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Q.: I have heard that the rules have changed for using current year Title IV funds to pay minor prior year charges. Could you please explain the changes and when they will go into effect?

A.: These changes will go into effect on July 1, 2008; however, as with all of the general provisions changes published on November 1, 2007, Federal Register, schools may choose to implement the new rules early (on or after November 1, 2007) or wait until July 1, 2008. If a school chooses to implement the changes early, it must apply them uniformly to all students and not on a case-by-case basis.

The new regulations have changed the requirements for payment of minor prior year expenses in two ways:

1. The amount that may be paid is increased from less than $100 to no more than $200; and,
2. The exception allowing a school to use current year Title IV funds to pay previous year charges of more than the allowable amount — as long as doing so would not prevent the student from paying his or her current educational costs — is removed. Under the new rules, payments of minor prior year expenses may not exceed, under any circumstances, the $200 limit.

The regulations pertaining to using current year Title IV funds to pay prior award year charges are located in 34 CFR 668.164(d)(2).

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