NASFAA’s Reauthorization Task Force Recommends Changes to Title IV General Provisions

 Reauthorization - Masthead  

Late in March, a task force of 17 NASFAA members forwarded an initial list of 61 recommendations for changes to the Higher Education Act in the upcoming Reauthorization to the NASFAA Board of Directors. The Board accepted most of those recommendations, although it was requested that some be further developed. This is the seventh in a series of articles that highlight those recommendations. NASFAA encourages members to suggest additional areas where legislative change is needed in the General Provisions. To do so, you may comment publicly below or send your concerns privately to For comprehensive coverage of all reauthorization topics, please refer to NASFAA’s HEA Reauthorization Web Center. 

Non-automatic Allowable Charges (Cash Management) 

NASFAA’s Reauthorization Task Force (RTF) recommends that schools be allowed to use Title IV funds to pay all allowable education-related costs charged to the student’s institutional account without any additional authorization, unless the student acts to place restrictions on automatic payment for certain charges.

Currently, the Department of Education (ED) requires a school to obtain a student’s permission to credit Title IV funds to charges beyond the automatically allowable costs of tuition, fees, institutionally contracted room and board, and, for Pell Grant recipients, bookstore charges related to the requirement to provide a means of obtaining books and supplies early in the payment period.  Schools can use Title IV funds to pay other education-related costs charged to the student’s institutional account only if the student authorizes it (i.e., only if the student opts-in to such use of Title IV funds by the school). 

The RTF recommendation reverses that process. A school would have to inform students of its policy and provide an opt-out by which the student could restrict automatic application of Title IV funds to only tuition, fees, institutionally contracted room and board, and early bookstore charges, unless the student has authorized payment of other charges.

Overaward tolerance 

The RTF recommends establishing in the General Provisions section of law a common overaward tolerance of $500, applicable to the Campus-Based and Direct Loan Programs. This recommendation seeks to ensure consistent treatment of students across the Title IV programs (other than Pell Grant, which is not subject to an overaward provision resulting from additional resources).

The Direct Loan Program currently contains no provision regarding overawards. Currently, once a Direct loan has been fully disbursed, there is no concept of an overaward; loan funds do not have to be returned. Before disbursement has occurred, however, a school must adjust the loan (or, under certain circumstances, other aid in the student’s package) to the dollar for any unanticipated additional aid the student is awarded. By contrast, in the campus-based programs there is a $300 tolerance (which dates to 1995).

The FSA Handbook advises that “When a student’s aid package includes assistance from multiple programs and those programs have different overpay¬ment regulations/requirements, a school must apply the most stringent/restric¬tive requirements.”

The RTF believes that consistency in the overaward provisions would reduce student confusion and provide a fairer approach among students with different aid packages.

Ability to benefit 

In August 2008, based on a successful Experimental Sites project, Congress added to the law a provision that allowed students who do not have a high school diploma or its recognized equivalent to demonstrate the ability to benefit (ATB) by satisfactory completion of six credit hours (or the equivalent) that are applicable toward a degree or certificate offered by the institution. This provision was in place a relatively short span of time before it was rescinded along with the longstanding testing option to demonstrate ATB.

The RTF recommends that the six-credit provision be reinstated, with some modification. A student who does not have a high school diploma or its recognized equivalent, and was not home-schooled, could meet the general student eligibility requirement concerning academic credentials by successfully completing, with the equivalent of a grade of C or better, at least 6 units of college coursework that is applicable toward a degree or certificate.

Reinstatement of student eligibility 

The RTF recommends that rules surrounding the regaining of student eligibility be standardized across the Title IV programs to the extent possible. Under current rules, a student may be paid Pell Grant, campus-based aid, and TEACH Grant only for the payment period in which he or she gains eligibility, but may receive Direct Loans for the entire loan period." For certain causes of ineligibility the student can receive Title IV aid for the entire award year once the ineligibility is resolved.

For most causes of ineligibility, this recommendation would reinstate a student’s eligibility retroactively to the beginning of the award year (or loan period). For satisfactory academic progress (SAP) issues, reinstatement would affect only the current payment period, but that point in time would apply to all of the TIV programs. Introducing as much consistency as possible improves not only administrative processes, but student understanding as well.

Selective Service Registration 

The RTF recommends elimination of the requirement to be registered with Selective Service from the general student eligibility criteria. This recommendation has been made repeatedly for a long time. At the very least, responsibility for determining whether a failure to register was knowing and willful should be shifted back to Selective Service and some path be constructed that allows students who knowingly failed to register, but who are past the age of registration, to gain eligibility (possibly through community service or federal awards restricted to the cost of tuition and fees only).

Drug-related Ineligibility 

The RTF recommends elimination of the tie between student eligibility and drug convictions. Currently, a federal or state drug conviction—if reported by the student—can disqualify a student for federal student aid if it occurred during a period of enrollment for which the student was receiving federal student aid. 

Many if not most schools currently have admissions and student conduct rules which address drug use. Institutions generally have internal policies and procedures that would result in suspension or expulsion of students who are convicted of drug abuse while enrolled.

I-9 Employment Eligibility Verification 

The RTF recommends that the results of data base matches be acceptable in lieu of documents used to establish employment eligibility.

Currently schools are required to collect copies of Social Security Cards, Alien Registration Cards, citizenship documents, or passports even though citizenship, social security and INS matches are performed in the federal student aid application process.  This recommendation would simplify the process without compromising the law’s intent of verifying identity and eligibility for employment.

Date of issuance of final report for a program review 

The RTF is considering whether ED should be required to provide the final report for a Program Review to an institution within some specified timeframe after receipt of the institution’s response. In the past, institutions have complained about inordinately long delays in seeing their final report. Such delays create uncertainty and burden for the school because it does not know what is required to resolve problems or continue funding in Title IV programs.

However, the RTF also realizes that delays are sometimes due to reviewers trying to get a policy question resolved to the school’s benefit.

This recommendation is currently on hold, pending results of a survey that NASFAA will be sending out soon to the membership to ascertain the extent and nature of this issue.  Watch for it!


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