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Trends and Issues

Shoptalk Online 418, August 14, 2007

Trends and Issues

Sticky situations: Modules and mini-sessions

A school with standard term-based programs (semesters, trimesters, or quarters) often does creative things with some of its terms to provide students with flexible scheduling and coursework options. Many of these creative approaches include the use of modules and/or mini-sessions, particularly in the summer.

But such arrangements sometimes leave the financial aid office (FAO) asking itself several confusing questions: How does the FAO certify loans and schedule disbursements for modules and mini-sessions? How does the FAO handle the situation when a student drops a class during a module or mini-session? And how does the FAO handle the situation when a student withdraws from the school during a module or mini-session?

This article is another installment in our series on sticky situations that come up occasionally in the Title IV programs — see previous articles in editions 384, 390, 394, 402, and 409 — and addresses some common issues that arise with modules and mini-sessions.

Laying the groundwork
First, what are modules and mini-sessions? While not defined explicitly in ED guidance, modules and mini-sessions are generally understood as shorter periods in which a student could enroll within the bounds of a longer term. ED sheds light on the nature of modules on pages 5-69 to 5-70 of the 2007-08 Federal Student Aid Handbook. According to guidance received from ED's Office of Postsecondary Education (OPE), in the context of the use of the term "module" on those pages, modules and mini-sessions are the same.

Second, how does a school treat modules or mini-sessions with respect to the longer term? A school has the option to treat all of its mini-sessions as individual nonstandard terms or can combine them into a single standard term (per the 2006-07 Federal Student Aid Handbook, page 3-39). The school must be consistent for all students enrolled in the same academic program and for all Title IV purposes.

How does the FAO certify loans and schedule disbursements for modules and mini-sessions?
If a school treats its mini-sessions as a single standard term, the school certifies a loan period that begins on the first day of the first mini-session the student is scheduled to attend and ends on the last day of the last mini-session the student is scheduled to attend. The student's cost of attendance for the loan period should include costs only for the mini-sessions that the student is scheduled to attend.

The earliest the school may deliver the first disbursement of the loan — for a student who is not subject to delayed disbursement — is 10 days before the start of the first mini-session the student is scheduled to attend. If the school is not exempt from the multiple disbursement requirement, and the student does not plan to enroll in all mini-sessions, the second disbursement may not be made until the mid-point is reached when the student is actually enrolled and in attendance.

For example, if a student is scheduled to attend mini-sessions 1 and 4 only, even though the midpoint of the term would normally be the beginning of mini-session 3, the mid-point for this student is the beginning of mini-session 4.

If a school treats its mini-sessions as individual nonstandard terms, then the whole program is considered a nonstandard program. A nonstandard program's minimum loan period is the length of the student's program at the school, the school's academic year, or the student's remaining period of enrollment for the program of study at the school, whichever is less. The disbursements would coincide with the payment periods, which would be one per term.

What does the FAO do when a student drops a class during a module or mini-session?
If the school treats its mini-sessions as separate nonstandard terms, an undergraduate student would have to be enrolled for 12 credit hours in a mini-session in order to be considered full time for that mini-session. Thus, if a student dropped a class in a mini-session treated as a nonstandard term, that drop would affect the enrollment status of that nonstandard term only.

If the school combines the mini-sessions into a single standard term, a student would only have to enroll for 12 credits total — in all mini-sessions combined — in order to be considered full time for that term. Thus, if a student dropped a class during a mini-session of a combined standard term, that drop would affect the enrollment status for the full combined term. If a student dropped a class for a future mini-session of a combined standard term, that drop would similarly affect the enrollment status for the full combined term.

For example: A school has a summer term with two mini-sessions and combines the mini-sessions into a single standard term. A student is enrolled in both mini-sessions at three hours each — for a total of six hours, thus half time. The student's school has certified a Stafford loan for the student for the full summer term. Per the Common Manual subsection 8.7.F, unless a student is subject to delayed delivery, and as long as the student is enrolled at least half time for the full term, the school may deliver the first disbursement of the student's Stafford loan funds up to 10 days prior to the beginning of the first mini-session in which the student is enrolled. Since the student is enrolled in the first mini-session of the term, the school may deliver the student's funds up to 10 days before the first day of the first mini-session.

If the school delivers the student's loan based on at least half-time enrollment at the beginning of the first mini-session of the summer term, and the student completes the first mini-session but subsequently drops the class for the second mini-session, the student is not considered withdrawn — the student is considered to have dropped from half time (6 hours) to below half time (3 hours). The school is not responsible for recovering the delivered loan funds. However, if there are any undelivered loan funds, the school cannot deliver those funds because the student is now enrolled less than half time — unless the school is able to offer those funds in a late delivery.

For more information on the conditions for late delivery, see the Common Manual subsection 8.7.E.

What does the FAO do when a student withdraws from the school during a module or mini-session?
The actions that a school must take when a student withdraws from the school during a module or mini-session vary, as outlined below. The following guidance is derived from the 2007-08 Federal Student Aid Handbook, pages 5-69 to 5-71; the NASFAA publication "NASFAA Answers Summer Financial Aid Questions" (see link under "More information" below); and responses to direct inquiries sent to ED's OPE. For the sake of simplicity, the guidance refers only to "mini-sessions," but "modules" could be substituted in the text and the same guidance would apply.

If a school considers its mini-sessions as separate nonstandard terms, and a student withdraws from a mini-session, the school must consider the student withdrawn for Title IV purposes and perform the R2T4 calculation, either on a payment period or period of enrollment basis, depending on how the school chooses to complete the calculation. The school would calculate the percentage of the period completed by dividing the number of days the student attended within the mini-session by the total number of days in the payment period or period of enrollment.
If a school considers its mini-sessions as combined into a single standard term, and a student withdraws from a mini-session, the school may or may not have to perform the R2T4 calculation.
- If a student does not complete at least one course by the end of the term, the school must consider the student to be withdrawn for Title IV purposes and perform the R2T4 calculation. The school would calculate the percentage of the period completed by dividing the total number of days the student has attended by the total number of days in the mini-sessions that the student was scheduled to attend.
- If a student completes a course from one mini-session but withdraws from a subsequent mini-session, the student is not considered withdrawn for Title IV purposes. The school is not required to perform the R2T4 calculation, because the student has completed at least one course by the end of the term. The student's actions represent, per the 2007-08 Federal Student Aid Handbook, page 5-21, "a change in enrollment status not a withdrawal," similar to the actions of a student who, in a fall semester not composed of mini-sessions, drops from 12 credits to 9 credits, or even from 6 credits to 3 credits. As long as the student does not drop down to 0 credits, the student is not considered withdrawn for R2T4 purposes.
  
  However, it is important to remember, as stated on pages 5-70 and 5-71 of the 2007-08 Federal Student Aid Handbook that, because of this change in enrollment status, the school would be required to recalculate any Pell Grant award in accordance with 34 CFR 690.80(b)(2)(ii). The school must complete this recalculation, because the student failed to begin attendance in the required number of credit hours for which the Pell grant was awarded.
  
  In addition, per Dear Colleague Letter GEN-00-24, the school would also be required to revise the student's cost of attendance in the event institutional charges were changed as a result of the reduced enrollment and in order to eliminate living expenses for periods of non-attendance; the school would then have to recalculate the student's eligibility for any campus-based aid that had been awarded. A change in enrollment status to less than half time as a result of the failure to begin attendance in all subsequent mini-sessions would not affect the student's eligibility for any FFELP or Direct Loan Program funds previously delivered.
- If a student withdraws from the first mini-session, but the student is enrolled in — and the school has obtained confirmation from the student that the student intends to attend — a future mini-session within the term, the school is not required to consider the student withdrawn for Title IV purposes. Again, the student's actions represent "a change in enrollment status not a withdrawal," and the school does not have to perform the R2T4 calculation. For confirmation, a school may not rely upon the student's previous registration. Rather, the confirmation from the student must be obtained at the time of, or after, the student's withdrawal.
  
  Of course, if the student subsequently does not attend the future mini-session as intended, or begins and ceases attendance prior to the end of the term (thus ensuring that the student will not complete at least one course by the end of the term), the school must consider the student withdrawn for Title IV purposes and complete the R2T4 calculation. Again, the school would calculate the percentage of the period completed by dividing the total number of days the student has attended by the total number of days in the mini-sessions that the student was scheduled to attend.

More information
For more information on how to handle mini-sessions/modules and disbursements, drops, and withdrawals, refer to the following sources:

ED's presentation "Need Analysis and Determining Eligibility in Crossover Periods" from the 2001 NASFAA Conference located at ifap.ed.gov/presentations/2001finalcrossovers.html
NASFAA's publication "NASFAA Answers Summer Financial Aid Questions," located at www.nasfaa.org/publications/2003/reg2003backup/rsummerqa060903.html
Dear Colleague Letter GEN-00-24, located at www.ifap.ed.gov/dpcletters/gen0024.html
The 2007-08 Federal Student Aid Handbook, pages 5-69 to 5-71

For questions on these topics, call TG customer assistance at (800) 845-6267 or send an message to cust.assist@tgslc.org.

Give yourself an entrance/exit counseling checkup

With the traditional fall semester just a couple of weeks away, schools will be making sure that their first-time Stafford loan borrowers complete entrance counseling. Now is the time to double-check that the entrance and exit counseling you are providing to your students has all of the requisite components.

Requirements are listed below.

Entrance counseling
According to federal regulations, entrance counseling must explain to the Stafford loan borrower:

The use of the Stafford Master Promissory Note (Stafford MPN)
The seriousness and importance of acquiring loan debt
The likely consequences of default
The borrower's obligation to repay the loan even if the borrower doesn't complete or doesn't like his or her education

Entrance counseling must also provide the borrower with sample monthly loan repayment amounts based on either:

Several levels of student indebtedness
The average indebtedness at the school or in the same program of study at the school

In addition to the required components, a school may choose to include, in its entrance counseling sessions, information on:

Other types of available financial aid
The importance of budgeting and managing living expenses
The terms and conditions of the loan
The student's rights and responsibilities
An overview of repayment, deferment, forbearance, cancellation options and conditions, loan consolidation, and refinancing options
The school's policy on the frequency of annual loan limits
The school's refund, withdrawal, and satisfactory academic progress (SAP) policies
Information on the consequences of borrowing several education loans and of delinquency and default
An explanation of loan sales and the servicing of loans
The importance of reading and retaining loan records
The importance of communication with the lender

Exit counseling
According to federal regulations, exit counseling must explain the same topics required in entrance counseling, plus the following:

The availability of various repayment options, including the standard, graduated, income-sensitive, and extended repayment terms, as well as consolidation
Debt-management strategies
The conditions for the deferment, forbearance, and discharge of a Stafford loan
The availability of ED's Student Loan Ombudsman's office
The availability of the National Student Loan Data System (NSLDS) for information about a student's federal student aid awards

In exit counseling, a school must also ensure that the borrower provides the following information, which the school must subsequently provide to the guarantor within 60 days of receipt:

The borrower's current name, address, Social Security Number, references, and driver's license number (including state of issuance)
The name and address of the borrower's next of kin
The borrower's expected permanent address (if known)
The name and address of the borrower's expected employer (if known)

To learn more
Whatever your school's method of offering entrance and exit counseling, ensure that it meets standards set by the Department of Education. The Federal Student Aid Handbook enumerates many of these specifications. The Common Manual includes them in various sections, including 4.4.B and 4.4.C, which are titled "Entrance Counseling" and "Exit Counseling."

For questions about entrance and exit counseling, contact TG's customer assistance team at (800) 845-6267, or send an message to cust.assist@tgslc.org.

Question of the week

Q.: Can a borrower receive teacher loan forgiveness for his or her Federal Consolidation loan?

A.: Assuming that the borrower meets all applicable eligibility criteria, a borrower may receive teacher loan forgiveness for a Federal Consolidation loan, but only on the portion of the Consolidation loan that was used to repay the borrower's qualifying Stafford loan(s).

Let's review an example. A student borrows Stafford loans to pay for his undergraduate degree, and Stafford and Grad PLUS loans to pay for his graduate degree. The borrower has $15,000 in Stafford loan debt and $5,000 in PLUS loan debt. The borrower graduates and consolidates all of his loans; the borrower now has a Consolidation loan of $20,000. The borrower subsequently performs five years of qualifying service for teacher loan forgiveness as a special education teacher. Note that the borrower could request a forbearance from his lender for the underlying portion of the loan that may be eligible for teacher loan forgiveness (the Stafford loan) for each of the five years of qualifying service. The borrower applies for the $17,500 forgiveness amount. Since the borrower can receive forgiveness only on the portion of the Consolidation loan that was used to repay the borrower's qualifying Stafford loan(s), the borrower may receive forgiveness on the underlying Stafford loan amount — for the original principal plus any accrued interest — up to a total of $17,500. The borrower may not receive forgiveness for any of the underlying PLUS loan portion of his Consolidation loan.

For more information about the Teacher Loan Forgiveness Program, see the Common Manual subsection 13.9.B and visit TG Online at www.tgslc.org/borrowers/tlf.cfm.

Do you have a question?
If you have a question that needs an answer, feel free to Ask TG™. Ask TG is TG's online query tool for borrowers, schools, and lenders. It includes a database of frequently asked questions about financial aid, student loan processing, and TG's products and services. To submit a question to Ask TG, visit tgslc.custhelp.com.