Trends and Issues

Sticky situations: Satisfactory academic progress

In this article, Shoptalk Online continues its series on difficult policy issues that come up every so often in the Title IV programs with a discussion of satisfactory academic progress (SAP). Because we know that few areas of financial aid policy are stickier than SAP, we hope to improve your understanding of this area by reviewing SAP requirements, working through some real-life scenarios, and pointing you in the right direction for more information. For previous "Sticky Situations" articles, see Shoptalk Online editions 384, 390, 394, 402, 409, and 418 and 424.

Federal Student Aid Handbook guidance
The 2007-08 Federal Student Aid Handbook (FSA Handbook) provides a wealth of helpful information for schools looking to develop or revise their SAP policies. Keep in mind, though, that since ED has granted schools a great deal of latitude in developing and implementing SAP policies, the FSA Handbook will not provide a solution for every situation.

As outlined in the FSA Handbook, there are two primary components of a SAP policy: quantitative, which tracks the amount of coursework attempted and completed, and qualitative, which tracks the quality of performance.

The quantitative component establishes a maximum timeframe in which a student must complete his or her educational program. For an undergraduate program, the timeframe must not exceed 150 percent of the published length of the educational program. For example, an undergraduate student pursuing a degree requiring 120 credit hours would be expected to complete that degree within 180 credit hours and would be ineligible for Federal Student Aid (FSA) if he or she exceeded that threshold. Graduate programs are not subject to the 150 percent maximum time frame, but "a school offering graduate programs must develop, disseminate, and consistently apply a policy defining the maximum timeframe graduate students have to complete their programs" (FSA Handbook page 2-122).

The qualitative component requires that "a student enrolled in a program of study of more than 2 academic years must, once the student has been enrolled for two academic years, have a 'C' average or its equivalent, or have an academic standing consistent with the institution's requirement for graduation. If your school does not use letter grades, it must define the equivalent of a 'C' average" (FSA Handbook page 2-121).

A school may choose to build some flexibility into either or both of its quantitative and qualitative SAP components by, for example, allowing a graduated GPA scale dependent upon grade level or requiring completion of a percentage of coursework annually rather than on a term basis.

Other components that must be included in a SAP policy, per page 2-123 of the FSA Handbook:

• A school must establish specific policies defining the effect of incomplete course grades, withdrawals, repetitions, and noncredit remedial courses on satisfactory progress;
• A school must establish rules for both undergraduate and graduate students who change majors, as well as for students who seek to earn additional degrees; and
• The policy must include provisions for consistent application of the standards to all students within categories (e.g., full-time, part-time, undergraduate, and graduate students), and educational programs established by the school.

A few more things to remember:

The FSA Handbook states on page 1-8 that "[m]inimally you must check...progress at intervals of one year or half the length of the program, whichever is less." A school may choose to review SAP more frequently, but it must do so as a policy, not on a case-by-case basis.

Also, a SAP review must include all periods of the student's enrollment, even periods in which the student did not receive FSA funds. A student cannot regain eligibility by paying for his or her classes without using FSA, or by sitting out a semester.

Finally, you must always ensure that your policy is written and published and readily available to students so that they know the expectations they are expected to fulfill.

A student is on a probationary status under a school's SAP policy. Is the school permitted to award grants but refuse to award federal loans?

It is permissible for a school to provide for a probationary period in its SAP policy, per the FSA Handbook, page 2-126:

"Your school's policy can also include a limited conditional or probationary period during which a student who doesn't meet your school's SAP standards can continue to receive FSA funds."

However, the school cannot award only grants during a probationary period, because that would constitute a refusal to certify a loan. Federal regulations in 34 CFR 682.603(e) permit a school to refuse to certify a loan only in very limited circumstances, and only on a case-by-case basis. That is, a school may not have a policy, including a SAP policy, to refuse to certify loans for an entire category of students — in this case, those on probation. A student on probation must be offered the same federal financial aid opportunities — including loan access — as a student who is not on probation.

A student has been readmitted to a school under a state law allowing a "Fresh Start", which removed his or her previous grades from the calculation of the GPA. Since the student's GPA now includes only recent coursework, must the school consider the previous coursework when evaluating SAP?

The FSA Handbook says on page 2-126:

"The FSA program regulations make no provision for the concept of academic amnesty or academic renewal. Therefore, a school must always include courses applicable to a student's major (whenever taken) in evaluating a student's satisfactory academic progress (SAP)."

For example, Texas law provides for an academic amnesty program called "Fresh Start," which is described in Section 51.931 of the Texas Education Code; please note that the law specifically allows for exceptions to admission standards only, not financial aid requirements:

"If an applicant elects to seek admission under this section, a public institution of higher education, in considering the applicant for admission, shall not consider academic course credits or grades earned by the applicant 10 or more years prior to the starting date of the semester in which the applicant seeks to enroll. An applicant who makes the election to apply under this section and is admitted as a student may not receive any course credit for courses undertaken 10 or more years prior to enrollment under this section."

A school determines that a student will not be able to complete his degree within 150 percent of the published length of his program of study. Can the school continue to award financial aid until the student reaches the 150 percent point? If the school knows the student needs only a few courses hours beyond the 150 percent point, can it make an exception?

The FSA Handbook says on page 1-10: "If your SAP review makes it clear that a student cannot mathematically finish the program within this period, she becomes ineligible for aid" — however, pages 2-123 and 2-126 state that in the event a student becomes ineligible:

"Your school may permit appeals of adverse academic progress determinations for mitigating circumstances. If you do, your school's written academic progress policy must explain the mitigating circumstances and the appeals procedures...when you grant an appeal, you are acknowledging that, because of the documented unusual circumstances, the student continues to be FSA eligible even though he or she falls below your school's academic progress standard."

Page 1-10 explains how to award FSA funds to a student who has regained eligibility through the appeals process:

"A student may be paid Pell and Campus-based funds for the payment period in which she resumes satisfactory academic progress. For Stafford and PLUS loans, she regains eligibility for the entire period of enrollment in which she again meets SAP standards unless school policy provides for reinstatement of eligibility at a later point."

A school evaluates SAP after spring grades are posted, but spring grades are not posted until after summer classes begin. If the school determines that a student enrolled in summer school is not making SAP, when does the student become ineligible for aid — as of the date that the determination was made, or beginning the next semester? If ineligibility is effective immediately, should the school cancel and return any aid already delivered to the student before the school determined he or she was ineligible?

Guidance on page 4-29 of the 2006-07 FSA Handbook summarizes the school's responsibilities in this situation; the example provided in the text concerns spring and fall, but could just as easily concern spring and summer:

"CHECKING ELIGIBILITY AT THE TIME OF DISBURSEMENT

Before disbursing FSA funds, a school must first make sure that the student is eligible to receive them. Note that a student may have been making satisfactory academic progress when award letters were mailed in the spring term, but may no longer be making progress when he or she comes to the business office to receive the disbursement at the beginning of the fall term. You must make sure, at the time of disbursement, that the student still meets the eligibility requirements for the FSA funds, and that the appropriate documentation is kept."

If the student is eligible at the time you deliver funds, he or she may keep those funds. However, if a student is determined to be ineligible before you deliver funds, you cannot release the funds unless the student successfully appeals.

Thus, in the scenario provided above, the student who received aid at the beginning of the summer term and was subsequently determined not to be making SAP, would be allowed to keep aid already received — because the student was eligible at the time of disbursement — but would be ineligible for additional aid unless the student submitted a successful SAP appeal.

More information
In addition to the sections of the FSA Handbook discussed in this article, ED provides an online SAP assessment module in the "Tool for Schools" section of its Information for Financial Aid Professionals (IFAP) website at http://ifap.ed.gov/qahome/qaassessments/sap.html. If you have a question about SAP, call TG customer assistance at (800) 845-6267 or send an message to cust.assist@tgslc.org.

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Question of the week

Q.: What is the current PLUS loan origination fee, and can the fee be subsidized for the borrower?

A.: The current PLUS loan origination fee is 3 percent, and, unlike the Stafford loan origination fee, it cannot be subsidized for either the parent PLUS or the Grad PLUS borrower. The PLUS loan origination fee will stay at 3 percent — for parent and Grad PLUS borrowers alike — even when the Stafford loan origination fee, which is currently 1.5 percent, is eliminated — through ongoing annual reductions — on July 1, 2010.

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.

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