Federal Updates

ED issues implementation guidance on HERA related changes

On Tuesday, June 20, 2006, the Department issued Dear Colleague Letter (DCL) GEN-06-10 providing additional guidance to institutions about changes resulting from the Higher Education Reconciliation Act (HERA) of 2005. The DCL outlines institutional responsibility and ED action that is required in order to implement certain changes required by the HERA.

Topics addressed in GEN-06-10 include:

• Definition of estimated financial assistance (EFA)
• Construction of a student's cost of attendance (COA)
• Treatment of qualified education benefits, such as 529 pre-paid tuition and savings plans
• Calculation of an applicant's expected family contribution (EFC)
• Treatment of certain assets and resources
• Including active military members in the definition of an independent student
• Student eligibility related to drug provisions

Of particular note
GEN-06-10 elaborates on the treatment of qualified education benefits, and clarifies that "If an institution is aware that an independent student (or spouse) or the parents of a dependent student own a qualified education benefit, it must ensure that the value of the plan is correctly included as an asset in the calculation of the student's EFC." If the independent student (or spouse) is the account holder, the value of the plan must be reported as an asset of the student; if the parent is the account holder, the value of the plan must be reported as an asset of the parent; if someone whose information is not included on the FAFSA, such as a grandparent or non-custodial parent, is the account holder, the value of the plan is not reported — unless the school has determined that it should be reported on the FAFSA per the use of professional judgment (on a case-by-base basis).

The DCL also clarifies that "the value of the asset that must be reported on the FAFSA is, for savings plans or savings accounts, the balance of the account at the time the FAFSA is completed" and "the value [of the prepaid tuition plan] is the 'refund' value of any tuition credits or certificates purchased under the qualified education benefit... [i.e.,] the amount the owner of the plan would receive if the account were liquidated as of the date the asset is reported." Shoptalk Online Edition 355 had previously stated that "distributions" of a prepaid tuition plan must be reported on the FAFSA — however, the DCL clarifies that it is not the distributions of the plan but the plan's 'refund' value that must be reported.

More information
To access GEN-06-10, visit http://ifap.ed.gov/dpcletters/GEN0610.html.

For questions about DCL GEN-06-10, contact TG customer assistance at (800) 845-6267 or send an e-mail message to cust.assist@tgslc.org.

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ED releases guidance on HERA for foreign schools

Last week, ED released a Dear Colleague Letter (DCL) that highlights issues of particular interest to foreign schools, and provides information on foreign school reporting requirements. Among the topics covered in GEN-06-11 are the ineligibility of telecommunications programs offered by foreign schools, changes in FFELP direct disbursement rules, verification of enrollment for direct disbursements, and general disbursement requirements. Also included is information about the availability of a new reporting feature in the E-APP, the methods a foreign school may use to obtain a valid Student Aid Report, referrals to ED's Office of Inspector General, and a reminder of the foreign school's responsibility to submit annual compliance audits and financial statements.

GEN-06-11 also announces the creation of FSA COACH for Foreign Schools (available at www.ed.gov/fsacoach/foreignschools), and notes that once final regulations regarding the changes under HERA have been published, ED will mail a copy of those regulations to all foreign schools.

How TG will help
TG is committed to ensuring that all of our business partners, in the U.S. and beyond, have access to the most accurate and timely information and guidance available. We are aware of the communications difficulties facing our foreign business partners, and are taking a proactive role in disseminating this information as efficiently as possible. TG's loan guarantee operations/data reporting and compliance administrative operations are leading this effort by sending an e-mail to the designated contact listed in the Postsecondary Education Participants System (PEPS) for each foreign school. The e-mail will contain a summary of the DCL, along with links to the online versions of the DCL and the text of the HERA, and TG contact information if the school official needs assistance.

More information
To access GEN-06-11, visit http://ifap.ed.gov/dpcletters/GEN0611.html.

If you have questions about DCL GEN-06-11, please contact Bonnie Brinkley, assistant manager for TG loan guarantee operations/data reporting, at bonnie.brinkley@tgslc.org.

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CCI forms revised as a result of HERA changes

Recently, NCHELP announced that Common Claim Initiative (CCI) forms were revised to incorporate changes resulting from the Higher Education Reconciliation Act (HERA) of 2005. The revised forms include the FFELP Default Aversion Assistance Request (DAAR) form, the FFELP Claim Form, and the FFELP Supplemental Claim Form.

In addition to including modifications necessary as a result of the HERA, the Default Aversion and Claim Subcommittee (DACS) included a borrower e-mail address field in the demographic information section of the DAAR form. This change is consistent with the similar addition of the e-mail address field in the Master Promissory Notes. Discussions are currently taking place in an effort to align the electronic exchange through Common Account Maintenance (CAM) with the revised DAAR form.

The revised CCI forms are available for immediate use with an effective date of July 1, 2006. PDF versions of the forms can be found on TG Online at http://www.tgslc.org/forms/index.cfm.

More information
For more information about the revised CCI forms, call Ron Stroud, TG assistant vice president of claims, at (800) 252-9743, ext. 4779, or send an e-mail message to ron.stroud@tgslc.org.

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