov, www.usafunds.org,
www.IBRInfo.org or www.FinAid.org/calculators/ibr.phtml.
Trainer’s Tidbit
The Poverty Guideline is published annually by the U.S. Department of Health and Human Services,
categorized by state and family size. For more information about the 2009 guidelines, visit
www.aspe.hhs.gov/poverty/09poverty.shtml.
14

Lender/General Loan Issues Committee
Topic
HEOA Section
Determining borrower eligibility for in-school deferment. 422
Borrower notification when the transfer, sale or assignment of a loan results in a
change where payment is sent.
422
Total and permanent disability loan discharge. 437
PLUS loan repayment, post-enrollment deferment and interest capitalization. 424
FFELP and FDLP Teacher Loan Forgiveness. 429 and 454
Prohibited inducements for lenders and guarantors. 422 and 436
New audit requirements for FFELP school lenders and Eligible Lender Trustees
originating FFELP.
Eligibility for IBR.
436
493C
Until final regulations are published and effective, schools and lenders are required to comply with the statutory language as
written.
NOTES
15

Loans — School-Based Loan Issues
Negotiators working on issues related to school-based loans reached consensus on new rules for all
issues.
ED agreed that the new conflict-of-interest rules governing private loans should not apply to loans
made by higher education institutions themselves. Without this exemption, colleges would have
been required to certify information about their own loans and would have been barred from using
their institution's name or logo on promissory notes or payment-plan agreements. Employees
administering the programs also could not have been paid by the institution.
ED also clarified that colleges may offer recourse loans to their high-risk borrowers as long as they
didn't enter into a "quid pro quo" (the giving of something in return for something else) arrangement
with the lender. This will not violate new conflict-of-interest rules.
On the issue of loan disclosures, ED previously had said there was no way around a requirement that
colleges with preferred lender lists disclose an array of information about student aid options in "all
informational materials" that "describe or discuss loans." After negotiations ED will allow colleges to
provide a link to information found on the college's Web site, as long as the school lists contact
information on the site that can be used by an individual who wishes to request the information in
writing.
In response to changes in the calculations of cohort default rates, college negotiators asked ED to
exempt colleges with small numbers of borrowers from new rules requiring them to calculate the
rate over a three-year period, rather than two-year period, and to make public only final, official rates.
ED agreed not to publish draft rates, but did not provide any exemptions for colleges with few
borrowers.
Loans — School-Based Loan Issues Committee
Topic
HEOA Section
Required disclosures for covered entities. 120
Program Participation Agreement: code of conduct. 493
Advisory board reimbursements. 1011
Private education loan certification. 1021
Information and dissemination activities.
Entrance and exit counseling.
488(a)
488(b) and 488(g)
Program Participation Agreement: preferred lending lists. 493
Cohort default rate calculations. 436
Minimum information requirements for loan borrowers. 120
Until final regulations are published and effective, schools and lenders are required to comply with the statutory language as
written.
16

Accreditation
Negotiators on accreditation issues reached consensus on all issues. The proposed language affects
how accrediting organizations monitor their institutional members and are themselves monitored by
ED. The negotiated rules that will be published will be based on the team’s concensus.
The draft rules originally suggested several indicators that accrediting agencies might use to measure
an institution's performance, including financial audits, student retention rates, graduation rates, job
placement statistics and data about the number of students who passed state licensing exams. The
language to which negotiators agreed uses broader terms, saying "the [accrediting] agency must
regularly collect and analyze key data and performance indicators, including but not limited to
financial information and measures of student success."
Accrediting agencies also were worried about rules that would prohibit them from informing
institutions if ED made an inquiry about that college. The compromised language approved by
negotiators relaxes that condition slightly, by allowing accrediting agencies to decide on a case-bycase
basis whether to inform an institution about a department investigation, unless ED specifically
requests that the agency keep that inquiry confidential.
Accreditation Committee
Topic
HEOA Section
Distance and correspondence education. 495(1)(A) and (5)
Due process and appeals.
Operating procedures.
495(1)(C)
495(2)(C),(D) and (F)
Until final regulations are published and effective, schools and lenders are required to comply with the statutory language as
written.
NOTES
17

Discretionary Grants
The panel working on issues related to federal grant programs reached agreement on issues
involving Gaining Early Awareness and Readiness for Undergraduate Programs, which helps lowincome
students prepare for college, and migrant education programs, but not on issues related to
the TRIO programs for disadvantaged students. Concerns included how colleges can use money for
Talent Search, a college-preparatory program, and the appeals process for unsuccessful applicants for
TRIO funding. Without consensus, ED is not obligated to honor agreements reached with the nonfederal
negotiators when it writes regulatory language to be published as a proposed rule.
Discretionary Grants
Topic
HEOA Section
TRIO Programs. 403
GEAR UP. 404
Migrant Education Programs. 408
Until final regulations are published and effective, schools and lenders are required to comply with the statutory language as
written.
General and Non-Loan Programmatic Issues
Negotiations on general and non-loan issues failed to reach agreement on regulations governing
year-round Pell Grants and consumer information. Without consensus, ED is not obligated to honor
agreements reached with the non-federal negotiators when it writes regulatory language to be
published as a proposed rule.
Year-Round Pell Grant Awards
The HEOA established that a student may receive up to two Pell Grant scheduled awards during a
single award year if the student is pursuing a certificate, associate degree or a baccalaureate degree
and is enrolled at least half time for more than one academic year, more than two semesters or the
equivalent time during a single award year.
Disagreement during negotiations centered on the interpretation of "accelerate the student's
progress" as it relates to eligibility for a second scheduled award within one award year. Some nonfederal
negotiators believed the statutory language was intended to allow even a part-time student
to be considered to “accelerate” attending year-round. Proposed language, however, would require
that a student complete all hours in the school's defined academic year before receiving a second
scheduled Pell Grant award in the same award year.
NOTES
18

Negotiators representing community colleges and four-year public institutions said the rule would
prevent students who enroll less than full time for one or more terms or who fail a course from ever
receiving a second Pell Grant. ED countered that it wanted to be sure that recipients were truly
"accelerating" academically.
Trainer’s Tidbit
ED implemented additional COD System functionality to support 2009-2010 Pell Grant changes
related to the HEOA. EDExpress contains a new field "Additional Eligibility Indicator" which, if
checked, will allow users to originate Pell Grant awards up to 200 percent of a scheduled award. The
National Student Loan Data System also will display the additional eligibility indicator.
General and Non-Loan Programmatic Issues Committee
Topic
HEOA Section
Year-round Pell Grant. 401
Pell Grants to children of soldiers. 401
TEACH Grant extenuating circumstances.
Federal Work-Study.
412(a)(1)
441(2), 443, 444, 446
and 447
90/10 Rule. 493
Consumer information. 488 and 493
Financial assistance for students with intellectual disabilities. 485(a)(8) and 709
Readmission requirements for service members. 487
Definition of baccalaureate "liberal arts" programs at proprietary schools.
102(d)(1)(A)(i)
Until final regulations are published and effective, schools and lenders are required to comply with the statutory language as
written.
NOTES
19

2009 Negotiated Rulemaking —
Summer/Fall
As announced in May 2009, ED plans to engage
in another round of negotiated rulemaking.
Negotiations should begin in late summer/early
fall, with two committees discussing issues
submitted by interested parties from three
public meetings conducted in June.
ED plans to convene a committee to develop
regulations to implement changes made by the
HEOA that affect foreign schools.
The topics under consideration (as of September
2009) by a second committee addressing
program integrity include:
Satisfactory Academic Progress.
Incentive compensation paid by institutions
to persons or entities engaged in student
recruiting or admissions activities.
Definition of a credit hour, particularly in the
context of awarding Pell Grants.
Verification of information included on
student aid applications.
Definition of a high school diploma as a
condition of receiving federal student aid.
Gainful employment in a recognized
occupation.
State authorization for institutional
participation.
ED expects to issue the NPRMs for this round of
meetings after negotiations conclude by March
2010. Final rules should be issued by July 1, 2010,
with an effective date of July 1, 2011. Early
implementation may be allowed.
Other Legislative Activity
Student Aid and Fiscal Responsibility Act of
2009.
H.R. 3221.
Credit Card Accountability, Responsibility and
Disclosure (CARD) Act of 2009.
P.L. 111-024.
Proposed Medical Economic Deferment for
Students (MEDS) Act.
H.R. 1615.
Proposed Tax Relief for IBR Loan Forgiveness.
H.R. 2492.
Proposed Consumer Financial Protection
Agency.
H.R. 3126.
Military Benefits
Legislation passed by Congress on June 30, 2008,
is considered the most extensive educational
benefit package for veterans authorized since
the original GI Bill was signed into law in 1944.
The bill, called the Post-9/11 Veterans
Educational Assistance Act, was part of the 2008
Supplemental Appropriation Act and established
both the Post-9/11 GI Bill and the Yellow Ribbon
Program.
Since then, the HEA Technical Corrections and
the 2009 Supplemental Appropriations Act
became law. The DoD also announced its policies
on transferability of veterans educational
benefits and included a number of changes and
clarifications.
NOTES
20

Post-9/11 GI Bill
Chapter 33
Under the Post-9/11 GI Bill, eligible veterans will
receive education benefits sufficient to cover
tuition and fees, up to the rate charged at the
most expensive public institution in the state
where the student is enrolled. They also will
receive a stipend for books and supplies up to
$1,000 per year. Most veterans will qualify for a
monthly housing allowance as well. The benefit
amount is determined by the aggregate length
of service.
Yellow Ribbon Program
The Yellow Ribbon Program allows a
postsecondary school in the United States to
enter into an agreement with the VA to provide
additional funds to veterans when the school’s
tuition and fees exceed the highest in-state
undergraduate rate. Veterans may receive funds
through the Yellow Ribbon Program if they
attend a participating school and are receiving
full benefits under Chapter 33. A list of
participating Yellow Ribbon Program institutions
is posted on the VA Web site at www.gibill.va.gov.
Transferability of Benefits
One of the benefits requested by veteran
advocacy groups was transferability allowing
service members to share their education
benefits with immediate family members. The
DoD has announced its policy for Post-9/11 GI Bill
transferability. On or after Aug. 1, 2009, the
eligible service member may transfer entitlement
of the Post-9/11 GI Bill to a spouse or child.
Spouse:
The spouse is not eligible for the monthly
housing allowance or stipend for books and
supplies while the service member is on
active duty.
A subsequent divorce will not affect eligibility,
though the service member has the right to
revoke the transfer at any time.
The spouse will remain eligible to use
transferred entitlement until the earliest of:
Child:
15 years from the service member’s last
discharge from active duty.
The date the service member revokes the
transferred entitlement (in the case of
divorce).
The service member dies while on active
duty.
15 years after the service member’s date
of death.
The child is eligible for the monthly housing
allowance or stipend for books and supplies,
even if the parent is on active duty.
A child's subsequent marriage will not affect
eligibility to receive the educational benefits;
however, the military parent has the right to
revoke the transfer at any time.
The child will remain eligible to use the
transferred entitlement until either their 26 th
birthday or the date the military parent
revokes the transferred entitlement.
Trainer’s Tidbit
Eligible service members can transfer benefits
to their spouses or children online at
www.dmdc.osd.mil/TEB/.
21

2009 Supplemental
Appropriations Act
P.L. 111-32.
Effective Aug. 1, 2009.
The final 2009 Supplemental Appropriations Act
includes a provision to expand GI Bill benefits to
the children of fallen U.S. soldiers of the wars in
Iraq and Afghanistan, regardless of the soldiers’
length of military service. The new benefit will be
known as the “Marine Gunnery Sergeant John
David Fry Scholarship.”
The benefits include:
Tuition and fees up to the maximum in-state
tuition rate and fees at a public institution in
the state where they are enrolled.
A monthly housing allowance at the location
of the school, based on the Basic Housing
Allowance for an E-5 with dependents.
An annual stipend for books and supplies of
up to $1,000.
This new benefit allows children to use Post-9/11
GI Bill benefits that could have been transferred
to them if their military parent had lived. It is
slightly different than the normal family transfer
option under the Post-9/11 GI Bill.
Trainer’s Tidbit
U.S. Rep. Chet Edwards (D-TX) included a
provision in the 2009 Supplemental
Appropriations bill that named the program
the "Marine Gunnery Sergeant John David Fry
Scholarship" to honor a father of three in his
congressional district who was killed in action.
Sergeant Fry was an explosive device disposal
technician who was credited with saving
numerous lives before sacrificing his own in
Iraq.
Dependent
Eligibility
Military
Service
Requirements
Age
Restriction
Post-9/11 GI Bill
Allows more than
one person to
receive transferred
benefits, but no
more than 36 total
months can be
transferred.
Requires the
parent to have
completed a
minimum of
military service for
their benefits to
transfer to their
children (six years
with an additional
four-year
commitment).
Ends benefits to
children at age 26.
Fry
Scholarship
Will qualify
each
dependent for
36 months of
benefits.
Extends the full
benefit to each
dependent
child.
No minimum
length of
parental
military service
to qualify.
Ends benefits
to children at
age 33.
Because this is a last-minute addition to the VA
benefits program, the bill includes language
giving the VA until Aug. 1, 2010, to create a
process for applying promised retroactive
payments to dependents using the benefits
between Aug. 1, 2009, and Aug. 1, 2010.
22

Emergency Preparation
In light of recent natural disasters and other
emergencies affecting college campuses, ED has
a renewed focus on emergency preparation.
Schools are encouraged to review and update
their primary and alternate contact information
on the Program Participation Agreement at
http://eligcert.ed.gov.
If an event occurs that affects a school’s ability to
operate normally, the school should call
(800) 433-7327 to discuss the situation with ED
representatives.
Trainer’s Tidbit
Schools may find additional information online
at http://ifap.ed.gov/ifap/disaster.jsp.
Keeping Current
Keeping current with what is happening with
reauthorization, the federal budget process and
negotiated rulemaking can be a challenge,
especially in recent times.
USA Funds’ Education Access Report.
www.usafunds.org/apps/eareport/
default.aspx.
USA Funds’ Education Access Report is a free
online publication providing weekly news on
topics important to the financial aid and
education lending communities. To subscribe
to the Education Access Report, simply access
the site and input an e-mail address.
ED Schools Portal.
www.ifap.ed.gov/ifap/mailinglist.jsp.
Schools can sign up to receive e-mail notices
when new documents are posted, such as
Federal Registers and Dear Colleague Letter.
Information for Financial Aid
Professionals.
www.ifap.ed.gov.
Provides Dear Colleague Letters, electronic
publications and numerous other references
that are excellent resources for financial aid
administration.
The Federal Student Aid Handbook.
www.ifap.ed.gov.
The FSA Handbook is published each year by
ED as a primary resource for financial aid
administrators. The electronic version may be
downloaded and is searchable using PDF
search features.
NOTES
23

The Blue Book.
www.ifap.ed.gov/bbooks/102005BlueBook.
html.
Addresses the rules and procedures that
schools must follow in requesting,
maintaining, disbursing and managing Title
IV funds. It is not published annually.
The ISIR Guide.
www.ifap.ed.gov/ifap/byAwardYear.jsp
?type=isirguide.
Assists in interpreting student information on
the Institutional Student Information Record
sent electronically to schools by the Central
Processing System. ISIRs contain processed
student information reported on the FAFSA,
as well as key processing results and NSLDS
financial aid history information.
Audit Guide of Federal Student Financial
Assistance Programs.
www.ifap.ed.gov/ifap/byYear.jsp?type=
aguides.
Assists independent public auditors in
performing audits of Title IV aid programs.
National Association of Student Financial
Aid Administrators.
www.nasfaa.org.
Provides a daily newsletter with legislative
and regulatory analysis related to federal
student aid programs. Membership may be
required.
The Library of Congress.
http://thomas.loc.gov/.
Public access to government documents and
related resources.
GovTrack.
www.govtrack.us.
An online resource to track specific federal
legislation.
U.S. Government Printing Office.
www.gpoaccess.gov.
Provides an online gateway to the Code of
Federal Regulations, Federal Register
publications and the Unified Agenda.
Regulations.gov.
www.regulations.gov.
A source for all regulations issued by U.S.
government agencies, including ED. This site
contains all federal regulations that are open
for public comment (proposed rules) and
closed for public comment (final rules), as
published in the Federal Register.
U.S. Department of Veterans Affairs.
www.va.gov.
A resource for veterans and non-veterans
about the various benefits and programs
available through the VA.
NOTES
24

Putting It To Work
The topics covered in this training session are conveyed in general terms to encompass learners from
all types of postsecondary institutions. You should consider how the concepts covered in the training
apply to your school.
Schools are often given the flexibility in administering and applying guidelines to certain federal
student aid programs. That's why it is essential that you discuss these items (shown below) with your
supervisor.
Your supervisor can give you institution-specific guidelines on how the material we discussed in this
training session can be applied to your job.
1. How does our financial aid office ensure all legislative and regulatory changes are effectively
incorporated into policies and procedures?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
2. What information should be shared with other campus departments? How will it be
communicated?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
3. List some key resources our office uses to stay informed and research new legislation and
regulations.
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
4. Does our office review new bills, legislation and regulation and submit comments? If not, why?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
25

Trainer's Toolkit
The Trainer's Toolkit is a listing of terms, Web sites
and reference material directly related to the
Federal Update.
Terms, Acronyms and
Abbreviations
ACG
Academic Competitiveness Grant.
The Academic Competitiveness Grant provides
up to $750 for the first year of undergraduate
study and up to $1,300 for the second year of
undergraduate study to full-time students who
are eligible for a Federal Pell Grant and who have
successfully completed a rigorous high school
program, as determined by the state or local
education agency and recognized by the U.S.
Secretary of Education. Students enrolled at least
half time qualify for prorated grant amounts.
Active Duty
Serving in full-time duty in the active military
service of the U.S., not including training or
attendance at a service school.
AGI
Adjusted Gross Income.
AGI is defined as taxable income from all sources,
minus specific deductions allowed by the
Internal Revenue Service. Parent and student AGI
is reported on the Free Application for Federal
Student Aid.
Alternative/Private Loans
Education loans made available from nonfederal
sources — such as banks, credit unions and
endowment associations. The term alternative or
private is used to define these loans.
Award Year
An award year begins on July 1 in one calendar
year and ends on June 30 of the following
calendar year. For example, the 2009-2010 award
year begins July 1, 2009, and ends June 30, 2010.
Awarding/Packaging
The process used by institutions to combine the
various forms of financial aid — including aid
such as grants, loans, scholarships and workstudy
— for students to attend school.
AY
Academic Year.
An undergraduate academic year for credit-hour
programs must consist of at least 30 weeks of
instructional time. An undergraduate clock-hour
program must consist of at least 26 instructional
weeks. The minimum number of instructional
weeks for graduate programs is defined by the
school.
Campus-Based Aid Programs
Federal Perkins Loans, Federal Work-Study and
Federal Supplemental Educational Opportunity
Grants are the three campus-based aid programs.
Campus-based aid programs are federal financial
aid programs administered by the institution,
rather than ED. ED provides a fixed pool of money
to participating schools, with some programs
requiring a contribution from the institution as
well.
CCRAA
College Cost Reduction and Access Act of
2007.
The College Cost Reduction and Access Act (P.L.
110-84) provides numerous changes in federal
financial aid administration. The CCRAA was
signed into law on Sept. 27, 2007, with some
provisions retroactively applied to the 2007-2008
academic year; others were implemented Oct. 1,
2007, and the majority took effect either July 1,
2008, or July 1, 2009. Technical amendments to
the CCRAA were signed into law on Dec. 21, 2007
(P.L. 110-153).
27

CDR
Cohort Default Rate.
The CDR is the percentage of borrowers of
certain federal education loans who default
before the end of the fiscal year following the
fiscal year in which they entered repayment on
their loans. ED annually calculates this rate to
determine the default experience of students
who attended a particular school during a
specific time period.
CFR
Code of Federal Regulations.
The CFR is a collection of federal regulations
disseminated by the U.S. government. ED’s
regulations are codified in Volume 34 of the CFR.
Search the most recent CFR at
www.access.gpo.gov/nara/cfr/cfr-tablesearch.html#page1
or go to www.ifap.ed.gov and
click on “Code of Federal Regulations (GPO
Compilation)” under “Laws & Regulations.”
COA
Cost of Attendance.
The total estimated cost for a student to attend
school, including tuition and fees, room and
board, allowances for books and supplies,
transportation and personal and incidental
expenses.
COD
Common Origination and Disbursement.
The COD is a common process integrated with a
system designed to support origination,
disbursement and reporting for Direct Loans and
Pell Grants, and reporting for campus-based
programs. The COD System is a technical solution
designed to accommodate the COD Process for
Federal Pell Grant and Direct Loan funding and
campus-based reporting.
Code of Conduct
Institutions are required to develop and maintain
a code of conduct prohibiting any conflicts of
interest with respect to Title IV loans. Schools
must inform officers, employees and agents of
the institutions with loan-related responsibilities
about the institution’s code of conduct
provisions each year.
Common Manual
www.commonmanual.org.
A compilation of federal statute, regulation and
other guidance to assist schools and lenders in
administering the FFELP. Written in a life-of-loan
sequence and in the simplest terms, the manual
provides an efficient “first source” to locate
important guidance on daily processing
questions. The manual also includes an extensive
array of hyperlinks from its text to its source
material in statute, regulations and the
Department’s subregulatory publications.
Consumer Information
Information provided to students, faculty, staff
and the community about an institution of
higher education. ED regulates and mandates
this disclosure of information.
CPS
Central Processing System.
The CPS is ED’s processing facility for Free
Application for Federal Student Aid data.
28

DCL
Dear Colleague Letter.
ED distributes DCLs to schools, lenders, servicers
and guarantors to provide interpretive policy
guidance about federal student aid programs.
Typically, a DCL provides interim guidance after
Congress reauthorizes the Higher Education Act
or between releases of final regulations. Recent
and archived DCLs are available in the Letters
and Announcements section on the Information
for Financial Aid Professionals Web site at
www.ifap.ed.gov. Listed below are the types of
DCLs that ED publishes:
General Distribution (GEN).
Training Announcements (ANN).
Campus-based Programs (CB).
Pell Grant Program (P).
Financial Partners (FP).
DoD
U.S. Department of Defense.
www.defense.gov.
The DoD is charged with supplying military
service members in order to discourage
waractivities and ensure the security of the
United States. DoD is the largest and oldest
government agency and the nation’s largest
employer.
ECASLA
Ensuring Continued Access to Student Loans
Act of 2008.
The ECASLA (P.L. 110-227) provides numerous
changes in federal financial aid administration.
The ECASLA was signed into law on May 7, 2008,
to ensure that students and families would
continue to be able to borrow federal student
loans for the 2008-2009 academic year. The bill
was enacted less than one month after its
introduction. Subsequent revisions clarified some
of this bill’s provisions.
ED
U.S. Department of Education.
www.ed.gov.
ED was created in 1980 when several federal
agencies were combined. Its mission is to ensure
equal access to education and to promote
educational excellence throughout the nation.
ED’s purpose is to:
Establish policies on federal financial aid for
education.
Distribute and monitor federal student aid
funds.
Collect data on schools and disseminate that
research.
Focus national attention on key educational
issues.
Prohibit discrimination and ensure equal
access to education.
EFA
Estimated Financial Assistance.
The school’s estimate of the amount of financial
assistance that a student has been or will be
awarded for the enrollment period for which a
loan is sought. The EFA includes assistance from
federal, state, institutional, scholarship, grant,
financial need-based employment, or other
sources. EFA does not include veterans
educational benefits or ROTC payments.
EFC
Expected Family Contribution.
The EFC figure is determined by Congressionallyapproved
Federal Methodology need-analysis
formulas. The EFC is an index that colleges use to
determine financial aid eligibility.
29

Experimental Site
The experimental sites initiative provides eligible
schools the opportunity to develop and test
different ways to meet federal student aid
program requirements with the goals of
providing better service to students and
reducing administrative burden. Schools
complete an annual report and ED may use the
results to propose legislative and regulatory
changes.
FAA
Financial Aid Administrator.
An FAA is a college or university employee who is
responsible for the administration of financial
aid.
FAFSA
Free Application for Federal Student Aid.
The FAFSA is ED’s official form used to apply for
aid from all federal student aid programs.
FDLP
Federal Direct Student Loan Program.
The FDLP is similar to the Federal Family
Education Loan Program. The funds for these
loans are provided by the U.S. government
directly to students and their parents through
their schools.
Federal Pell Grant
Federal Pell Grants are the foundation of financial
aid awards for students who demonstrate
financial need. Because it is the foundation of
financial aid award packages, Pell Grant funds
always must be awarded to students who are
eligible. Students’ eligibility is based on the
Expected Family Contribution as calculated from
information provided on the FAFSA.
Federal Perkins Loans
Federal Perkins loans are intended to assist
students with exceptional need by providing
long-term federal loans with a fixed interest rate
of 5 percent. Interest does not accrue on Perkins
loans while the student is in school and during
authorized periods of deferment. Individual
award amounts and awarding policies are
determined by the school.
Federal Stafford Loans
Federal Stafford loans are available to
undergraduate and graduate students enrolled
at least half time. Students may borrow up to
established annual loan limits, based upon their
grade level. Stafford loans may be subsidized
(need-based) or unsubsidized (non-need-based).
Recipients have a six-month grace period upon
ceasing to be enrolled at least half time.
FFELP
Federal Family Education Loan Program.
Loan programs authorized by Title IV, Part B of
the Higher Education Act of 1965, as amended,
that includes Federal Stafford loans, Federal
Unsubsidized Stafford loans, Federal PLUS loans
and Federal Consolidation loans. These loan
programs are funded by lenders, guaranteed by
guarantors and reinsured by the federal
government. These programs are defined
individually in 34 CFR 682.
FSEOG
Federal Supplemental Educational
Opportunity Grant.
FSEOG is a federal grant program for
undergraduate students with exceptional
financial need. FSEOG grants are awarded by
schools and they provide up to $4,000 per year
to students. First priority for FSEOG funds must
go to students with the lowest EFC who also
receive Pell Grants. If funds remain after Pell
Grant recipients receive FSEOG, you may award
funds to students with the lowest EFCs who are
not receiving Pell Grants.
30

FWS
Federal Work-Study.
FWS is a self-help form of financial aid that
provides students with part-time employment
during the school year. The federal government
pays a portion of the student's salary, while the
employer pays the remaining portion. Eligibility
for FWS is based on financial need. Money earned
from a FWS job is not counted as income for the
subsequent year's need-analysis process.
FY
Fiscal Year.
The FY is the 12-month period during which
financial assistance is awarded through the
federal government. The federal fiscal year is
Oct. 1 - Sept. 30.
GEAR UP
Gaining Early Awareness and Readiness for
Undergraduate Programs.
www.ed.gov/gearup.
GEAR UP is a federal program designed to better
prepare middle and high school students for
college through mentoring programs and
scholarships, as well as new academic
preparation and awareness programs for
students and parents.
Guarantor
A private, nonprofit organization or state
government entity that guarantees to the lender
repayment of federal student loans. The
guarantor works with borrowers whose student
loan payments are seriously past due to help
them avoid default. If a borrower defaults, the
guarantor partially reimburses the lender,
purchases the defaulted loan and continues
efforts to recover the amount owed by the
borrower.
HEA
Higher Education Act of 1965, as amended.
The HEA is the law that authorizes most federal
programs and activities that assist and enable
students to enter and succeed in postsecondary
education. The primary focus of the HEA is
student aid, in the form of grants, loans and workstudy
assistance.
HEOA
Higher Education Opportunity Act of 2008.
The HEOA (P.L. 110-315) reauthorized the Higher
Education Act of 1965, as amended. The HEOA
was signed into law on Aug. 14, 2008, with some
provisions retroactively applied to the 2008-2009
academic year; others are to be implemented at
later dates.
HERA
Higher Education Reconciliation Act of 2005 (P.L.
109-171) reauthorizes portions of the Higher
Education Act of 1965, as amended. HERA was
signed into law on Feb. 8, 2006 and contains
provisions that affect the federal student
financial aid programs authorized by Title IV.
Some key provisions include: fixed interest rates
for Stafford and PLUS loans, increases in Stafford
Loan limits and the introduction of two new
grant programs.
HHS
U.S. Department of Health and Human
Services.
www.hhs.gov.
HHS is the U.S. government's principal agency for
protecting the health of Americans and
providing essential human services, especially for
those who are least able to help themselves. The
department has more than 300 programs,
covering a wide spectrum of activities including
financial assistance for students seeking training
in medicine, dentistry, nursing and other healthrelated
fields.
31

IBR
Income-Based Repayment.
Effective July 1, 2009, any borrower who is in
repayment or enters repayment and has a partial
financial hardship is eligible for income-based
repayment. Borrowers who participate in IBR may
be eligible for forgiveness of any outstanding
loan balance that remains after 25 years.
IFAP
Information for Financial Aid Professionals.
www.ifap.ed.gov.
Information for Financial Aid Professionals is a
Web site that was developed to provide school
and financial partners with electronic access to
the many FSA publications that guide the
administration of the Title IV Student Financial
Assistance programs.
IRS
Internal Revenue Service.
www.irs.gov.
The IRS is the federal agency responsible for
administering and enforcing the U.S. Treasury
Department's revenue laws, through the
assessment and collection of taxes,
determination of pension plan qualification and
related activities.
ISIR
Institutional Student Information Record.
The ISIR is an electronic record provided to the
school by ED’s Central Processing System. The
ISIR includes information provided by students
on the FAFSA. The ISIR also contains students’
Expected Family Contribution and the results of
federal database matches (including citizenship,
names, dates of birth and Social Security number
matches).
Lender
The organization that funds education loans for
students and parents under the FFELP.
32
Loan Forgiveness
Federal education loans may be discharged,
canceled or forgiven, which relieves the borrower
from any further obligation to repay the
remaining amount due. Some borrowers may
qualify for forgiveness of a portion of the loan
principal. Forgiveness of loan debt usually is tied
to service for a specified period of time, such as
teaching.
NASFAA
National Association of Student Financial Aid
Administrators.
www.nasfaa.org.
NASFAA supports financial aid professionals at
colleges, universities and career schools. NASFAA
is the only national association with a primary
focus on student aid legislation, regulatory
analysis and professional development for
financial aid administrators.
National SMART Grant
National Science and Mathematics Access to
Retain Talent Grant.
A National SMART Grant provides up to $4,000
for each of the third and fourth years of
undergraduate study to students who are
eligible for a federal Pell Grant and are majoring
in physical, life or computer sciences,
mathematics, technology or engineering, or in a
foreign language determined critical to national
security. The recipient also must have maintained
a cumulative grade point average of at least 3.0
in coursework related to the major. The National
SMART Grant is awarded in addition to the Pell
Grant award.
NPRM
Notice of Proposed Rulemaking.
An NPRM is a notice printed in the Federal
Register of proposed regulations from a
government agency, such as ED. Interested
parties are invited to submit comments and
recommendations about proposed regulations.
ED reviews comments and then issues final
regulations.

P.L.
Public Law.
A P.L. is designated by the number of the
Congress and the order in which it is enacted. For
example, P.L. 106-10 is the tenth law enacted
during the 106 th Congress.
PLUS
Formerly Parent Loans for Undergraduate
Students.
PLUS loans are federal loans available to parents
of dependent undergraduate students and to
graduate/professional students. Borrowers may
obtain up to the full cost of education, less the
amount of any other financial aid received or
anticipated. Borrowers must not have adverse
credit, as defined in regulation, to qualify for a
PLUS loan.
Preferred Lender Arrangement
Exists when a covered institution or institutionaffiliated
organization recommends the
education loan products of a lender, and that
lender provides education loans to students or
parents of dependent students attending a
covered institution.
SAP
Satisfactory Academic Progress.
SAP is a set of qualitative and quantitative
standards set by a school that require its students
to maintain an academic standing consistent
with the school's policy on progression toward
graduation requirements.
SAR
Student Aid Report.
The SAR is the report sent to students that
summarizes the information included in the
FAFSA. The SAR also indicates the amount of Pell
Grant eligibility, if any, and the Expected Family
Contribution, as well as any eligibility issues. The
SAR is the student’s version of the ISIR.
TEACH Grant
Teacher Education Assistance for College and
Higher Education Grant.
The College Cost Reduction and Access Act of
2007 created the TEACH Grant program. The
program provides grants of up to $4,000 per year
to students who intend to teach in a high-need
subject area in a public or private elementary or
secondary school that serves students attending
Title I schools. In exchange for receiving a TEACH
Grant, recipients must agree to teach full time for
at least four academic years within eight
academic years. If this obligation is not met, the
TEACH Grant converts to an unsubsidized Direct
Stafford loan.
Title IV Aid
Federal student financial aid programs
administered by ED that include Pell Grants,
Academic Competitiveness Grants, National
SMART Grants, Federal Supplemental Educational
Opportunity Grants, TEACH Grants, Federal Work-
Study Program, Federal Perkins loans, subsidized
FFEL/Direct Stafford loans, unsubsidized
FFEL/Direct Stafford loans, FFEL/Direct PLUS
loans for parents and FFEL/Direct PLUS loans for
graduate or professional students.
TRIO Programs
Six TRIO programs exist to assist students from
disadvantaged backgrounds: Educational
Opportunity Centers, Ronald E. McNair
Postbaccalaureate Achievement, Student
Support Services, Talent Search, Upward Bound
and Upward Bound Math-Science.
VA
U.S. Department of Veterans Affairs.
www.va.gov.
The VA provides patient care, veterans benefits
(including educational benefits) to U.S. veterans.
33

References, Resources and Web Sites
Technical Corrections Bill
Federal Legislation or Regulations.
To make technical corrections to the Higher Education Act of 1965, as amended, and for other
purposes.
P.L. 111-39.
July 1, 2009.
www.govtrack.us.
Higher Education Opportunity Act of 2008.
P.L. 110-315.
Aug. 14, 2008.
www.ed.gov/policy/highered/leg/hea08/index.html.
U.S. Department of Education.
Dear Colleague Letter GEN-08-12/FP-08-10.
Subject: The Higher Education Opportunity Act.
December 2008.
www.ifap.ed.gov/dpcletters/GEN0812FP0810.html.
Press Release.
Obama Administration Announces Streamlined College Aid Application.
June 24, 2009.
www.ed.gov/news/pressreleases/2009/06/06242009.html.
National Association of Student Financial Aid Administrators.
HEOA Technical Corrections Bill Adopts Provisions Advocated by NASFAA.
NASFAA News.
June 25, 2009.
www.nasfaa.org/publications/2009/gheacorrections062509.html.
HEOA Technical Corrections Bill Adopts Provisions Advocated by NASFAA.
NASFAA News.
June 25, 2009.
www.nasfaa.org/publications/2009/ln1777signed070609.html.
House and Senate Pass HEA Technical Amendments Bill.
NASFAA News.
June 24, 2009.
www.nasfaa.org/publications/2009/ghr1777062409.html.
Other Resources.
Chronicle of Higher Education.
Congress Approves Technical Amendments to Higher Education Act.
June 24, 2009.
www.chronicle.com/article/Congress-Approves-Technical/47800.
34

Federal Budget Process
U.S. Department of Education.
Budget Office – Overview.
www.ed.gov/about/overview/budget/index.html.
Budget Process in the U.S. Department of Education.
www.ed.gov/about/overview/budget/process.html.
Press Release.
U.S. Department of Education Expands Its Student Loan Servicing Capacity.
June 12, 2009.
www.ed.gov/news/pressreleases/2009/06/06172009b.html.
Fiscal Year 2010 Budget Summary.
May 7, 2009.
www.ed.gov/about/overview/budget/budget10/summary/edlite-section1.html.
Questions & Answers on the Pell Grant Program.
April 6, 2009.
www.ed.gov/about/overview/budget/budget10/finaid/faq-pell.html.
Questions & Answers on the Transition to 100 Percent Direct Lending.
April 6, 2009.
www.ed.gov/about/overview/budget/budget10/finaid/faq-ffel-dl.html.
Questions & Answers on Updates to the Perkins Loan Program.
April 6, 2009.
www.ed.gov/about/overview/budget/budget10/finaid/faq-perkins.html.
National Association of Student Financial Aid Administrators.
Department Official Gives Additional Details on Obama's Perkins Loan Proposal.
April 3, 2009.
www.nasfaa.org/publications/2009/gperkins040309.html.
Other Resources.
The New America Foundation.
Federal Education Budget Project.
www.febp.newamerica.net/background-analysis/federal-budget.
Negotiated Rulemaking
Federal Legislation and Regulations.
Negotiated Rulemaking Committees; Establishment.
74 FR 24728.
May 26, 2009.
www.ifap.ed.gov/fregisters/FR05262009.html.
Notice of establishment of negotiated rulemaking committees.
73 FR 80314
Dec. 31, 2008.
www.ifap.ed.gov/fregisters/FR12312008.html.
35

U.S. Department of Education.
The Negotiated Rulemaking Process for Title IV Regulations — Frequently Asked Questions.
www.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html.
2009 Negotiated Rulemaking for Higher Education — Team I— General/Lender Loan Issues.
www.ed.gov/policy/highered/reg/hearulemaking/2009/loans-lender.html.
2009 Negotiated Rulemaking for Higher Education — Team II — Loans-School-Based Loan Issues.
www.ed.gov/policy/highered/reg/hearulemaking/2009/loans-school-based.html.
2009 Negotiated Rulemaking for Higher Education — Team III— Accreditation.
www.ed.gov/policy/highered/reg/hearulemaking/2009/accreditation.html.
2009 Negotiated Rulemaking for Higher Education — Team IV— Discretionary Grants.
www.ed.gov/policy/highered/reg/hearulemaking/2009/grants.html.
2009 Negotiated Rulemaking for Higher Education — Team V — General and Non-Loan
Programmatic Issues.
www.ed.gov/policy/highered/reg/hearulemaking/2009/gen-program.html.
2009 Negotiated Rulemaking for Higher Education — Summer/Fall.
www.ed.gov/policy/highered/reg/hearulemaking/2009/negreg-summerfall.html.
Office of Postsecondary Education — Policy Initiatives.
www.ed.gov/about/offices/list/ope/policy.html.
Conference Call with Deputy Undersecretary Robert Shireman of the U.S. Department of Education
Transcript.
May 29, 2009.
www.ed.gov/policy/highered/reg/hearulemaking/2009/call-analysts.pdf.
National Association of Student Financial Aid Administrators.
HEOA NegReg Team V (General and Non-Loan Issues): Round 3 Ends Without Consensus.
NASFAA News.
May 15, 2009.
www.nasfaa.org/publications/2009/anteamvr3051509.html.
HEOA NegReg Team IV, Final Round Concludes Without Consensus.
NASFAA News.
May 4, 2009.
http://www.nasfaa.org/publications/2009/anteamiv050409.html.
HEOA Negreg Team V, Round Two — General and Non-Loan Programmatic Issues.
NASFAA News.
April 29, 2009.
www.nasfaa.org/publications/2009/rteamv042909.html.
HEOA Negreg Team II, Round Two: School-Based Loan Issues Team Reaches Tentative Agreement on
Most Issues.
NASFAA News.
April 8, 2009.
www.nasfaa.org/publications/2009/annegreg040809.html.
36

Other Resources.
Chronicle of Higher Education.
Negotiations Over Rules for Higher Education Act End With Mixed Success.
June 1, 2009.
www.chronicle.com/weekly/v55/i38/38negreg.htm.
Other Legislative Activity
Federal Legislation and Regulations.
Credit Card Accountability Responsibility and Disclosure Act of 2009.
P.L. 111-24.
May 22, 2009.
www.govtrack.us.
H.R. 3221: Student Aid and Fiscal Responsibility Act of 2009.
www.govtrack.us.
H.R. 3126: Consumer Financial Protection Agency Act of 2009.
www.govtrack.us.
H.R. 2492: To amend the Internal Revenue Code of 1986 to exclude from gross income discharges of
student loans the repayment of which is income contingent or income based.
www.govtrack.us.
H.R. 1615: Medical Economic Deferment for Students (MEDS) Act.
www.govtrack.us.
Veteran's Benefits
Federal Legislation and Regulations.
Supplemental Appropriations Act, 2009.
P.L. 111-32.
June 24, 2009.
www.govtrack.us.
Post-9/11 GI Bill; Final Rule.
74 FR 14654.
March 31, 2009.
http://edocket.access.gpo.gov/2009/pdf/E9-7052.pdf.
U.S. Department of Education.
Electronic Announcement.
Subject: Change of Effective Date for the Exclusion of Federal Veterans Education Benefits as
Estimated Financial Assistance for Purposes of the Title IV Student Assistance Programs.
July 2, 2009.
www.ifap.ed.gov.
U. S. Department of Defense.
Directive Type Memorandum (DTM) 09-003: Post-9/11 GI Bill.
www.dantes.doded.mil/DANTES_WEB/library%5Cdocs%5Cnews%5C20090623_post911gibill.pdf.
37

U.S. Department of Veterans Affairs.
GI Bill Website.
www.gibill.va.gov/.
National Association of Student Financial Aid Administrators.
Post-9/11 GI Bill Resource Center.
www.nasfaa.org/subhomes/GIBill/GIhome.html.
GI Bill Educational Assistance.
2009 NASFAA Conference presentation by:
Lynn Nelson, Department of Veterans Affairs.
www.nasfaa.org/Subhomes/AnnualConference2009/handouts.html.
Other Resources.
American Council on Education.
Serving those who Serve: Higher Education and America’s Veterans.
www.acenet.edu/stws.
38

Federal Student Aid Legislative and Regulatory Process

Federal Student Aid Legislative and
Regulatory Process
Federal student aid programs originally were
authorized by the Higher Education Act of 1965.
The HEA was enacted by Congress to provide
financial assistance for students attending
postsecondary educational institutions and to
fund educational programs that strengthen
colleges and universities. Since the enactment of
the HEA in 1965, reauthorization, regulation,
budget resolutions, negotiated rulemaking and
technical corrections have amended the HEA and
shaped the federal student aid programs.
To understand the legislative process it is
important to acknowledge the major players
involved in the creation of the laws, regulations
and policies that govern federal student aid
programs.
The Players
The U.S. Congress
Congress passes laws, establishes basic program
rules and appropriates funds for the federal
student aid programs. Congress also conducts
studies and hearings to gather information used
to create new laws and make changes to the
HEA. Each federal student aid program is based
on legislation enacted by Congress. Congress
delegates the regulation and administration of
the law to the executive branch, specifically the
U.S. Department of Education.
U.S. Department of Education
As a member of the executive branch of the U.S.
government, ED regulates the federal funding for
education in the United States. ED’s
responsibilities include:
Proposing financial aid legislation and
making annual budget requests.
Publishing regulations and policies, based on
law, to maintain program integrity within the
Title IV student aid programs.
Evaluating eligibility of schools and
educational programs for Title IV
participation by performing on-site program
reviews for schools and Federal Family
Education Loan Program lenders and
guarantors.
Helping schools resolve issues with annual
audits and initiating enforcement action
when program funds are misused.
Assisting with the delivery of federal student
aid. ED maintains databases and the
application and need analysis systems to
determine students’ federal financial aid
eligibility, and operates systems for delivering
program funds to schools.
Providing training and technical assistance to
schools, as well as access to various resources
to assist in maintaining program integrity.
These resources include Web sites,
publications, free software and conferences.
Handling billing and collections for the
Federal Direct Loan Program.
Office of Management and Budget
The role of the Office of Management and
Budget is to set funding priorities and levels for
executive branch departments. In relation to
federal student aid, the OMB also reviews federal
regulations in order to limit the burden of
information collection requirements placed on
schools.
1

How a Bill Proceeds Through the U.S. House of
Representatives and the U.S. Senate
A legislative proposal begins as a bill that can be
drafted by anyone. It may be introduced either in the
House or in the Senate, or similar bills may be
introduced in both chambers. Only elected members
of Congress, however, have the right to introduce a
bill to the legislative chamber to which they are
elected.
A Congress lasts for two years, beginning in January
of the year following the biennial election of
members, and is divided into two one-year sessions.
S. ###
Introduced in
House.
Committee
hearings
Committee vote.
Full House vote.
Bill drafted.
Introduced in
Senate.
Committee
hearings.
Committee vote.
Full Senate vote.
H.R. ####
Each bill is designated as H.R. for the House of
Representatives or S. for the Senate, with a unique
number designating the sequence in which it was
introduced during the two-year Congress. For
example, H.R. 1, The American Recovery and
Reinvestment Act, was the first bill introduced in the
House of Representatives during the 111 th Congress.
Bills that are not acted on expire at the end of the
two-year Congress.
Resulting bill sent to opposite chamber.
Conference Committee resolves differences. Bill
returned to both House and Senate for final vote.
Presidential action.
After a bill is introduced, it generally is referred to the
appropriate committee or subcommittee for review,
study, hearings and a vote. In the House of
Representatives, bills that affect federal student aid
programs are referred to one of the following
committees:
House Committee on Education and Labor.
Subcommittee on Higher Education, Lifelong
Learning and Competitiveness.
House Committee on Appropriations.
Subcommittee on Labor, Health and Human
Services, Education and Related Services.
House Committee on the Budget.
The following committees in the Senate deal with
student aid legislation:
Senate Committee on Health, Education, Labor
and Pensions.
Senate Committee on Appropriations.
Subcommittee on Labor, Health and Human
Services, Education and Related Services.
Senate Committee on the Budget.
S. ###
Introduced in
House.
Committee
hearings
Committee vote.
Full House vote.
Bill drafted.
Resulting bill sent to opposite chamber.
Introduced in
Senate.
Committee
hearings.
Committee vote.
Full Senate vote.
H.R. ####
Conference Committee resolves differences. Bill
returned to both House and Senate for final vote.
Presidential action.
2

Bill drafted.
Introduced in
House.
Introduced in
Senate.
After subcommittee hearings, a vote will determine if
the bill is to be referred to the full committee for
further review. The full committee votes on the bill
and if approved, the bill is sent to the chamber floor
for further debate and a vote.
S. ###
Committee
hearings
Committee vote.
Full House vote.
Committee
hearings.
Committee vote.
Full Senate vote.
H.R. ####
Resulting bill sent to opposite chamber.
Conference Committee resolves differences. Bill
returned to both House and Senate for final vote.
Presidential action.
Bill drafted.
If the bill passes one chamber, it is referred to the
other chamber where it usually follows the same path
through committee and floor action. This chamber
may take the following actions on the bill:
Approve it.
Reject it.
Ignore it.
Change it.
S. ###
Introduced in
House.
Committee
hearings
Committee vote.
Full House vote.
Resulting bill sent to opposite chamber.
Introduced in
Senate.
Committee
hearings.
Committee vote.
Full Senate vote.
H.R. ####
Conference Committee resolves differences. Bill
returned to both House and Senate for final vote.
Presidential action.
NOTES
3

Bill drafted.
If there are differences between the House- and
Senate-passed versions of a bill, a joint conference
committee is formed to reconcile the differences. If
agreement is reached, a conference report, including
the text of the bill and a description of committee
findings, recommendations and intentions, is issued
to both the House and Senate for a final vote. Both
houses of Congress must approve the bill in identical
form for it to move forward to the president.
S. ###
Introduced in
House.
Committee
hearings
Committee vote.
Full House vote.
Resulting bill sent to opposite chamber.
Introduced in
Senate.
Committee
hearings.
Committee vote.
Full Senate vote.
H.R. ####
Conference Committee resolves differences. Bill
returned to both House and Senate for final vote.
Presidential action.
The president has various options with respect to the
bill:
If the president approves of the legislation, it is
signed and becomes law.
If the president takes no action for 10 days and
Congress still is in session, the bill automatically
becomes law.
If the president takes no action, and Congress has
adjourned its second session, the legislation dies
as a “pocket veto.”
If the president opposes the bill, he can veto it.
Congress can override the veto if two-thirds of
each chamber votes for the override. The
overruled bill then becomes law.
S. ###
Introduced in
House.
Committee
hearings
Committee vote.
Full House vote.
Bill drafted.
Resulting bill sent to opposite chamber.
Conference Committee resolves differences. Bill
returned to both House and Senate for final vote.
Introduced in
Senate.
Committee
hearings.
Committee vote.
Full Senate vote.
H.R. ####
Presidential action.
A bill passed by both chambers of Congress and signed by the president becomes a public law. The law is
identified by an alpha-numeric designation beginning with the letters P.L. The first number represents the
Congressional term and the second number represents the number of the law enacted by that Congress. For
example, P.L. 89-329 was the identifier for the Higher Education Act when it first passed into law in 1965. The
identifier shows that the 89 th Congress passed the HEA, and that it was the 329 th law enacted by that
Congress.
Reauthorization
Congress rarely passes laws that give permanent authority to the programs authorized. Instead, the
authority is for a limited time. For example, the HEA typically is reauthorized every five to six years.
During reauthorization, Congress re-examines the HEA and votes to maintain, modify or add to the
federal student aid programs. Since 1965, Congress has reauthorized the HEA eight times: 1968, 1972,
1976, 1980, 1986, 1992, 1998, and 2008. As a result, the HEA is officially referred to as the “Higher
Education Act of 1965, as amended.”
4

Year of
Enactment
1968
1972
1976
1980
1986
1992
1998
2008
Reauthorization of the Higher Education Act of 1965, as amended
P.L. 89-329
Common Provisions
Financial aid to students will not be considered as income or
resources when determining eligibility for Title IV and certain other
programs.
Created Basic Educational Opportunity Grant.
Renamed National Defense Student Loan to National Direct
Student Loan.
Renamed Educational Opportunity Grant to Supplemental
Educational Opportunity Grant.
Created State Student Incentive Grant program.
Required each state to have a guarantor.
Required participating institutions to provide consumer
information to students.
Established Satisfactory Academic Progress requirements.
Created Parent Loans for Undergraduate Students program.
Renamed BEOG to Pell Grant in honor of Senator Claiborne Pell.
Created need analysis formulas.
Created Supplemental Loans for Students loan program.
Renamed NDSL to Perkins Loans in honor of Senator Carl Perkins.
Consolidated congressional methodology with Pell formula into
one federal need analysis methodology.
Required that financial aid application — Free Application for
Federal Student Aid — be free to students.
Created unsubsidized Stafford loan program.
The private lender loan program was renamed Federal Family
Education Loan Program.
Created the Federal Direct Student Loan program.
Established Return to Title IV provisions.
Increased FFELP default period from 180 to 270 days.
Removed bankruptcy protection for student loans.
Developed Stafford Master Promissory Note.
Expanded consumer information requirements.
Implemented year-round Pell Grants.
Made changes to need analysis, definition of independent student
and expanded professional judgment provisions.
Expanded eligibility for armed service members and families.
Made changes to calculation of cohort default rate.
Public Law
P.L. 90-575
P.L. 92-318
P.L. 94-482
P.L. 96-374
P.L. 99-498
P.L. 102-325
P.L. 105-244
P.L. 110-315
5

The reauthorization process begins when the
congressional committees responsible for
authorizing and reauthorizing legislation
conduct public hearings on proposed legislation.
In these hearings, individuals representing
postsecondary schools, students, parents, lenders,
guarantors, education associations and federal
agencies testify about the effects of the
proposed legislation and make their
recommendations. These hearings are important
forums in which interested parties have the
opportunity to influence the shape of legislation.
Reauthorization gives Congress, interested
parties and the public an opportunity to:
Review each program authorized by the law.
Recommend whether each program should
stay the same, be modified or be eliminated.
Suggest new programs for Congress to
authorize.
The Regulatory Process
When new legislation is enacted it often is
necessary for ED to develop regulations that
provide clarification or implementation guidance
to assist schools in administering the federal
student aid programs. Additionally, regulations
can make changes in ED policy and address
administrative problem areas. Schools are
required to comply with regulations as if they
were law.
Notice of Proposed Rulemaking
The 1992 amendments to the HEA require ED to
follow a specific process when making new
regulations. The negotiated rulemaking process
begins with a series of regional hearings that
identify issues or topics that require regulation.
Teams of education community experts and
other stakeholders join with ED representatives
to analyze existing legislation and regulations,
with the goal of reaching consensus, and develop
a document called a Notice of Proposed
Rulemaking.
According to ED’s master calendar, NPRMs are
published in the Federal Register in the spring or
early summer. Each NPRM will include the
language developed during the negotiation
sessions, indicate if consensus was reached and
provide an opportunity for noncommittee
members to comment on the proposed rules. The
NPRM states the length of time the public has to
comment on the proposed regulations. The
comment period can range from 30 to 120 days,
depending on the NPRM’s content and the
degree of urgency for publishing final
regulations. Most NPRMs have a 45- or 60-day
comment period. Comments from interested
parties can be submitted through the Federal
e-Rulemaking Portal at www.regulations.gov or
by postal mail, commercial or hand delivery.
Comments may not be submitted via fax or
e-mail. Once the comment period has ended, ED
will review comments and suggestions, amend
the proposed rules and publish final regulations.
The OMB also reviews regulations for:
Overall federal policy.
Budget implications.
Potential paperwork burden.
Cost to the populations it serves (in this case,
institutions of postsecondary education,
lenders, guarantors, students and parents).
6

Negotiated Rulemaking Process
U.S. Department of
Education
Negotiated Rulemaking
Committee
Higher Education
Community
Solicit comments
regarding issues to be
regulated.
Determine topics for
negotiated rulemaking
committees.
Nominate negotiated
rulemaking committee
members.
Appoint committee
members to represent
stakeholders such as
students, schools,
lenders, guarantors
and ED.
If consensus is reached,
ED is required to abide
by the consensus in
NPRM. If consensus is not
reached, ED is free to
draft proposed
regulations as it sees fit.
Committees meet to
discuss topics, with the
goal of consensus.
Committees present
findings (with or without
consensus) to ED.
NPRM published in
Federal Register for
public comment.
After comment period,
ED publishes final
regulations, addressing
any substantive public
comments.
NOTES
7

Final Regulations
Final regulations have the impact of law. Once the negotiated rulemaking process is complete, ED
analyzes the comments it receives and uses them to develop the final regulations. In a preamble to
final regulations, ED summarizes the comments it received and indicates whether it made any
changes to the proposed regulation on the basis of specific comments. ED publishes final regulations
in the Federal Register. The goal is to publish the final regulations by Nov. 1, to be effective July 1, the
beginning of the next award year. The purpose of the Nov. 1 deadline is to give schools sufficient time
to prepare for regulatory changes.
2009 2010
2011
Final Regs. Pub.
Prepare for Reg. Changes
Interim Final Regulations
Final Regs. Effective
Financial Aid Award Year
July 1 Oct. 1 Jan. 1 April il1 July 1 Oct. 1 Jan. 1 April il1 July 1
In some cases, NPRMs do not precede final regulations. There may be a situation in which there is
need for quick action after Congress passes new legislation. In such situations, ED publishes interim
final regulations. One example occurred after the passage of the Higher Education Reconciliation Act
in February 2006. The legislation stated that some provisions must be implemented by July of that
year, so there was no time for the negotiated rulemaking process. In this case, interim final regulations
included an invitation for schools and the public to comment and a due date for comments. After ED
assessed the comments, it published the final regulations in December 2006.
Another situation that calls for the use of interim final regulations is when ED receives comments on
an NPRM that show that a major policy issue still needs to be addressed. In that case, ED publishes
interim final regulations to guide program activities until the policy decisions are made and final
regulations are published. When this happens, ED usually asks for comments again before publishing
final regulations.
NPRMs, interim final regulations and final regulations are all published in the Federal Register. Access
the Federal Register through ED’s Information for Financial Aid Professionals Web site at
www.ifap.ed.gov or through the U.S. Government Printing Office Web site at www.gpoaccess.gov/fr.
NOTES
8

Policy and Operational
Guidance
ED may provide policy guidance to clarify
provisions in the HEA or in regulations. Generally,
the purpose is to help schools, lenders,
guarantors and groups participating in Title IV
programs comply with legislative and regulatory
requirements. This additional guidance is
provided in the form of Dear Colleague Letters,
Electronic Announcements, program manuals,
technical references and other publications.
Dear Colleague Letters
ED publishes Dear Colleague Letters by posting
them on its IFAP Web site www.ifap.ed.gov. DCLs
are organized by their publication year and by
categories that correspond to federal student aid
programs and certain participants.
Dear Colleague Letter Types
ANN
CB
FP
GEN
P
Training announcements.
Campus-based Programs (Federal
Perkins loans, Federal Supplemental
Educational Opportunity Grants and
Federal Work-Study).
Financial Partner letters.
General distribution.
The Federal Pell Grant Program.
Electronic Announcements
Electronic announcements are posted on IFAP
and categorized according to type:
Application processing.
Campus-based.
COD system.
Direct loans.
EDESuite.
FFEL.
General.
Grants.
Loans.
The Budget Cycle
The budget process determines how much
money the federal government can spend on its
programs, including federal student aid
programs. The budget process begins when the
president submits the executive branch’s
proposed budget for the upcoming federal fiscal
year to Congress, reflecting the president’s
spending priorities and recommendations. The
president submits the budget no earlier than the
first Monday in January and no later than the first
Monday in February. The president’s budget,
developed by OMB, outlines federal fiscal policy,
including:
Amount federal government should spend.
Projected tax revenues.
Anticipated federal government deficit or
surplus (difference between government
spending and tax revenues).
NOTES
9

House and Senate budget committees review the president's plan along with information about
spending and revenues from other sources, including the Congressional Budget Office. Congress is
expected to adopt a budget resolution by April 15. Because it is agreed upon by both chambers of
Congress, the budget resolution is called the “Concurrent Budget Resolution.” The Concurrent Budget
Resolution guides Congress as it considers legislation throughout the year. The Concurrent Budget
Resolution and its accompanying conference report contain fiscal-year spending ceilings. The
resolution also includes instructions that guide congressional committees when they consider
appropriations and other legislation. The instructions, called "reconciliation instructions," explain the
assumptions used in developing the Concurrent Budget Resolution. Examples of assumptions include
changes in revenue, changes in authorized programs and amounts to be appropriated.
The Budget Cycle and the Financial Aid Award Year
The budget cycle in Congress follows the federal fiscal year, beginning on Oct. 1 and ending on
Sept. 30. The financial aid award year, however, begins on July 1 and ends on June 30. How do the two
calendars reconcile?
Many schools prepare for financial aid application processing in the winter before the new award
year. For an award year that begins on July 1, students begin filing the Free Application for Federal
Student Aid in January, and schools begin packaging students’ awards soon thereafter. Schools need
to know the amount of federal campus-based student aid dollars available for the upcoming award
year before student award packages are finalized. Because the budget cycle begins in October, the
process accommodates schools' planning and operating needs by setting the funding levels in
advance of the award year. This process is called "forward funding."
An example of this is illustrated below:
2009 2010
2011
Appropriations
Federal Fiscal Year
Preparation for Processing
Financial Aid Award Year
July 1 Oct. 1 Jan. 1 April il1 July 1 Oct. 1 Jan. 1 April il1 July 1
NOTES
10

Spending Limits
Congress limits the amount that can be spent in
each federal student aid program, with different
spending limits for each program. The federal
student aid programs fall under two spending
categories: discretionary and mandatory.
Discretionary Spending
Each year Congress must enact limits for
discretionary spending based on the president's
recommendations. Appropriations bills contain
these spending limits. The following federal
financial aid programs are subject to
discretionary spending limits:
Federal Pell Grant.
Academic Competitiveness Grant.
National Science and Mathematics Access to
Retain Talent Grant.
Teacher Education Assistance for College and
Higher Education Grant.
Federal Perkins Loan.
Federal Supplemental Educational
Opportunity Grant.
Federal Work-Study.
Mandatory Spending
Spending levels governed by authorizing
legislative formulas or other criteria are
considered mandatory spending. These spending
levels do not require enactment through
appropriations legislation. Many of the programs
subject to mandatory spending are considered
entitlements. The two federal financial aid
programs subject to mandatory spending are
the:
Federal Family Education Loan Program.
Federal Direct Loan Program.
The HEA authorizes the funding for these
programs, which is in effect until legislative
action makes changes. The Direct Loan Program
is fully funded by the federal government. The
federal government funds the subsidies for the
FFELP, while private lenders provide the capital.
NOTES
11

Reconciliation
The process of passing legislation that reflects
the assumptions made in the Concurrent Budget
Resolution is called “reconciliation.” Typically, a
reconciliation bill makes changes in the laws
governing taxes, discretionary and mandatory
spending and the debt ceiling. Reconciliation
legislation also can take the form of a single
omnibus reconciliation bill that covers most or all
legislative changes, including spending for
discretionary spending programs. The Higher
Education Reconciliation Act of 2005 was part of
an omnibus reconciliation bill called the Deficit
Reduction Act of 2005. Examples of changes
made to financial aid administration through
reconciliation legislation included:
Addition of new programs: Grad PLUS, ACG
and National SMART Grant.
Loan limit increases for first- and second-year
undergraduate students and for graduate
students.
Loan origination fee reductions.
Expanded loan forgiveness for teachers in
math, science and special education.
Adjustments to federal need analysis
methodology.
Trainer’s Tidbit
An omnibus bill is a measure that packages
together the provisions of several different
subjects into a single and often extensive bill.
Examples include reconciliation bills and
combined appropriations bills.
The reconciliation schedule calls for Congress to
complete action on reconciliation legislation by
June 15 of each year, but the schedule is not
always followed. There are no built-in
consequences if Congress does not meet this
statutory schedule. After both the House and
Senate pass their versions of the reconciliation
bill, both bills are referred to a conference
committee.
Appropriations
By custom, appropriations measures originate in
the House of Representatives. Generally, starting
in late May, the House Committee on
Appropriations (including its subcommittees)
begins to mark up annual appropriations bills.
The House Appropriations Subcommittee on
Labor, Health and Human Services, Education and
Related Services is responsible for educationspending
legislation. The full House Committee
on Appropriations is scheduled to report its last
version of the annual appropriations bill by June
10, with House floor action completed by June
30.
Trainer’s Tidbit
Markup describes the process by which
congressional committees and subcommittees
review, debate, amend, and rewrite proposed
legislation. Generally markups end with a
committee vote to send the new version of the
bill to the floor for a final vote.
Meanwhile, the Senate Appropriations
Committee and its Subcommittee on Labor,
Health and Human Services, Education and
Related Services work on appropriations bills. The
Senate does not have a specific schedule for
completing appropriations legislation.
The schedule calls for all Congressional action
(House, Senate and the full Congress) to be
completed by Sept. 30, because Oct. 1 is the
beginning of the new fiscal year. If a new
appropriations law is not enacted before the old
one expires, any agency covered by the
appropriations must cease its ongoing functions.
For example, if by Oct. 1 Congress hasn’t passed
appropriations to fund ED’s programs, including
its federal student aid programs, ED has to stop
work.
To avoid interruptions in federal programs if
appropriations bills are delayed, Congress usually
passes a continuing resolution to keep the
government operating until annual
appropriations are passed. A CR is a temporary,
limited spending measure that allows a federal
12

agency to continue operating for a set period,
such as a week or 10 days. If Congress still does
not pass an annual appropriations bill before the
expiration of the CR, Congress generally passes
another CR, and so on, until Congress can pass an
annual funding bill and it goes to the president.
Committee reports accompany each
appropriations bill as it goes through the process
of becoming a law. These reports include
explanations of committee actions, expectations
for results and directives to the federal agency
affected by the appropriations legislation. Unlike
language in the legislation, the report language
does not have the force of law and, at least
technically, does not require compliance. ED tries
to carry out the directives in the report language
because the report clarifies Congressional intent
for the appropriations legislation.
Resources for Financial Aid
Administrators
Financial aid administrators often must research
federal student aid law, regulations and ED policy
guidance to ensure office policies and
procedures are correct and current, to respond to
inquiries from school administrators, students or
parents, or to stay informed and advocate for
change. The appendix includes a resource to
assist in comparing statutory (HEA Title IV, U.S.
Code Titles 20 and 42) and regulatory (Code of
Federal Regulations Title 34) federal student aid
provisions.
Higher Education Act
www.ifap.ed.gov.
Original federal student assistance authorizing
legislation (P.L. 89-329) signed into law by
President Lyndon Johnson on Nov. 8, 1965. The
HEA was an important component of Johnson’s
Great Society domestic agenda to end poverty
and racial injustice.
United States Code
www.gpoaccess.gov/uscode/index.html.
The U.S. Code is the codification by subject of the
general and permanent laws of the United States.
It is divided into 50 titles and published by the
U.S. House of Representatives.
Code of Federal Regulations
www.gpoaccess.gov/CFR.
The CFR is the codification of the general and
permanent rules published in the Federal
Register by the departments and agencies of the
executive branch of the federal government. It is
divided into 50 titles representing the areas
subject to federal regulation. Each volume of the
CFR is updated once each calendar year and is
issued on a quarterly basis.
Information for Financial Aid Professionals
www.ifap.ed.gov.
IFAP probably is the best known site to financial
aid administrators. Created by ED as a
comprehensive resource, it contains links to:
The HEA.
United States Code.
Code of Federal Regulations.
Federal Registers.
Dear Colleague Letters.
Electronic Announcements.
Federal Student Financial Aid Handbooks.
Forms and other important documents for
federal financial aid programs.
13

USA Funds
www.usafunds.org.
Education Access Report: A weekly electronic
newsletter reports legislative action and links to
some of the most authoritative sources of
information about pursuing and financing higher
education.
Askpolicy@usafunds.org is a resource to help
financial aid administrators understand and
follow the rules of the student loan program.
Questions of day-to-day situations, examples, or
scenarios can be sent to the USA Funds policy
staff. Answers with regulatory citations usually
are returned within one business day.
National Association of Student Financial
Aid Administrators
www.nasfaa.org.
The NASFAA Web site (membership may be
required) includes a Regulatory and Legislative
Resources section as well as a legislative center
with a Student Aid Bill Watch center and links to
congressional sites. The regulatory center links to
newly enacted laws, regulatory resources and ED
announcements and guidance. Two other helpful
NASFAA resources:
Policies and Procedures tools – Reading and
Interpreting Regulation & Statute.
NASFAA Monograph #18 – A Primer on the
Federal Budget Process.
Govtrack.us: A Civic Project to Track
Congress
www.govtrack.us.
Govtrack.us is a Web site that enables the public
to track the status of legislation and view voting
records and committee assignments. Govtrack.us
is non-partisan and is not affiliated with the U.S.
government.
THOMAS: Legislative Information on the
Internet
www.thomas.gov.
Named in honor of Thomas Jefferson, this Library
of Congress site provides access to bills and
public laws from the 93 rd Congress to the present.
U.S. House of Representatives and U. S.
Senate
www.house.gov.
www.senate.gov.
These sites outline all of the activities of the U.S.
House of Representatives and the U.S. Senate and
their respective committees and provide links to
contact representatives and senators.
NOTES
14

Trainer’s Toolkit
The Trainer’s Toolkit is a list of terms, Web sites
and reference material directly related to the
Federal Student Aid Legislative and Regulatory
Process.
Terms, Acronyms and
Abbreviations
Award Year
An award year begins on July 1 in one calendar
year and ends on June 30 of the following
calendar year. For example, the 2009-2010 award
year begins July 1, 2009, and ends June 30, 2010.
Authorization/Reauthorization Bills
Versus Appropriations Bills
Authorization/Reauthorization bills are known as
“authorizing legislation.” Once signed into law,
this type of bill will enact specific programs
based on specific goals outlined within the
legislation. The bill also authorizes spending
ceilings for the program.
Appropriation bills authorize the budget for
programs that were created through authorizing
legislation. The budget is set within the spending
ceiling established by Congress set for the
program.
For example, a reauthorization bill may create a
new need-based grant program with a spending
ceiling that will provide up to $10,000 per
student who meets the eligibility requirements.
Later, an appropriations bill could be signed into
law that budgets only $2,000 per student.
AY
Academic Year.
An undergraduate academic year for credit-hour
programs must consist of at least 30 weeks of
instructional time. An undergraduate clock-hour
program must consist of at least 26 instructional
weeks. The minimum number of instructional
weeks for graduate programs is defined by the
school.
Branches of the United States
Government
The United States government is made up of
three branches: the executive branch, the
legislative branch and the judicial branch. The
three branches were designed to create a system
of checks and balances.
The executive branch consists of the
president and cabinet. The president may
sign into law or veto a bill sent from the
legislative branch. The legislative branch may
override the veto if a two-thirds majority
supports the bill. If a two-thirds majority is
not reached, the president’s veto will stand.
The secretary of education is a member of
the president’s cabinet, making the
Department of Education part of the
executive branch.
The legislative branch contains the Congress.
Congress is made up of representatives from
the 50 states and is divided into two houses,
the House of Representatives and the Senate.
Members of each house can write and
introduce a bill that the entire Congress
eventually may vote to send to the executive
branch to be signed into law.
The judicial branch is the Supreme Court. The
nine justices of the court rule on laws
through court cases based on their
interpretation of the U.S. Constitution and
other legal sources.
CCRAA
College Cost Reduction and Access Act of
2007.
The College Cost Reduction and Access Act (P.L.
110-84) provides numerous changes in federal
financial aid administration. The CCRAA was
signed into law on Sept. 27, 2007, with some
provisions retroactively applied to the 2007-2008
academic year; others were implemented Oct. 1,
2007, and the majority took effect either July 1,
2008, or July 1, 2009. Technical amendments to
the CCRAA were signed into law on Dec. 21, 2007
(P.L. 110-153).
15

CFR
Code of Federal Regulations.
The CFR is a collection of federal regulations
disseminated by the U.S. government. ED’s
regulations are codified in Volume 34 of the CFR.
Search the most recent CFR at
www.access.gpo.gov/nara/cfr/cfr-tablesearch.html#page1
or go to www.ifap.ed.gov and
click on “Code of Federal Regulations (GPO
Compilation)” under “Laws & Regulations.”
DCL
Dear Colleague Letter.
ED distributes DCLs to schools, lenders, servicers
and guarantors to provide interpretive policy
guidance about federal student aid programs.
Typically, a DCL provides interim guidance after
Congress reauthorizes the Higher Education Act
or between releases of final regulations. Recent
and archived DCLs are available in the Letters
and Announcements section on the Information
for Financial Aid Professionals Web site at
www.ifap.ed.gov. Listed below are the types of
DCLs that ED publishes:
General Distribution (GEN).
Training Announcements (ANN).
Campus-based Programs (CB).
Pell Grant Program (P).
Financial Partners (FP).
ECASLA
Ensuring Continued Access to Student Loans
Act of 2008.
The ECASLA (P.L. 110-227) provides numerous
changes in federal financial aid administration.
The ECASLA was signed into law on May 7, 2008,
to ensure that students and families would
continue to be able to borrow federal student
loans for the 2008-2009 academic year. The bill
was enacted less than one month after its
introduction. Subsequent revisions clarified some
of this bill’s provisions.
ED
U.S. Department of Education.
www.ed.gov.
ED was created in 1980 when several federal
agencies were combined. Its mission is to ensure
equal access to education and to promote
educational excellence throughout the nation.
ED’s purpose is to:
Establish policies on federal financial aid for
education.
Distribute and monitor federal student aid
funds.
Collect data on schools and disseminate that
research.
Focus national attention on key educational
issues.
Prohibit discrimination and ensure equal
access to education.
FDLP
Federal Direct Student Loan Program.
The FDLP is similar to the Federal Family
Education Loan Program. The funds for these
loans are provided by the U.S. government
directly to students and their parents through
their schools.
FFELP
Federal Family Education Loan Program.
Loan programs authorized by Title IV, Part B of
the Higher Education Act of 1965, as amended,
that includes Federal Stafford loans, Federal
Unsubsidized Stafford loans, Federal PLUS loans
and Federal Consolidation loans. These loan
programs are funded by lenders, guaranteed by
guarantors and reinsured by the federal
government. These programs are defined
individually in 34 CFR 682.
16

FSA
Federal Student Aid.
http://federalstudentaid.ed.gov.
The office within the U.S. Department of
Education responsible for the overall
management and administration of most of the
Title IV programs and their operating systems.
FY
Fiscal Year.
The FY is the 12-month period during which
financial assistance is awarded through the
federal government. The federal fiscal year is
Oct. 1 - Sept. 30.
GAO
General Accounting Office.
www.gao.gov.
The GAO is the arm of Congress that investigates
the performance of the federal government. GAO
evaluates the use of public funds and the
performance of federal programs, while also
providing analytical, investigative and legal
services to support Congress in its policy
formulation and decision-making processes.
HEA
Higher Education Act of 1965, as amended.
The HEA is the law that authorizes most federal
programs and activities that assist and enable
students to enter and succeed in postsecondary
education. The primary focus of the HEA is
student aid, in the form of grants, loans and workstudy
assistance.
HEOA
Higher Education Opportunity Act of 2008.
The HEOA (P.L. 110-315) reauthorized the Higher
Education Act of 1965, as amended. The HEOA
was signed into law on Aug. 14, 2008, with some
provisions retroactively applied to the 2008-2009
academic year; others are to be implemented at
later dates.
IFAP
Information for Financial Aid Professionals.
www.ifap.ed.gov.
Information for Financial Aid Professionals is a
Web site that was developed to provide school
and financial partners with electronic access to
the many FSA publications that guide the
administration of the Title IV Student Financial
Assistance programs.
Legislation Versus Regulation
Legislation consists of laws enacted by Congress
and signed by the president. Legislation
authorizes or reauthorizes programs or provides
spending limits for existing programs.
Regulations are developed by ED, which provides
instruction on how to follow the laws. The final
regulations have the weight of law.
NASFAA
National Association of Student Financial Aid
Administrators.
www.nasfaa.org.
NASFAA supports financial aid professionals at
colleges, universities and career schools. NASFAA
is the only national association with a primary
focus on student aid legislation, regulatory
analysis and professional development for
financial aid administrators.
NPRM
Notice of Proposed Rulemaking.
An NPRM is a notice printed in the Federal
Register of proposed regulations from a
government agency, such as ED. Interested
parties are invited to submit comments and
recommendations about proposed regulations.
ED reviews comments and then issues final
regulations.
17

P.L.
Public Law.
A P.L. is designated by the number of the
Congress and the order in which it is enacted. For
example, P.L. 106-10 is the tenth law enacted
during the 106 th Congress.
Title IV Aid
Federal student financial aid programs
administered by ED that include Pell Grants,
Academic Competitiveness Grants, National
SMART Grants, Federal Supplemental Educational
Opportunity Grants, TEACH Grants, Federal Work-
Study Program, Federal Perkins loans, subsidized
FFEL/Direct Stafford loans, unsubsidized
FFEL/Direct Stafford loans, FFEL/Direct PLUS
loans for parents and FFEL/Direct PLUS loans for
graduate or professional students.
18

References, Resources and Web Sites
U.S. Department of Education
Information for Financial Aid Administrators - IFAP Web site.
www.ifap.ed.gov.
NASFAA
A Primer on the Federal Budget Process.
Monograph #18.
April 2006.
www.nasfaa.org.
Policies and Procedures Tools.
Reading and Interpreting Regulation and Statute 2008.
www.nasfaa.org.
Other Resources
How Our Laws Are Made.
Office of the Parliamentarian of the U.S. House of Representatives in consultation with the Office
of the Parliamentarian of the U.S. Senate.
http://thomas.loc.gov/home/lawsmade.toc.html.
The Legislative Process: Background Information.
www.lexisnexis.com/help/CU/The_Legislative_Process/Stage_0.htm.
19

Appendix
Federal Student Aid Statutory and Regulatory Sources
21

Federal Student Aid Statutory and Regulatory Sources
HEA
http://republicans.edlabor.house.
gov/archive/publications/comp
index.htm
U.S. Code
www.gpoaccess.gov/uscode/browse.html
Regulations
http://ecfr.gpoaccess.gov/e/ecfr/ecfrbrowse/
Title34/34cfrv3_02.tpl
Title IV Student Assistance
Title 20 Education
Chapter 28 Higher Education Resources &
Student Assistance
Subchapter IV Student Assistance
Title 34 Education
Subtitle B Education
Chapter IV Office of Vocational & Adult
Education
Provision Part Section Part Section Subpart
Grants A 400-420 A 1070 - 1070f
FFELP B 421-440 B 1071 - 1087-4
Wm. D. Ford
Direct Loan
Perkins
Loans
Need
Analysis
General
Provisions
Program
Integrity
Federal
Work-Study
D 451-460 C 1087a - 1087j
E 461-469 D 1087aa - 1087ii
F 471-480 E 1087kk - 1087w
G 481-493 F 1088 - 1099
H 495-498 G 1099a - 1099c
Title 42 – Public Health & Welfare
Chapter 34 – Economic Opportunity
Programs
Subchapter I – Research & Demonstrations
C 441-448 C 2751 - 2757
668.1 – 668.198 Student Assistance
General Provisions
673.1 – 673.7 General Provisions
Campus-Based
676.1 – 676.21 FSEOG
686.1 – 686.43 TEACH
690.1 – 690.83 Pell
691.1 – 691.83 ACG/SMART
692.1 – 692.80 LEAP
668.1 – 668.198 Student Assistance
General Provisions
682.100 – 682.800 FFELP
668.1 – 668.198 Student Assistance
General Provisions
685.100 – 685.402 Wm. D. Ford Federal
Direct Loan
668.1 - 668.198 Student Assistance
General Provisions
673.1 - 673.7 General Provisions
Campus-Based
674.1 - 674.64 Federal Perkins Loan
Program
668.1 - 668.198 Student Assistance
General Provisions
668.1 - 668.198 Student Assistance
General Provisions
668.1 - 668.198 Student Assistance
General Provisions
668.1 - 668.198 Student Assistance
General Provisions
673.1 - 673.7 General Provisions
Campus-Based
675.1 - 675.50 Federal Work-Study
22

FAFSA and Delivery System Update

FAFSA and Delivery System Update
The 1992 Reauthorization of the Higher
Education Act of 1965, as amended, mandated
the creation of a common financial form,
provided at no cost, which families would use to
apply for federal financial aid. Since its inception
in 1993, the Free Application for Federal Student
Aid has undergone numerous transformations.
Simplification
The Higher Education Opportunity Act of 2008
mandated the simplification of the FAFSA. Some
of the changes go into effect for the 2009-2010
award year; however, full implementation of the
new provisions will be for 2010-2011.
2009-2010 FAFSA
Enhancements
FAFSA on the Web Address
In May 2009, the FOTW address changed to
www.fafsa.gov. The former address,
www.fafsa.ed.gov, still will continue to work. The
change was made to decrease the likelihood of
an applicant going to a non-government or paid
site.
FAFSA on the Phone
HEOA Section 483(a).
On Dec. 17, 2008, the Department of Education
announced a new filing option: FAFSA on the
Phone. FAFSA on the Phone is a non-Web,
paperless filing alternative for students with
limited access to the Internet who are facing fastapproaching
state application deadlines. Instead
of filing an electronic or paper FAFSA, students
call the Federal Student Aid Information Center
at (800) 4-FED AID and relay their FAFSA data to a
customer service representative. The process is
expected to take approximately 30 minutes. A
Student Aid Report is sent to the student within
seven to 10 days after submitting the
information, which then will need to be reviewed
by the student (and parent, if appropriate),
signed and sent back to an address provided.
Reducing Data Elements
HEOA Section 483(a).
The 2009-2010 FAFSA is a six-page application
with more than 100 questions and four pages of
instructions. ED is charged with reducing the
number of data elements required from
applicants by at least half. After consulting with
financial aid administrators, students and
families, as well as reviewing various research
studies, ED submitted a report to Congress on its
progress in January 2009. The report may be
viewed as an Electronic Announcement at
www.ifap.ed.gov.
1

2009-2010 Mid-Year Enhancements
ED implemented a number of enhancements for the 2009-2010 award year.
FOTW Confirmation Page
As of May 2009, the 2009-2010 confirmation page now provides additional information to FAFSA
applicants:
An estimate of aid eligibility from the following Title IV programs:
Federal Pell Grants.
Academic Competitiveness Grants.
Federal Stafford loans.
A link to the College Navigator Web site.
An option to e-mail the confirmation page to a personal e-mail address.
In August 2009, the following information from the Integrated Postsecondary Education Data System
for the school(s) indicated on the FAFSA was added to the confirmation page:
Retention rates.
Graduation rates.
Transfer rates.
NOTES
2

Sample Confirmation Page
Mid-Year Enhancements.
555666777 0234
3

Enhanced Skip Logic
FOTW currently employs skip logic to reduce the number of questions an applicant must answer. By
incorporating enhanced skip logic technology, ED anticipates that navigation time will be reduced by
more than half for many applicants. The number of questions will be reduced by 20 percent and the
number of Web pages required to complete an application will be reduced by 50 percent. The
following enhancements were implemented in August 2009 for the remainder of the 2009-2010
award year and beyond.
Dependency Status
Students who are independent because of their age or marital status will be asked only the
dependency status questions regarding children or other dependents. The remaining dependency
status questions will not appear.
Selective Service
Male students over the age of 26 will not be asked whether they want to be registered for Selective
Service.
Homeless Students
The College Cost Reduction and Access Act added criteria for certain homeless students to be
considered independent. All applicants will be asked if they are homeless or at risk for being
homeless. Depending on the answer provided and age of the student, the application will employ
the following decision tree to determine which additional homeless questions will display:
Is the student homeless or at risk for being homeless?
No
Yes
No further homelessrelated
questions asked.
What is the student’s
age?
21 or younger
Three homeless-related
questions are asked.
22 or older
“Yes” to at least
one question
Student is homeless and
not required to provide
parental information on
the FAFSA.
“No” to all three
questions
Applicant can submit
FASFA without parental
information, but is
directed to contact the
financial aid office.
4

Trainer’s Tidbit
Due to the provisions in the McKinney-Vento Homeless Assistance Act, the following students are
directed to a financial aid administrator for a homeless determination and/or a dependency override:
Students who are under the age of 22 and unable to answer “yes” to any of the homeless-related
questions.
Students who are between the ages of 22 and 24 and are homeless or at risk for being homeless.
Identifying Students for Unsubsidized Loans Only
Additional questions will be listed on the FAFSA for dependent students to indicate if their parents
refuse to complete the FAFSA and no longer provide financial support. The student will be allowed to
submit the FAFSA without parental data, but an Expected Family Contribution will not be generated.
The Institutional Student Information Record will note that the student submitted the FAFSA without
parental data and the SAR will direct the student to contact the financial aid office.
Trainer’s Tidbit
Schools have discretion to use professional judgment to award unsubsidized Stafford loans when
the student’s parents will not provide FAFSA data and financial support to the student. Schools
that exercise professional judgment must collect appropriate documentation. Generally, the
documentation requirement may be met by obtaining a signed and dated notice from the parent(s)
stating that they:
Have ended their financial support, including the date the support ended.
Will not provide financial support in the future.
Will not complete the parental section of the FAFSA.
If parents refuse to provide a statement, schools must obtain documentation from a third party that
describes the parental relationship with the student.
NOTES
5

Reduction of Income and Asset Information
HEOA Section 483(a).
The HEOA requires that ED continue to work with the Internal Revenue Service to determine if tax
data could be shared with the FOTW application to generate an EFC. Beginning in January 2010, a
new IRS data share process will be implemented on a pilot basis for the 2009-2010 award year, with
full implementation expected in July 2010 for the 2010-2011 award year.
IRS Data Share
FOTW applicants will have the option of retrieving their tax data from the IRS to automatically
populate certain income-related questions on the FAFSA. Both student and parent data may be
retrieved from the IRS. The tax data will not be shared with a third party, only the tax filer; therefore,
tax filer consent is not required.
Trainer’s Tidbit
The IRS data share process is not a database match with the IRS.
NOTES
6

IRS Data Share Process
FOTW applicants will be directed to link to the IRS in the “Finances” portion of the application.
Sample Student Finances Screen
“You may access the IRS site
to retrieve your income data
to complete your application
or use your tax return. If you
would like to retrieve your
data from the IRS click here.”
7

Applicants will be required to provide their PIN to authenticate their identity. Conditional PINs, or
those generated in real time, are acceptable for the IRS data share process.
The IRS request screen will open in a new window. It will be pre-populated with the appropriate tax
year and Social Security number, which the tax filer cannot update; however, the pre-populated name
and date of birth may be changed in order to match the IRS database. The tax filer will be required to
provide an address and filing status, for example, single, married filing jointly or head of household.
Any data entered or changed on this screen will not update information in FOTW.
Sample IRS Request Screen
Trainer’s Tidbit
If the filing status is married filing jointly, either tax filer’s name or SSN will work to retrieve tax data.
NOTES
8

Upon clicking “submit,” the tax filer will be shown the FAFSA questions and the tax data that can be
used to populate the answer fields.
Sample IRS Data Screen
If the tax filer clicks the “transfer” button, the IRS data automatically is sent to FOTW and the browser
window closes. The tax data transferred to the FAFSA, however, may be changed by the tax filer.
Instead of transferring the data, the tax filer could elect to print the information on this screen, close
the browser window and enter the information manually on the FAFSA.
Trainer’s Tidbit
Income earned from work is not available in the IRS data share process because information only is
retrieved from the tax return, not W-2 or 1099 forms.
9

IRS Data Share Exceptions
During the 2009-2010 award year, only a subset of applications will be authorized to use the IRS data
share feature. ED will analyze data from the pilot group to make any necessary adjustments before
full implementation in July 2010 for the 2010-2011 award year.
Certain groups of tax filers will not be eligible for the IRS data share process for 2009-2010 or
2010-2011:
Non-tax filers.
Tax filers using a Taxpayer Identification Number, rather than an SSN.
Tax filers who changed their marital status after Dec. 31 of the tax year.
Tax filers who request an extension beyond the Apr. 15 deadline.
Tax filers who file as married filing separately.
Students making changes to a previously processed FAFSA.
IRS Data Share and Verification
There will be no indication on the 2009-2010 SAR or ISIR that IRS data was used on the application.
For 2010-2011, however, a flag will appear on the ISIR indicating that IRS data was used. If the
applicant changed any IRS data after the transfer from the IRS, the flag will not appear.
NOTES
10

2010-2011 FAFSA Enhancements
FAFSA on the Web
ED implemented a technology upgrade that allowed a full redesign of the 2010-2011 FOTW
application. The enhancements will reduce the number of pages in the FOTW application.
Additionally, status indicators will be added to FOTW screens to guide applicants through each
section. Parent and student sections will be more clearly identified, with targeted instructions and
help screens based on responses.
Sample 2010-2011 FOTW Screen
11

State of Legal Residence
Questions regarding the student’s state of legal residence and length of residency will not display for
applicants who confirm they have lived at their current address for at least five years.
Drug Conviction
First-time college students will not see the drug conviction eligibility questions because these
applicants have never received Title IV aid.
Additional Financial Information and Untaxed Income
Instead of having all applicants enter dollar amounts for additional financial information and untaxed
income, FOTW will ask applicants to check boxes for each type of income. Only those applicants who
indicate they have income from these sources will be prompted to enter dollar amounts.
Paper FAFSA
While less than one percent of FAFSA filers utilize the paper form, enhancements for the 2010-2011
paper FAFSA will be implemented. These changes also will translate to the FOTW application.
12

Veterans Benefits
As of July 1, 2009, veterans educational benefits are not considered as estimated financial assistance.
As a result, all questions related to veterans educational benefits will be removed from the FAFSA.
Marital Status
The marital status question will be expanded to four options to accommodate the IRS data share
process:
Single.
Married/Remarried.
Separated.
Divorced/Widowed.
Military Housing and Allowances
Additional text will be added to the FAFSA explaining that military housing and allowances should
not be included as untaxed income.
Earnings from Cooperative Education Programs
A new question will be added to the FAFSA explaining that earnings from a cooperative education
program will be excluded from income.
NOTES
13

Summary of FAFSA Changes
FOTW Paper/PDF Effective Year*
Location:
Web address: www.fafsa.gov. May 2009 2009-2010
Questions added:
Homeless students (identify potential students to
utilize skip logic).
August 2009 2009-2010
Students whose parents will not provide FAFSA data
and financial support.
August 2009 2009-2010
Earnings from cooperative education program. January 2010 2010-2011
Questions deleted:
Selective Service Registration (for male students age
26 or older).
August 2009 2009-2010
Drug conviction (for first-time college students)
(2009-2010 FAFSA Q23).
January 2010 2010-2011
Veterans benefits (2009-2010 FAFSA Q44-45). January 2010 2010-2011
Independent student status questions for students
age 24 or older, or married (2009-2010 FAFSA
Q48-60).
Graduate student.
Veteran.
Orphan, foster care or ward of court.
Emancipated minor.
Legal guardianship.
August 2009 2009-2010
Questions/Instructions reworded or reformatted:
Homeless students (enhanced skip logic). August 2009 2009-2010
Marital status (2009-2010 FAFSA Q16 and Q61). January 2010 2010-2011
Additional financial information presented in checkbox
format (2009-2010 FAFSA Q46 and Q94).
January 2010 2010-2011
Untaxed income presented in check-box format
(2009-2010 FAFSA Q47 and Q95).
January 2010 2010-2011
Value of military housing and allowances (2009-2010
FAFSA Q47g and Q95g).
January 2010 2010-2011
Confirmation Page Information:
Estimated Federal Pell Grant amount. May 2009 2009-2010
Estimated Stafford loan amount. May 2009 2009-2010
Link to College Navigator Web site. May 2009 2009-2010
Ability to e-mail FOTW confirmation page. May 2009 2009-2010
Retention, graduation and transfer rates. August 2009 2009-2010
* Enhancements implemented in 2009-2010 also will be effective in future award years.
14

2010-2011 Key Dates
August 2009
Software Developers:
Draft EDExpress Technical Reference.
Draft Application Processing System Specifications.
Software Developers Conference, Aug. 20, 2009.
October 2009
EDExpress Packaging Technical Reference.
Summary of Changes for the Application Processing System.
Student Web Application Products Process Guide.
Central Processing System Test System User Guide.
November 2009
School Electronic Process Guide.
ISIR Guide.
SAR Comments Codes and Text.
EFC Guide.
January 2010
Jan. 1, 2010:
FAA Access to CPS Online available.
FOTW available.
Jan. 4, 2010:
CPS begins processing ISIRs.
EDExpress Release 1.0 available.
Final Application Processing System Specifications for Software Developers.
NOTES
15

Trainer’s Toolkit
The Trainer’s Toolkit is a listing of terms, Web sites
and reference material directly related to the
FAFSA and Delivery System Update.
Terms, Acronyms and
Abbreviations
ACG
Academic Competitiveness Grant.
The Academic Competitiveness Grant provides
up to $750 for the first year of undergraduate
study and up to $1,300 for the second year of
undergraduate study to full-time students who
are eligible for a Federal Pell Grant and who have
successfully completed a rigorous high school
program, as determined by the state or local
education agency and recognized by the U.S.
Secretary of Education. Students enrolled at least
half time qualify for prorated grant amounts.
Award Year
An award year begins on July 1 in one calendar
year and ends on June 30 of the following
calendar year. For example, the 2009-2010 award
year begins July 1, 2009, and ends June 30, 2010.
CCRAA
College Cost Reduction and Access Act 0f
2007.
The College Cost Reduction and Access Act (P.L.
110-84) provides numerous changes in federal
financial aid administration. The CCRAA was
signed into law on Sept. 27, 2007, with some
provisions retroactively applied to the 2007-2008
academic year; others were implemented Oct. 1,
2007, and the majority took effect either July 1,
2008, or July 1, 2009. Technical amendments to
the CCRAA were signed into law on Dec. 21, 2007
(P.L. 110-153).
College Navigator Web Site
http://nces.ed.gov/collegenavigator/.
The College Navigator Web site provides data
from the National Center for Education Statistics
about a variety of school characteristics, such as
admissions, cost, financial aid, academic
programs, retention and graduation rates.
Comment Codes
Comments range from providing general
financial aid information to notifying the student
or financial aid administrator that action may be
necessary to process financial aid. Comment
codes are located in the last line of the FAA
Information section of the SAR or ISIR. Some
comments are tied to C flags or rejects based on
the student’s FAFSA data or database matches.
Cooperative Education Program
Programs that combine traditional classroom
learning with practical work experience.
CPS
Central Processing System.
The CPS is ED’s processing facility for Free
Application for Federal Student Aid data.
Dependency Override
For the purpose of determining student aid
eligibility, a financial aid administrator may use
professional judgment to override a student’s
dependency status. The decision for the override
must be based on unusual circumstances faced
by the student.
Dependent Student
A student who does not meet the eligibility
requirements for an “independent student,”
under the Higher Education Act of 1965, as
amended.
17

DoD
U.S. Department of Defense.
www.defense.gov.
The DoD is charged with supplying military
service members in order to discourage war
activities and ensure the security of the United
States. DoD is the largest and oldest government
agency and the nation’s largest employer.
ED
U.S. Department of Education.
www.ed.gov.
ED was created in 1980 when several federal
agencies were combined. Its mission is to ensure
equal access to education and to promote
educational excellence throughout the nation.
ED’s purpose is to:
Establish policies on federal financial aid for
education.
Distribute and monitor federal student aid
funds.
Collect data on schools and disseminate that
research.
Focus national attention on key educational
issues.
Prohibit discrimination and ensure equal
access to education.
EDExpress
A software program provided by ED to process
financial aid data. This software is used to enter
new applications and make changes or
corrections to existing applications. It also is used
to calculate financial aid packages for students.
EFA
Estimated Financial Assistance.
The school’s estimate of the amount of financial
assistance that a student has been or will be
awarded for the enrollment period for which a
loan is sought. The EFA includes assistance from
federal, state, institutional, scholarship, grant,
financial need-based employment, or other
sources. EFA does not include veterans
educational benefits or ROTC payments.
EFC
Expected Family Contribution.
The EFC figure is determined by Congressionallyapproved
Federal Methodology need-analysis
formulas. The EFC is an index that colleges use to
determine financial aid eligibility.
FAA
Financial Aid Administrator.
An FAA is a college or university employee who is
responsible for the administration of financial aid.
FAA Access to CPS Online
www.faaaccess.ed.gov.
A Web tool that financial aid administrators use
to enter application data, view student
information, make corrections, check the status of
applications, request ISIRs, and access the ISIR
Analysis Tool and R2T4 on the Web.
FAFSA
Free Application for Federal Student Aid.
The FAFSA is ED’s official form used to apply for
aid from all federal student aid programs.
FAO
Financial Aid Office.
The FAO is the college or university office that is
responsible for determining students’ financial
need and awarding them financial aid.
18

Federal Pell Grant
Federal Pell Grants are the foundation of financial
aid awards for students who demonstrate
financial need. Because it is the foundation of
financial aid award packages, Pell Grant funds
always must be awarded to students who are
eligible. Students’ eligibility is based on the
Expected Family Contribution as calculated from
information provided on the FAFSA.
Federal Stafford Loans
Federal Stafford loans are available to
undergraduate and graduate students enrolled
at least half time. Students may borrow up to
established annual loan limits, based upon their
grade level. Stafford loans may be subsidized
(need-based) or unsubsidized (non-need-based).
Recipients have a six-month grace period upon
ceasing to be enrolled at least half time.
FM
Federal Methodology.
FM is the need-analysis formula used to
determine the EFC. FM takes family size, the
number of family members in college, taxable
and nontaxable income, and assets into account.
FOTP
FAFSA on the Phone.
(800) 4-FED-AID.
FAFSA on the Phone is the telephone-based
version of the FAFSA.
FOTW
FAFSA on the Web.
www.fafsa.gov.
FOTW is the electronic version of the FAFSA.
FSA
Federal Student Aid.
http://federalstudentaid.ed.gov.
The office within the U.S. Department of
Education responsible for the overall
management and administration of most of the
Title IV programs and their operating systems.
FSAIC
Federal Student Aid Information Center.
(800) 4-FED-AID.
The Federal Student Aid Information Center
serves the public with information about the
federal student aid application process. FSAIC's
primary role is to respond to student and parent
inquiries. Customer service representatives
provide comprehensive assistance in English, as
well as Spanish, on general information related to
federal student aid (Title IV programs), the FAFSA
application (paper and online), pre-filled FAFSA
on the Web, FAFSA corrections, FAFSA4caster, the
U.S. Department of Education's federal student
aid grant and loan programs and student loan
history.
HEA
Higher Education Act of 1965, as amended.
The HEA is the law that authorizes most federal
programs and activities that assist and enable
students to enter and succeed in postsecondary
education. The primary focus of the HEA is
student aid, in the form of grants, loans and workstudy
assistance.
HEOA
Higher Education Opportunity Act of 2008.
The HEOA (P.L. 110-315) reauthorized the Higher
Education Act of 1965, as amended. The HEOA
was signed into law on Aug. 14, 2008, with some
provisions retroactively applied to the 2008-2009
academic year; others are to be implemented at
later dates.
19

IFAP
Information for Financial Aid Professionals.
www.ifap.ed.gov.
Information for Financial Aid Professionals is a
Web site that was developed to provide school
and financial partners with electronic access to
the many FSA publications that guide the
administration of the Title IV Student Financial
Assistance programs.
Independent Student
A student who meets one or more of the criteria
listed on the FAFSA that classify a student as
independent for Title IV purposes. Students also
may be classified as independent if a financial aid
administrator determines and documents that
the student is independent based on the
financial aid administrator’s professional
judgment of the student’s unusual
circumstances.
IPEDS
Integrated Postsecondary Education Data
System.
www.nces.ed.gov/ipeds/.
IPEDS is the postsecondary education data
collection program for the National Center for
Education Statistics. All primary providers of
postsecondary education in the United States
submit data that includes enrollments, program
completions, graduation rates, faculty, staff,
finances, institutional prices and student financial
aid. The data are made available to students,
researchers and others.
IRS
Internal Revenue Service.
www.irs.gov.
The IRS is the federal agency responsible for
administering and enforcing the U.S. Treasury
Department's revenue laws, through the
assessment and collection of taxes,
determination of pension plan qualification and
related activities.
IRS Form 1040
The basic form that is used by taxpayers to file
their income tax returns.
IRS Form 1099
A tax statement showing how much the taxpayer
received in interest, capital gains, and dividends,
along with other financial information.
IRS Form W-2
A federal wage and tax statement showing:
Total earnings.
Federal state and municipal taxes withheld.
FICA taxes.
Various other deductions including
contributions to retirement accounts,
unemployment insurance and health
insurance.
ISIR
Institutional Student Information Record.
The ISIR is an electronic record provided to the
school by ED’s Central Processing System. The ISIR
includes information provided by students on
the FAFSA. The ISIR also contains students’
Expected Family Contribution and the results of
federal database matches (including citizenship,
names, dates of birth and Social Security number
matches).
NASFAA
National Association of Student Financial Aid
Administrators.
www.nasfaa.org.
NASFAA supports financial aid professionals at
colleges, universities and career schools. NASFAA
is the only national association with a primary
focus on student aid legislation, regulatory
analysis and professional development for
financial aid administrators.
20

PIN
Personal Identification Number.
www.pin.ed.gov.
PINs are four-digit numbers assigned to students
by ED. PINs electronically identify a student.
Students can use their PINs to access their FAFSA
data, to make corrections to that data and
electronically sign an initial FAFSA on the Web or
Renewal FAFSA on the Web and to view their
information in the National Student Loan Data
System.
PJ
Professional Judgment.
PJ is the delegation of authority from the federal
government to a financial aid administrator to
make changes on a case-by-case basis when
extenuating circumstances exist.
Selective Service
Selective Service is the federal agency
responsible for ensuring that all men between
the ages of 18 and 25 are registered with the
Selective Service System for the purpose of
having information available about potential
soldiers in the event of war.
SSN
Social Security Number.
The SSN is the number assigned by the Social
Security Administration that identifies a
particular individual's Social Security account.
This number is used as a personal identifier and
is required on the FAFSA to receive Title IV
financial aid.
Title IV Aid
Federal student financial aid programs
administered by ED that include Pell Grants,
Academic Competitiveness Grants, National
SMART Grants, Federal Supplemental Educational
Opportunity Grants, TEACH Grants, Federal Work-
Study Program, Federal Perkins loans, subsidized
FFEL/Direct Stafford loans, unsubsidized
FFEL/Direct Stafford loans, FFEL/Direct PLUS
loans for parents and FFEL/Direct PLUS loans for
graduate or professional students.
VA
U.S. Department of Veteran’s Affairs.
www.va.gov.
The VA provides patient care, veterans benefits
(including educational benefits) to U.S. veterans.
Verification
The process a school follows to check the
accuracy of the information reported by the
student on the FAFSA. The information reported
is compared against documents, such as signed
federal tax forms and signed Verification
Worksheets, which the student provides to the
school.
21

References, Resources and Web Sites
U.S. Department of Education
Electronic Announcement.
Subject: Report to Congress on Efforts to Simplify the Free Application for Federal Student Aid.
Jan. 21, 2009.
www.ifap.ed.gov.
Dear Colleague Letter GEN-08-12.
Subject: The Higher Education Opportunity Act.
December 2008.
www.ifap.ed.gov.
FAFSA Simplification - What Does That Mean and How Do We Get There?
2006 FSA Conference presentation by:
Carney McCullough and Michele Brown.
www.ifap.ed.gov/presentations/attachments/06FSAConfSession24.ppt.
NASFAA
Application Processing System Update.
2009 NASFAA Conference presentation by:
Michele Brown and Marilyn LeBlanc.
www.nasfaa.org/Subhomes/AnnualConference2009/handouts.html.
Simplifying the Financial Aid Process.
2009 NASFAA Conference presentation by:
David Bergeron and Jeff Baker.
www.nasfaa.org/Subhomes/AnnualConference2009/handouts.html.
22

Appendices
Appendix A
FASFA on the Phone Fact Sheet
Appendix B
Draft 2010-2011 FAFSA
23

Appendix A
FASFA on the Phone Fact Sheet
25

Appendix B
Draft 2010-2011 FAFSA
Use this form to apply free for federal and
STATE TE AID DEADLINESDLINES
state student grants, work-study and loans.
Check with your financial aid administrator for these
Or apply free online at
states and territories:
www.fafsa.ed.gov. .
AL, AS *, AZ, CO, FM *, GA, GU *, HI
*, MH *, MP *, NC,
NE, NM, NV *, OR, PR, PW *, SD *, TX *, UT, VA *, VI
*,
Applying by the Deadlines
VT *, WA, WI and WY *.*
For federal aid, submit your application as early as possible, but no earlier er than
Pay attention to the symbols that may be listed after
January 1, 2010. We must
receive your application no later
than June 30, 2011.
your state deadline.
Your college must have your correct, complete information
n by your last day of
AK April 15, 2010 (date received)
enrollment in the 2010-2011 011 school year.
AR
Academic Challenge - June
1, 2010 (date received)
For state or college aid, the deadline may be as early as January 2010.
See the table
Workforce Grant - Contact your financial aid
to the right for state deadlines. You may also need to complete additional forms.
administrator. r.
Higher Education Opportunity Grant
Check with your high school guidance counselor or a financial ncial aid administrator at
- June 1, 20100 (fall term)
(date received)
your college about state and college sources of student aid
and deadlines.
9D
- November 1, 2010 (spring
term) (date received)
CA Initial awards
- March 2, 2010 + *
If you are filing close to one of these deadlines, we recommend mend you file online at
Additional community college awards
www.fafsa.ed.gov. This is the fastest and easiest way to
apply for aid.
- September 2, 2010
(date postmarked) + *
CT
February 15, 2010
(date received) eived)
#*
Using Your Tax Return
DC June 30, 2010 0
(date received
by state)
# *
DE April 15, 2010 0
(date received)
If you are supposed to file
a 2009 federal income tax return, we recommend mend that
FL
May 15, 20100
(date processed)
ed)
you complete it
before filling ling out
this
form.
If
you have not
yet
completed your
2009
IA
July 1, 2010
(date received)
tax return, you can still submit your FAFSA using best estimates. After
you submit
ID Opportunity Grant - March
1, 2010 (date received)
# *
your tax return, correct any income or tax information that
is different from what
you initially submitted on
your FAFSA.
IL First-time applicants - September ember 30, 2010 (date
received)
#
mit0
Filling Out the FAFSA
Your answers on this form
will be read electronically. 2
Therefore: efore:
Correct
Incorrect r
2t
2rec
otx
x √
1 5
E
L M S
T
e1
ts
D
Blue is for student information and purple ple is for parent information.
uand
If you or your family has unusual usual circumstances
(such as loss of employment),
complete this form to the
extent Jupurp
Jh
you can, then submit Dch it as
instructed
and consult
with the financial aid office at the college you plan to attend.
For more information or help in filling out the FAFSA, go to
www.studentaid.ed.gov/completefafsa or call 1-800-4-FED-AID
0-4-FED-AID
(1-800-433-3243). TTY users (for the hearing impaired) may
call 1-800-730-8913.
2or2
$
1 2356
nno no cents
,
Mailing Your FAFSAA
After you complete this application, make a copy of pages
3 through 8 for your
records. Then mail the original of pages 3 through 8 in the
attached envelope or
send it to:
Federal Student Aid
Programs, P.O. Box 4691, Mt. Vernon, IL 62864-0059.
After your application is processed, you will receive a summary mary of your
information
in your Student Aid Report
(SAR). If you provide an e-mail address, your SAR will be
sent by e-mail within 3-5
days. If you do not provide an e-mail address, your SAR will
be mailed to you within three weeks. If you would like to check the status
of your
FAFSA, go to
www.fafsa.ed.gov a.ed.gov
or call 1-800-4-FED-AID. D.
Let’s Get Started!
Now go to page 3 of the
application form and begin filling ing it out. Refer to the
notes as instructed.
CTD
Continuing applicants - August 15, 2010 (date
breceived)
#
IN March 10, 2010 (date received)
ed)
KS
April 1, 2010 (date received)
# *
KY March 15, 2010
(date received) ed)
#
LA
July 1, 2010 (date received)
MA May 1, 2010 (date received)
#
MD
March 1, 2010 (date received)
ME
May 1, 2010 (date received)
MI
March 1, 2010 (date received)
MN
30 days after term starts (date received)
MO
April 1, 2010 (date received)
#
MS
MTAG and MESG Grants - September 15, 2010 (date
received)
#
HELP Scholarship - March 31, 2010 (date received)
#
MT
March 1, 2010 (date received) #
ND
March 15, 2010 (date received)
ed)
NH
May 1, 2010 (date received)
NJ
2009-2010 Tuition Aid Grant recipients - June 1, 2010
(date received)
All other applicants
- October 1, 2010, fall & spring terms (date received)
- March 1, 2011, spring term
only (date received)
NY May 1, 2011 (date received)
+ *
OH
October 1, 2010 (date received)
OK
April 15, 2010 (date received) #
PA
All 2009-2010 State Grant recipients & all non-
2009-2010 State Grant recipients in degree program
- May 1, 2010 (date received)
*
All other applicants - August 1, 2010 (date received)
*
RI
March 1, 2010 (date received) #
SC Tuition Grants - June 30, 2010 (date received)
SC Commission on Higher Education - no deadline
TN State Grant - March 1, 2010 (date received)
#
State Lottery - September 1, 2010 (date received)
#
WV
April 15, 2010 (date received) # *
# For priority consideration, submit application plication by date specified.
+ Applicants encouraged to obtain proof of mailing.
* Additional form may be required.
ap
bmOpportunity
bmFirst-time
1 2
June
ne
e2
29,
9,
2009
09
9D
Draft
CADr
aft
t
pDo
on ,n
not
Mno
ts
sub sub
ubmit.
(sucD
ectot
ot√
STATE TE AID DEADLINES
27

Notes for questions 14
and 15 (page 3)
Notes for questions 38 (page 4)
If you are an eligible noncitizen, write in your eight- or nine-digit Alien
and 86
(page 7) — Notes for those
who filed a 1040EZ
Registration ti Number. Generally, erally, you are an eligible ibl noncitizen if you are
On the 1040EZ, if a person didn’t check either box on line 5, enter
(1) a permanent U.S. resident ent with a Permanent Resident Card (I-551); (2)
01 if he
or she is single, or 02 if he or she is married. If a person
a conditional permanent resident (I-551C); or (3) the holder
of an Arrival-
checked either the “you” or “spouse” box on line 5, use 1040EZ
Departure Record (I-94) from the Department of Homeland
Security showing worksheet line F to determine the number of exemptions ($3,500
any one of the following designations: “Refugee,” “Asylum Granted,” “Parolee”
equals one exemption).
(I-94 confirms
that
you were paroled for
a minimum of
one
year and status has
not expired), “Victim of human trafficking,” T-Visa holder (T-1, T-2, T-3, etc.) or
Notes for questions 42 and 43 (page 4)
“Cuban-Haitian Entrant.”
and 90
and 91 (page 7)
If you are in the U.S. on an
F1 or F2 student visa, a J1 or J2 exchange visitor
visa, or a G series visa (pertaining to international organizations), ions), select “No,
I am not a citizen or eligible le noncitizen.” You will not be eligible for federal
student aid; however, you
should still complete the application i
because you
may be eligible for state or
college aid.
Notes for question 22
(page 3)
The Selective Service System, and the registration requirement for young
men, preserves America’s ability to provide manpower in an
emergency to the
U.S. Armed Forces. Almost
all men—ages 18 through 25—must register. For
more information about Selective Service, visit www.sss.gov.
Notes for question 30
(page 4)
For undergraduates, select
the enrollment status for the college you will most
likely attend.
“Full-time” generally means taking at least 12 credit hours in
a term or
24
clock hours per week.
“Three-quarter-time” generally means taking at least 9 credit
hours in a
term or 18 clock hours per week.
“Half-time” generally
means taking at least 6 credit hours in a
term or 12
clock hours per week.
Notes for question 32
(page 4)
120
The Teacher Education Assistance sistance for College and
Higher Education (TEACH)
Grant Program provides grants to students enrolled ed in a participating
9atin
9n college who intend to teach in a public or private elementary or secondary
school that serves students ts from low-income families. Answer 29ducation
2ry “Yes” to learn
more about the TEACH Grant. Answer “No”
if you are
not interested in the
TEACH Grant. Answer “Don’t know”
if you are not sure but
would like more
information about the TEACH Grant. Additional information
n about the TEACH
Grant Program is available
at
www.teachgrant.ed.gov. ed.gov.
neinfor
Notes for questions 34
(page 4)
and 81 (page 6)
If you filed or will file a foreign tax return, a tax return with Puerto Rico,
another U.S. territory (e.g.,
Guam, American Samoa, the U.S.
. Virgin Islands,
Swain’s Island or the Northern Marianas Islands) or one of the Freely
Associated States (i.e., the
Republic of Palau, the Republic of the Marshall
Islands or the Federated States of Micronesia), use the information from that
return to fill out this form.
If you filed a foreign return, convert all monetary
units to U.S. dollars, using
the exchange rate that is in effect
today. To view
the daily exchange rate, go
to www.federalreserve.gov/releases/h10/
eleases/h10/
update.
Net worth means current value minus debt. If net worth is
negative, e, enter 0.
Investments include real estate (do not
include the home you
live in), trust funds, UGMA and UTMA accounts, counts, money market
funds, mutual funds, certificates of deposit, stocks, stock options,
bonds, other securities, installment and land sale contracts
(including ng mortgages held), commodities, etc.
Investments also include qualified educational benefits or
education savings accounts
tq
(e.g. Coverdell ell savings accounts, 529
college savings plans and the refund value of 529 prepaid tuition
plans). For a student who does not report
parental information,
the
accounts owned by the student (and/or the student’s spouse)
repoD
are
reported as student investments in question 42. For a student
muD
who must report parental information, the accounts are reported
as parental
Dorted
investments in question 90, including all accounts
owned by the student and all accounts owned by the parents for
any member mber of the household.
old.
Investments do not include the home you live in, the value
0Invest
of life insurance, retirement
plans (401[k]
plans, pension funds,
annuities, non-education IRAs, Keogh plans, etc.) or cash, savings
and checking accounts already reported in questions 41 and 89.
Investments also do not include UGMA
and UTMA accounts for
which ubes,
you are the custodian, but not the
owner.
Investment ent value means the
current balance ance or market value of
these investments as of today. Investment nt debt means only those
debts that are related to the investments.
Business ss and/or investment farm value
includes the market
value of
land, buildings, machinery, equipment, inventory, etc.
Business
s and/or investment farm debt means only those debts for
which the business or investment farm was used as collateral.
Business ss value does not include the value of a small business
if your family owns and controls more than 50 percent of the
business
s and the business has 100 or fewer full-time or full-time
equivalent ent employees. For small businesss value, your family
includes
(1) persons directly related to you, such as a parent,
sister or
cousin, or (2) persons who are or
were related to you by
marriage, such as a spouse, stepparent or
sister-in-law.
Investment farm value does not include the value of a family
farm that you (your spouse and/or your parents) live on and
operate.
Notes for questions 49 (page 5)
June ne
e2
29, 9,
2009 09
9D
Draft
aft
Do
hDo
on
not
ts
sub sub
ubmit.
Notes for questions 35
(page 4)
Answer
“Yes” if you are currently serving
in the U.S. Armed Forces
and 82 (page 6)
or are a
National Guard or Reserves enlistee who is on active duty
for other than state or training purposes.
In general, a person is eligible ible to file a 1040A or 1040EZ if he
or she makes
less than $100,000, does not itemize deductions, does not receive income
Answer
“No” if you are a National Guard
or Reserves enlistee who
from his or her own business or farm and does not receive alimony. A person
is on active duty for state or training purposes.
poses.
is not eligible to file a 1040A 0A or 1040EZ if he or she makes $100,000 or more,
itemizes deductions, receives income from his or her own business or farm,
is self-employed, receives
alimony or is required to file Schedule D for capital
gains. If you filed a 1040 only to claim Hope or Lifetime Learning credits, and
you would have otherwise
e been eligible for a 1040A or 1040EZ, 0EZ, you should
answer “Yes” to this question. If you filed a 1040 and were not required to file
a tax return, you should answer “Yes” to this question.
Page 2
Notes
continued on page 9.
28

Step One (Student): For questions 1-32, leave blank any questions that do not apply to you (the student).
Your full name (exactly as it
appears on your Social Security card)
1. Last
2. First
name
name
OMB # 1845-0001
3. Middle
initial
Your mailing address
4. Number and
street (include
apt. number)
5. City (and
country if not
U.S.)
8. Your Social Security Number 9. Your date
MONTH
DAY
YEAR
10. Your permanent telephone number
of birth
tm
– –
M M
D D 1 9
Y
Y
Your Driver’s license
number (if you have one)
11. Driver’s license
number
19. Did you become a legal
resident of
this
state
before January 1, 2005? 05?
Ju19.
@
6. State
te
7. ZIP code
( ) –
12. Driver’s license
state
13. Your e-mail address.
If you provide your e-mail address, we will communicate municate with you electronically. cally. For example, when
your FAFSA has been processed, you will
be notified by e-mail. Your
e-mail address will also be shared with your state and the colleges listed
on your FAFSA to allow
them to communicate municate with you. If you
prefer to be contacted by
postal mail or do not have an e-mail address, s, please leave this field blank.
su
14. Are you a U.S.
Yes, I am a U.S. citizen (U.S. national). Skip to question 16.
1
15. Alien Registration Number
citizen?
No, in 2
Mark only one.
but I am an eligible noncitizen. Fill question 15.
bA A
See Notes page 2. . No, I am not a citizen or noncitiz9
eligible noncitizen. Skip to question 16. 3
Report your marital status as of the date you sign your FAFSA. A.
If your marital status changes after you sign your FAFSA, you
cannot not change this information.
n.
16. What is your
17. Month and year you
MONTH
I am
single
1
I am separated
3
marital status as
were married,
of today?
I am
married/remarried
2
divorced or e1
I am
widowed
4 separated,
M M
divorced or widowed
18. What is your
state of legal
residence?
STATE
TE
am
arried/remarriedne ne
uaryD
orcednorn
Yes
No
1
2
D
your
aratednot
1
o
bmg
20. If the answer to question 19
is “No,” give month and year
you became a legal resident.
M M Y
Y
Y
Y
MONTH
)
Jun une
ne2
2e
29,
2009 009
09 9D
Draft raft
Do on
not
ts
su2u
sub u1ub
ubm
bmi
mit.
YEAR
YEAR
M M Y
Y
Y Y
21. Are you male
or female?
Male
Female
1
2
If female, skip to question 23.
22. Most male students must register with Selective Service to receive
federal aid. If you are male, age 18-25 and not registered, fill in the
circle and we will register you.
See Notes page 2. .
Register me
1
23. Have you been convicted for the possession or sale of illegal drugs for an offense that occurred while you were receiving
federal student aid (such
as grants, loans or work-study)?
Answer “No” if you have never received federal student aid or if you have never had a drug conviction
n while receiving federal student aid.
If you have a drug conviction for an offense that occurred while
you were receiving federal student aid, answer “Yes,” but complete and
submit this application, and
we will mail you a worksheet to help
you determine if your conviction affects your eligibility for aid. If you are
unsure how to answer this question, call 1-800-433-3243 for help.
No
Yes
1
3
Some states t and colleges offer aid idbased on the level l of schooling your
parents completed.
24. Highest
school
your
father completed
Middle school/Jr. high
25. Highest
school
your
mother completed
Middle school/Jr. high
High school
High school
College or
beyond
3
College or beyond
Other/unknown
1
2
3 4
Other/unknown
1
2
3
4
26. When you begin collegee in the 2010-2011 school year, what will be your high school completion status?
High school diploma
....................................................................
1
........................................................... Homesch
General Educational
Development (GED) certificate
........
2
Homeschooled ....................................................................
None of
the above
..............................................................
3
4
For Help–www.studentaid.ed.gov/completefafsa
d.gov/completefafsa
Page
3
29

1. J
1
2
27. Will you have your first
bachelor’s degree before July 1, 2010?
Step One CONTINUED from page 3
28. When you begin the 2010-2011 school year, what will be
your grade level?
29. When you begin the 2010-2011 school year, what degree or certificate cate
will you be working on?
Never attended college and
1st year
undergraduate
.........................
0
1st bachelor’s degree .........................................................................................................
1
Attended college before and 1st
year undergraduate ........................
1
2nd bachelor’s degree ......................................................................................................... 2
Associate degreee (occupational or technical program)
..........................................
3
2
2nd year
undergraduate/sophomore .......................................................
Associate degreee (general education or transfer program) ram) ..................................
4
3rd year undergraduate/junior nior
....................................................................
3
Certificate or diploma (occupational, technical or education program of
less than two years) ............................................................................................................
5
4
4th year undergraduate/senior nior ....................................................................
Certificate or diploma (occupational, technical or education program of
two ormore years) ................................................................................................................
5
6
5th year/other undergraduate ate
....................................................................
7
Teaching credential (nondegree program)
................................................................
1st year graduate/professional onal
....................................................................
6
Graduate or professional degree
....................................................................................
8
Continuing graduate/professional essional or beyond
......................................
7
Other/undecided d
..................................................................................................................
9
30. When you begin the 2010–2011 school year, what do you
expect
31. In addition to
grants, are you interested in being considered for work-
your enrollment status to be?
See Notes page 2.
study or student loans?
1
1
Full-time
...............................................................................................................
Work-study (student aid that you earn through work)
..........................................
2
2
Three-quarter-time
..........................................................................................
Student
loans (which you
must
pay
back) ..................................................................
3
3
Half-time
..............................................................................................................
Both
work-study and
student
loans
f...... ..............................................................................
4
Less than half-time
...........................................................................................
Neither
......................................................................................................................................
D
4
5
5
Don’t know
.........................................................................................................
Don’t
know
..............................................................................................................................
32. Are you planning to complete course work necessary to
become an elementary or secondary
Yes
know
now page school teacher, either or in the future? See Notes 2.
1 No
2 Don’t tkno
3
Answer questions 33–58 3–58 about yourself
(the student). If you are single, separated, divorced or widowed,
Step Two (Student):
answer only about yourself. If you are married as of today, include information about your spouse
(husband or wife).
33. For 2009, have you (the
student) completed your IRS income tax
34. What income
b
tax return did you file or will you file for 2009?
return or another tax return listed in question 34?
1
IRS
1040
...................................................................................................................................
1
2
I have already completed my return.
........................................................
IRS
1040A or 1040EZ ...........................................................................................................
2
A foreign tax return. See Notes page 2.
.....................................................................
3
I will file, but I have not yet
completed my return.
...............................
uturn.
ub.............................................
A tax return with
Puerto Rico, another
U.S. territory or
Freely Associated
3
4
I’m Im not going to file.
Skip to
question 39.
.............................................
State. te.
See Notes
page 2. ..................................................................................................
93
9...
35. If you have filed or will file a 1040, were you eligible to file a 1040A Yes
know
See Notes page 2.
For questions 36–45,
if
the
answer is
zero
or
the question does not apply enter Report 36. What was your (and spouse’s) income Adjusted line 37; 1040A—line 21;
negible
n
or 1040EZ? tStat
1 No
2 Don’t 3
to you,
0.
whole dollar amounts with no cents.
napply
se’s) adjusted gross D
for 2009?
gross income is on IRS Form 1040—
or
1040EZ—line 4.
$
,
37. Enter your (and spouse’s) income tax for 2009. Income tax amount is on IRS Form 1040—line 56; 1040A—
line 35; or 1040EZ—line
11.
$
thee
tes
.....b
A t
sub
38. Enter your (and spouse’s) exemptions for 2009. Exemptions are on
IRS Form 1040—line 6d
or Form 1040A—
line 6d. For Form 1040EZ, see Notes page 2.
Yes 1
No
2
Questions 39 and 40 ask about earnings (wages, salaries, tips, etc.) in 2009. Answer the questions whether or not a tax return was filed. This information
may be on the W-2 forms, or on IRS Form 1040—lines 7 + 12
+ 18 + Box 14 of IRS Schedule K-1 (Form 1065); or 1040A—line 7; or 1040EZ—line 1. If any
individual earning item is negative, do not include that item
in your calculation.
Yes
econdD
Jun
ne2
29, 2009 009
09
9D
Draft
aft
ft
Do on
not
ts
sub
ubmit.
,
No
39.
How much did you earn
from working in 2009?
40. How much did your
spouse earn from working in
2009?
$
$
,
,
41. As of today, what is your (and spouse’s) total current balance ance of cash,
savings and checking accounts?
Do not include student
financial aid.
42. As of today, what is the net worth of your (and spouse’s)
investments, including real estate? e?
Don’t include the
home you live in. Net worth means current value minus debt.
See Notes page 2.
43. As of today, what is the net worth of your (and spouse’s)
current businesses and/or investment farms?
For a family farm or family business, see Notes page 2.
For Help — 1-800-433-3243
Page
4
$
$
$
,
,
,
Step Two CONTINUED on page 5
30

Step Two CONTINUED from page 4
44. Student’s 2009 Additional Financial Information (Enter the ecombined amounts for you and your spouse.)
a. Education credits (Hope and Lifetime Learning tax credits) from
IRS Form 1040—line 50 or 1040A—line 31.
$
b. Child support paid because of divorce or separation or as a result of a legal requirement. Don’t include support for children in
your household, as reported rted in question 94.
c. Taxable earnings from need-based employment programs, such as Federal Work-Study and need-based employment portions
of fellowships and assistantships. antships.
$
$
,
,
,
d. Student grant and scholarship aid reported to the IRS in your adjusted gross income. Includes AmeriCorps benefits (awards,
living allowances and interest accrual payments), as well as grant and scholarship portions of fellowships and assistantships. e. Combat pay or special combat pay. Only enter the amount that was taxable and included in your adjusted gross income.
Do not enter untaxed combat pay reported on the W-2 (Box 12, Code Q).
f. Earnings from work under
racooperative education program offered by acollege
college.
$
$
$
,
,
,
45. Student’s 2009 Untaxed dInc
Income (Enter the combined amounts for you and your spouse.)
a.
Payments to tax-deferred
pension
and
savings
plans (paid directly or
withheld
from earnings), including, but not limited
$
to,
amounts reported
on
the
W-2 forms in Boxes 12a through h 12d, codes D, E, F,
G, H and S.
,
b. IRA deductions and payments to self-employed SEP,
SIMPLE, Keogh and
other
qualified
plans from IRS Form 1040—line fted
t+
Draft28
2 +
line 32 or
1040A—line 17.
$
,
c. Child support received for
any of your children.
Don’t include
foster care or adoption payments.
$
,
d.
Tax exempt interest
income from IRS Form 1040—line 8b or 1040A—line 8b.
$
,
e.
Untaxed portions of IRA distributions from IRS Form 1040—lines (15a
minus 15b) or
1040A—lines (11a 1a minus
11b).
Exclude rollovers.
If negative, enter a zero here.
$
,
f. Untaxed
portions
of pensions from IRS Form 1040—lines (16a minus
16b) v2
1040A—lines minus 12b).
Exclude rollovers.
If negative, enter
a zero here.
g. Housing, food and other living allowances paid to members of military, cler2 2
or
(12a
$
,
the clergy and
others (including ing cash payments and
cash
value of benefits).
Don’tinclude the value of on-base military housing or the 2y,
2gy value of
a basic military allowance for housing. $
,
uy
ub12b).
h.
Veterans noneducation benefits, such as Disability,
Death 2
Pension, or Dependency & Indemnity Compensation (DIC) and/or VA
Educational
Work-Study allowances. lowances.
$
sy ,
i. Other untaxed income not
reported, such as workers’ compensation, disability, etc.
Don’t include student aid,
earned income credit, ee
additional ditional child tax welfarot
credit, welfare e payments, untaxed Social Security benefits,
$
Supplemental Security Income, WorkforceInvestment
estmen
educational 2d al benefits, combat pay, benefits
from flexible spending
,
arrangements (e.g., cafeteria er
plans), foreign income exclusion orcredit tfor federal o,
tax on
special fuels.
j. Money received, or paid on
your behalf (e.g., ., bills), not reported elsewhere e on this form.
$
eclu
ex
ee
etAct ,
Step Three (Student): t): Answer all l questions s in this step to determine if you will need to provide parental information.
uarJ
g
9
whernot
edero
Do
(J
46. Were you born before January ......................................................................................................................................................................................
47. Asoftoday,
are you married? “Yes” you arD
1, 1987?
(Also answer
if are separated but not divorced.) ...........................................................................
48. At the beginning of the
2010–2011 school year, will you be working on a master’s ordoctorate program (such as an
MA, MBA, MD, JD, PhD, EdD,
graduate certificate, etc.)?
....................................................................................................................................................
49. Are you currently serving on active duty in the U.S. Armed Forces for purposes other than
training? See Notes page 2.
50. Are you a veteran of the
U.S. Armed Forces? See Notes page 9.
....................................................................................................................................
51. Do you have children who will receive more than half of their support from you between July 1, 2010 and June 30, 2011? Yes 1 No
2
52. Do you have dependents (other than your children or spouse) who live with you and who
receive more than half of
their supportfrom you,
now and through June 30, 2011?
.............................................................................................................................................
Yes
1 No
2
53. At any time since you turned age 13, were both your parents deceased, were you in foster
care or were
you a
dependentorward oft
the court?
See Notes page 9.
.............................................................................................................................................................
Yes
1 No
2
54. Are you or were you an
emancipated minor as determined ed by a court in your state of legal
l residence? See Notes page 9.
Yes 1 No
2
55. Are you or were you in legal guardianship as determined d by a court in your state of legal residence? See Notes page 9.
56. At tany time on or after July 1, 2009, did your high school
or school district ict homeless liaison
determine ermine that you were
an unaccompanied youth who was homeless? See Notes page 9.
.............................................................................................................................
57. Atany time on or after July 1, 2009, did the director of an
emergency shelter or transitional al housing program funded
by the U.S. Department
of Housing and Urban Development determine that you were an
unaccompanied youth who
was homeless?
See Notes page 9.
....................................................................................................................................................................................................
58. Atany time on or after July 1, 2009, did the director of a runaway or homeless youth basic
center or transitional living
program determine that t you were an unaccompanied youth who was homeless or were self-supporting and at risk of
being homeless?
See Notes page 9.
................................................................................................................................................................................................
For Help–www.studentaid.ed.gov/completefafsa d.gov/completefafsa
Page
5
af
ftt
JAJ
Jun une ne
e2
29, 2009009
09
9D
D
Do
on
no
ot
c.ot
ts
sub
ubmit.
1 2
Yes
No
1 2
Yes
2
No
No
2
1 2
Yes
1 2
Yes
2
No
1 2
Yes
2
No
2
No
1 2
Yes
2
No
1 2
Yes
1 2
Yes
2
No
1 2
Yes
2
No
31

If
you (the
student)
answered ed
“No” to every question in Step Three, go
to Step Four.
If
you
answered
“Yes” to any question in Step Three, skip Step Four and go
to Step Five on page
8.
(Health professions ons students:
Your
college may require you to complete Step Four even
if you answered
“Yes”
to any Step Three question.)
Step Four (Parent Information): Complete this
step
if
you (the
student) answered
“No”
to all
questions
in Step Three.
Answer all
the
questions
in Step Four
about
your parents
even
if
you do
not
live with them.
Grandparents, nts, foster
parents,
legal
guardians,
aunts
and
uncles
are
not
considered parents on this form unless
they
have legally adoptedd you.
If your parents
are living and
married
to each
other,
answer
the
questions about
them.
If your
parent is single, widowed,
divorced, separated or remarried,
see
the Notes
on page
9 for
additional
instructions.
59. Whatisyo
your ourparents’marit
marital alstatusasof
as ftoday today? 60.
Month
and
year
MONTH YEAR
they were married,
1
3
Married or remarried
Divorced or
separated
separated, divorced
M M
Y
Y
Y
Y
2
4
or widowed
Single
Widowed
What
are the
Social Security Numbers,
names
and
dates
of
birth
of the
parents
reporting
information on this form? If your
parent does
not
have
a
Social
Security
Number,
you
must
enter
000-00-0000.
0000
Enter
two
digits it
for
each
day
and
month
(e.g.,
for
May 31, enter
05
31).
61. FATHER’S/STEPFATHER’S SOCIAL
SECURITY NUMBER
62. FATHER’S/STEPFATHER’S LAST NAME, AND
63. FIRST INITIAL
64. FATHER’S/STEPFATHER’S DATE OF
BIRTH
– –
– –
M M D D
M M
DD
D
1 9 Y Y
65.
MOTHER’S/STEPMOTHER’S
SOCIAL SECURITY NUMBER
66. MOTHER’S/STEPMOTHER’S LAST NAME,
AND
67. FIRST INITIAL 68. MOTHER’S/STEPMOTHER’S DATE OF
BIRTH
yourr
19 Y
Y
D
69. Your parents’
e-mail
address.
If you provide your parents’ e-mail
address, we will let
them know your FAFSA has been en processed. This e-mail address will
also be shared with
your state and the colleges listed on your
FAFSA to allow them to communicate your
parents.
Dwith
9
@
70. What
is your
answer STATE
71. Did your parents
72. If the
to question 71 is “No,”
MONTH YEAR
parents’
become legal
month
b
and year legal residency
Yes
10give state of legal
residents
of this
state
began
for
the
parent
who
has
2005?
2
residence?
before January 1,
No
lived in the state
the
longest.
inb
M M Y Y
Y Y
73. How many people
are in your parents’
household? hold?
Include:
2
yourself, even
if you
don’t live with your
parents,
your parents,
your parents’ other
children if (a) your parents
will provide
than between 2011, (b) the
children
could
answer
“No”
to every question in Step Three 5 this
other people
if they now
live with your
parents, your parents continue
to provide more
than
half of
their
support
between een July andnot
more
half of their support
July 1, 2010 and June 30,
or
2e
on page of
form, and
provide
more than half of their support and your parents will
nue
1, 2010 0 and June
30,
2011. 1.
eyo
74. How many people
in your parents’
household will college Always count yourself
as
a
college Do neJuly
yD
D
be
students between July 1, 2010 and June 30, 2011?
lege student. not
include your parents. You may include others
only if they
w ill
attend, at least
half- time
in 2010-2011,
a program
that leads
a college
degree or
certificate.
or
uto
In 2008 or 2009, did you,
your parents
or anyone
in your parents’ household
(from question
73) receive
benefits from any of the
federal
benefits
programs listed? Mark all the
programs
that
apply.
Answering
Dth these questions
will not
reduce your
eligibility for
student aid or
for these
other
benefits.
TANF may
have a different name
in
your
parents’
state.
Call 1-800-4-FED-AID
to
find out
the
name of the
state’s
program.
Don
stion2in2
June
ne 29,
2020
2009 100
09
9D
Draft
aft ,a
ft
67ḟt
Do n
not
5ot
ts
sub
ubmit
mit
it.
,
,
tFIRST
75.
Supplemental
Security
Income
76.
Food
Stamps
77. Free or
Reduced
Price Lunch
78. Temporary
Assistance
for Needy Families
(TANF)
79.
Special
Supplemental
Nutrition Program
for
Women,
Infants and Children (WIC)
80. For 2009, have your parents completed their IRS income
tax return
or another tax return
listed in question
81?
My parents have already completed their return
.....................................
2
My parents will file, but they have not yet completed their
return. rn.
My parents are not going to file.
Skip to question 87. ........................
1
3
81. What
income tax return
did your
parents
file or
will
they
file
for 2009?
IRS 1040
...................................................................................................................
IRS 1040A or 1040EZ
...........................................................................................
Af
foreign tax
return. See Notes page 2.
.....................................................
A tax return
with Puerto Rico, another U.S. territory ry or Freely
Associated State.
See Notes page 2.
............................................................
1
2
3
4
82. If your parents
have filed or will file a 1040,
were they
eligible to file
a 1040A
or 1040EZ?
See Notes
page
2.
Yes
No
Don’t know
1
2
3
83.
As
of
today,
is either
of your parents
a
dislocated worker? See Notes
page
9.
Yes
No
Don’t know
1
2
3
For Help — 1-800-433-3243
Page
6
Step Four CONTINUED on page 7
32

Step Four CONTINUED from page 6
For questions 84–93, if the
answer is zero or the question does not apply, enter 0. Report whole dollar amounts with no cents.
84. What was your parents’
adjusted gross income for 2009?
Adjusted gross income is on IRS
Form 1040—line 37;
1040A—line 21; or 1040EZ—line 0EZ—line 4.
$
85. Enter your parents’ income tax for 2009. Income tax amount is on IRS Form 1040—line 56; 1040A—line 35; or
1040EZ—line 11.
86. Enter your parents’ exemptions for 2009. Exemptions are
on IRS Form 1040—line 6d or on
Form 1040A—line 6d.
For Form 1040EZ,
see Notes page 2. .
Questions 87 and 88 ask about
earnings (wages, salaries, tips, etc.) in
2009. Answer the questions whether er or not a tax return was filed. This information may be on
the W-2 forms, on IRS Form 1040—lines 40—lines7+12+18+Box14ofIRSS
+ 18 + 14 of Schedule K-1 (Form 1065); on 1040A—line 7; or on 1040EZ—line 1. If any individual earning item is
negative, do not include that t item in your calculation.
l 87. How much did your father/stepfather earn from working
in 2009?
$
88. How much did your mother/stepmother earn from working in 2009?
$
89. As of today, what is your parents’ total current balance of cash, savings and checking
accounts?
90. As of today, what is the net worth of your parents’ investments, including ng real estate? e?
Don’t include
the home
you live in? Net worth means current value minus debt.
See Notes page 2.
91. As of today, what is the
net worth of your parents’ current businesses s and/or investment farms?
For a family farm or family business, see Notes page 2. .
92.
Parents’
2009 Additional i
Financial
i Information
(Enter
the
amounts
for
your
parent[s].)
[])
a. Education credits (Hope and Lifetime Learning tax credits) from
IRS Form 1040—line 50 or 1040A—line 31.
$
b. Child support paid because of divorce or separation or as a result of a
legal requirement. Don’t include support for children
in your parents’ household, as reported in question 73.
$
0Don’t c. Your parents’ taxable earnings from need-based employment programs, Feder09
such as Federal Work-Study and need-based
employment portions of fellowships and assistantships.
$
d. Student grant and scholarship aid reported to the IRS in your parents’ adjusted gross income. Includes AmeriCorps benefits
(awards, living allowances
and interest accrual payments), as well as grant and scholarship ship portions fellowships and
assistantships.
uof $
e. Combat pay or special combat pay. Only enter the amount 29t that
was taxable able and included din your parents’ adjusted
d
gross income. Do not enter er untaxed combat pay reported on the W-2
(Box 12, Code Q).
$
f. Earnings from work under a cooperative education program offered by a college.
$
nt.0
93.
Parents’
2009 Untaxed
Income (Enter
amounts for your parent[s].)
a. Payments to tax-deferred pension and savings plans (paid directly including, amounts reported on the
forms in unthe
Boxes 12a through 12d,
b. IRA deductions and payments Junamo
D
or withheld from earnings), but not limited to,
W-2
codes D, E, F, G, H and S.
to self-employed l SIMD
SEP, SIMPLE, Dgh
Dour
Keogh and other qualified plans from IRS Form 1040—line 28 +
line 32 or 1040A—line 17.
’ Jun
ne 2
29, h29
2009
09
9D
Draft
aft
Do
on
not
ts
sub
ubmit.
$
$
$
$
$
$
$
,
,
,
,
,
,
,
,
,
,
,
,
,
,
,
c. Child support received for
any of your parents’ children.
Don’t include foster care or adoption payments.
d. Tax exempt interest income from IRS Form 1040—line 8b or 1040A—line 8b.
e. Untaxed portions of IRA distributions from IRS Form 1040—lines (15a minus 15b) or 1040A—lines (11a 1a minus 11b).
Exclude rollovers. If negative, enter a zero here.
f. Untaxed portions of pensions from IRS Form 1040—lines (16a minus 16b) or 1040A—lines (12a minus 12b).
Exclude rollovers. If negative, enter a zero here.
g. Housing, food and other living allowances paid to members of
the military, clergy and others (including cash payments and
cash value of benefits). Don’t include the value of on-base military itary housing or the value of a basic military allowance for
housing.
h. Veterans noneducation benefits, such as Disability, Death Pension, or Dependency & Indemnity Compensation (DIC) and/or
VA Educational Work-Study allowances.
i. Other untaxed income not
reported, such as workers’ compensation, disability, etc.
Don’t include student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits,
Supplemental Security Income, Workforce investment Act educational benefits, combat pay, benefits from flexible spending
arrangements (e.g., cafeteria eria plans), foreign income exclusion or credit for federal tax on special fuels.
For Help–www.studentaid.ed.gov/completefafsa d.gov/completefafsa
Page
7
$
$
$
$
$
$
$
,
,
,
,
,
,
,
33

Step Five (Student): Complete this step only if
you (the student) answered “Yes”
to any questions in Step Three.
94. How many people are in your household?
Include:
yourself (and your spouse),
your children, if you will provide more than half of their support port between July 1, 2010 and June 30, 2011, and
other people if they now live with you, you provide more than half of their support and you will continue to provide more than half of
their support between
July 1, 2010 and June 30, 2011.
95. How many people in your (and your spouse’s) household
will be college students between en July 1, 2010 and June 30, 2011?
Always count yourself as a college student. Include others only
if they will attend, at least half-time in
2010-2011, a program that leads to
a college degree or certificate. cate.
In 2008 or 2009, did you (or
your spouse) or anyone in your household (from question 94) receive benefits from any of the federal eral benefits programs
listed?
Mark all the programs
that apply. Answering these questions will not reduce your eligibility for student aid or for these other benefits. TANF may have a different
name in your state. Call 1-800-4-FED-AID -4-FED-AID to find out the name of the
state’s program.
96.
Supplemental
l
Security
Income
97.
Food
Stamps
98.
Free or
Reduced
Price Lunch
101. As of today, are you (or your spouse) a dislocated worker? See Notes page 9.
99.
Temporary Assistance
for Needy Families
(TANF)
Step Six (Student): Indicate which colleges es you want to receive your FAFSA FSA information.
102.c
102.e
102.g
2ND FEDERAL SCHOOL CODE
3RD FEDERAL SCHOOL CODE
4TH FEDERAL SCHOOL CODE
OR
OR
OR
ADDRESS
AND CITY
NAME OF
COLLEGE
ADDRESS
AND CITY
NAME OF
COLLEGE
ADDRESS
AND CITY
NAME OF
COLLEGE
ADDRESS
AND CITY
Step Seven (Student and Parent): Read, sign and date.
100.
Special Supplemental
ental
Nutrition Program
for
Women,
Infants
and
Children (WIC)
STATE
STATE
STATE
off campus
102.d
on campus
with parent
off campus
102.f
on campus
with parent
off campus
102.h
on campus
with parent
off campus
D
If you are the student, by signing ng this application you certify that you
Date this completed.
and/or state student financial ial aid only to pay the cost of attending an
higher
education, (2) are not in default on a federal student loaD
loan or have made arrangements to repay it, (3) onD
Dan
Df (1) institution will use federal 103.
atethisformwascompleted
of MONTH DAY
satisfactory
do not owe money back on a federal eral student grant or have
arrangements made satisfactory to repay it, (4) will notify your college if you default on a M M D D 2010 or 2011
federal student t loan and (5)
will not receive a Federal Pell Grant from more than one college
for the same period of time.
104. Student(Signbelow
below)
If you are the parent or the student, by signing this application
you agree, if asked, to
provide information that will verify the accuracy of your completed form. This information on
1
may include U.S. or state income tax forms that you filed or are
required to file. Also, you
certify that you understand
that
the Secretary of Education has the authority to verify
information reported on this application with the Internal Revenue Service and other
federal agencies. If you sign any document related to the federal eral student aid programs
Parent (A parent from Step Four sign below).
electronically using a Personal Identification Number (PIN), you
certify that you are the
person identified by the PIN
and have not disclosed that PIN to
anyone else. If you purposely
2
give false or misleading information, you may be fined up to $20,000, sent to prison, or both.
Yes
1
ormaaf
No
Don’t know
2
3
f.
Enter the six-digit federal school code and your housing plans. You can
find the school codes
at
www.fafsa.ed.gov or you can
call 1-800-4-FED-AID.
If you cannot get the code,
write in the complete name, address, dress, city and
state of the college. For state aid, you may wish to list your preferred college
first. To have more colleges
receive your FAFSA information,
read What is the FAFSA?
on
page 10.
HOUSING PLANS
1ST FEDERAL SCHOOL CODE
STATE
NAME OF
102.a
COLLEGE
102.b
on campus
OR
with parent
June
ne 2
29,
2009
09D
Draft
raft
Do n
not
ts
sub
ubmit
bmit.
mit.
ft1
1
2
3
1
2
3
1
2
3
1
2
3
If you or your family paid a fee
e for someone to
fill out this form or to advise you on how to fill
it out, that person must complete this part.
Preparer’s name, firm and address. dress.
105.
Preparer’s Social Security Number (or 106)
–
– –
106.
Employer ID
number (or 105)
107.
Preparer’s signature and date
COLLEGE USE ONLY
D/O
1
FAA Signature
1
Federal School Code
1
DATAA ENTRY
USE ONLY:
P
* L E
For Help — 1-800-433-3243
Page 8
34

Notes for question 50
(page 5)
Answer “Yes” (you are a veteran) if you (1) have engaged in
active duty
in the U.S. Armed Forces (Army, Navy, Air Force, Marines or
Coast Guard)
or are a National Guard or
Reserve enlistee who was called
to active duty
for other than state or training purposes, or were a cadet or midshipman
at one of the service academies, and (2) were released under a condition
other than dishonorable.
Also answer “Yes” if you are not a veteran now
but will be one by June 30, 2011.
Answer “No” (you are not a veteran) if you (1) have never engaged in
active duty in the U.S. Armed Forces, (2) are currently a ROTC student or
a cadet or midshipman at
a service academy, (3) are a National Guard
or Reserve enlistee activated ted only for state or training purposes, poses, or (4)
were engaged in active duty in the U.S. Armed Forces but released under
dishonorable conditions.
Also answer “No” if you are currently serving in the U.S. Armed Forces
and will continue to servee through June 30, 2011.
Notes for question 53
(page 5)
Answer “Yes” if you had no living parent (biological or adoptive) at any
time since you turned age
13, even if you are now adopted. d.
Answer “Yes” if you were in foster care at any time since you turned age
13, even if you are no longer in foster care as of today.
Answer “Yes” if you were a dependent or ward of the court
at any time
since you turned age 13, even if you are no longer a dependent d
or ward of
the court as of today.
Note that the financial aid
administrator at your school may require you
to provide proof that you
were in foster care or a dependent nt or 20
ward of
the court.
Notes for questions 54
and 55 (page 5)
Answer “Yes” if you can provide a copy of a court’s decision today you are an emancipated minor or are in legal guardianship. Also2
that as of
anship. Also
answer “Yes” if you can provide a copy of a court’s decision
that you were
an emancipated minor or
were in legal guardianship immediately ely before
you reached the age of fb
being an adult ltin your state. t
The court must tb
be
9t
located in your state of legal residence at the time
the court’s decision was
issued.
2rt’s
29must
Answer “No” if you are still a minor and the court decision is no longer
in effect or the court decision was not in effect at the time you became
an adult.
Note that the financial aid
administrator Junr at your
college lege may require
you to provide proof that
you were an emancipated ated
minor
or in legal
guardianship.
Notes for questions 56–58 58 (page 5)
Answer “Yes” if you received a determination at any time on or after
July 1, 2009, that you were e an unaccompanied youth who
was homeless or,
for question 58, at risk of being homeless.
“Homeless” means lacking fixed, regular and adequate
e housing,
which includes living in shelters, motels or cars, or temporarily living
with other people because you had nowhere else to go.
“Unaccompanied” means you are not living in the physical custody of
your parent or guardian.
an.
“Youth” means you are 21 years of age or younger or you are still
enrolled in high school ol as of the day you sign this application.
Answer “No” if you are not homeless, at risk of being homeless or if you
do not have a determination. tion. You should contact your financial aid office
for assistance if you do not have a determination but believe you are an
unaccompanied youth who is homeless or are an unaccompanied youth
providing for your own living expenses who is at risk of being homeless.
Note that the financial aid
administrator at your college may require you
to provide a copy of the determination if you answered “Yes” to any of
these questions.
Page 9
Notes
for Step Four, questions 59–93 – 93 (pages 6 and 7)
Additional instructions about who is considered a parent on this
form:
If your parent is widowed or single,
answer the questions
about that parent.
If your widowed parent is remarried
as of today, answer the
questions about that parent and your stepparent.
If your parents are divorced or separated, answer the
questions about the parent you lived with more during the
past 12 months. (If you did not live
with one parent more
than the other, give answers
about
the parent
who provided
more financial support during the past 12 months, or during
the most recent year that you actually ally received support
from a parent.) If this parent is remarried as of today, answer
the questions about that parent and your stepparent.
Notes
for questions 83 (page 6)
and 101 (page 8)
In
general, eral, a person may be
considered
a dislocated worker if he
or
she:
is
D
receiving unemployment ment benefits due to being laid
off
or losing a job and
is unlikely to
return to a previous
occupation;
has been laid off or received a lay-off notice from a job;
Dccupation;
was self-employed but is now unemployed due to
economic conditions or natural disaster; or
9
is
a displaced homemaker. A displaced homemaker is
generally b
a person who previously
provided unpaid
services to the family (e.g., a stay-at-home t-home mom or
dad), is no longer supported ported by the
husband or wife, is
unemployed or underemployed, and is having trouble
finding or upgrading employment.
ubmit.or natural
If a person quits work, generally erally he or she is not considered
a dislocated worker even if, for example,
the person is
receiving i
unemployment benefits.
is no longer supp
or under
ubnemployed
ubad),
29, 099DD
en
fiub uub
Answer
“Yes” to question 83 if your parent is a dislocated
worker. r. Answer “Yes” to question 101 if you or your spouse is a
dislocated worker.
Answer
“No” to question 83 if your parent is not a
dislocated worker. Answer “No” to question 101 if neither
you nor your spouse is a dislocated worker.
Answer
“Don’t know” to question 83 if you are not sure
whether er your parent is a dislocated worker. Answer “Don’t
know” to question 101 if you are not sure whether you
or your
spouse is a dislocated worker. You can contact
your financial aid office for assistance in
answering these
questions.
Note that the financial aid administrator
r at your school may
requiree you to provide proof that your parent is a dislocated
worker, r, if you answered “Yes” to question 83, or that you or
your spouse is a dislocated worker, if you
answered “Yes” to
question 101.
p
receivin
June ne e2
29,
9,
2009 9D
haD
Draft
aft
ft
dab
Do
uiren
becamnon
not ts
sub sub
bmit.
35

What is the FAFSA?
Why fill out a FAFSA?
The Free Application for Federal eral Student Aid (FAFSA) is the first step in the financial aid
process. You use the FAFSA to
apply for federal student aid, such
as grants, loans and
work-study. In addition, most
states and colleges use information
from the FAFSA to award
nonfederal aid.
Why all the questions?
The questions on the FAFSA are required to calculate your Expected Family Contribution
(EFC). The EFC measures your
family’s financial strength and determines your eligibility
for federal student aid. Your state and the colleges you list may also use some of your
responses. They will determine if you may be eligible for school or state aid, in addition to
federal aid.
How do I find out what my Expected Family Contribution (EFC) is?
Your EFC will be listed on your Student Aid Report
(SAR). Your SAR
summarizes the
information you submitted on
your FAFSA. It is important to review ew your SAR to make sure
all of your information is correct and complete. Make corrections or provide additional
information, as necessary.
How much aid do I get?
Using the information on your FAFSA and your EFC, the financial aid office at your college
will determine the amount of
aid you will receive. The colleges use your EFC to prepare a
financial aid package to help you meet your financial need. Financial need is the difference
between your EFC and your college’s cost of attendance (which can include living
expenses), as determined by the college. If you or your family have unusual circumstances
that should be taken into account, contact your college’s financial aid office. Some
examples of unusual circumstances are: unusual medical or dental expenses enses or a large
change in income from last year to this year.
When do I get the aid?
Any financial aid you are eligible to receive will be paid to you through your college.
Typically, your college will first use the aid to pay tuition, fees and
room
and board (if
provided by the college). Any
remaining aid is paid to you for your other educational
expenses. If you are eligible for a Federal Pell Grant, you
may receive 9,m it from
only one
college for the same period of
enrollment.
2
How can Ih have more colleges receive my FAFSA
Ai information?
If you are completing a paper
FAFSA, you can only list four colleges in the school code step.
You may add more colleges by doing one of the following:
2es 1.
Use the Federal Student Aid PIN you will receive after your FAFSA has been processed
and go to FAFSA on the Web
at
www.fafsa.ed.gov. . Select ect the “Add or Delete a School
Code” link.
2.
Use the Student Aid Report
(SAR), which you will receive after your FAFSA is processed.
Your Data Release Number
(DRN) verifies your identity and will be listed on the first page
of your SAR. You can call 1-800-4-FED-AID 0-4-FED-AID and provide DRN to a customer service
representative, who will add more school codes youD
for
you. u.Dyour
3.
Provide your DRN to the financial aid administrator at tth the llD
college you want added, and
he or she can add their school code to your FAFSA.
Note:
Your FAFSA record can
only list up to ten school codes. If there are ten school codes
on your record, any new school codes that you add will replace one or more of the school
codes listed.
Where can I get more information on student aid?
The best place for informationn about student financial aid is the financial aid office at the
college you plan to attend. The financial aid administrator can telll you about student aid
available from your state, the
college itself and other sources.
You can also visit our web sites www.FederalStudentAid.ed.gov d.gov or
www.studentaid.ed.gov.
For information by phone you can call our Federal Student Aid Information Center
at 1-800-4-FED-AID (1-800-433-3243). TTY users (for the hearing impaired) may call
1-800-730-8913.
You can also check with
your high school counselor, your state aid agency or your
local library’s reference section.
Information about other nonfederal assistance may be available from
foundations, religious
organizations, community organizations and civic groups, as well as
organizations related to
your field of interest, such as the American Medical or American Bar Association. Check with
your parents’ employers or unions to see if they award scholarships or have tuition payment
plans.
Page
10
Information on the Privacy Act and use of
your Social Security Number
We
use the information that you provide on this form to determine
if you are eligible to receive federal student financial aid and the
amount that you are eligible to receive.
Sections 483 and 484 of the
Higher Education Act of 1965, as amended, give us the authority to
ask
you and your parents these questions, and to collect the Social
Security Numbers of you and your parents. We use your Social
Security Number to verify your identity
and retrieve your records,
and we may request your Social Security Number again for those
purposes.
poses.
State te and institutional student financial
aid programs may also use
the
information that you provide on this
form to determine if you
are
eligible to receive state and institutional aid and the need that
you
have for such aid. Therefore, we will l disclose the information
thatt you provide on this form to each institution you list in questions
102a - 102h, state agencies in your state
of legal residence and the
state te agencies of the states in which the
colleges that you list in
questions 102a - 102h are
located.
If you are applying solely for federal aid,
you must answer all of the
following owing questions that apply to you: 1-9, 14-16, 18, 21-23, 26-28,
33-37, 37, 39-59, 61-68, 70, 73-85, 87-101, 103-104. If you do not answer
these questions, you will not receive federal aid.
Without your consent, we
may disclose
information that you
provide to entities under a published “routine use.” Under such a
routine use, we may disclose information on to third parties that we
have authorized to assist
us in administering the above programs;
9ha
9ro
9p
to
other federal agencies
under computer matching programs,
such b
as those with the Internal Revenuee Service, Social Security
Administration, Selective
Service System, Department of Homeland
Security, Department of Justice and Veterans erans Affairs; to your parents
or spouse; and to members ers of Congresss if you ask them to help you
with
student aid questions.
ubpouse;
uburity,
If the federal government, the U.S. Department of Education, or
an employee of the U.S. Department of Education is involved in
litigation, we may send information to the Department of Justice, or
a court or adjudicative body, if the disclosure is related to financial
aid
and certain conditions are met. In addition, we may send
your information to a foreign, federal, state, or local enforcement
agency if the information that you submitted indicates a violation
or potential violation of law, for which that agency has jurisdiction
for investigation or prosecution. Finally,
we may send information
regarding a claim that is determined to
be valid and overdue to a
consumer reporting agency. This information includes identifiers
from
the record; the amount, status and
history of the claim; and the
program under which the claim arose.
29, D
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State Certification
By submitting this application, you are giving your state financial
aid
agency permission to verify any statement on this form and to
obtain income tax information for all persons required to report
income on this form.
The
Paperwork Reduction Act of 1995
The
Paperwork Reduction Act of 1995 says that no one is required to
respond to a collection of information unless it displays a valid OMB
control number, which for this form is 1845-0001. The time required
to complete this form is estimated to be
one hour, including time to
review ew instructions, search data resources, es, gather the data needed,
and
complete and review the information on collection. If you have
comments about this estimate or suggestions for improving this
form, please write to:
U.S. Department of Education, Washington, DC 20202-4700.
We
may request additional information
from you to process
your application more efficiently. We will collect this additional
information only as needed and on a voluntary basis.
36

Professional Judgment in Today’s Economy

Professional Judgment
in Today’s Economy
“In our current economy, the need for financial aid is greater than ever. The Pell Grant program and other
federal financial aid programs are an economic lifeline for students at colleges and universities.”
U.S. Secretary of Education Arne Duncan
(July 21, 2009)
Students and their families recognize the long-term value of pursuing a postsecondary certificate or
degree, even during an economic downturn. As they cope with unemployment, loss of savings and
investments, foreclosure and even bankruptcy, students and families depend on the knowledge and
experience of financial aid administrators for help as they explore their options based on their own
unique set of circumstances.
Authority to Make Adjustments
HEA Section 479A.
Professional judgment is the discretionary action available to a financial aid administrator to address
special circumstances that affect a student’s ability to pay educational expenses. Exercising the
authority to make adjustments on a case-by-case basis using professional judgment helps aid
administrators ensure Title IV rules and processes address most students’ needs. Even if adjustments
do not create or increase eligibility for Federal Pell or other grant programs, students may benefit in
other ways, such as qualifying for the federal interest subsidy on need-based federal student loans or
for Federal Work-Study funding.
Some aid administrators are reluctant to make adjustments based on professional judgment
decisions that might change a student’s eligibility. The subjective nature of the process can create
uncertainty, and the action of reevaluating eligibility takes time away from other essential processing.
Some aid administrators have been concerned that too many adjustments might attract unwanted
attention from auditors or even result in a program review by the U.S. Department of Education.
During 2009, ED encouraged schools to make adjustments as necessary and indicated that an
increase in professional judgment processing is both acceptable and understandable. ED does
monitor the percentage of applications for which an exception is processed and uses the
determination to select schools for audit review. Due to the state of the U.S. economy and the
unemployment rate, however, ED announced that an adjustment would be made to the “risk-based
model” that triggers program reviews to reflect a more realistic percentage for both the 2008–2009
and 2009–2010 award years.
Trainer’s Tidbit
According to Dear Colleague Letter GEN-09-05, the U.S. Departments of Education and Labor
collaborated to establish an online resource for those who are recently unemployed, available at:
www.opportunity.gov.
1

Unusual Circumstances
HEA Section 479A.
The Higher Education Act of 1965, as amended,
outlines what may constitute unusual
circumstances, including the following
suggestions:
Tuition expenses at an elementary or
secondary school.
Medical, dental or nursing home expenses
not covered by insurance.
Unusually high child care or dependent care
costs.
Recent unemployment of a family member or
an independent student.
Student or family member who is a dislocated
worker (as defined in section 101 of the
Workforce Investment Act of 1998).
Parents enrolled at least half time in a degree,
certificate or other program leading to a
recognized educational credential at an
eligible institution.
Change in housing status that results in an
individual being homeless (as defined in
section 103 of the McKinney-Vento Homeless
Assistance Act).
Other changes in a family’s income, a family’s
assets or a student’s status.
These circumstances must be considered on a
case-by-case basis for conditions that
differentiate an individual student from a defined
group of students, rather than for conditions that
exist across a group.
Aid administrators must make reasonable
decisions that support the intent of the law.
Schools are accountable for their PJ adjustments
and for documenting each decision (2009-2010
Federal Student Aid Handbook, p. AVG-106). A
financial aid administrator’s decision is final and
cannot be appealed to ED.
The financial aid office may receive subsequent
requests for an adjustment made in a prior year. It
is acceptable to make the same adjustment for
multiple award years, as long as updated
documentation is submitted by the family to
ensure that the professional judgment still is
appropriate.
Trainer’s Tidbit
Before a financial aid administrator can
exercise PJ, the verification process must be
completed (if the student is selected by the
Central Processing System or the school) and
all conflicting information must be resolved.
Policies and Procedures
34 CFR 668.14.
Institutions must have written policies and
procedures outlining which types of
circumstances will be considered and how any
recalculation will be performed. Policies and
procedures should not be so restrictive as to
eliminate possible consideration of an
unanticipated special circumstance, nor be so
open that almost any situation qualifies. Schools
need to collect and retain applicable
documentation.
NOTES
2

New Guidance
Dear Colleague Letter GEN-09-04
In April 2009, ED published GEN-09-04, reminding financial aid administrators of their authority to
make adjustments addressing unique circumstances not already reflected in a student’s Free
Application for Federal Student Aid. Delegated Assistant Secretary for Postsecondary Education
Daniel T. Madzelan encouraged administrators to consider the special circumstances of students and
families during economically difficult times, saying:
“I encourage you to do more than provide good service to the students who request that you make
an adjustment. I would ask you to reach out to your students (and prospective students), particularly
those who seem to have hit a rough patch, to make sure that they know there may be ways that you
can help” (GEN-09-04, p. 1).
Schools are encouraged to consider making adjustments for changes in circumstances that result in
changes in income such as loss of a job or a reduction in work hours, or even a “student's decision to
leave the workforce or to reduce work hours in order to return to school” (GEN-09-04, p. 1).
Among other recommendations, ED suggests an alternate approach to making adjustments related
to loss of income. To better reflect the “current and near-term economic situation” students and
families are facing, the suggestion is to consider using projected income for the next 12 months
(GEN-09-04, p. 2).
NOTES
3

Example
Michael is an independent student enrolled full time in his first semester of a four-year radiology
program at your school. Before he enrolled, Michael was working full time as assistant manager at an
electronics store when he decided to switch to a career offering greater job security. Michael was
excited when a local hospital awarded him a semester-long internship for which he is being paid
$1,000 per month during his first semester (Aug. 1 - Dec. 1). He applied for financial aid last January,
quit his job on July 31 and enrolled full time in August. On Dec. 1, Michael contacts your office to talk
about whether he can afford to continue his studies as a full-time student for the spring term.
To help Michael achieve his goals, the financial aid office could reevaluate his eligibility using one of
several different approaches:
FAFSA filed
for 2010-2011
Adjustment requested
for 2010-2011
2009-2010 FAFSA 2010-2011 FAFSA 2011-2012 FAFSA
1 Prior Tax Year (2009)
2 Current Tax Year (2010)
3 Current Academic Year
4 Next 12 Months
Jan. 1, 2009 Jan. 1, 2010 Jan. 1, 2011 Jan. 1, 2012
Option 1: Continue to Use Income from the Prior Tax Year
Michael reported income last year of $32,000. You might choose not to adjust the income on his
FAFSA for his first year, knowing that he is likely to qualify for more need-based federal, state and
institutional aid next year when he reapplies for financial aid. To help him transition from working full
time to attending college full time, you might use professional judgment to award additional
institutional aid for his first year or for next semester once his internship funding has ended.
Option 2: Adjust Income Based on Current Tax Year
You could collect documentation of this year’s earnings to date and a signed statement from Michael
of his projected earnings through the end of the current tax year. If income from his full-time job
ended in July, his projected income for the current tax year might be two-thirds of last year’s income,
or approximately $18,667, plus his internship income of $4,000. Adjustments to his adjusted gross
income, income earned from work and taxes paid, are likely to result in a lower Expected Family
Contribution on which to base his revised award offer.
NOTES
4

Option 3: Adjust Income Based on Current
Academic Year
The majority of Michael’s income during the
current tax year will be from his full-time job,
which ended in July. You could collect a signed
statement from Michael, and any supporting
documentation you require, of his projected
earnings for the 12-month period from August
through the following July. Depending on his
enrollment and employment plans next spring
and summer, Michael’s projected income might
be only $4,000, which represents his earnings
from his paid internship. The larger adjustment to
his AGI, income earned from work and taxes paid,
is likely to result in an even lower EFC on which
to base his revised award offer.
Option 4: Adjust Income Based on Next 12
Months
Based on ED’s guidance in GEN-09-04, Michael’s
projected income could be determined for the
12-month period of time from the date the
significant loss of income occurred, Dec. 1. You
could collect a signed statement from Michael,
and any supporting documentation required,
regarding his projected earnings for the 12-
month period from Dec. 1 through the following
Nov. 30.
Depending on his future enrollment and
employment plans, Michael’s projected income is
unknown for the next 12 months without
additional documentation. Adjustments to his
AGI, income earned from work and taxes paid, is
likely to result in additional eligibility for needbased
federal, state and institutional aid, and you
could revise his award offer accordingly.
What other options may exist?
Dear Colleague Letter GEN-09-05
In May 2009, ED published GEN-09-05, providing
additional guidance to aid administrators on
documenting and making adjustments related to
unemployment. To increase awareness of the
range of opportunities available to them, each
state will provide recipients of unemployment
benefits with a letter encouraging them to
consider attending an institution of higher
education, for which financial aid may be
available. To ease the administrative burden on
unemployed individuals, aid administrators may
use this letter or other evidence of receipt of
unemployment benefits to document that the
recipient’s projected income earned from work is
zero. These letters are valid for this purpose for
up to 90 days from the date the agency issued
them, unless other employment has been found.
Schools can accept other documentation of
receipt of unemployment benefits.
For these circumstances only, unemployment
benefits also may be considered to be zero
because ED determined that unemployment
benefit amounts would not have a measurable
effect on the EFC of an independent student. ED
expanded the recommendations further to
indicate that, if other members of the student’s
family are receiving unemployment benefits,
schools should make appropriate adjustments
based on the entire family’s economic situation.
In this letter, ED again encourages aid
administrators to use their professional
judgment to assist the unemployed, reassuring
the financial aid community that the “risk-based
model” that triggers program reviews will be
adjusted accordingly for both 2008–2009 and
2009–2010.
5

Dislocated Workers
29 U.S.C. 2801.
As defined in the Workforce Investment Act,
dislocated workers are employees who have lost
their jobs or received notice of termination of
employment, especially those in an industry or
occupation to which they are unlikely or unable
to return. This may include self-employed
persons, such as farmers or fishermen, who
become unemployed due to natural disasters or
economic downturns. This definition also covers
“displaced homemakers” who were not working
outside the home, and were dependent on
another family member for support that has
ended, and are now unemployed or
underemployed.
Dislocated worker status is not dependent upon
receipt of unemployment benefits, and receipt of
unemployment benefits does not automatically
qualify an individual as a dislocated worker. For
example, employees who leave voluntarily might
qualify for unemployment benefits, but they are
not considered dislocated workers.
The effect on Title IV aid eligibility depends on
which family member meets the definition and
when the change occurred.
Status Changes Before Filing
the FAFSA
The College Cost Reduction and Access Act of
2007 adds “dislocated worker” status to the
qualifying criteria for the simplified needs or
auto-zero EFC calculation. The status is reported
as of the date the FAFSA is signed, and the
resulting EFC may be lower than if the standard
calculation were used, which may help the
student to qualify for additional financial
assistance.
The AGI reported on the FAFSA is from the base
(prior) year, which may no longer reflect the
resources currently available to the family.
Instead, schools could reevaluate Title IV aid
eligibility based on projected income and assets,
using professional judgment to modify the
appropriate FAFSA data elements relevant to the
family’s situation:
AGI.
Income earned from work.
Federal income taxes paid.
Cash, savings and checking.
Net worth of investments.
Net worth of businesses and/or
investment farms.
It is possible that an adjustment to the AGI based
on the family’s circumstances might enable the
student to qualify for one of the alternate EFC
calculations, which is likely to improve the
student’s eligibility for aid even further. Since this
also might make any potential adjustments to
assets unnecessary, it usually is helpful to
simulate the effect of various types of
adjustments before determining which types of
information and documentation to collect from
the student.
Status Changes After Filing the
FAFSA
Schools are encouraged to consider making
adjustments even after the FAFSA is signed and
processed. In the event that a wage-earner
becomes a dislocated worker after applying for
federal financial aid, the student’s eligibility still
may be reevaluated.
A student cannot update the dislocated worker
question on the FAFSA if the dislocated worker
status occurred after the FASFA was signed.
However, a financial aid administrator can adjust
the dislocated worker question on the FAFSA
based on a PJ request from the student, even if
the status changed after the FAFSA was signed. If
this adjustment, plus the change in income,
makes the family eligible for the simplified needs
test or auto-zero EFC, the CPS will use this
adjusted information to calculate the new EFC for
the family.
6

Trainer’s Tidbit
The 2009-2010 Federal Student Aid Handbook
Application and Verification Guide (p. AVG-35)
states that dislocated worker status is not a
required verification item. Schools choosing to
verify this answer on the FAFSA or require
documentation as part of a reevaluation of
eligibility using professional judgment might
collect:
Letter from the employer.
Notice of layoff or termination.
Verification from the unemployment
insurance system.
State workforce agency statements.
Federal income tax returns.
Newspaper articles.
A signed statement from the dislocated
worker.
Dependency Override
GEN-03-07.
Students who do not meet the criteria to be
classified as an independent student for financial
aid purposes may be declared independent by
professional judgment based on unusual
circumstances; however, schools may not
consider an independent student as dependent
under any circumstances.
ED has interpreted “unusual circumstances” to
mean conditions that make it inappropriate to
expect a parental contribution. An abusive family
environment or abandonment by parents may
be grounds for a dependency override.
Documentation must be submitted to support
such claims and may come from the student,
family members or others with knowledge of the
situation. Letters, court documents or school
records may be required for review when
considering a dependency override request.
GEN-03-07 identifies four conditions that,
individually or in combination with one another,
do not qualify as unusual circumstances for a
dependency override.
Parents’ refusal to contribute to the student’s
education.
Parents’ unwillingness to provide information
on the FAFSA or for verification.
Parents’ inability or decision not to claim the
student as a dependent for income-tax
purposes.
Student’s demonstration of total selfsufficiency.
The CCRAA allows financial aid administrators to
grant dependency overrides based on a
documented override at another institution for
the same award year.
Overrides do not carry over from one year to the
next. Students must reaffirm each year that the
unusual circumstances persist and schools must
determine whether an override still is justified.
7

Parental Refusal to
Provide Support
HEOA Section 472.
Amends HEA Section 479A.
To address the needs of students who do not
qualify for a dependency override, the Higher
Education Opportunity Act of 2008, gave aid
administrators new authority, on a case-by-case
basis, to provide unsubsidized Stafford loans to
students whose parents refuse to help them
apply for financial aid or provide any financial
support.
Support includes direct or indirect financial
assistance provided to the student. Direct
support includes cash or checks (other than gifts
for holidays) intended to help students pay bills,
maintain their cost of living or cover their
educational expenses. Indirect support includes,
but is not limited to:
Living or renting rooms in parents’ homes.
Providing coverage under parents’ medical or
auto insurance.
Making car payments or paying rent.
Before approving this exception, schools must
thoroughly document that the student’s
situation meets specific criteria. Generally, the
documentation requirement may be met by
obtaining a signed and dated notice from the
parent(s) stating that they:
Have ended their financial support, including
the date the support ended.
Will not provide financial support in the
future.
Will not complete the FAFSA.
If the parent(s) refuses to provide a statement,
schools must obtain documentation from a thirdparty
that describes the parental relationship
with the student.
The maximum unsubsidized Stafford loan that
may be awarded is based on grade level, cost of
attendance, estimated financial assistance and
limited to the following amounts:
8
Students approved for this exception do not
qualify for any additional unsubsidized Stafford
loan on the basis of a parent’s inability to obtain
approval to borrow a Federal PLUS loan. These
students will not qualify for any other aid that
requires an official EFC.
Reporting Professional
Judgment Decisions
Once the professional judgment is complete,
schools must remember to set the “professional
judgment” flag in their data system before
transmitting the record to the Central Processing
System. The CPS processes the adjustment, the
results are reflected on the Institutional Student
Information Record and a flag is added to the
comment section on the last page of the ISIR.
The following flags indicate the status of an EFC
adjustment resulting from a professional
judgment decision by an aid administrator.
ISIR
Value
Blank
Unsubsidized Federal Stafford
Loan Annual Limits
Grade Level
Adapted from the 2009-2010 ISIR Guide.
Total
Year 1 $5,500
Year 2 $6,500
Year 3 and beyond $7,500
Value Printed
on ISIR
Blank
1 Yes
2 Failed
Description
No EFC adjustment
processed.
EFC adjustment
processed.
EFC adjustment
attempted but failed.
“When a financial aid administrator uses
professional judgment to change a data item on
the ISIR, only the school that made the change
remains listed on the new ISIR transaction” (2009-
2010 ISIR Guide, p. 18).

Case Study
Rochelle Key, a current student at your school, and her parents, Marlon and Patricia, completed the
FAFSA for the 2009-2010 academic year. The CPS selected her application for verification and your
office corrected her FAFSA based on the following documents submitted by the family:
Dependent Verification Worksheet.
Rochelle’s federal tax return.
Marlon and Patricia's joint federal tax return.
In accordance with GEN-09-04, your office reaches out to all current and prospective students
encouraging them to contact the financial aid office if they are experiencing financial difficulties. In
response, Mr. Key requests consideration of the family’s circumstances due to lost wages, hoping
Rochelle may qualify for additional financial aid.
Is this a potential professional judgment? Why or why not?
Background Information
Professional Judgment Options
Option 1: Continue to Use Income from the Prior Tax Year.
Option 2: Adjust Income Based on Current Tax Year.
Option 3: Adjust Income Based on Current Academic Year.
Option 4: Adjust Income Based on Next 12 Months.
U.S. Tax Paid Proration Calculation
Previous U.S. Tax Paid
Previous AGI
x New AGI = New (prorated) U.S. Tax Paid
Case Study Instructions
Based on the documentation provided, only option 2 or 3 would result in an adjustment at this time.
Option 1 would not require any adjustments and option 4 would require additional documentation.
Use option 2 or 3 and review the provided documentation to complete the following worksheet.
9

Changes to Data Elements: Dependent Student
Option: ______
Component of AGI ISIR 01 ISIR 02
Father’s income $52,621 $52,621
Earnings from work $52,621 $52,621
PJ
Adjustment
Action
Parental Income Details
Business income $0 $0
Partnership income $0 $0
Mother’s income $44,250 $44,250
Earnings from work $44,250 $41,760
Business income $0 $2,490
Partnership income $0 $0
Interest income $380 $380
Severance pay N/A N/A
Unemployment
compensation
N/A
N/A
Component of AGI ISIR 01 ISIR 02
AGI $94,381 $97,251
PJ
Adjustment
Action
Parent(s)
U.S. tax paid $4,863 $9,906
Untaxed income and
benefits
$0 $0
Number in household 5 5
Number in college 3 2
Type of return filed 1040 1040
Eligible to file
1040A/1040EZ
Cash, savings and
checking
Net worth of
investments/business
Don’t know
No
$5,208 $5,208
$0 $0
EFC Result 9,862 9,516
10

Changes to Data Elements: Dependent Student
Option: ______
Component of AGI ISIR 01 ISIR 02
Father’s income $52,621 $52,621
Earnings from work $52,621 $52,621
PJ
Adjustment
Action
Parental Income Details
Business income $0 $0
Partnership income $0 $0
Mother’s income $44,250 $44,250
Earnings from work $44,250 $41,760
Business income $0 $2,490
Partnership income $0 $0
Interest income $380 $380
Severance pay N/A N/A
Unemployment
compensation
N/A
N/A
Component of AGI ISIR 01 ISIR 02
AGI $94,381 $97,251
PJ
Adjustment
Action
Parent(s)
U.S. tax paid $4,863 $9,906
Untaxed income and
benefits
$0 $0
Number in household 5 5
Number in college 3 2
Type of return filed 1040 1040
Eligible to file
1040A/1040EZ
Cash, savings and
checking
Net worth of
investments/business
Don’t know
No
$5,208 $5,208
$0 $0
EFC Result 9,862 9,516
11

Marlon B. Key
3447 Overhill Ave.
Wyandotte, OK 74370
May 15, 2009
RE: Rochelle Key
School ID: 111111
To whom it may concern:
At the time of filing my daughter’s 2009-2010 FAFSA I was employed full time. However, due to a
plant closure I was laid off on May 1, 2009.
From January through May 1, 2009, I received $17,540 in wages. I also received two weeks of
severance pay. I have enclosed a copy of my unemployment information and I expect to receive
unemployment benefits of $350 per week, for up to a maximum of 26 weeks.
Here is a breakdown of what I anticipate my income to be through the end of 2009:
Actual wages earned by me: $17,540.
Severance pay received: $2,023.88.
Unemployment expected: $9,100.
My wife's income also is changing for this year. As of Jan. 1, 2009, she left her job as a health care
manager to take a position as a sales manager with another company. As a result of this job change,
her income will decrease to $35,000 for the year. She also decided to close her side business selling
cosmetics to focus on this new job opportunity.
We greatly appreciate any consideration you might give regarding our unexpected change in
income. Please let me know if there is anything else you need from me to complete my daughter’s
file.
Marlon Key
13

ABC Company
Oklahoma City, OK 73105
April 1, 2009
Re: Severance Agreement
Dear Marlon Key:
Following up on our recent discussions, I would like to confirm the terms of a proposed severance
agreement. We have advised you that, unfortunately, we deem it necessary to terminate the
employment relationship. We would like to ensure an amicable parting and a smooth transition. To
that end, ABC Company is willing to provide you with the following:
(1) We will pay you two weeks' severance pay at your current base rate, payable on the date of
your separation, in one lump sum less the usual tax withholdings.
(2) We will continue your group medical benefits by paying your "COBRA” premiums for a period of
six months following your termination date. After that, you will have the right to continue the
benefits at your own expense for the remainder of the 18-month COBRA period.
(3) We will not oppose any claim for unemployment compensation benefits that you may file.
The effective date of your separation from the ABC Company will be May 1, 2009. You will be paid
through that date.
In exchange for these payments and promises, which exceed anything to which you would already
be entitled under ABC Company’s policies and benefit programs, you would agree to release and
hold ABC Company harmless from any claims you might have arising out of your employment with
the company and the termination of your employment.
In addition, you agree to keep this agreement strictly confidential, not disclosing its terms to any
other persons except your legal counsel, immediate family members, financial advisors, taxing
authorities, or as otherwise required by applicable law.
You may take up to 21 days to decide whether you wish to enter into this agreement. We
encourage you to consult an attorney regarding this agreement before signing it. If you sign the
agreement you will have up to seven days thereafter to revoke it. The agreement will not take
effect until this seven-day period has expired.
If you have any questions, let me know. If these terms are acceptable to you, please sign, date and
return the original copy to me. An extra copy is enclosed for your records.
We appreciate your past contributions on behalf of ABC Company, and we wish you all the best in
your future career endeavors.
Very truly yours,
Mark Q. Johnson
Vice President of Operations
ABC Company
Agreed: ____________________________________
Dated: _______________
14

EMPLOYMENT BENEFIT OFFICE
OKLAHOMA CITY, OK 73105
MARLON B KEY Mail Date: 05/12/2009
3447 OVERHILL AVE. SSN: BBB-BB-BBBB
WYANDOTTE OK 74370
Telephone Number
1-888-980-WORK
NOTICE OF UNEMPLOYMENT INSURANCE AWARD
1. Claim Beginning Date: 05/03/2009 2. Claim Ending Date: 05/01/2010
3. Maximum Benefit Amount: $9,100 4. Weekly Benefit Amount: $350
5. Total Wages: $52,621 6. Highest Quarter Earnings: $13,155.25
7. You must look for full-time work each week. Please see your handbook, A Guide to Benefits and
Employment Services, DE1275A, for more information about looking for work.
8. Employee Name 9. Employee Wages for the Quarter Ending: 10. Employer Name
Marlon B Key MAR. 2008 JUN. 2008 SEP. 2008 DEC. 2008 ABC Company
13,155.25 13,155.25 13,155.25 13,155.25
DE428/z/ Rev. 3 (2-07)
15

2009-2010 Institutional Student Information Record
OMB Number: 9999-9999
Student ID 999-99-9999 AAA-AA-AAAA KE XX 99 02 EFC 9999 9516 X
STEP ONE (THE STUDENT) (Q1 - Q32) Dependency Status DEPENDENT X
Name
XXXXXXXXXXXX XXXXXXXXXXXXXXXX
ROCHELLE A KEY
Address:
STEP TWO (STUDENT & SPOUSE) CONT.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 3447 OVERHILL AVENUE Military or Clergy Allowances 999990
XXXXXXXXXXXXXXXX WYANDOTTE XX OK 99999 74370 Veterans Noneducation Benefits 999990
Social Security Number 999-99-9999 AAA-AA-AAAA Other Untaxed Income 999990
Date of Birth
Permanent Home Phone #
MM/DD/CCYY 02/28/1987
999-999-9999
555-405-5298
Money Received/Paid on Your Behalf 999990
Driver's License # XXXXXXXXXXXXXXXXXXXXX T1234567 STEP THREE (STUDENT STATUS) (Q48 - Q60)
E-mail Address Born Before 01-01-1986?
MM-DD-CCYY? XXX NO
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
rochelle@theinternet.com
Citizenship Status XXXXXXXXXXXXXXXXXXXX U.S. CITIZEN Is Student Married? XXX NO
Alien Registration Number XXXXXXXXX Working on Master's/Doctorate Program? XXX NO
Marital Status XXXXXXXXX SINGLE On Active Duty in U.S. Armed Forces? XXX NO
Marital Status Date MM/DD/CCYY Veteran of U.S. Armed Forces? XXX NO
State of Legal Residence XX OK Have Children You Support? XXX NO
Legal Resident before 01-01-2004? MM-DD-CCYY? XXX YES Dependents Other Than Children/Spouse? XXX NO
Legal Residence Date MM/CCYY Orphan or Ward of the Court? XXX NO
Male or Female? XXXXXX FEMALE Are you an Emancipated Minor? XXX NO
Register for Selective Service? XXX NO Are you in Legal Guardianship? XXX NO
Drug Conv Affecting Elig? XXX NO Homeless Child or Youth? XXX NO
Father's Educational Level XXXXXXXXXXXXXX HIGH SCHOOL Determined by HUD Homeless? XXX NO
Mother's Educational Level XXXXXXXXXXXXXX HIGH SCHOOL At Risk for Homelessness? XXX NO
High School or Equivalent?
XXX YES
First Bachelor's Degree by 07-01-2009? MM-DD-CCYY? XXX NO STEP FOUR (PARENTS) (Q61 - Q95)
Grade Level in College XXXXXXXXXXXXXXXX JUNIOR Marital Status XXXXXXXXX MARRIED
Degree/Certificate XXXXXXXXXXXXXXXX 1ST BACHELORS Marital Status Date MM/DD/CCYY
08/27/1985
Enrollment Status XXXXXXXXXXXXXXXX FULL TIME Father's/Stepfather's SSN 999-99-9999
BBB-BB-BBBB
Interested in Work-Study/Loans? XXXXXXXXXX YES Father's Last Name XXXXXXXXXXXXXXXX KEY
Coursework to become a teacher? XXXXXXXXXX YES Father's First Initial XM
Father's Date of Birth
MM/DD/CCYY
11/13/1951
STEP TWO (STUDENT & SPOUSE) (Q33 - Q47) Mother's/Stepmother's SSN 999-99-9999
CCC-CC-CCCC
Tax Return Filed? ALREADY XXXXXXXXX FILED Mother's Last Name XXXXXXXXXXXX KEY
Type of CCYY 2008 Tax Return Used XXXXXXXXX 1040A/EZ Mother's First Initial XP
Eligible to File 1040A/1040EZ? XXXXXXXXXX YES Mother's Date of Birth MM/DD/CCYY
08/27/1954
Adjusted Gross Income 999999 7045 # E-mail Address
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
88keys@theinternet.com
U.S. Income Tax Paid 99999 159 # State of Legal Residence XX OK
Exemptions Claimed
Student's Income Earned From Work
990
999999 6500
Legal Residents before 01-01-2004?
MM-DD-CCYY? XXX YES
Legal Residence Date MM/DD/CCYY
Spouse's Income Earned From Work 9999990
Number of Family Members 995
Cash, Savings, and Checking 9999990
Number in College 992 #
Net Worth of Investments 9999990
Supplemental Security Income Benefits XXX NO
Net Worth of Business/Farm 9999990
Food Stamp Benefits XXX NO
Receiving Veteran's Benefits? XXX NO Free/Reduced Price Lunch Benefits XXX NO
Type of Veterans Benefits 9 TANF Benefits XXX NO
Student's Addl Financial Information 999990
WIC Benefits XXX NO
Education Credits 999990
Tax Return Filed? ALREADY XXXXXXXXX FILED
Child Support Paid 999990
Type of CCYY 2008 Tax Return Used XXXXXXXXX 1040
Taxable Earnings Need-Based Emply 999990
Eligible to File 1040A/1040EZ? XXXXXXXXXX NO #
Grant & Scholarship Aid Reported 999990
Parent a Dislocated Worker? XXXXXXXXXX NO
Special Combat Pay/Combat Pay 999990
Adjusted Gross Income 999999 97251 #
Student/Spouse Untaxed Income 999990
U.S. Income Tax Paid 99999 9906 #
Tax-Deferred Pension/Savings 999990
Exemptions Claimed 995
IRA Deductions and Payments 999990
Father's Income Earned From Work 99999 52621
Child Support Received 999990
Mother's Income Earned From Work 99999 44250
Tax Exempt Interest Income 999990
Cash, Savings, and Checking 999999 5208
Untaxed IRA Distributions 999990
Net Worth of Investments 9999990
Untaxed Portions of Pension 999990
Net Worth of Business/Farm 9999990
*=assumption h=highlight flag #=corrected this trans @=corrected previous trans
Page 2 of 6
16

2009-2010 Institutional Student Information Record
Student ID 999-99-9999 AAA-AA-AAAA KE 9902
EFC 9999 9516 X
Last Name
XXXXXXXXXXXXXXXX KEY
STEP FOUR (PARENTS) CONT.
STEP SIX (Q104)
Parents' Addl Financial Information 999990
School #1 999999 002451 Housing #1 XXXXXXXXXXX
ON CAMPUS
Education Credits 999990
School #2 999999 005486 Housing #2 XXXXXXXXXXX
ON CAMPUS
Child Support Paid 999990
School #3 999999 002717 Housing #3 XXXXXXXXXXX
ON CAMPUS
Taxable Earnings Need-Based Emply 999990
School #4 999999 005524 Housing #4 XXXXXXXXXXX
ON CAMPUS
Grant & Scholarship Aid Reported 999990
School #5 999999 Housing #5 XXXXXXXXXXX
Special Combat Pay/Combat Pay 999990
School #6 999999 Housing #6 XXXXXXXXXXX
Parents' Untaxed Income 999990
Tax-Deferred Pension/Savings 999990
STEP SEVEN (Q105-109)
IRA Deductions and Payments 999990
Date Application Completed MM/DD/CCYY
02/02/2009
Child Support Received 999990
Signed By XXXXXXXXXXXXXXXXXXXX
STUDENT AND PARENT
Tax Exempt Interest Income 999990
Preparer's SSN 999-99-9999
Untaxed IRA Distributions 999990
Preparer's EIN XXXXXXXX
Untaxed Portions of Pension 999990
Preparer's Signature XXXXXX
Military or Clergy Allowances 999990
Veterans Noneducation Benefits 999990
OFFICE INFORMATION
Other Untaxed Income 999990
Primary EFC Type 94
Secondary EFC Type 94
STEP FIVE (STUDENT HH) (Q96 - Q103) Processed Date MM/DD/CCYY
07/29/2009
Number Family Members 99 Transaction Data Source/Type:
Number in College 99 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Supplemental Security Income Benefits XXX Source of Correction XXXXXXXXX
Food Stamp Benefits XXX Federal School Code Indicator 999999
Free/Reduced Price Lunch Benefits XXX Reject Override Codes:
TANF Benefits XXX A: B: C: G: J: K: N: W:
WIC Benefits XXX 3: 4: 12: 20:
Student/Spouse a Dislocated Worker? XXX Assumption Override Codes:
1: 2: 3: 4: 5: 6:
17

U.S. Department
of Education
Federal Student Aid Programs
Dependent
FORM APPROVED
OMB NO. 1845-0041
Your application was selected for review in a process called
A. Student Information
What you should do
Key Rochelle A AAA-AA-AAAA
Last name First name M.I.
3447 Overhill Ave.
Address (include apt. no.)
Wyandotte OK 74370
City State ZIP Code
B. Family Information
Social Security Number
02/28/87
Date of birth
(555) 405-5298
Phone number (include area code)
parent(s)’ household
Full Name Age Relationship College
Missy Jones 18 Sister Central University
Rochelle Key 22
City University
Marlon Key 57 Father
Patricia Key 54 Mother Local Community College
Molly Key 18 Sister City University
Sierra Key 16 Sister
18

Dependent
1.
2.
Sources of Untaxed Income 2008 Amount Sources of Untaxed Income 2008 Amount
a. Child Support
b. Workman’s Compensation
c. Untaxed Pensions
3.
Sources
2008 Income
$
$
$
1.
2.
Sources of Untaxed Income 2008 Amount Sources of Untaxed Income 2008 Amount
a. Child Support
b. Workman’s Compensation
c. Untaxed Pensions
$
$
$
$
$
$
3.
Sources
2008 Income
$
$
$
d.
e.
f.
d.
e.
f.
$
$
$
$
$
$
Rochelle Key 3/1/09
Student Date
Patricia Key
3/1/09
Parent Date
Do not mail this worksheet to the Department of Education. Submit this worksheet to your
Financial Aid Administrator at your school. Don’t forget to sign your tax forms.
19

Department of the Treasury—Internal Revenue Service
1040 U.S. Individual Income Tax Return 2008 (99) IRS Use Only—Do not write or staple in this space.
For the year Jan. 1–Dec. 31, 2008, or other tax year beginning , 2008, ending , 20
OMB No. 1545-0074
Label
Your first name and initial
Last name
MARLON B
KEY BBB BB BBBB
Form
(See
instructions
on page 14.)
Use the IRS
label.
Otherwise,
please print
or type.
Presidential
L
A
B
E
L
H
E
R
E
If a joint return, spouse’s first name and initial
Last name
Home address (number and street). If you have a P.O. box, see page 14.
City, town or post office, state, and ZIP code. If you have a foreign address, see page 14.
Apt. no.
Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund (see page 14)
Filing Status
Check only
one box.
Exemptions
If more than four
dependents, see
page 17.
Income
Attach Form(s)
W-2 here. Also
attach Forms
W-2G and
1099-R if tax
was withheld.
If you did not
get a W-2,
see page 21.
Enclose, but do
not attach, any
payment. Also,
please use
Form 1040-V.
Adjusted
Gross
Income
Your social security number
Spouse’s social security number
1 Single
4 Head of household (with qualifying person). (See page 15.) If
2 Married filing jointly (even if only one had income)
the qualifying person is a child but not your dependent, enter
3 Married filing separately. Enter spouse’s SSN above
this child’s name here.
and full name here.
5 Qualifying widow(er) with dependent child (see page 16)
Boxes checked
6a Yourself. If someone can claim you as a dependent, do not check box 6a
on 6a and 6b
2
b
Spouse
No. of children
c Dependents:
(4) if qualifying
(2) Dependent’s
(3) Dependent’s
on 6c who:
3
child for child tax
social security number
relationship to
(1) First name Last name
you credit (see page 17)
d
Total number of exemptions claimed
7 Wages, salaries, tips, etc. Attach Form(s) W-2
7
8a Taxable interest. Attach Schedule B if required
8a
b Tax-exempt interest. Do not include on line 8a
8b
9a Ordinary dividends. Attach Schedule B if required
9a
b Qualified dividends (see page 21)
9b
10 Taxable refunds, credits, or offsets of state and local income taxes (see page 22) 10
11 Alimony received
11
12 Business income or (loss). Attach Schedule C or C-EZ
12
13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 13
14 Other gains or (losses). Attach Form 4797
14
15a IRA distributions 15a
b Taxable amount (see page 23) 15b
16a Pensions and annuities 16a
b Taxable amount (see page 24) 16b
17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17
18 Farm income or (loss). Attach Schedule F
18
19 Unemployment compensation
19
20a Social security benefits 20a b Taxable amount (see page 26) 20b
21 Other income. List type and amount (see page 28)
21
22 Add the amounts in the far right column for lines 7 through 21. This is your total income 22
23
PATRICIA M
3447 OVERHILL AVE.
WYANDOTTE OK 74370
Educator expenses (see page 28)
KEY
ROCHELLE KEY AAA AA AAAA DAUGHTER
MOLLY KEY
DDD DD DDDD DAUGHTER
SIERRA KEY
EEE EE EEEE DAUGHTER
24 Certain business expenses of reservists, performing artists, and
fee-basis government officials. Attach Form 2106 or 2106-EZ 24
25 Health savings account deduction. Attach Form 8889 25
26 Moving expenses. Attach Form 3903
26
27 One-half of self-employment tax. Attach Schedule SE 27
28 Self-employed SEP, SIMPLE, and qualified plans
28
29 Self-employed health insurance deduction (see page 29) 29
30 Penalty on early withdrawal of savings
30
31a Alimony paid b Recipient’s SSN
31a
32 IRA deduction (see page 30)
32
33 Student loan interest deduction (see page 33) 33
34 Tuition and fees deduction. Attach Form 8917
34
35 Domestic production activities deduction. Attach Form 8903 35
36 Add lines 23 through 31a and 32 through 35
37 Subtract line 36 from line 22. This is your adjusted gross income
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 88.
23
Cat. No. 11320B
CCC
Checking a box below will not
change your tax or refund.
36
37
You
CC CCCC
You must enter
your SSN(s) above.
Spouse
● lived with you
● did not live with
you due to divorce
or separation
(see page 18)
Dependents on 6c
not entered above
5
94381 00
Add numbers on
lines above
380 00
2490 00
97251 00
97251 00
Form 1040 (2008)
20

Form 1040 (2008)
Tax
and
Credits
Standard
Deduction
for—
● People who
checked any
box on line
39a, 39b, or
39c or who
can be
claimed as a
dependent,
see page 34.
● All others:
Single or
Married filing
separately,
$5,450
Married filing
jointly or
Qualifying
widow(er),
$10,900
Head of
household,
$8,000
Other
Taxes
Payments
If you have a
qualifying
child, attach
Schedule EIC.
Refund
Direct deposit?
See page 63
and fill in 73b,
73c, and 73d,
or Form 8888.
Amount
You Owe
Third Party
Designee
Sign
Here
Joint return?
See page 15.
Keep a copy
for your
records.
Paid
Preparer’s
Use Only
38 Amount from line 37 (adjusted gross income)
38
39a Check You were born before January 2, 1944, Blind. Total boxes
if: Spouse was born before January 2, 1944, Blind. checked 39a
b If your spouse itemizes on a separate return or you were a dual-status alien, see page 34 and check here 39b
c Check if standard deduction includes real estate taxes or disaster loss (see page 34) 39c
40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) 40
41 Subtract line 40 from line 38
41
42 If line 38 is over $119,975, or you provided housing to a Midwestern displaced individual, see
page 36. Otherwise, multiply $3,500 by the total number of exemptions claimed on line 6d 42
43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- 43
44 Tax (see page 36). Check if any tax is from: a Form(s) 8814 b Form 4972 44
45 Alternative minimum tax (see page 39). Attach Form 6251
45
46 Add lines 44 and 45
46
47 Foreign tax credit. Attach Form 1116 if required
47
48 Credit for child and dependent care expenses. Attach Form 2441 48
49 Credit for the elderly or the disabled. Attach Schedule R 49
50 Education credits. Attach Form 8863
50
51 Retirement savings contributions credit. Attach Form 8880 51
52 Child tax credit (see page 42). Attach Form 8901 if required 52
53 Credits from Form: a 8396 b 8839 c 5695 53
54 Other credits from Form: a 3800 b 8801 c
54
55
56
Add lines 47 through 54. These are your total credits
Subtract line 55 from line 46. If line 55 is more than line 46, enter -0-
55
56
57 Self-employment tax. Attach Schedule SE
57
58 Unreported social security and Medicare tax from Form: a 4137 b 8919
58
59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required 59
60 Additional taxes: a AEIC payments b Household employment taxes. Attach Schedule H 60
61 Add lines 56 through 60. This is your total tax
61
62 Federal income tax withheld from Forms W-2 and 1099 62
63 2008 estimated tax payments and amount applied from 2007 return 63
64a Earned income credit (EIC)
64a
b Nontaxable combat pay election 64b
65 Excess social security and tier 1 RRTA tax withheld (see page 61) 65
66 Additional child tax credit. Attach Form 8812
66
67 Amount paid with request for extension to file (see page 61) 67
68 Credits from Form: a 2439 b 4136 c 8801 d 8885 68
69 First-time homebuyer credit. Attach Form 5405
70 Recovery rebate credit (see worksheet on pages 62 and 63)
71 Add lines 62 through 70. These are your total payments
72
73a
b
d
If line 71 is more than line 61, subtract line 61 from line 71. This is the amount you overpaid
Amount of line 72 you want refunded to you. If Form 8888 is attached, check here
Routing number
c Type: Checking Savings
Account number
74 Amount of line 72 you want applied to your 2009 estimated tax 74
75 Amount you owe. Subtract line 71 from line 61. For details on how to pay, see page 65 75
76 Estimated tax penalty (see page 65)
76
Do you want to allow another person to discuss this return with the IRS (see page 66)? Yes. Complete the following.
Designee’s
name
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and
belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature
Date
Your occupation
Daytime phone number
Marlon Key 2/15/09 MANAGER ( 555 ) 405-5298
Spouse’s signature. If a joint return, both must sign. Date
Spouse’s occupation
Preparer’s
signature
Firm’s name (or
yours if self-employed),
address, and ZIP code
Phone
no. ( )
Date
69
70
4863 00
Check if
self-employed
EIN
Phone no.
71
72
73a
Personal identification
number (PIN)
Preparer’s SSN or PTIN
( )
Page 2
97251 00
10900 00
86351 00
17500 00
68851 00
9906 00
9906 00
9906 00
9906 00
4863 00
0 00
0 00
5043 00
No
Form 1040 (2008)
21

Putting It To Work
The topics covered in this training session are conveyed in general terms to encompass learners from
all types of postsecondary institutions. You should consider how the concepts covered in the training
session apply to your school.
Schools often are given flexibility in administering and applying guidelines to certain federal student
aid programs. That’s why it is essential that you discuss these items (shown below) with your
supervisor.
Your supervisor can give you institution-specific guidelines on how the material we discussed in this
training session can be applied to your job.
1. Does my school use professional judgment? If so, in what situations?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
2. Does my office have institutional policies and procedures for exercising professional judgment to
ensure consistent application?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
3. How does my school reach out to our students to address unusual financial and family
circumstances during challenging economic times?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
4. When questions arise from professional judgment, is there continuing conversation among staff
with the objective of serving all students equitably and compassionately?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
22

Trainer’s Toolkit
The Trainer’s Toolkit is a listing of terms, Web sites
and reference materials directly related to
Professional Judgment.
Terms, Acronyms and
Abbreviations
CCRAA
College Cost Reduction and Access Act 0f
2007.
The College Cost Reduction and Access Act (P.L.
110-84) provides numerous changes in federal
financial aid administration. The CCRAA was
signed into law on Sept. 27, 2007, with some
provisions retroactively applied to the 2007-2008
academic year; others were implemented Oct. 1,
2007, and the majority took effect either July 1,
2008, or July 1, 2009. Technical amendments to
the CCRAA were signed into law on Dec. 21, 2007
(P.L. 110-153).
Certification
The act of attesting that something is true or
meets a certain standard. For example, the school
completes its section of a FFELP application,
thereby certifying the borrower’s eligibility for
the guarantee.
CFR
Code of Federal Regulations.
The CFR is a collection of federal regulations
disseminated by the U.S. government. ED’s
regulations are codified in Volume 34 of the CFR.
Search the most recent CFR at
www.access.gpo.gov/nara/cfr/cfr-tablesearch.html#page1
or go to www.ifap.ed.gov and
click on “Code of Federal Regulations (GPO
Compilation)” under “Laws & Regulations.”
COA
Cost of Attendance.
The total estimated cost for a student to attend
school, including tuition and fees, room and
board, allowances for books and supplies,
transportation and personal and incidental
expenses.
DCL
Dear Colleague Letter.
ED distributes DCLs to schools, lenders, servicers
and guarantors to provide interpretive policy
guidance about federal student aid programs.
Typically, a DCL provides interim guidance after
Congress reauthorizes the Higher Education Act
or between releases of final regulations. Recent
and archived DCLs are available in the Letters
and Announcements section on the Information
for Financial Aid Professionals Web site at
www.ifap.ed.gov. Listed below are the types of
DCLs that ED publishes:
General Distribution (GEN).
Training Announcements (ANN).
Campus-based Programs (CB).
Pell Grant Program (P).
Financial Partners (FP).
23

Dislocated Worker
According to the FAFSA, in general, workers are
considered as dislocated if they meet one of the
following conditions:
They have lost their job.
They have been laid off or received a lay-off
notice from their job.
They are receiving unemployment benefits
due to being laid off or losing a job and are
unlikely to return to a previous occupation.
They are self-employed but are unemployed
due to economic conditions or natural
disaster.
They are receiving unemployment benefits;
however, they may not be considered a
dislocated worker if they have quit their job
and are receiving unemployment benefits.
They are a displaced homemaker. A displaced
homemaker generally is a person who
previously provided unpaid services to the
family (for example, a stay-at-home mom or
dad), is no longer supported by the husband
or wife, is unemployed or underemployed,
and is having trouble finding or upgrading
employment.
A person who quits work generally is not
considered a dislocated worker.
ECASLA
Ensuring Continued Access to Student Loans
Act of 2008.
The ECASLA (P.L. 110-227) provides numerous
changes in federal financial aid administration.
The ECASLA was signed into law on May 7, 2008,
to ensure that students and families would
continue to be able to borrow federal student
loans for the 2008-2009 academic year. The bill
was enacted less than one month after its
introduction. Subsequent revisions clarified some
of this bill’s provisions.
ED
U.S. Department of Education.
www.ed.gov.
ED was created in 1980 when several federal
agencies were combined. Its mission is to ensure
equal access to education and to promote
educational excellence throughout the nation.
ED’s purpose is to:
Establish policies on federal financial aid for
education.
Distribute and monitor federal student aid
funds.
Collect data on schools and disseminate that
research.
Focus national attention on key educational
issues.
Prohibit discrimination and ensure equal
access to education.
EFC
Expected Family Contribution.
The EFC figure is determined by Congressionallyapproved
Federal Methodology need-analysis
formulas. The EFC is an index that colleges use to
determine financial aid eligibility.
FAA
Financial Aid Administrator.
An FAA is a college or university employee who is
responsible for the administration of financial
aid.
FAFSA
Free Application for Federal Student Aid.
The FAFSA is ED’s official form used to apply for
aid from all federal student aid programs.
24

FAFSA4caster
www.FAFSA4caster.ed.gov.
FAFSA4caster is a tool created by ED to help
students and families prepare financially and
plan for college before the student’s senior year
in high school.
FAO
Financial Aid Office.
The FAO is the college or university office that is
responsible for determining students’ financial
need and awarding them financial aid.
Federal Pell Grant
Federal Pell Grants are the foundation of financial
aid awards for students who demonstrate
financial need. Because it is the foundation of
financial aid award packages, Pell Grant funds
always must be awarded to students who are
eligible. Students’ eligibility is based on the
Expected Family Contribution as calculated from
information provided on the FAFSA.
Federal Stafford Loans
Federal Stafford loans are available to
undergraduate and graduate students enrolled
at least half time. Students may borrow up to
established annual loan limits, based upon their
grade level. Stafford loans may be subsidized
(need-based) or unsubsidized (non-need-based).
Recipients have a six-month grace period upon
ceasing to be enrolled at least half time.
FFELP
Federal Family Education Loan Program.
Loan programs authorized by Title IV, Part B of
the Higher Education Act of 1965, as amended,
that includes Federal Stafford loans, Federal
Unsubsidized Stafford loans, Federal PLUS loans
and Federal Consolidation loans. These loan
programs are funded by lenders, guaranteed by
guarantors and reinsured by the federal
government. These programs are defined
individually in 34 CFR 682.
HEA
Higher Education Act of 1965, as amended.
The HEA is the law that authorizes most federal
programs and activities that assist and enable
students to enter and succeed in postsecondary
education. The primary focus of the HEA is
student aid, in the form of grants, loans and workstudy
assistance.
HEOA
Higher Education Opportunity Act of 2008.
The HEOA (P.L. 110-315) reauthorized the Higher
Education Act of 1965, as amended. The HEOA
was signed into law on Aug. 14, 2008, with some
provisions retroactively applied to the 2008-2009
academic year; others are to be implemented at
later dates.
Independent Student
A student who meets one or more of the criteria
listed on the FAFSA that classify a student as
independent for Title IV purposes. Students also
may be classified as independent if a financial aid
administrator determines and documents that
the student is independent based on the
financial aid administrator’s professional
judgment of the student’s unusual
circumstances.
ISIR
Institutional Student Information Record.
The ISIR is an electronic record provided to the
school by ED’s Central Processing System. The ISIR
includes information provided by students on
the FAFSA. The ISIR also contains students’
Expected Family Contribution and the results of
federal database matches (including citizenship,
names, dates of birth and Social Security number
matches).
25

PJ
Professional Judgment.
PJ is the delegation of authority from the federal
government to a financial aid administrator to
make changes on a case-by-case basis when
extenuating circumstances exist.
SAR
Student Aid Report.
The SAR is the report sent to students that
summarizes the information included in the
FAFSA. The SAR also indicates the amount of Pell
Grant eligibility, if any, and the Expected Family
Contribution, as well as any eligibility issues. The
SAR is the student’s version of the ISIR.
Title IV Aid
Federal student financial aid programs
administered by ED that include Pell Grants,
Academic Competitiveness Grants, National
SMART Grants, Federal Supplemental Educational
Opportunity Grants, TEACH Grants, Federal Work-
Study Program, Federal Perkins loans, subsidized
FFEL/Direct Stafford loans, unsubsidized
FFEL/Direct Stafford loans, FFEL/Direct PLUS
loans for parents and FFEL/Direct PLUS loans for
graduate or professional students.
Verification
The process a school follows to check the
accuracy of the information reported by the
student on the FAFSA. The information reported
is compared against documents, such as signed
federal tax forms and signed Verification
Worksheets, which the student provides to the
school.
26

References, Resources and Web Sites
Federal Legislation and Regulations
Higher Education Opportunity Act of 2008.
P.L. 110-315 Section 472.
Aug. 14, 2008.
Discretion of Student Financial Aid Administrators.
www.ed.gov/policy/highered/leg/hea08/index.html.
College Cost Reduction and Access Act of 2007.
P.L. 110-84 Section 603.
Sept. 27, 2007.
Discretion of Student Financial Aid Administrators.
www.govtrack.us.
Higher Education Act of 1965, as amended.
P.L. 89-329 Section 479A.
Discretion of Student Financial Aid Administrators.
http://republicans.edlabor.house.gov/archive/publications/compindex.htm.
Electronic Code of Federal Regulations.
http://ecfr.gpoaccess.gov/.
U.S. Department of Education
Dear Colleague Letter GEN-09-05.
Subject: Update on Professional Judgment by Financial Aid Administrators.
May 9, 2009.
www.ifap.ed.gov.
Dear Colleague Letter GEN-09-04.
Subject: Use of “Professional Judgmgent” by Financial Aid Administrators.
April 2, 2009.
www.ifap.ed.gov.
Dear Colleague Letter GEN-08-12.
Higher Education Opportunity Act.
Dec. 31, 2008.
www.ifap.ed.gov.
Dear Colleague Letter GEN-03-07.
Subject: Dependency Overrides.
May 2, 2003.
www.ifap.ed.gov.
2009-2010 Federal Student Aid Handbook.
Application and Verification Guide.
Chapter 2: Filling Out the FAFSA.
Chapter 5: Corrections, Updates and Adjustments.
www.ifap.ed.gov.
27

FSA Assessments.
Verification Activity 5: Dependency Overrides & Professional Judgment.
www.ifap.ed.gov/qahome/fsaassessment.html.
Press Release.
Education Secretary Arne Duncan Issues Statement on Report That Profiles Successful Pell Grant
Recipients.
July 21, 2009.
www.ed.gov/news/pressreleases/2009/07/07212009.html.
USA Funds
USA Funds University Online Course.
Professional Judgment.
Course 204.
www.usafunds.org.
NASFAA
Monograph 22: Professional Judgment in Eligibility Determination and Need Analysis.
May 2009.
www.nasfaa.org/PDFs/2007/Monograph22.pdf.
NASFAA Web Encyclopedia.
Version 2.8, Section: Professional Judgment, 1.26.
28

Appendices
Appendix A
Dear Colleague Letter GEN-09-04
Appendix B
Dear Colleague Letter GEN-09-05
Appendix C
Criteria for Simplified Needs Formulas and Automatic-Zero EFC
Calculation 2009-2010
Appendix D
Case Study Answer
29

Appendix A
Dear Colleague Letter GEN-09-04
Publication Date: April 2, 2009
DCL ID: GEN-09-04
Subject: Use of "Professional Judgment" by Financial Aid Administrators
Summary: This letter reminds financial aid administrators of their ability to
exercise adequately documented professional judgment when determining the
eligibility of students for federal student aid. It encourages aid administrators to
consider special circumstances of students and families during these
challenging economic times.
Dear Colleague:
I am writing to remind you of the authority you, as a financial aid administrator,
have under the law (section 479A of the Higher Education Act) to make
adjustments, on the basis of adequate documentation, and on a case-by-case
basis, to address circumstances not reflected in a student’s original Free
Application for Federal Student Aid (FAFSA). This authority is particularly
important for families who may be struggling during these difficult economic
times. When families experience a layoff, face a costly medical situation, or
lose a house to foreclosure, they are likely to feel vulnerable and unsupported.
Simply stated, most do not know about their right to request that you adjust
one or more of the components that determine their eligibility for financial aid.
It is for this reason that I encourage you to do more than provide good service
to the students who request that you make an adjustment. I would ask you to
reach out to your students (and prospective students), particularly those who
seem to have hit a rough patch, to make sure that they know there may be
ways that you can help.
Your thoughtful use of professional judgment, especially to address a
student’s financial and family circumstances that may have changed from the
base year information originally reported on the student’s FAFSA, may be
critical in determining whether the student can enter or continue in
postsecondary education. A changed circumstance certainly includes the loss
of a job or a reduction in work hours or wages, but it also includes, for
example, the income loss associated with a prospective student’s decision to
leave the workforce or to reduce work hours in order to return to school.
When you make adjustments related to the student’s or the student’s family’s
30

income, it is appropriate to use information that realistically reflects the
individual’s and/or family’s current and near-term economic situation. For
example, for an individual who has lost a job or has taken a significant salary
cut beginning in November of 2008, you may choose to project income for the
next 12-month period (December 2008 through November 2009) and use that
figure instead of the base year income (calendar 2008) that was initially used
in the calculation of the student’s expected family contribution (EFC). Of
course, you should seek to obtain, and maintain verifiable third-party
documentation of the changed circumstances in order to support your decision
to use professional judgment. By way of example, if an individual has lost a
job, and you choose to project income for the next 12-month period, you
should seek to obtain adequate documentation of the individual’s loss of
employment.
While we encourage you to exercise professional judgment where appropriate,
you should be mindful of the statutory limitations. Professional judgment must
only be used to address special circumstances, which are conditions that
differentiate an individual student from a class of students. While students may
face common or similar issues in these economic times, you may not establish
automatic categories of special circumstances and provide identical treatment
to all students in that circumstance. You could, however, identify a category to
reach out to (for example, all students that had a parent that had recently lost
a job) but then would need to assess and document how each individual
student’s situation was affected. (It would not be permissible to assume that
every student in that category was affected in the same way.) You should refer
to the complete information on pages 99-100 of the Application and
Verification Guide of the Department’s 2008-09 Federal Student Aid Handbook
for further guidance on the use of professional judgment.
While not every student will become eligible for a Federal Pell Grant as a
result of an adjustment based on your exercising professional judgment, many
may become eligible for a subsidized Federal Stafford Loan or for assistance
from one of the three campus-based programs. And, of course, most students
are eligible for Federal Unsubsidized Stafford Loans from either the Federal
Direct Loan Program or from the Federal Family Education Loan Program.
These federal student loans have much better interest rates, repayment
options, and other terms than those that are available with private educational
loans, credit cards, or most any other method of credit-based financing.
Most non-federal loans have high, variable interest rates, loan fees well above
those for the federal student loan programs, limited repayment options, and
almost none of the features and protections provided in the federal programs,
including payment deferment, forbearance, and cancellation.
31

For more information about the advantages of federal student loans over
private, non-federal loans, I encourage you to share with your students the
information found at:
http://www.federalstudentaid.ed.gov/federalaidfirst/index.html.
If you have questions regarding the information provided in this letter, please
contact Carney McCullough by phone to (202) 502-7639 or by mail to
carney.mccullough@ed.gov.
Within the next few weeks we will establish a "Frequently Asked Questions"
page on our Information for Financial Aid Professionals (IFAP) website at
www.ifap.ed.gov. An announcement of this new page will be posted to IFAP
as soon as the page becomes live.
On behalf of Secretary of Education Arne Duncan, I thank you in advance for
your cooperation as together we provide opportunities to ensure that all
Americans have the opportunity to participate in our country’s outstanding
postsecondary education system.
Sincerely,
Daniel T. Madzelan
Delegated the Authority to Perform
the Functions and Duties of the
Assistant Secretary for
Postsecondary Education
32

Appendix B
Dear Colleague Letter GEN-09-05
33

Appendix C
Criteria for 2009-2010 Simplified Needs Formulas and Automatic-Zero
EFC Calculation
Dependent Student
Simplified
(assets not considered)
Parents had a 2008 AGI of $49,999 or
less (for tax filers), or if non-filers,
income earned from work in 2008 is
$49,999 or less; and
Either
o Parents filed or are eligible to file a
2008 IRS Form 1040A or 1040EZ (or
not required to file any income tax
return), or
Automatic Zero EFC
Parents had a 2008 AGI of $30,000 or
less (for tax filers), or if non-filers,
income earned from work in 2008 is
$30,000 or less; and
Either
o Parents filed or are eligible to file a
2008 IRS Form 1040A or 1040EZ (or
not required to file any income tax
return), or
o
Anyone in the parents’ household
size (as defined on the FAFSA)
received means-tested federal
benefits during 2007 or 2008, or
o
Anyone in the parents’ household
size (as defined on the FAFSA)
received means-tested federal
benefits during 2007 or 2008, or
o Parent is a dislocated worker.
Student (and spouse, if any) had a 2008
AGI of $49,999 or less (for tax filers), or if
non-filers, income earned from work in
2008 is $49,999 or less; and
o
Parent is a dislocated worker.
Independent Student
Without Dependents
(other than a spouse)
Independent Student
With Dependents
(other than a spouse)
Either
o Student (and spouse, if any) filed or
are eligible to file a 2008 IRS Form
1040A or 1040EZ (or not required to
file any income tax return), or
o
Anyone in the student’s household
size (as defined on the FAFSA)
received means-tested federal
benefits during 2007 or 2008, or
o Student (or spouse, if any) is a
dislocated worker.
Student (and spouse, if any) had a 2008
AGI of $49,999 or less (for tax filers), or if
non-filers, income earned from work in
2008 is $49,999 or less; and
Either
o Student (and spouse, if any) filed or
are eligible to file a 2008 IRS Form
1040A or 1040EZ (or not required to
file any income tax return), or
o
Anyone in the student’s household
size (as defined on the FAFSA)
received means-tested federal
benefits during 2007 or 2008, or
Not applicable.
Student (and spouse, if any) had a 2008
AGI of $30,000 or less (for tax filers), or
if non-filers, income earned from work
in 2008 is $49,999 or less; and
Either
o Student (and spouse, if any) filed or
are eligible to file a 2008 IRS Form
1040A or 1040EZ (or not required
to file any income tax return), or
o
Anyone in the student’s household
size (as defined on the FAFSA)
received means-tested federal
benefits during 2007 or 2008, or
o
Student (or spouse, if any) is a
dislocated worker.
o
Student (or spouse, if any) is a
dislocated worker.
35

Appendix D
Case Study Answer
Rochelle Key, a current student at your school, and her parents, Marlon and Patricia, completed the
FAFSA for the 2009-2010 academic year. The CPS selected her application for verification and your
office corrected her FAFSA based on the following documents submitted by the family:
Dependent Verification Worksheet.
Rochelle’s federal tax return.
Marlon and Patricia's joint federal tax return.
In accordance with GEN-09-04, your office reaches out to all current and prospective students
encouraging them to contact the financial aid office if they are experiencing financial difficulties. In
response, Mr. Key requests consideration of the family’s circumstances due to lost wages, hoping
Rochelle may qualify for additional financial aid.
Is this a potential professional judgment? Why or why not?
Yes, if your school’s policy and procedures allow this type of adjustment.
37

Option 1: Continue to Use Income from the Prior Tax Year.
You might choose not to adjust the income on Rochelle's FAFSA this year, knowing that she is likely to
qualify for more need-based federal, state and institutional aid next year when she reapplies for
financial aid. To help her this year, you might award additional institutional aid.
Option 2: Adjust Income Based on Current Tax Year.
You could choose to convert prior year income to current tax year income.
Father’s earnings from work $17,540
Mother’s earnings from work 35,000
Mother’s business income 0
Interest income 380
Severance pay 2,024
Unemployment compensation + 9,100
Total adjusted AGI 64,044
Previous U.S. Tax Paid
Previous AGI
x New AGI = New (prorated) U.S. Tax Paid
9,906
97,251
x 64,044 = 6,524
Changes to Data Elements: Dependent Student
Option: 2
Component of AGI ISIR 01 ISIR 02
PJ
Adjustment
Action
Parental Income Details
Father’s income $52,621 $52,621 $17,540
Earnings from work $52,621 $52,621 $17,540 Wages from Jan. 1 to Apr. 30.
Business income $0 $0 N/A
Partnership income $0 $0 N/A
Mother’s income $44,250 $44,250 $35,000
Earnings from work $44,250 $41,760 $35,000 Current tax year wages.
Business income $0 $2,490 $0
Partnership income $0 $0 N/A
Interest income $380 $380 $380
Business closed on
Dec. 31, 2008.
Assume same interest
earnings.
Severance pay N/A N/A $2,024 Received during May 2009.
Unemployment
compensation
N/A N/A $9,100
Maximum benefit (26 weeks)
during 2009.
38

Component of AGI ISIR 01 ISIR 02
PJ
Adjustment
Action
Parent(s)
AGI $94,381 $97,251 $64,044
Estimated AGI
(see income details).
U.S. tax paid $4,863 $9,906 $6,524 $9,906 / 97,251 x 64,044
Untaxed income and
benefits
$0 $0 $0
Number in household 5 5 5
Number in college 3 2 2
Type of return filed 1040 1040 1040
Eligible to file
1040A/1040EZ
Cash, savings and
checking
Net worth of
investments/business
Don’t know No Yes
$5,208 $5,208 $5,208
$0 $0 $0
No business income;
did not itemize.
EFC Result 9,862 9,516 3,857
Option 3: Adjust Income Based on Current Academic Year.
As indicated in GEN-09-05, for other members of the student’s family who are unemployed, you should
examine the totality of the family's economic situation and make appropriate adjustments, such as
zeroing out the unemployed individual’s income and unemployment benefits. As a result, you could
choose to convert prior year income to current tax year income less Mr. Key’s wages, severance pay and
unemployment benefits. You could choose to use only Mrs. Key’s wages of $35,000.
Father’s earnings from work $0
Mother’s earnings from work 35,000
Mother’s business income 0
Interest income 380
Severance pay 0
Unemployment compensation + 0
Total adjusted AGI 35,380
Previous U.S. Tax Paid
Previous AGI
x New AGI = New (prorated) U.S. Tax Paid
9,906
97,251
x 35,380 = 3,604
39

Changes to Data Elements: Dependent Student
Option: 3
Component of AGI ISIR 01 ISIR 02
PJ
Adjustment
Action
Parental Income Details
Father’s income $52,621 $52,621 $0
Earnings from work $52,621 $52,621 $0 Exception for unemployed.
Business income $0 $0 N/A
Partnership income $0 $0 N/A
Mother’s income $44,250 $44,250 $35,000
Earnings from work $44,250 $41,760 $35,000 Current tax year wages.
Business income $0 $2,490 $0
Partnership income $0 $0 N/A
Interest income $380 $380 $380
Business closed on
Dec. 31, 2008.
Assume same interest
earnings.
Severance pay N/A N/A $0 Exception for unemployed.
Unemployment
compensation
N/A N/A $0 Exception for unemployed.
Component of AGI ISIR 01 ISIR 02
PJ
Adjustment
Action
Parent(s)
AGI $94,381 $97,251 $35,380
Estimated AGI
(see income details).
U.S. tax paid $4,863 $9,906 $3,604 $9,906 / 97,251 x 35,380.
Untaxed income and
benefits
$0 $0 $0
Number in household 5 5 5
Number in college 3 2 2
Type of return filed 1040 1040 1040
Eligible to file
1040A/1040EZ
Cash, savings and
checking
Net worth of
investments/business
Don’t know No Yes
$5,208 $5,208 $5,208
$0 $0 $0
No business income;
did not itemize.
EFC Result 9,862 9,516 1,434
40

Option 4: Adjust Income Based on Next 12 Months.
Mr. Key’s change in employment status results in a significant change to the family’s income. You could
use ED’s suggestion to convert prior year income to projected income for the 12-month period of time
from the date the significant loss of income occurred, May 1, 2009.
Income Consideration
Include in
AGI
Exclude
from AGI
Rationale
Father’s earnings from work Earned before May 1, 2009.
Mother’s earnings from work
Prorate for May 1, 2009 through Dec 31, 2009.
Need to collect documentation regarding
Mrs. Key’s estimated income from
Jan. 1, 2010 through Apr. 30, 2010.
Mother’s business income Closed as of Dec. 31, 2008.
Severance pay
Unemployment
compensation
Received on or after May 1, 2009, but can
exclude based on ED guidance.
Received on or after May 1, 2009, but can
exclude based on ED guidance.
Additional Considerations
In cases where there is significant loss of income, it might be appropriate to reduce or eliminate any
reported assets as well. In this case, the parental Education Savings and Asset Protection Allowance
based on Mr. Key’s age (58) is $68,300, which exceeds the reported assets of $5,208. Adjusting or
eliminating the reported assets will have no effect on this family’s EFC.
When reviewing Rochelle’s paperwork, you find that her sister Molly also attends your institution.
Based on your instituational policies, what additional steps would you take with regard to processing
a professional judgment for Molly?
Other options and appropriate documentation requirements may exist.
41

USA Funds ® Update

Financial Literacy
USA Funds Update
As part of their education, it’s important for students to develop basic life management skills to
enable them to complete their programs of study in a timely manner and graduate with a minimum
amount of debt. USA Funds Life Skills® is a Web-based financial literacy program that equips
postsecondary education institutions to teach their students to manage their time and money wisely
during school and after graduation.
Complex information is organized into a simple, interactive format that helps students understand
and learn basic strategies for managing their finances, graduating on time, minimizing their
education debt and taking full responsibility of their education loans. The curriculum addresses
personal finance topics and debt management challenges that students face once they leave school
— income potential, cost of living, credit and budgets. Because students who fully understand how to
manage their debt and learn the appropriate use of credit are less likely to default on their student
loans, USA Funds Life Skills also supports schools’ efforts to lower education loan default rates.
Topics are presented as life lessons, which can be grouped into customized learning paths. Each life
lesson can be completed in approximately 30 minutes and includes online, printable, professional
resources, interactive exercises, real-life scenarios and a glossary of financial and student loan terms
often unfamiliar to students. Students also are asked to complete a pre- and post-test to measure
their understanding of the material.
Schools can choose to target learning paths to different student groups — undergraduate, adult
learner or graduate and professional students, or to other segments. Other segments such as
students on academic probation, freshmen attending orientation, students graduating or leaving
school, student-athletes or at-risk populations could complete separate learning paths. The
curriculum can be incorporated into either an entirely online or face-to-face delivery, or a blended
approach that uses a combination of both formats. The online delivery also reduces staff resources
required to facilitate the program and allows schools to track status and completion information
online and through downloadable reports.
Sample topics of life lessons include:
Financial Aid and Paying for College
Paying for Higher Education.
Applying for Financial Aid.
Repaying Student Loans.
School and Personal Life Management
Achieving Goals.
Selecting a Program of Study.
Managing School Life.
1

Managing a Personal Life.
Living on a Budget.
Estimating Take-Home Pay.
Credit Management
Managing Credit Card Debt.
Credit Reports, Credit Scores and Credit
Ratings.
Identity Theft.
Graduating Students
Establishing Career Goals.
Expected Income.
Finding a Job.
Preparing for an Interview.
Living on a Budget.
Graduate and Professional Students
Pursuing a Graduate Education.
Cost of a Graduate Education.
Paying for a Graduate Degree.
Managing Debt While Pursuing a Graduate
Degree.
Budgeting While Pursuing a Graduate
Degree.
Surviving During a Medical Residency.
Couples in School
Having a Life with Little Money.
Coping With School and a Relationship.
Managing Money While in School.
Loan Counseling
Entrance and exit counseling help students gain
the fundamentals they need to understand and
manage their student loan debt as they begin
their postsecondary education and select the
repayment plan best suited to their needs as they
prepare to leave school. USA Funds Loan
Counselor® is a suite of custom loan counseling
products designed to help schools fulfill all
federal entrance and exit counseling
requirements and simplify Stafford and Grad
PLUS counseling with one online tool.
Designed with insight from students and
financial aid administrators, USA Funds Loan
Counselor makes information easy for students
to learn, understand and recall, and simple for
administrators to customize to existing office
procedures. Topics are addressed through “big
idea” statements that introduce additional
detailed information. Simplified information
makes it easier for students to grasp the main
ideas, understand key concepts and remember
content. Students are engaged with interactive
tools, like a budgeting calculator and videos that
feature advice and student testimonials.
Metaphorical imagery helps explain topics. For
example, piles of laundry help demonstrate how
unsubsidized interest adds up if not paid while in
school. An interactive budgeting calculator helps
borrowers estimate how much they spend each
month and determine places where spending
can be reduced if necessary.
Multiple choice and true-or-false questions help
students learn and retain information as they
progress through each session, which typically
can be completed in 45 minutes or less. Each
concept is tested and reinforced, helping to
ensure that students understand each topic
NOTES
2

efore moving on. Students have the option to
stop, save and go back to complete the
counseling session later if time is an issue.
USA Funds Loan Counselor is accessible directly
from schools’ Web sites. It can supplement your
current loan counseling process, replace your
existing process or be used in special situations
when a student is unable to complete in-person
counseling. Schools also can customize the tools
by choosing the quiz questions, reinforcement
messages, the number of correct answers
required to pass and add the school logo.
Schools using OpenNet can integrate entrance
counseling into the loan application process for
all borrowers, first-time borrowers or first-time
borrowers at the school.
USA Funds Loan Counselor features six modules
for entrance, interim and exit counseling for
undergraduate, graduate and parent borrowers:
USA Funds Stafford Loan Guide SM entrance
counseling for undergraduate borrowers:
Provides information about borrower rights
and responsibilities, crucial loan terms, the
Master Promissory Note, consequences of
default and repayment options, presented in
a way that relates to students’ everyday
experiences.
USA Funds Loan Review SM interim counseling
for undergraduate, graduate and professional
students: Keeps borrowers informed about
how much they have borrowed and helps
them make smarter choices about their
finances while they’re still enrolled in school.
USA Funds Student Loan Transition Guide SM
exit counseling for undergraduate students:
Reviews key information provided as part of
entrance counseling and provides detailed
loan indebtedness information from the
Meteor network to help students select the
repayment plan best suited to their individual
financial situations.
USA Funds Grad Guide SM entrance counseling
for graduate and professional students:
Addresses the unique issues faced by
graduate and professional students and
offers a set of tools, resources and
information to help students navigate their
options, plan a budget and understand the
details of credit — including student loans.
USA Funds Grad Guide exit counseling for
graduate and professional students: Builds on
the information provided during entrance
counseling by reviewing Stafford and Grad
PLUS loans, repayment options, rights and
responsibilities and the consequences of
default.
USA Funds Parent PLUS Guide for parent
borrowers: Provides an overview of PLUS loan
terms and conditions, rights and
responsibilities, and repayment and payment
relief options to help parent borrowers make
more informed decisions.
USA Funds Loan Counselor helps lower cohort
default rates through regular counseling and
increases efficiency by allowing schools to track
student progress — for only a few students or for
an entire student population. Reports can be
downloaded to monitor students’ progress in
counseling sessions and also can be used to
meet reporting requirements from the U.S.
Department of Education. Results also can be
downloaded directly into the FAM system.
Students’ exit counseling results are
automatically transmitted to guarantors via the
National Student Clearinghouse without any
additional involvement from schools.
3

Student Retention
Keeping students in school is essential to their
success. Successful students get good jobs, which
provide the income students need to repay their
loans. When students stay in school, research
clearly shows it has an impact on lowering cohort
default rates. Because of this link between
student retention and default prevention, USA
Funds soon will offer the USA Funds Retention
Puzzle, an online blueprint that helps schools
boost student retention and reduce loan defaults
by offering resources for creating, refining or
updating retention action plans. The USA Funds
Retention Puzzle provides a form that helps
schools audit current student retention efforts, a
process for retention planning, a list of online
student retention resources and links to awardwinning
student retention best practices.
The four pieces of the retention puzzle include:
1. Institutional assessment — Who are we?
Helps a campus define itself based on
qualitative and quantitative measures by
using local and national benchmarks to
perform a self-assessment that identifies
strengths, opportunities and challenges. This
question challenges an institution to consider
its image and reputation as a retentionfocused
institution that puts students first.
Key measures include:
First-year retention rates.
Gaps in performance.
Graduation rates.
Loan default rates.
These measures must be documented and
validated from multiple perspectives sources and
perspectives.
2. Student assessment — Who are our students?
Helps schools identify students likely to
succeed and those likely to withdraw prior to
graduation. The goals of the student
assessment are to identify variables
associated with students’ retention or early
departure and improve retention strategies
for all student groups. Motivation variables
that guide student behavior include:
Who are the students when they enroll?
How do they change after they enroll?
How well do they make the transition to
college?
How engaged are they in the campus?
What specific information can be
provided about the students?
The following retention formula provides a
framework for analyzing student data:
Entering Student Variables
+ Student Motivation Variables
+ Student Integration Variables
= Student’s Likelihood to Persist
NOTES
4

3. Institutional intervention — What do our
students need? Helps schools examine their
current efforts and develop a proactive
infrastructure to promote student success.
These efforts include a retention index score
that reflects the level of focus on student
retention, a retention audit that documents
retention practices and a retention plan that
is comprehensive, deliberate and intentional.
Successful retention plans:
Are structured.
Are interlocked with other programs and
services.
Rely on extended, intensive student
contact.
Are based on a strategy of engagement.
Place special emphasis on staff quality.
Focus on affective as well as cognitive
needs.
Track and monitor the level of student
satisfaction.
It’s important to be proactive to provide students
with the tools they need to survive — before
they know they need them.
4. Student intervention — How do we know if
our programs are working? Helps evaluate
student outcomes and offers case studies of
successful retention policies. Studentcentered
initiatives represented by these
institutions are grounded in retention theory
and are guided by a philosophy that the most
successful retention programs are defined by
student outcomes. Evaluation of the student
outcomes for each strategy that’s
implemented will determine the next steps,
whether it’s moving forward if outcomes are
successful, adjusting and moving forward if
outcomes are questionable or abandoning
the effort if outcomes are not favorable.
NOTES
5

Debt Management
Consultants
USA Funds debt management consultants work
closely with schools to fine-tune their current
default prevention efforts or to develop a
comprehensive default management plan. The
team offers years of financial aid and debt
management experience to help assess schools’
current practices and suggest improvements.
Debbie Bradford
Debt Management Consultant
(972) 941-8810
deborah.bradford@usafunds.org
Arkansas, Louisiana, Mississippi, Oklahoma, Texas
Carol Buchli
Debt Management Consultant
(573) 445-6080
carol.buchli@usafunds.org
Iowa, Idaho, Kansas, Minnesota, Missouri, Montana,
Nebraska, North Dakota, Nevada, Oregon, South
Dakota, Tennessee, Wyoming
Anne Fischer
Debt Management Consultant
(773) 561-8131
anne.fischer@usafunds.org
Illinois, Indiana, Kentucky, Michigan, Ohio,
Wisconsin, West Virginia
Eileen Muhlig
Debt Management Consultant
(607) 749-2703
eileen.muhlig@usafunds.org
Connecticut, Washington DC, Delaware, Maryland,
Massachusetts, New Hampshire,New Jersey, New
York, Pennsylvania, Rhode Island, Virginia, Vermont
Carole Ann Simpson
Debt Management Consultant
(619) 733-6019
caroleann.simpson@usafunds.org
Alaska, California, Hawaii, Guam, Washington
Bonnie Weaver
Debt Management Consultant
(480) 375-0267
bonnie.weaver@usafunds.org
Arizona, Colorado, New Mexico, Utah
George Covino
Senior Director
(760) 408-9444
george.covino@usafunds.org
Vernetta Fairley
Managing Director
(601) 545-2449
vernetta.fairley@usafunds.org
Chris Miller
Debt Management Consultant
(954) 227-1329
christopher.miller@usafunds.org
Alabama, Florida, Georgia, North Carolina, Puerto
Rico, South Carolina
NOTES
6

Life Cycle of a Stafford Loan

Life Cycle of a Stafford Loan
According to The College Board, federal loans represent more than 40 percent of undergraduate
student aid and more than 60 percent of graduate student aid (Trends in Student Aid, 2008). Federal
Stafford loans have become a staple of financial aid packages for students across the country.
Borrowers benefit from college financing at below-market interest rates with highly flexible
repayment terms.
Undergraduate Student Aid by Source
Graduate Student Aid by Source
(in Billions), 2007-2008 (in Billions), 2007-2008
21%
7%
3%
6%
14%
1%
41%
FederalLoans($43.8)
FederalWorkStudy($1.0)
PellGrants($14.4)
OtherFederalGrants($3.5)
PrivateandEmployer
Grants($7.5)
InstitutionalGrants($22.8)
7% StateGrants($47.8)
EducationTaxCreditsand
Deductions($6.0)
17%
8%
8%
1%
1% 3%
62%
FederalLoans($23.0)
FederalWorkStudy($0.1)
FederalGrantPrograms($3.1)
PrivateandEmployerGrants($3.0)
InstitutionalGrants($6.3)
StateGrants($0.2)
EducationTaxCreditsand
Deductions($1.0)
Adapted from Trends in Student Aid, 2008.
Stafford loan borrowers will deal with their educational debt not only during their time of enrollment,
but also for years — and, in some cases, decades — afterwards. When schools understand the various
requirements for processing Stafford loans, award appropriate loan amounts and provide resources
to students for successful repayment, aid administrators help ensure a positive experience for the
growing population of student borrowers.
Federal Family Education Loan Program
FFELP is the largest source of higher education loans and the largest federally sponsored student aid
program. Established by the Higher Education Act of 1965, as amended, and initially called the
Guaranteed Student Loan program, FFELP is an education loan program through which commercial
lenders — such as banks, credit unions and savings and loan associations — fund Stafford loans.
1

FFELP Players
Player
Federal
Government
Schools
Guarantors
Lenders
Servicers
Secondary
Markets
Borrowers
Responsibility
Congress reviews the Higher Education Act of 1965, as amended, and determines if
changes are necessary.
U.S. Department of Education administers and regulates FFELP.
ED monitors program compliance.
Certify student and parent eligibility and provide loan counseling.
Deliver loan funds, process refunds and conduct other loan-related transactions.
Monitor and report students’ enrollment statuses.
Support schools with policy and process advice and assistance.
Assist borrowers to resolve payment problems and avoid default.
Provide a guarantee of payment to lenders if borrowers fail to repay loans.
Maintain a reserve of funds to pay lender claims.
Recover, on behalf of federal taxpayers, amounts owed by borrowers in default on
their loans.
Monitor school and lender compliance with the HEA, federal regulations and
guarantor policies.
Provide sources of funding for borrowers.
Service loans while a borrower is in repayment.
Deliver customer service to borrowers and school financial aid offices.
Manage loans on behalf of guarantors, lenders and secondary markets.
Serve as point-of-contact for borrowers, schools, loan holders and guarantors.
Purchase loan from lenders, which transfers ownership of the loans and provides
capital for funding new loans.
Service loans while a borrower is in repayment.
Be aware of their rights and responsibilities under the terms and conditions of their
loans and repay the loans according to the repayment plan they selected.
Keep their loan holders informed of their contact information and any information
pertinent to their ability to repay their loans.
Case Study
Toney Richardson completed two years of study at Local Community College and is transferring to
State College for the 2009-2010 academic year to obtain a Bachelor of Science degree in biology.
2

Stafford Loan Eligibility Requirements
34 CFR 668.32.
34 CFR 682.201.
Borrowers of Stafford loans must meet certain eligibility requirements before a loan is certified.
Eligible borrowers must:
Complete a Free Application for Federal
Student Aid.
Provide a valid Social Security number.*
Register with Selective Service (if required).
Be regular students in an eligible program.
Be enrolled at least half time.
Be U.S. citizens or eligible noncitizens.
Meet ability-to-benefit criteria.
Maintain satisfactory academic progress.
Eligible borrowers may not:
Be enrolled in elementary or secondary school.
Be incarcerated.
Be in default on a federal student loan.
Owe an overpayment on a federal grant or loan.
Have pled guilty or no contest to or been
convicted of a crime of fraud in obtaining
Title IV aid.
Have been convicted of certain drug-related
offenses that occurred while enrolled and
receiving Title IV aid.
* Does not apply to students who are residents of the Federated States of Micronesia, Republic of the Marshall Islands or
the Republic of Palau until July 1, 2010.
Toney completed his 2009-2010 Free Application for Federal Student Aid and no reject codes were
indicated on his Institutional Student Information Record. He talks with his advisor about his
schedule for the fall 2009 term. Full-time status at State College is 12 hours per semester and half
time is determined proportionally.
For how many hours does Toney need to register to be eligible for Stafford loans?
NOTES
3

Types of Federal Stafford Loans
Stafford loans are the most common source of federal loan funds and are available to both
undergraduate and graduate students. There are two types of Stafford loans, subsidized and
unsubsidized.
Subsidized Loans
Unsubsidized Loans
Financial Need
34 CFR 682.301(a)(1)
Need-based.
Not need-based.
Eligibility
34 CFR 682.603(d)
Cost of Attendance
- Expected Family Contribution
- Estimated Financial Aid
= Eligibility for Need-Based Aid
Cost of Attendance
- Estimated Financial Aid
= Eligibility for Non-Need-Based Aid
Minimum Amount
34 CFR 682.201
2008-2009 FSA
Handbook, p. 3-121
If a student’s subsidized Stafford loan
eligibility is $200 or less and the amount
can be included as part of an
unsubsidized Stafford loan, schools are
not required to certify a separate
subsidized loan.
No regulatory minimum.
Interest
34 CFR 682.300
Interest Rate
34 CFR 682.202(a)(1)
Federal government pays interest while
the student is in school at least half time,
during the grace period and authorized
periods of deferment.
Undergraduate Borrowers
First Disbursement
Graduate Borrowers
Rate
Prior to 7/1/2006
Variable
7/1/2006-6/30/2008 6.8%
7/1/2008-6/30/2009 6.0%
7/1/2009-6/30/2010 5.6%
7/1/2010-6/30/2011 4.5%
7/1/2011-6/30/2012 3.4%
First Disbursement
Rate
Prior to 7/1/2006
Variable
7/1/2006-6/30/2012 6.8%
Borrower is responsible for interest that
accrues after disbursement. Borrowers
may pay the interest or have it
capitalized.
All Borrowers
First Disbursement
Rate
Prior to 7/1/2006
Variable
7/1/2006-6/30/2012 6.8%
4

Fees
34 CFR
682.202(c) and (d)
Grace Period
34 CFR
682.209(a)(3)(i)
Repayment
34 CFR
682.209(a)(3)(i)
Subsidized Loans
Federal Default Fee
1.0 percent on all loans.
Origination Fee
First Disbursement
Rate
7/1/2007-6/30/2008 1.5%
7/1/2008-6/30/2009 1.0%
7/1/2009-6/30/2010 0.5%
7/1/2010 and after 0%
Six months after student ceases halftime
enrollment.
Begins the day after grace period.
Unsubsidized Loans
Federal Default Fee
1.0 percent on all loans.
Origination Fee
First Disbursement
Rate
7/1/2007-6/30/2008 1.5%
7/1/2008-6/30/2009 1.0%
7/1/2009-6/30/2010 0.5%
7/1/2010 and after 0%
Six months after student ceases halftime
enrollment.
Begins the day after grace period.
Toney borrowed subsidized and unsubsidized Stafford loans between July 1, 2007, and June 30,
2009. He plans to borrow Stafford loans at State College during the next two academic years.
What will be the interest rate on each of Toney’s loans?
Academic Year Subsidized Unsubsidized
2007-2008
2008-2009
2009-2010
2010-2011
NOTES
5

Loan Limits
34 CFR 682.204.
Students have both annual and aggregate limits on the amount they may borrow through the
Stafford loan program. The frequency of annual loan limits is based on the type of academic year used
by the school.
Frequency of Annual Loan Limits
2008-2009 Federal Student Aid Handbook, Volume 3, Chapter 5.
The frequency of borrowing annual loan limits is based on whether the school is using a Scheduled
Academic Year or Borrower-Based Academic Year. Once students have borrowed the maximum
amount for the current SAY or BBAY, they cannot borrow again until the next SAY or BBAY.
Schools can use BBAY for standard-term credit-hour programs for all students, on a case-by-case basis
or for only certain academic programs. Schools also can switch the student to BBAY from SAY, or vice
versa, to best suit the needs of the student.
Trainer’s Tidbit
34 CFR 668.3.
An undergraduate academic year is a time period of at least 30 instructional weeks for a credit-hour
program and 26 weeks for a clock-hour program, in which a student is expected to complete the
minimum of:
24 semester or trimester hours.
36 quarter hours.
900 clock hours.
2008-2009 Federal Student Aid Handbook.
“There is no minimum hours component to the definition of an academic year for graduate and
professional programs. For purposes of FFEL and DL programs, a loan period certified for an
academic year in a graduate or professional program would include the weeks of instructional time
in the academic year and the hours a full-time student is expected to complete in those weeks”
(p. 3-2).
NOTES
6

Scheduled Academic Year
A scheduled academic year is a fixed period that generally begins and ends at the same time each
calendar year, such as the first day of the fall semester through the end of the spring semester.
Students regain eligibility each scheduled academic year as long as they meet eligibility criteria and
have not exceeded their annual or aggregate limits.
Summer can be designated as either a header to the following SAY, a trailer to the preceding SAY or it
can be either a header or trailer depending on the individual student on a case-by-case basis.
Two Semesters + Summer Trailer
Fall Spring Summer Fall Spring Summer Fall Spring Summer
Year 1 Year 2 Year 3
Two Semesters + Summer Header
Summer Fall Spring Summer Fall Spring Summer Fall Spring
Year 1 Year 2 Year 3
Students are not required to be enrolled in all terms of the SAY for their next loans to be certified.
Schools can certify a new loan before the existing loan period expires, as long as the new loan period
does not cross into the next SAY. One or more loans can be processed for the same SAY, as long as
total amounts borrowed do not exceed annual loan limits based on the student’s grade level.
Borrower-Based Academic Year
Unlike SAY, the beginning and ending dates for a BBAY depend on an individual student’s period of
enrollment and progress. BBAY allows the academic year for the student to begin at any point that
the student enrolls and ends when the student completes the calendar period associated with the
BBAY. Because it is based on each individual student’s enrollment, BBAY requires student-by-student
tracking and may require extra work.
Fall Spring Summer Fall
Spring not
enrolled
Summer
Year 1 Year 2 Year 3
Fall
NOTES
7

Annual Stafford Loan Limits
34 CFR 682.204(a), (c) and (d).
The annual loan limit is the maximum amount a borrower may receive in a single academic year.
Limits are based on the student’s dependency status and current grade level. Students who have
received their full annual loan limit may not receive additional Stafford loan funds until a new
academic year begins, unless they progress to a higher grade level within the same academic year.
The base loan amount may consist of subsidized funds, unsubsidized funds or a combination of the
two. Subsidized amounts are limited by the student’s remaining financial need and unsubsidized
funds may not exceed the COA minus other EFA. All undergraduate loan limits are subject to
proration.
Trainer’s Tidbit
2008-2009 Federal Student Aid Handbook.
“The annual loan limit applies to the SAY, plus the summer trailer or header. Once the calendar period
associated with all of the terms in the SAY and the summer header or trailer (if any) has elapsed, a
student regains eligibility for a new annual loan limit” ( p. 3-80).
NOTES
8

Annual Undergraduate Stafford Loan Limits
Effective July 1, 2008.
Maximum Annual Loan Limits
Preparatory Coursework for Enrollment
in Undergraduate Programs
Base Stafford Loan
(Subsidized and Unsubsidized)
Dependent
Students
Independent Students or
Parent PLUS Denial/Ineligibility
$2,625 $2,625
Additional Unsubsidized Stafford Loan N/A $6,000
TOTAL $2,625 $8,625
First-Year Undergraduate
Base Stafford Loan
(Subsidized and Unsubsidized)
Dependent
Students
Independent Students or
Parent PLUS Denial/Ineligibility
$3,500 $3,500
Additional Unsubsidized Stafford Loan $2,000 $6,000
TOTAL $5,500 $9,500
Second-Year Undergraduate
Base Stafford Loan
(Subsidized and Unsubsidized)
Dependent
Students
Independent Students or
Parent PLUS Denial/Ineligibility
$4,500 $4,500
Additional Unsubsidized Stafford Loan $2,000 $6,000
TOTAL $6,500 $10,500
Third-Year and Beyond Undergraduate
Base Stafford Loan
(Subsidized and Unsubsidized)
Dependent
Students
Independent Students or
Parent PLUS Denial/Ineligibility
$5,500 $5,500
Additional Unsubsidized Stafford Loan $2,000 $7,000
TOTAL $7,500 $12,500
9

After reviewing Toney’s academic transcript and ISIR, State College determines he is a third-year,
dependent student.
What is Toney’s 2009-2010 Stafford loan limit?
Toney’s EFC is $9,348 for the 2009-2010 academic year. State College’s cost of attendance for the
academic year is $12,548. The only aid for which Toney is eligible is Stafford loans.
Calculate Toney’s eligibility for subsidized and unsubsidized loans for 2009-2010.
Aggregate Stafford Loan Limits
34 CFR 682.204(b) and (e).
The aggregate loan limit is the maximum cumulative amount for a student’s entire undergraduate
and graduate career. This limit includes all amounts that the student has outstanding in loans from
the FFEL and Direct Loan program. As with annual loan limits, the cumulative balance may consist of
subsidized funds, unsubsidized funds or a combination of the two. Once the aggregate limit is
borrowed, the student has no remaining Stafford loan eligibility.
Aggregate Undergraduate Stafford Loan Limits
Base Stafford Loan
(Subsidized and Unsubsidized)
Dependent Students
Independent Students or
Parent PLUS Denial/Ineligibility
$23,000 $23,000
Additional Unsubsidized Stafford Loan $8,000 $34,500
TOTAL $31,000 $57,500
NOTES
10

Trainer’s Tidbit
34 CFR 682.204.
Some items do not count toward the aggregate Stafford loan limit, such as:
Capitalized interest.
Collection costs.
PLUS loans borrowed by the student or student’s parents.
A TEACH grant that has been converted to an unsubsidized Direct Stafford Loan.
Amounts that are repaid, refunded, returned, prepaid, canceled, discharged or forgiven.
Toney’s aggregate loan history as reported on the National Student Loan Data System is as follows:
$6,328
$5,672
$12,000
$8,000
$6,328
$5,672
$12,000
$8,000
Calculate Toney’s remaining subsidized and unsubsidized aggregate eligibility.
NOTES
11

Transfer Student Monitoring Process
34 CFR 668.19(b).
Dear Colleague Letter GEN-01-09.
Financial aid administrators are required to review the financial aid history for all transfer students to
obtain the following information:
Is the student in default on a federal loan?
Does the student owe an overpayment on a federal grant or loan?
What amount of federal Pell Grant, Academic Competitiveness Grant, National SMART Grant
and/or TEACH Grant did the student already receive during the award year?
What amount of Stafford loan did the student already receive during the academic year?
Has the student borrowed the full aggregate Stafford loan limit?
This information must be used to determine a student’s remaining eligibility for federal student aid
funds. Transfer monitoring was created to help financial aid administrators track changes in a
student’s financial aid history that may affect current awards.
ED requires financial aid administrators to use the Transfer Student Monitoring Process through
NSLDS. To add a student to the transfer monitoring list, the school must submit the following student
information to NSLDS:
Student identifiers:
Name.
Social Security number.
Date of birth.
Monitoring information:
Beginning enrollment date.
Identifies the date the school expects the student to begin enrollment.
Beginning monitoring date.
Designates the date NSLDS will begin monitoring the student.
The school can determine this date, to some degree. The monitoring begin date cannot be later than the beginning
enrollment date. If the school notifies NSLDS after the enrollment begin date, or the school does not provide a date,
NSLDS will use the date of notification.
NOTES
12

State College is a term-based, credit-hour school and uses a scheduled academic year with a
summer header. The 2009-2010 academic calendar is as follows:
Summer term: June 29 – Aug. 21.
Fall term: Sept. 1 – Dec. 11.
Spring term: Jan. 25 – May 14.
On July 15, Toney notifies State College that he plans to enroll for the fall term. Later that day the
financial aid office adds him to the transfer student monitoring list.
Complete the following NSLDS Transfer Monitoring Request:
AAA-AA-AAAA
ANTHONY
RICHARDSON
12291988
Schools submit transfer monitoring requests to NSLDS and must wait at least seven days before
disbursing funds. The designated FAA at each school requesting transfer monitoring will receive e-
mail alerts of any changes in financial aid history from NSLDS for 90 days after the Enrollment Begin
Date.
Trainer’s Tidbit
GEN-01-09.
The school is not liable for any overpayments resulting from a change in financial aid history as long
as the school followed the Transfer Student Monitoring Process.
NOTES
13

Lender Choice
34 CFR 682.212(h).
Schools may choose to provide a recommended lender list to Stafford loan borrowers to assist them
in selecting a FFELP lender. If the school provides such a list, the school must:
Not deny or delay processing of a loan based on the borrower’s choice of lender.
Provide a minimum of three unaffiliated lenders.
Disclose the method and criteria that the institution used to select lenders.
List interest rates and other benefits offered by each lender for comparison.
Inform borrowers that they do not have to borrow from a lender on the list.
Not assign a lender to first-time borrowers.
Update the list annually.
Entrance Counseling
34 CFR 682.604(f).
At or prior to the delivery of the first disbursement, schools must ensure that first-time student
borrowers of federal Stafford loans receive simple and understandable information about the loan
terms and conditions and the student's responsibilities. Loan counseling may be conducted online, in
a group setting or in one-on-one sessions.
Some schools consider entrance counseling to be a continual process and provide information to
students throughout their enrollment. Receiving ongoing communication about their loans enables
students to make informed borrowing decisions and remain aware of their overall loan debt and the
implications of that debt upon repayment.
NOTES
14

Stafford Loan Entrance Counseling Minimum Requirements
Effective Aug. 14, 2008.
Use and importance of Master Promissory Note.
First-Time Stafford Loan Borrowers*
Seriousness and importance of the obligation to repay full amount of the loan, even if the borrower:
Does not complete the program or does not complete it within the regular time for program
completion.
Is unable to obtain employment upon completion of the program.
Is dissatisfied with the school or does not receive the service purchased from the school.
Effect of loan acceptance on eligibility for other types of financial aid.
Capitalization of interest and option to pay interest on unsubsidized loans while enrolled in school.
School’s definition of half-time enrollment during any and all terms and the consequences of failing to
maintain half-time enrollment.
Importance of contacting appropriate school office(s) if withdrawing before completion of the student’s
program.
Likely consequences of default, including adverse credit reports, delinquent debt collection procedures
under federal law and litigation.
Sample monthly repayment amounts based on a range of student levels of indebtedness.
Availability of Title IV loan information in NSLDS and how that information can be accessed.
Name and contact information of the person or agency students should contact with questions about their
rights and responsibilities or terms and conditions of their loans.
* Student borrowers are exempt from entrance counseling if they previously received federal Stafford loans or federal
Supplemental Loans for Students at any school.
Is Toney required to receive entrance counseling before receiving his Stafford loan funds? Why or
why not?
What counseling information may be helpful to Toney as a borrower at State College?
15

Master Promissory Note
34 CFR 682.102(a).
Each new borrower of federal Stafford loans must complete and sign a Federal Stafford Loan Master
Promissory Note. Multi-year use of the MPN reduces paperwork and simplifies the loan process for
applicants by essentially opening a line of credit for education expenses during their academic
careers. An MPN typically is valid for up to 10 years. A new MPN may be required in certain situations,
such as students changing lenders, students changing their names, students choosing to complete a
new MPN or the school requiring a new MPN.
The MPN is available in electronic and paper versions. For electronic processing, the school will
transmit the loan certification to the lender or to a guarantor that will process the loan on behalf of
the lender.
Loan Certification
34 CFR 682.603.
After the school determines a student’s eligibility for Stafford loan funds, it is responsible for notifying
the lender and guarantor of the student’s Stafford loan eligibility, identifying the loan period and
providing disbursement dates. Loans typically are electronically certified and submitted to the lender
or guarantor, but also may be sent via hardcopy.
Weeks in an Academic Year
34 CFR 668.3.
An undergraduate academic year for credit-hour programs must consist of at least 30 weeks of
instructional time. An undergraduate clock-hour program must consist of at least 26 instructional
weeks.
Trainer’s Tidbit
34 CFR 668.3(b)(2).
“A week of instructional time is any week in which at least one day of regularly scheduled instruction
or examinations occurs or, after the last scheduled day of classes for a term or payment period, at
least one day of study for final examinations occurs.”
NOTES
16

State College is a term-based, credit-hour school and uses a scheduled academic year with a
summer header. The 2009-2010 academic calendar is as follows:
Summer term: June 29 – Aug. 21.
Fall term: Sept. 1 – Dec. 11.
Spring term: Jan. 25 – May 14.
Shaded areas indicate dates when classes are not in session.
June 2009 July 2009 August 2009
1 2 3 4 5 6 1 2 3 4 1
7 8 9 10 11 12 13 5 6 7 8 9 10 11 2 3 4 5 6 7 8
14 15 16 17 18 19 20 12 13 14 15 16 17 18 9 10 11 12 13 14 15
21 22 23 24 25 26 27 19 20 21 22 23 24 25 16 17 18 19 20 21 22
28 29 30 26 27 28 29 30 31 23 24 25 26 27 28 29
30 31
September 2009 October 2009 November 2009
1 2 3 4 5 1 2 3 1 2 3 4 5 6 7
6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14
13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21
20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28
27 28 29 30 25 26 27 28 29 30 31 29 30
December 2009 January 2010 February 2010
1 2 3 4 5 1 2 1 2 3 4 5 6
6 7 8 9 10 11 12 3 4 5 6 7 8 9 7 8 9 10 11 12 13
13 14 15 16 17 18 19 10 11 12 13 14 15 16 14 15 16 17 18 19 20
20 21 22 23 24 25 26 17 18 19 20 21 22 23 21 22 23 24 25 26 27
27 28 29 30 31 24 25 26 27 28 29 30 28
31
March 2010 April 2010 May 2010
1 2 3 4 5 6 1 2 3 1
7 8 9 10 11 12 13 4 5 6 7 8 9 10 2 3 4 5 6 7 8
14 15 16 17 18 19 20 11 12 13 14 15 16 17 9 10 11 12 13 14 15
21 22 23 24 25 26 27 18 19 20 21 22 23 24 16 17 18 19 20 21 22
28 29 30 31 25 26 27 28 29 30 23 24 25 26 27 28 29
30 31
What are the beginning and end dates of State College’s academic year?
How many weeks are in the academic year?
17

Loan Period
34 CFR 682.200(b).
The loan period, or period of enrollment, is the time frame for which a Stafford loan is intended. For
term-based schools, the period of enrollment must coincide with an academic term as established by
the school for which institutional charges generally are assessed (for example, semester, trimester,
quarter, length of the student’s program or academic year).
Toney does not plan to attend State College during the summer, but plans to enroll and borrow for
the fall and spring terms during the 2009-2010 academic year.
For what loan period(s) will his loan be certified?
Payment Period
34 CFR 682.200(b).
Loans must be disbursed on a payment period basis. The payment period begins on the first day of
regularly scheduled classes and the length is determined by the structure of the school’s academic
program. For example, the payment period for a term-based school would be the academic term.
Toney does not plan to attend State College during the summer, but plans to enroll for both fall and
spring during the 2009-2010 academic year.
What will be the payment period(s) for his loan?
What gross amount (before fees) of subsidized and unsubsidized funds will be certified for the
payment period(s)?
18

Disbursement Schedule
34 CFR 668.167.
A school is required to specify a disbursement schedule for all Stafford loans it certifies, in accordance
with each loan’s payment period. The disbursement schedule should be based on when the school
believes the lender will issue the funds, not when the school anticipates it will receive the funds.
The disbursement schedule is based on the funds delivery method the lender uses. The school must
determine whether the funds are subject to the 30-day delayed disbursement provision for first-year,
first-time undergraduate borrowers and adjust the disbursement schedule accordingly.
Trainer’s Tidbit
34 CFR 682.604(c)(5)(i).
Schools are exempt from the delayed disbursement regulation if their cohort default rates are less
than 10 percent for each of the three most recent fiscal years.
Earliest Disbursement Schedule Dates
Funds Delivery
Method
Electronic Funds
Transfer
Master Check
Individual Check
First-Year, First-Time Borrowers
Subject to Delayed Disbursement
27 days after the first day of the first
payment period.
27 days after the first day of the first
payment period.
First day of the first payment period.
All Other Borrowers
13 days before the first day of the first
payment period.
13 days before the first day of the first
payment period.
30 days before the first day of the first
payment period.
NOTES
19

Are Toney’s loans subject to the first-year, first-time borrower delayed disbursement provision? Why
or why not?
August 2009 September 2009 January 2010
1 1 2 3 4 5 1 2
2 3 4 5 6 7 8 6 7 8 9 10 11 12 3 4 5 6 7 8 9
9 10 11 12 13 14 15 13 14 15 16 17 18 19 10 11 12 13 14 15 16
16 17 18 19 20 21 22 20 21 22 23 24 25 26 17 18 19 20 21 22 23
23 24 25 26 27 28 29 27 28 29 30 24 25 26 27 28 29 30
30 31 31
Toney’s lender uses EFT for funds delivery. What is the earliest date the school can set the
disbursement schedule for the fall and spring terms?
NOTES
20

Certification Form
34 CFR 682.603.
Most lenders and guarantors process certifications electronically, but continue to accept paper
certification forms. Both methods, however, require the same information.
Toney plans to complete his biology degree by May 15, 2011, and will enroll in nine hours for the
fall and spring terms.
Complete Toney’s FFELP Stafford Loan School Certification Form.
00000000
State College
90465 Main Street
Indianapolis, IN 46206
Richardson Anthony C AAA-AA-AAAA
67 Ridge Court 555-555-1234 12/29/1988
Indianapolis IN 46032 tcrichardson@theinternet.com
Anytown Bank New York City NY
21

Stafford Loan Notices
34 CFR 668.165(a).
Schools must notify Stafford loan borrowers of various details about their loans prior to disbursing
funds. Notices may be made either in hard copy, electronically or via a Web site. Borrowers must
affirmatively consent to receive information electronically, “…in a manner that reasonably
demonstrates that the individual is able to access the information to be provided in an electronic
form” (GEN-05-16).
In many cases, these notices coincide with other financial aid functions, such as award notification
and disbursement.
Notice
Amount of proceeds from subsidized and
unsubsidized loans.
When loan proceeds will be delivered and in what
method.
Anticipated date and amount of disbursement.
Confirmation that the borrower accepts the loan
under terms of the multi-year MPN.
Amount and date loan proceeds will be credited to
the student’s account.
Right of the borrower to cancel the loan and the
process and deadline to make that request.
Notification by the school to the borrower of the
results of cancellation requests.
Time Frame
Prior to disbursement.
Prior to disbursement.
Prior to disbursement.
Prior to disbursement.
Affirmative confirmation: No earlier than 30 days
before and no later than 30 days after the school
credits the student’s account.
Passive confirmation: No earlier than 30 days
before and no later than seven days after the school
credits the student’s account.
Affirmative confirmation: No earlier than 30 days
before and no later than 30 days after the school
credits the student’s account.
Passive confirmation: No earlier than 30 days
before and no later than seven days after the school
credits the student’s account.
After the cancellation is processed.
NOTES
22

Trainer’s Tidbit
Affirmative Confirmation
A process through which an institution obtains written confirmation of the types and amounts of
Title IV loans that a borrower wants before the institution credits the student's account with those
loan funds.
Passive Confirmation
A process that requires borrowers be notified when a loan is made, but the borrowers must take
action only if they do not want the loan or want to change the loan amount. With a passive process,
loan funds may be disbursed after the borrower has been notified of the new loan.
Loan Cancellation Requests
34 CFR 668.165(a)(4).
Borrowers must notify the school if they wish to cancel all or a portion of their loan. Upon receipt of a
cancellation notice, the school must process that request by returning the loan funds to the lender,
canceling the disbursement or canceling the entire loan, as applicable. Schools must inform
borrowers in writing of the outcome of their cancellation requests.
Cancellation Received
Prior to disbursement.
Within 14-day period but after funds are
disbursed to borrower.
After 14-day period or first day of payment
period, as applicable.
Cancellation Time Frame
Affirmative confirmation: The first day of payment period
or 14 days after notifying the borrower of the right to cancel,
whichever is later.
Passive confirmation: No later than 30 days after notifying
the borrower of the right to cancel.
School must return funds applied to student’s account that
paid authorized charges.
School may, but is not required to, return funds and cancel
disbursement, as applicable.
NOTES
23

State College allows students to accept or decline loans via the electronic award notifications the
school provides. Toney accepts his loans on Aug. 17. On Aug. 20, he receives notification that funds
will disburse on Aug. 31. On Aug. 25, he decides to reduce his unsubsidized Stafford loan to $1,000
for the fall term and cancel his spring term unsubsidized loan.
August 2009 September 2009
1 1 2 3 4 5
2 3 4 5 6 7 8 6 7 8 9 10 11 12
9 10 11 12 13 14 15 13 14 15 16 17 18 19
16 17 18 19 20 21 22 20 21 22 23 24 25 26
23 24 25 26 27 28 29 27 28 29 30
30 31
Is the school required to process Toney’s cancellation request? Why or why not?
If so, what is the latest date the school may process the request?
NOTES
24

Maintaining Stafford Loan
Funds
34 CFR 668.163.
Schools must maintain a bank account for federal
funds. The account must be federally insured or
secured by collateral that has a value reasonably
equal to the amount of federal student aid funds
in the account. In most cases, schools are not
required to use a separate account for each
federal aid program. ED may impose this
requirement as a result of administrative action
or program review findings.
If the school maintains funds from multiple
programs in a single bank or investment account,
the school must separately track the flow of
those funds and the interest earned on each
program. Schools are not required to maintain
FFELP funds in an interest-bearing account. If the
school does maintain its FFELP funds in an
interest-bearing account, the school may use the
earned interest to defray the operational costs of
the program.
The school is required to identify that Title IV
funds are held in the account by including the
phrase “federal funds” in the name of the account,
or by notifying the bank or investment company
that the account contains federal funds. If the
school notifies the bank or investment company,
the school should keep a copy of the notification
in its records.
Trainer’s Tidbit
Schools that do not use the phrase “federal
funds” in the name of the account, excluding
public schools, must file a Uniform Commercial
Code Form (UCC-1) statement with the state or
local municipal government to disclose that an
account contains federal funds. The school
must keep a copy of the UCC-1 in its records.
Disbursing Stafford Loan
Funds
34 CFR 668.164.
34 CFR 682.604.
A school disburses FFELP funds when it credits a
student’s school account or pays the student
directly with institutional funds in advance of its
receipt of FFELP funds or with funds received
from a lender.
Lenders may send loan funds to schools via:
EFT: The electronic transfer of funds from the
lender to an account at the school or school’s
financial institution.
Master Check: A single check that includes
loan funds for two or more borrowers at a
single institution.
Individual Check: A single check that
includes loan funds for a single borrower and
requires the borrower’s endorsement, and in
some cases the school’s endorsement, to be
cashed.
Trainer’s Tidbit
Schools must maintain standards of
administrative capability, including dividing
“the functions of authorizing payments and
disbursing or delivering funds so that no office
has responsibility for both functions with
respect to any particular student aided under
the programs” (34 CFR 668.16(c)(2)).
25

Disbursement Frequency
34 CFR 682.604(c)(6).
Loan proceeds must be disbursed to borrowers in substantially equal installments with no single
installment exceeding half of the loan amount. If the loan period consists of more than one payment
period, each payment period should have at least one disbursement. If the loan is for a single
payment period, it must have at least two disbursements, unless the school is exempt from this
requirement.
Trainer’s Tidbit
34 CFR 682.604(c)(8)(i)(B).
Schools are exempt from the multiple disbursement regulation with respect to loans made for a
single term if their cohort default rates are less than 10 percent for each of the three most recent
fiscal years.
State College’s cohort default rates are as follows:
FY 2003 11.2%
FY 2004 9.9%
FY 2005 9.4%
FY 2006 9.7%
Indicate Toney’s loan disbursement details below:
Loan Type Gross Amount Disbursement Frequency Term(s)
Subsidized Single Multiple Fall Spring
Unsubsidized Single Multiple Fall Spring
Loan fees usually are deducted from the loan amount. The remaining “net” loan amount is the
principal balance that the lender will disburse to the student in two or more installments.
What fee(s) will Toney be charged on his subsidized and unsubsidized loans?
Calculate the net amount (after fees) of each disbursement of Toney’s loans:
Loan Type Fall Spring
Subsidized 1 st 2 nd 1 st 2 nd
Unsubsidized 1 st 2 nd 1 st 2 nd
26

Disbursement Time Frames
34 CFR 668.167(b).
34 CFR 682.604(c).
Schools must disburse or return funds within certain time frames.
Period Definition Time Frame
Initial
Conditional
Return
The period in which funds must be disbursed
to the borrower.
The period during which funds may be
disbursed if the school believes the borrower
will meet eligibility requirements before the
period expires.
The period in which funds must be returned
to the lender.
EFT or Master Check: Three business days
after the school receives funds from the
lender.
Individual Check: 30 days after the school
receives funds from the lender.
10 business days after the initial period ends.
10 business days after the initial or
conditional period ends, as applicable. If the
borrower becomes eligible during this time,
funds may be disbursed.
Early Disbursements
34 CFR 668.164(f).
Schools are authorized, but not required, to disburse Stafford loan funds to students prior to the first
day of the payment period.
School Type
Term-Based
Non-Term-Based
Clock-Hour
Earliest Disbursement Date
10 days before the first day of the payment period.
The later of:
10 days before the first day of classes of the payment period.
Date the student completes the previous payment period.
The later of:
10 days before the first day of classes of the payment period.
Date the student completes the previous payment period.
NOTES
27

State College is a term-based, credit-hour school and uses a scheduled academic year with a
summer header. The first date of the fall payment period is Sept. 1.
August 2009 September 2009
1 1 2 3 4 5
2 3 4 5 6 7 8 6 7 8 9 10 11 12
9 10 11 12 13 14 15 13 14 15 16 17 18 19
16 17 18 19 20 21 22 20 21 22 23 24 25 26
23 24 25 26 27 28 29 27 28 29 30
30 31
What is the earliest date that State College can set its FFELP disbursements for the fall term?
Disbursement Methods
34 CFR 668.164(c) and (d).
Schools may choose one or a combination of the following methods for disbursing loan funds to
borrowers:
Crediting the student’s account. Loan proceeds may be used only to pay:
All current year allowable charges, and prior year allowable charges not to exceed $200.*
Tuition.
Fees.
Room and board, if contracted with the school.
Other charges authorized by the borrower.
Current year education-related charges.
Prior year charges not to exceed $200.*
Initiating an EFT to a bank account designated by the borrower.
Releasing the check issued by the lender to the borrower.
Mailing a school-issued check to the borrower.
Notifying the student that a school-issued check is available for immediate pickup at a specified
location. The check may be held for up to 21 days. After that, the school must either:
Mail the check to the borrower.
Initiate an EFT to the borrower’s bank account.
Return the funds to the lender.
Dispensing cash to the borrower and obtain a signed receipt.
* The total prior year allowable and authorized charges cannot exceed $200.
28

State College credits Stafford loan funds to the student’s account to pay institutional charges. Any
remaining balance is issued via EFT to the student’s bank account. Toney did not authorize any
additional charges to be paid from his loan funds.
Toney’s institutional charges for the fall term are as follows:
Tuition $1,387.72
Fees $439.00
Parking permit $125.00
What amount will be deposited into Toney’s bank account, if any?
Will Toney owe any money to State College for the fall term? Why or why not?
NOTES
29

Late Disbursements
34 CFR 668.164(g).
Late disbursements of Stafford loan funds are made to borrowers who are ineligible solely because
they no longer are enrolled at least half time. Late disbursements may occur after the loan period or
payment period for which the loan was certified. A late disbursement of loan funds must be offered
to eligible students who complete the payment period or period of enrollment. If a student dropped
below half-time status before the completion of the period, a late disbursement is at the school’s
discretion.
In order to make a late disbursement of FFELP funds, the school must:
Confirm that the Central Processing System has processed an ISIR with an official EFC prior to the
student’s ineligibility.
Have certified the loan prior to the student’s ineligibility.
Determine that the proceeds from the late disbursement will be used to pay educational
expenses incurred during the student’s period of eligible enrollment.
Confirm the student completed the applicable period before making a second or subsequent
disbursement.
Ensure the borrower signs an MPN before funds are disbursed.
Disburse the funds within 180 days of the date the student ceased to be enrolled half time or the
end of the loan period, whichever is earlier.
Toney completed the fall 2009 term and started spring 2010 at State College. On May 10, Toney
requested $2,000 in an unsubsidized loan. The financial aid office determines that he is eligible for
the loan and certifies it on May 13. He completes the spring term on May 14 without having
received his loan.
Is State College required to provide a late disbursement to Toney? Why or why not?
NOTES
30

Stafford Loan Proration
34 CFR 682.204.
Schools must prorate Stafford loan annual limits for undergraduate students if one of the following
exists:
The student’s program of study is less than an academic year.
The student’s program of study is at least one academic year and the remaining period of study
for the student to graduate or complete program requirements is less than an academic year.
Stafford Loan Proration Decision Tree
Is the student an
undergraduate?
YES
Is the student
taking
preparatory
coursework or
coursework
necessary for
teacher
certification?
NO
Is the student’s
academic
program less
than an
academic year?
YES
Prorate
Using
Method 1
NO
YES
NO
Do Not
Prorate
NO
Is the student’s
remaining
period of study
less than an
academic year?
YES
Prorate
Using
Method 2
Trainer’s Tidbit
2008-2009 Federal Student Aid Handbook.
“Proration is required only when it is known in advance that a student will be enrolled for a final
period of study shorter than an academic year. If a student originally enrolls for a final period of
study that is a full academic year in length, but completes the program early in less than a full
academic year, it is not necessary to retroactively prorate the annual loan limit” (p. 3-100).
NOTES
31

Proration Methods
Proportional proration is calculated by multiplying the student’s annual loan amount by the ratio of
the student’s program or the remainder of a student’s program as it relates to an academic year.
Proration Method 1 – Programs of Study Less Than a Full Academic Year
Step 1: Calculate A.
A =
Hours enrolled in student’s program
Hours in school’s AY
Step 2: Calculate B.
B =
Weeks in student’s program
Weeks in school’s AY
Step 3: Multiply the annual loan limit(s) by the result of the lesser of A or B.
Annual base year Stafford x Lesser of A or B = Annual Stafford prorated loan limit
Annual additional
unsubsidized Stafford
x Lesser of A or B =
Annual additional unsubsidized
Stafford prorated loan limit
Proration Method 2 – Remaining Period of Study Less Than a Full Academic Year
Step 1: Calculate A.
A =
Hours enrolled in student’s program
Hours in school’s AY
Step 2: Multiply the annual loan limit(s) by the result A.
Annual base year Stafford x Result of A = Annual Stafford prorated loan limit
Annual additional
unsubsidized Stafford
x
Result of A =
Annual additional unsubsidized
Stafford prorated loan limit
Trainer’s Tidbit
2008-2009 Federal Student Aid Handbook.
“It is acceptable to convert the fraction to a decimal and then multiply the annual loan limit by the
decimal, but this conversion is not a requirement. You may still choose to multiply the annual loan
limit by the original fraction. However, you should be consistent in the method you use, since the
fraction and decimal calculations sometimes result in slightly different prorated loan limits. (The
decimal method will generally — if not always — result in an amount that is equal to or slightly
higher than the amount calculated using the original fraction)” (p. 3-100).
32

Toney will continue enrollment as a fourth-year student at State College for 2010-2011. Based on
Toney’s 2010-2011 ISIR, his EFC is $9,348. State College’s cost of attendance for the academic year is
$13,048.
Calculate Toney’s eligibility for subsidized and unsubsidized loans for 2010-2011.
Toney informs the financial aid office that he is scheduled to graduate after the fall term of 2010. He
will enroll in 15 hours for the fall to finish his degree program and State’s academic year is 24 hours.
Does this change Toney’s eligibility for subsidized and unsubsidized loans? If so, what is his new
loan eligibility?
Exit Counseling
34 CFR 682.604(g).
Financial aid administrators are required to conduct exit counseling for every student at the school
who borrowed a Stafford loan, shortly before the student ceases to be enrolled at least half time, even
if the student does not graduate. Schools must ensure that exit counseling is provided to students
who leave the school without officially withdrawing. Counseling may be provided by interactive
electronic means or by mailing exit counseling materials within 30 days after learning that a student
has withdrawn or failed to complete exit counseling.
NOTES
33

Stafford Loan Exit Counseling Minimum Requirements
Effective Aug. 14, 2008.
Use and importance of Master Promissory Note.
Stafford Loan Borrowers
Seriousness and importance of the obligation to repay full amount of the loan, even if the borrower:
Does not complete the program or does not complete it within the regular time for program
completion.
Is unable to obtain employment upon completion of the program.
Is dissatisfied with or does not receive the services purchased from the school.
Likely consequences of default, including adverse credit reports, delinquent debt collection procedures
under federal law and litigation.
Debt management strategies that facilitate repayment.
Repayment options (standard, graduated, extended, income-sensitive and income-based) including:
Description of the different features.
Average anticipated monthly payment amounts.
Difference in interest paid and total payments.
Terms and conditions for full or partial cancellation, including a copy of information from ED publications
describing assistance programs.
Deferment and forbearance options, including a copy of information from ED publications describing
assistance programs.
Explanation that borrowers can:
Prepay each loan.
Have a shorter repayment schedule.
Change repayment plans.
Effects of loan consolidation including:
Effect on total interest to be paid and length of repayment term.
Effect on borrower benefits for underlying loans, such as loss of grace periods, deferment and
cancellation/forgiveness options.
Option to prepay or change repayment plans.
Statement that borrower benefits differ among lenders.
Tax benefits that are available to some borrowers.
Require borrower to provide:*
Name.
Social Security number.
Current address.
Expected permanent address.
Driver’s license number and state of issuance.
Name and address of next of kin.
References.
Name and address of expected employer, if any.
Availability of Title IV loan information in the National Student Loan Data System and how borrowers can
access loan information.
Availability of Student Loan Ombudsman’s office.
*Schools must provide this information to each borrower’s guarantor(s) within 60 days of the exit counseling.
34

Repayment Options
34 CFR 682.209.
After borrowers cease to be enrolled at least half
time, they begin to use their six-month grace
period. Borrowers of Stafford loans enter
repayment after their six-month grace period
expires. All repayment options, with the
exception of the income-based repayment plan,
require that each payment must at least equal
the interest accrued on the loan between
scheduled payments.
Standard Repayment
Borrowers repaying loans under the standard
repayment plan pay a fixed amount of at least
$50 each month for up to 10 years, not including
deferment and forbearance periods. This plan
generally repays the loan with the lowest interest
cost to the borrower.
Graduated Repayment
Borrowers’ payments are lower at first and then
increase. An important feature of this plan is that
no monthly payment will exceed more than three
times any other monthly payment. Borrowers
using this plan typically repay a greater amount
of interest than they would have under the
standard repayment plan.
Income-Sensitive Repayment
Monthly payments are based on annual income
and total loan amounts. As a borrower’s income
rises or falls, so does the student loan payment
amount. Borrowers must apply for this option
each year.
Extended Repayment
Borrowers may repay over a 25-year period on a
standard or graduated repayment plan if they
have FFELP loans totaling more than $30,000 and
were new borrowers on or after Oct. 7, 1998.
Income-Based Repayment
Borrowers in repayment or entering repayment
who have a partial financial hardship are eligible
for income-based repayment. The federal
government may pay interest during a portion of
the repayment period. Borrowers who participate
in IBR may be eligible for forgiveness of any
outstanding loan balance that remains after 25
years and 300 eligible payments.
NOTES
35

Repayment Relief
34 CFR 682.210(s).
Borrowers may qualify to postpone making payments temporarily by requesting deferment or
forbearance. In addition, regulations allow federal student loans to be discharged or forgiven under
certain circumstances. Making use of these options can help borrowers who may be struggling to
keep their loans in good standing and avoid delinquency or default.
Type of Deferment Description Time Limit
In-School
Graduate Fellowship
Rehabilitation Training
Unemployment
Economic Hardship
Military Service
Post-Active Duty
Student
Any period during which the borrower is enrolled at least half time
in a course of study at an institution of higher education that is
eligible for Title IV funds.
Borrowers participating in full-time graduate fellowships for a
period of at least six months; expires when the student no longer
is enrolled in a qualifying fellowship.
Period of time while the borrower is participating in vocational
rehabilitation, mental health services or drug/alcohol abuse
treatment rehabilitation training programs.
Borrowers who are not employed or who are working less than 30
hours per week in a job expected to last at least three months; also
must be working through an employment agency to find a job, or
actively seeking a job if there is no local employment agency.
Qualifications vary and may include:
Full-time employees whose earnings do not exceed the
minimum wage or 150 percent of the poverty line for the
borrower’s family size.
Borrowers currently granted economic hardship deferment for
Federal Perkins loans or Federal Direct Loans.
Public assistance recipients.
Peace Corps volunteers.
Borrowers serving on active duty for other than training purposes
during a war or a declared national emergency, including National
Guard duty.
Borrowers who were enrolled at least half time during activation or
within six months of activation could qualify for the military
service deferment while serving and the post-active duty student
deferment after demobilization.
Unlimited
Unlimited
Unlimited
Up to three
years
Up to three
years
Unlimited*
13 months
* Borrowers qualify while continuing to serve on active duty. Extended periods of deferment are available to borrowers after
demobilization.
36

Toney is having a hard time finding a job after graduating with his biology degree. He still is
actively looking for employment and has enrolled in six hours of graduate study at State College.
He is concerned about making his student loan payments and contacts his lender(s) for assistance.
For which deferment(s) may Toney qualify?
In-school.
Graduate fellowship.
Rehabilitation training.
Unemployment.
Economic hardship.
Military service.
Post-active duty student.
Students who are fully aware of their loan options, rights and responsibilities and repayment
obligations are more likely to satisfactorily repay their loans. Those who default on their loans
negatively affect their schools’ cohort default rates, which may alter their schools’ ability to process
and deliver funds for other students. Schools and students who work together throughout the
Stafford loan process create a win-win situation.
NOTES
37

Putting it to Work
The topics covered in this training session are conveyed in general terms to encompass learners from
all types of postsecondary institutions. You should consider how the concepts covered in the training
session apply to your school.
Schools often are given flexibility in administering and applying guidelines to certain federal student
aid programs. That’s why it is essential that you discuss these items (shown below) with your
supervisor.
Your supervisor can give you institution-specific guidelines on how the material we discussed in this
training session can be applied to your job.
How does my school confirm a student meets Stafford loan eligibility requirements?
Do we use passive or affirmative confirmation?
Who monitors NSLDS for annual and aggregate loan amounts?
Who adds students to NSLDS for Transfer Monitoring?
Who receives NSLDS Transfer Monitoring e-mail alerts?
How does my school conduct entrance counseling?
Is entrance counseling required for transfer students at my school?
How do students complete the Master Promissory Note for their loan(s)?
Who certifies Stafford loans? Are they processed electronically or via paper?
What is the length and time period of our academic year?
How do we receive loan funds (EFT, master check or individual check)?
How are required loan notices provided to students?
What is the loan cancellation process at my school?
How do we maintain Stafford loan funds (for example, federally insured account, school
collateral)?
How and when does my school disburse Stafford loan funds?
How do students authorize additional charges to be paid with federal financial aid?
What is my school’s cohort default rate?
39

Is my school exempt from the 30-day delayed disbursment and multiple disbursement
provisions? If so, do we exercise these options?
How does my school conduct exit counseling?
How do we work with students in repayment?
40

Trainer’s Toolkit
The Trainer’s Toolkit is a listing of terms, Web sites
and reference material directly related to the Life
Cycle of a Stafford Loan.
Terms, Acronyms and
Abbreviations
Affirmative Confirmation
A process through which an institution obtains
written confirmation of the types and amounts of
Title IV loans that a student wants before the
institution credits the student's account with
those loan funds.
Active Duty
Serving in full-time duty in the active military
service of the U.S., not including training or
attendance at a service school.
Award Year
An award year begins on July 1 in one calendar
year and ends on June 30 of the following
calendar year. For example, the 2009-2010 award
year begins July 1, 2009, and ends June 30, 2010.
AY
Academic Year.
An undergraduate academic year for credit-hour
programs must consist of at least 30 weeks of
instructional time. An undergraduate clock-hour
program must consist of at least 26 instructional
weeks. The minimum number of instructional
weeks for graduate programs is defined by the
school.
Bank Account
An account insured by the Federal Deposit
Insurance Corporation or the National Credit
Union Share Insurance Fund. The account may be
for checking, savings or one that underlies a
stored-value card or other transaction device.
BBAY
Borrower-Based Academic Year.
BBAY is an academic year that floats with a
student's attendance, typically seven to 10
months. Annual loan limits are applied to these
borrower-based years. BBAY is a concept used in
awarding aid and applying annual loan limits.
Capitalization
An increase in the principal balance of a Stafford,
PLUS, or Federal Consolidation loan that occurs
when a lender adds the unpaid interest accrued
on the loan to the outstanding principal balance.
Subsequent interest accrues on the new total
principal balance, which includes any capitalized
interest.
CDR
Cohort Default Rate.
The CDR is the percentage of borrowers of
certain federal education loans who default
before the end of the fiscal year following the
fiscal year in which they entered repayment on
their loans. ED annually calculates this rate to
determine the default experience of students
who attended a particular school during a
specific time period.
Certification
The act of attesting that something is true or
meets a certain standard. For example, the school
completes its section of a FFELP application,
thereby certifying the borrower’s eligibility for
the guarantee.
CFR
Code of Federal Regulations.
The CFR is a collection of federal regulations
disseminated by the U.S. government. ED’s
regulations are codified in Volume 34 of the CFR.
Search the most recent CFR at
www.access.gpo.gov/nara/cfr/cfr-tablesearch.html#page1
or go to www.ifap.ed.gov and
click on “Code of Federal Regulations (GPO
Compilation)” under “Laws & Regulations.”
41

COA
Cost of Attendance.
The total estimated cost for a student to attend
school, including tuition and fees, room and
board, allowances for books and supplies,
transportation and personal and incidental
expenses.
Common Manual
www.commonmanual.org.
A compilation of federal statute, regulation and
other guidance to assist schools and lenders in
administering the FFELP. Written in a life-of-loan
sequence and in the simplest terms, the manual
provides an efficient “first source” to locate
important guidance on daily processing
questions. The manual also includes an extensive
array of hyperlinks from its text to its source
material in statute, regulations and the
Department’s subregulatory publications
Day
A calendar day unless otherwise noted.
DCL
Dear Colleague Letter.
ED distributes DCLs to schools, lenders, servicers
and guarantors to provide interpretive policy
guidance about federal student aid programs.
Typically, a DCL provides interim guidance after
Congress reauthorizes the Higher Education Act
or between releases of final regulations. Recent
and archived DCLs are available in the Letters
and Announcements section on the Information
for Financial Aid Professionals Web site at
www.ifap.ed.gov. Listed below are the types of
DCLs that ED publishes:
General Distribution (GEN).
Training Announcements (ANN).
Campus-based Programs (CB).
Pell Grant Program (P).
Financial Partners (FP).
Default
The failure of a borrower (or endorser or comaker,
if any) to make installment payments when due,
provided that this failure persists for the most
recent period of 270 days (for a loan repayable in
monthly installments) or the most recent 330-
day period (for a loan repayable in less frequent
installments).
42

Disbursement
Traditionally, FFELP regulations have referred to
the lender’s “disbursement” of funds to a school,
and the school’s “delivery” of the loan proceeds to
a student. More recently, the Cash Management
regulations have used the term “disbursement” to
refer to the payment of FSA funds to a student or
parent, including the payment of loan funds. We
will use “disbursement” in the sense of Cash
Management regulations, that is, all payments to
a student or borrower.Methods of disbursement
include:
Issuing checks.
Electronic Funds Transfer to a bank account
designated by the student, or parent in the
case of a parent PLUS loan.
Dispensing cash for which the school obtains
a receipt.
Crediting a student’s school account.
Note: When issuing a check to the student or parent,
notification to the borrower can be accomplished by including
disbursement dates on award notifications, sending a letter to
the borrower, or other reasonable means by which the school
notifies the borrower of the availability of the funds.
ED
U.S. Department of Education.
www.ed.gov.
ED was created in 1980 when several federal
agencies were combined. Its mission is to ensure
equal access to education and to promote
educational excellence throughout the nation.
ED’s purpose is to:
Establish policies on federal financial aid for
education.
Distribute and monitor federal student aid
funds.
Collect data on schools and disseminate that
research.
Focus national attention on key educational
issues.
Prohibit discrimination and ensure equal
access to education.
EFA
Estimated Financial Assistance.
The school’s estimate of the amount of financial
assistance that a student has been or will be
awarded for the enrollment period for which a
loan is sought. The EFA includes assistance from
federal, state, institutional, scholarship, grant,
financial need-based employment, or other
sources. EFA does not include veterans
educational benefits or ROTC payments.
EFC
Expected Family Contribution.
The EFC figure is determined by Congressionallyapproved
Federal Methodology need-analysis
formulas. The EFC is an index that colleges use to
determine financial aid eligibility.
43

EFT
Electronic Funds Transfer.
EFT is used by some schools and lenders to
electronically transfer funds for Stafford and
PLUS loans directly to participating schools
without requiring an intermediate check for the
student to endorse.
FAFSA
Free Application for Federal Student Aid.
The FAFSA is ED’s official form used to apply for
aid from all federal student aid programs.
FDLP
Federal Direct Student Loan Program.
The FDLP is similar to the Federal Family
Education Loan Program. The funds for these
loans are provided by the U.S. government
directly to students and their parents through
their schools.
Federal Stafford Loans
Federal Stafford loans are available to
undergraduate and graduate students enrolled
at least half time. Students may borrow up to
established annual loan limits, based upon their
grade level. Stafford loans may be subsidized
(need-based) or unsubsidized (non-need-based).
Recipients have a six-month grace period upon
ceasing to be enrolled at least half time.
FFELP
Federal Family Education Loan Program.
Loan programs authorized by Title IV, Part B of
the Higher Education Act of 1965, as amended,
that includes Federal Stafford loans, Federal
Unsubsidized Stafford loans, Federal PLUS loans
and Federal Consolidation loans. These loan
programs are funded by lenders, guaranteed by
guarantors and reinsured by the federal
government. These programs are defined
individually in 34 CFR 682.
FT
Full Time.
Federal regulations specify a minimum standard
full-time definition for undergraduate students
but not for graduate students. For graduate and
professional students, the school must define
what comprises full-time status for each
graduate program based on standards
developed by the school. For undergraduates,
full-time status must be at least one of the
following:
12 semester hours or 12 quarter hours per
academic term in an educational program
using a semester, trimester or quarter system.
24 semester hours or 36 quarter hours per
academic year for an educational program
using credit hours but not using a semester,
trimester or quarter system, or the prorated
equivalent for a program of less than one
academic year.
24 clock hours per week for an educational
program using clock hours.
Funds
Any monies (including checks, drafts, or other
instruments); any commitment to provide
money; or any commitment of insurance that has
been, or may be, provided under the guarantor’s
programs to a borrower enrolled at and
attending a participating school, or a borrower
accepted for enrollment at a participating school.
FY
Fiscal Year.
The FY is the 12-month period during which
financial assistance is awarded through the
federal government. The federal fiscal year is
Oct. 1 - Sept. 30.
44

Grace Period
The period that begins the day after a Stafford
loan borrower ceases to be enrolled at least half
time at an eligible school, ends the day before
the repayment period begins, and during which
payments of principal are not required.
Guarantor
A private, nonprofit organization or state
government entity that guarantees to the lender
repayment of federal student loans. The
guarantor works with borrowers whose student
loan payments are seriously past due to help
them avoid default. If a borrower defaults, the
guarantor partially reimburses the lender,
purchases the defaulted loan and continues
efforts to recover the amount owed by the
borrower.
HEA
Higher Education Act of 1965, as amended.
The HEA is the law that authorizes most federal
programs and activities that assist and enable
students to enter and succeed in postsecondary
education. The primary focus of the HEA is
student aid, in the form of grants, loans and workstudy
assistance.
HT
Half Time.
To be enrolled half time, a student must be taking
at least half of the course load of a full-time
student. Your school defines a full-time workload,
but undergraduate programs must meet the
minimum standards set by ED. The school has
sole discretion to define its graduate program
enrollment requirements, but half-time
enrollment for a graduate student also must
equate to at least half of the school’s full-time
enrollment requirement.
IFAP
Information for Financial Aid Professionals.
www.ifap.ed.gov.
Information for Financial Aid Professionals is a
Web site that was developed to provide school
and financial partners with electronic access to
the many FSA publications that guide the
administration of the Title IV Student Financial
Assistance programs.
Late Disbursement
A disbursement made by a lender or delivered by
a school after the end of the loan period or the
date on which the student ceased to be enrolled
on at least a half-time basis.
Lender
The organization that funds education loans for
students and parents under the FFELP.
LTHT
Less Than Half Time.
To be enrolled less than half time, a student must
be taking less than half of the course load of a
full-time student. Your school defines a full-time
workload, but the definition must meet the
minimum standards set by ED.
MPN
Master Promissory Note.
An MPN is a contract students or parents sign
when taking out a Stafford or PLUS loan. The MPN
allows borrowers to receive loans for either a
single academic year or multiple academic years.
Net Amount
The resulting amount after any applicable taxes
or fees have been deducted.
45

NSLDS
National Student Loan Data System.
www.nslds.ed.gov.
NSLDS is ED’s central database for student aid. It
receives data from schools, guarantors, FFEL and
Direct Student Loan programs, the Pell Grant
program and other ED programs. NSLDS provides
a centralized, integrated view of Title IV loans and
Pell Grants that are tracked through their entire
cycle — from aid approval through closure.
Students also can view their information using
their PIN.
Partial Financial Hardship
Partial financial hardship exists when the annual
amount due on a borrower’s eligible loans, as
calculated under the standard 10-year
repayment plan, exceeds 15 percent of the
difference between the borrower’s adjusted
gross income and 150 percent of the poverty
income for the borrower’s family size.
Passive Confirmation
A passive confirmation process requires that a
borrower be notified when a loan is made, but
the borrower must take action only if the
borrower does not want the loan, or wants to
change the loan amount. With a passive process,
loan funds may be disbursed after the borrower
has been notified of the new loan.
Payment Period
The basis on which a school must schedule and
deliver disbursements for a particular loan
period. The payment period begins on the first
day of regularly scheduled classes. A payment
period is determined based on the structure of
the school’s academic program. At a school that
does not use standard terms, a payment period is
measured in credit or clock hours completed by
the student in relation to the length of the
student’s program of study. The payment period
requirement does not eliminate the multiple
disbursement requirement for a school to deliver
loan proceeds in substantially equal installments,
with no installment exceeding one-half of the
loan amount.
Period of Enrollment
The period for which a Stafford or PLUS loan is
intended. Except at non-term schools, the period
of enrollment must coincide with a bona fide
academic term established by the school for
which institutional charges generally are
assessed (for example, semester, trimester,
quarter, length of the student’s program or
academic year). Also referred to as the loan
period.
Proration
A reduction of the standard annual loan limit for
an undergraduate student. Proration of the loan
amount is required if the student’s program, or
the remainder of the student’s program, is less
than a full academic year in length.
SAY
Scheduled Academic Year.
SAY is a fixed-period academic year that typically
begins and ends the same time each year. Annual
loan limits are tied to the SAY for the school’s
students.
46

References, Resources and Web Sites
Federal Legislation or Regulations
Electronic Code of Federal Regulations.
http://ecfr.gpoaccess.gov.
U.S. Department of Education
Dear Colleague Letter GEN-05-16.
Subject: Responses to recent, recurring Federal Student Aid questions.
October 2005.
www.ifap.ed.gov/dpcletters/GEN0516.html.
Dear Colleague Letter GEN-01-09.
Subject: NSLDS Student Transfer Monitoring Process.
July 2001.
www.ifap.ed.gov/dpcletters/GEN0109.html.
2008-2009 Federal Student Aid Handbook.
Volume 1: Student Eligibility.
Chapter 1: School-Determined Requirements.
www.ifap.ed.gov.
Volume 1: Student Eligibility.
Chapter 3: NSLDS Financial Aid History.
www.ifap.ed.gov.
Volume 3: Calculating Awards and Packaging.
Chapter 5: Stafford/PLUS Loan Periods and Amounts.
www.ifap.ed.gov.
Volume 3: Calculating Awards and Packaging.
Chapter 7: Packaging Aid.
www.ifap.ed.gov.
National Student Loan Data Service.
User Guide for Transfer Student Monitoring on the Web.
June 2007.
www.ifap.ed.gov/nsldsmaterials/attachments/June07NSLDSUserGuideTSM.pdf.
National Student Loan Data System.
Web Site for Financial Aid Professionals.
Subject: Download Help.
www.nslds.ed.gov/nslds_FAP/documents/TransferMonitoring.pdf.
FFELP Stafford Loan School Certification Form.
www.ifap.ed.gov/dpcletters/attachments/FP0904StaffordSchoolCertExp073111.pdf.
FFELP Federal Stafford Loan Master Promissory Note.
www.ifap.ed.gov/dpcletters/attachments/FP0904StaffordHEOAExp073111.pdf.
47

Other Resources
The College Board.
Trends in Student Aid 2008.
http://professionals.collegeboard.com/profdownload/trends-in-student-aid-2008.pdf.
Common Manual.
April 2009.
www.commonmanual.org.
48

Appendices
Federal Stafford Loan Life Cycle Chart
Federal Stafford Loan Master Promissory Note
Case Study Answers
49

Federal Stafford Loan Life Cycle Chart
The Life of a Stafford Loan Figure 2-1
Phase 1
Origination
Applicant submits
Free Application for Federal
Student Aid (FAFSA)
Applicant completes Federal
Stafford Loan Master
Promissory Note and submits
to school, lender, or guarantor
School certifies loan eligibility
and sends loan information to
lender or guarantor
Lender reviews loan
information, approves loan,
and applies for guarantee
Guarantor reviews loan
information, guarantees
loan, and notifies lender
Lender provides disclosure to
borrower and sends
disbursement to school
School releases proceeds
to the borrower
School returns
proceeds to the lender
Lender cancels loan and
notifies guarantor
Phase 2
Interim Period
Borrower enters grace
period upon dropping
below half-time status
Phase 3
Repayment
Borrower may become
eligible for deferment or
forbearance
Borrower enters
repayment status
Borrower pays loan in
full or loan is paid
in full by
consolidation
Borrower
becomes
delinquent and
defaults
Borrower files
Chapter 12 or
13 bankruptcy
or hardship
petition
Borrower dies
Borrower
becomes totally
and
permanently
disabled
Borrower
applies or is
determined
eligible for
closed school
discharge
Borrower
applies for false
certification
discharge
Borrower
applies or is
determined
eligible for
unpaid refund
discharge
Borrower
applies for the
Teacher Loan
Forgiveness
Program
Borrower
applies or is
determined
eligible for
spouses and
parents of
victims of
September 11,
2001, discharge
Note: The appropriate entity will continue to service loan balances outstanding
after claim/discharge/forgiveness.
Lender files claim/discharge/
forgiveness with the guarantor
Provided from the 2009 Common Manual.
51

Federal Stafford Loan Master Promissory Note
52

Case Study Answers
Toney Richardson completed two years of study at Local Community College and is transferring to
State College for the 2009-2010 academic year to obtain a Bachelor of Science degree in biology.
Stafford Loan Eligibility Requirements
Toney completed his 2009-2010 Free Application for Federal Student Aid and no reject codes were
indicated on his Institutional Student Information Record. He talks with his advisor about his
schedule for the fall 2009 term. Full-time status at State College is 12 hours per semester and half
time is determined proportionally.
For how many hours does Toney need to register to be eligible for Stafford loans?
At least six hours.
Types of Federal Stafford Loans
Toney borrowed subsidized and unsubsidized Stafford loans between July 1, 2007, and June 30, 2009.
He plans to borrow Stafford loans at State College during the next two academic years.
What will be the interest rate on each of Toney’s loans?
Academic Year Subsidized Unsubsidized
2007-2008 6.8% 6.8%
2008-2009 6.0% 6.8%
2009-2010 5.6% 6.8%
2010-2011 4.5% 6.8%
53

Annual Undergraduate Stafford Loan Limits
After reviewing Toney’s academic transcript and ISIR, State College determines he is a third-year,
dependent student.
What is Toney’s 2009-2010 Stafford loan limit?
Subsidized Loans: $5,500
Unsubsidized Loans: $2,000
Toney’s EFC is $9,348 for the 2009-2010 academic year. State College’s cost of attendance for the
academic year is $12,548. The only aid for which Toney is eligible is Stafford loans.
Calculate Toney’s eligibility for subsidized and unsubsidized loans for 2009-2010.
Cost of Attendance $12,548
Expected Family Contribution - 9,348
Eligibility for Need-Based Aid 3,200
Subsidized Loan Eligibility: $3,200
Cost of Attendance $12,548
Estimated Financial Aid - 3,200
Eligibility for Non Need-Based Aid 9,348
Maximum Base Stafford Loan $5,500
Subsidized Stafford Loan - 3,200
Base Unsubsidized Loan Eligibility 2,300
Additional Unsubsidized Loan Eligibility + 2,000
Total Unsubsidized Loan Eligibility 4,300
Aggregate Stafford Loan Limits
Toney’s aggregate loan history as reported on the National Student Loan Data System is as follows:
$6,328 $6,328
$5,672
$5,672
$12,000
$12,000
$8,000
$8,000
54

Calculate Toney’s remaining aggregate eligibility.
Total Stafford Aggregate* $31,000
Subsidized Loans - 6,328
Unsubsidized Loans - 5,672
Remaining Stafford Aggregate Eligibility 19,000
*Not more than $23,000 can be subsidized
Base Stafford Aggregate $23,000
Subsidized Loans - 6,328
Remaining Subsidized Aggregate 16,672
Transfer Student Monitoring Process
State College is a term-based, credit-hour school and uses a scheduled academic year with a summer
header. The 2009-2010 academic calendar is as follows:
Summer term: June 29 – Aug. 21.
Fall term: Sept. 1 – Dec. 11.
Spring term: Jan. 25 – May 14.
On July 15, Toney notifies State College that he plans to enroll for the fall term. Later that day the
financial aid office adds him to the transfer student monitoring list.
Complete the following NSLDS Transfer Monitoring Request:
AAA-AA-AAAA
ANTHONY
RICHARDSON
12291988
09012009
07152009
Entrance Counseling
Is Toney required to receive entrance counseling before receiving his Stafford loan funds? Why or
why not?
No, Toney is not required to receive entrance counseling because he is a prior Stafford Loan borrower.
55

Weeks in an Academic Year
State College is a term-based, credit-hour school and uses a scheduled academic year with a summer
header. The 2009-2010 academic calendar is as follows:
Summer term: June 29 – Aug. 21.
Fall term: Sept. 1 – Dec. 11.
Spring term: Jan. 25 – May 14.
Shaded areas indicate dates when classes are not in session.
June 2009 July 2009 August 2009
1 2 3 4 5 6 1 2 3 4 1
7 8 9 10 11 12 13 5 6 7 8 9 10 11 2 3 4 5 6 7 8
14 15 16 17 18 19 20 12 13 14 15 16 17 18 9 10 11 12 13 14 15
21 22 23 24 25 26 27 19 20 21 22 23 24 25 16 17 18 19 20 21 22
28 29 30 26 27 28 29 30 31 23 24 25 26 27 28 29
30 31
September 2009 October 2009 November 2009
1 2 3 4 5 1 2 3 1 2 3 4 5 6 7
6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14
13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21
20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28
27 28 29 30 25 26 27 28 29 30 31 29 30
December 2009 January 2010 February 2010
1 2 3 4 5 1 2 1 2 3 4 5 6
6 7 8 9 10 11 12 3 4 5 6 7 8 9 7 8 9 10 11 12 13
13 14 15 16 17 18 19 10 11 12 13 14 15 16 14 15 16 17 18 19 20
20 21 22 23 24 25 26 17 18 19 20 21 22 23 21 22 23 24 25 26 27
27 28 29 30 31 24 25 26 27 28 29 30 28
31
March 2010 April 2010 May 2010
1 2 3 4 5 6 1 2 3 1
7 8 9 10 11 12 13 4 5 6 7 8 9 10 2 3 4 5 6 7 8
14 15 16 17 18 19 20 11 12 13 14 15 16 17 9 10 11 12 13 14 15
21 22 23 24 25 26 27 18 19 20 21 22 23 24 16 17 18 19 20 21 22
28 29 30 31 25 26 27 28 29 30 23 24 25 26 27 28 29
30 31
What are the beginning and end dates of State College’s academic year?
Sept. 1, 2009 – May 14, 2010.
How many weeks are in the academic year?
30 weeks.
The following weeks do not count in the academic year:
Dec. 13 - 19 Jan. 10 - 16
Dec. 20 - 26 Jan. 17-23
Dec. 27 - Jan. 2 March 21 - 27
Jan. 3 - 9
56

Loan Period
Toney does not plan to attend State College during the summer, but plans to enroll and borrow for
the fall and spring terms during the 2009-2010 academic year.
For what loan period(s) will his loan be certified?
Sept. 1 – May 14
Payment Period
Toney does not plan to attend State College during the summer, but plans to enroll for both fall and
spring during the 2009-2010 academic year.
What will be the payment period(s) for his loan?
Fall term: Sept. 1 – Dec. 11
Spring term: Jan. 25 – May 14
What gross amount (before fees) of subsidized and unsubsidized funds will be certified for the
payment period(s)?
Fall Term
Spring Term
Subsidized loan $1,600 $1,600
Unsubsidized loan + 2,150 + 2,150
Total 3,750 3,750
Disbursement Schedule
Are Toney’s loans subject to the first-year, first-time borrower delayed disbursement provision? Why
or why not?
No, because Toney is not a first-year, first-time borrower.
August 2009 September 2009 January 2010
1 1 2 3 4 5 1 2
2 3 4 5 6 7 8 6 7 8 9 10 11 12 3 4 5 6 7 8 9
9 10 11 12 13 14 15 13 14 15 16 17 18 19 10 11 12 13 14 15 16
16 17 18 19 20 21 22 20 21 22 23 24 25 26 17 18 19 20 21 22 23
23 24 25 26 27 28 29 27 28 29 30 24 25 26 27 28 29 30
30 31 31
Toney’s lender uses EFT for funds delivery. What is the earliest date the school can set the
disbursement schedule for the fall and spring terms?
Thirteen days before the first day of the first payment period, or Aug. 19, 2009, and Jan. 12, 2010.
57

Certification Form
Toney plans to complete his biology degree by May 15, 2011, and will enroll in nine hours for the fall
and spring terms.
Complete Toney’s FFELP Stafford Loan School Certification Form.
Richardson Anthony C AAA-AA-AAAA
67 Ridge Court 555-555-1234 12/29/1988
Indianapolis IN 46032 tcrichardson@theinternet.com
Anytown Bank New York City NY
3
5/15/2011
09-01-2009
05-14-2010 3,200 4,300
08-19-2009 01-12-2010
Loan Cancellation Requests
State College allows students to accept or decline loans via the electronic award notifications the
school provides. Toney accepts his loans on Aug. 17. On Aug. 20, he receives notification that funds will
disburse on Aug. 31. On Aug. 25, he decides to reduce his unsubsidized Stafford loan to $1,000 for the
fall term and cancel his spring term unsubsidized loan.
Is the school required to process Toney’s cancellation request? Why or why not?
Yes, because Toney’s request is received prior to loan funds being disbursed.
If so, what is the latest date the school may process the request?
The school has until the later of the first day of payment period or 14 days after notifying the borrower
of the right to cancel. The first day of the payment period is Sept. 1, and 14 days after the right to cancel
notification was sent is Aug. 31, so Sept. 1 is the latest date.
August 2009 September 2009
1 1 2 3 4 5
2 3 4 5 6 7 8 6 7 8 9 10 11 12
9 10 11 12 13 14 15 13 14 15 16 17 18 19
16 17 18 19 20 21 22 20 21 22 23 24 25 26
23 24 25 26 27 28 29 27 28 29 30
30 31
58

Disbursement Frequency
State College’s cohort default rates are as follows:
FY 2003 11.2%
FY 2004 9.9%
FY 2005 9.4%
FY 2006 9.7%
Indicate Toney’s loan disbursement details below:
Loan Type Gross Amount Disbursement Frequency Term(s)
Subsidized $3,200 Single Multiple Fall Spring
Unsubsidized $1,000 Single Multiple Fall Spring
Loan fees usually are deducted from the loan amount. The remaining “net” loan amount is the
principal balance that the lender will disburse to the student in two or more installments.
What fee(s) will Toney be charged on his subsidized and unsubsidized loans?
Subsidized
Unsubsidized
Origination fee: 0.5% = $16 0.5% = $5
Federal Default Fee: 1.0% = $32 1.0% = $10
Calculate the net amount (after fees) of each disbursement of Toney’s loans:
Loan Type Fall Spring
Subsidized 1 st $1,576 2 nd 1 st $1,576 2 nd
Unsubsidized 1 st $985 2 nd 1 st 2 nd
Subsidized Loan
$3,200 x 1.5% = $48
$3,200 – 48 = $3,152
$3,152 ÷ 2 = $1,576
Unsubsidized Loan
$1,000 x 1.5% = $15
$1,000 – 15 = $985
Early Disbursements
State College is a term-based, credit-hour school and uses a scheduled academic year with a summer
header. The first date of the fall payment period is Sept. 1.
August 2009 September 2009
1 1 2 3 4 5
2 3 4 5 6 7 8 6 7 8 9 10 11 12
9 10 11 12 13 14 15 13 14 15 16 17 18 19
16 17 18 19 20 21 22 20 21 22 23 24 25 26
23 24 25 26 27 28 29 27 28 29 30
30 31
What is the earliest date that State College can set its FFELP disbursements for the fall term?
Ten days before the first day of the payment period, or Aug. 22, 2009.
59

Disbursement Methods
State College credits Stafford loan funds to the student’s account to pay institutional charges. Any
remaining balance is issued via EFT to the student’s bank account. Toney did not authorize any
additional charges to be paid from his loan funds.
Toney’s institutional charges for the fall term are as follows:
Tuition $1,387.72
Fees $439.00
Parking permit $125.00
What amount will be deposited into Toney’s bank account, if any?
Subsidized Loan $1,576.00
Unsubsidized Loan + 985.00
Total Loans 2,561.00
Tuition $1,387.72
Fees + 439.00
Total Authorized Charges 1,826.72
Total Loans $2,561.00
Total Authorized Charges - 1,826.72
Amount Deposited 734.28
Will Toney owe any money to State College for the fall term? Why or why not?
Yes, Toney still will owe $125 for his parking pass because he did not authorize other charges to be paid
with his loan funds.
Late Disbursements
Toney completed the fall 2009 term and started spring 2010 at State College. On May 10, Toney
requested $2,000 in an unsubsidized loan. The financial aid office determines that he is eligible for the
loan and certifies it on May 13. He completes the spring term on May 14 without having received his
loan.
Is State College required to provide a late disbursement to Toney? Why or why not?
Yes, because Toney completed the payment period for which the loan was intended.
60

Proration Methods
Toney will continue enrollment as a fourth-year student at State College for 2010-2011. Based on
Toney’s 2010-2011 ISIR, his EFC is $9,348. State College’s cost of attendance for the academic year is
$13,048.
Calculate Toney’s eligibility for subsidized and unsubsidized loans for 2010-2011.
Cost of Attendance $13,048
Expected Family Contribution - 9,348
Eligibility for Need-Based Aid 3,700
Subsidized Loan Eligibility: $3,700
Cost of Attendance $13,048
Estimated Financial Aid - 3,700
Eligibility for Non Need-Based Aid 9,348
Maximum Base Stafford Loan $5,500
Subsidized Stafford Loan - 3,700
Base Unsubsidized Loan Eligibility 1,800
Additional Unsubsidized Loan Eligibility + 2,000
Total Unsubsidized Loan Eligibility 3,800
Toney informs the financial aid office that he is scheduled to graduate after the fall term of 2010. He
will enroll in 15 hours for the fall to finish his degree program and State’s academic year is 24 hours.
Does this change Toney’s eligibility for subsidized and unsubsidized loans? If so, what is his new loan
eligibility?
Yes. Because Toney’s remaining period of study is less than one academic year, his loan eligibility must
be prorated.
61

Step 1: Calculate A.
A =
0.625 =
Semester, Trimester, Quarter or Clock Hours in Program
Semester, Trimester, Quarter or Clock Hours in Academic Year
15
24
Step 2: Multiply the annual loan limit(s) by the result of A.
Base Stafford Loan Limit
(subsidized and/or unsubsidized)
x Result of A =
Annual Prorated
Base Stafford Loan Limit
$5,500 x 0.625 =
Additional Unsubsidized Loan Limit x Result of A =
$2,000 x 0.625 =
$3,437.50
Base Stafford
Annual Prorated
Unsubsidized Loan Limit
$1,250.00
Additional Unsubsidized
Base Subsidized Loan Eligibility $3,437.50
Base Unsubsidized Loan Eligibility 0
Additional Unsubsidized Loan Eligibility + 1,250.00
Total Stafford Loan Eligibility 4,687.50
Repayment Relief
Toney is having a hard time finding a job after graduating with his biology degree. He still is actively
looking for employment and has enrolled in six hours of graduate study at State College. He is
concerned about making his student loan payments and contacts his lender(s) for assistance.
For which deferment(s) may Toney qualify?
In-school.
Graduate fellowship.
Rehabilitation training.
Unemployment.
Economic hardship.
Military service.
Post-active duty student.
62

USA Funds® is the nation’s leading education loan guarantor. A nonprofit corporation,
USA Funds works to enhance postsecondary education preparedness, access and success
by providing and supporting financial and other valued services.
9/09 UNIV-191 © 2009 United Student Aid Funds, Inc. All rights reserved.