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Trends and Issues

Shoptalk Online 466, August 5, 2008

Trends and Issues

Question of the week

Q.: Last week, ED announced that it would send new Institutional Student Information Record (ISIR) transactions that may incorrectly indicate that a student has or is about to exceed Stafford aggregate loan limits. Can we just ignore these?

A.: No, ED has stated that schools must "carefully investigate" each of these records even though some of them may contain incorrect information. These records will generally result from one of three issues, and schools must review each record to determine the appropriate resolution.

Dependency status errors
Beginning in January, CPS incorrectly identified some independent students as dependent and, thus, erroneously flagged those students' ISIRs as having exceeded Stafford aggregate loan limits.

This issue was resolved on July 16, 2008, and ED states that it plans to send out new postscreening SAR/ISIR transactions with the NSLDS Postscreening Reason Code of 99 (Other).

Implementation of ECASLA loan limits at NSLDS
The Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) increased certain Stafford annual and aggregate loan limits for undergraduate students. The ECASLA authorizes schools, effective for loans first disbursed on or after July 1, 2008, to award loans according to ECASLA loan limits; however, the aggregate loan limit warning edits in NSLDS are still set at pre-ECASLA levels.

As a result, NSLDS is flagging some students' ISIRs using incorrect Stafford aggregate loan limit warning edits. Thus, some students may be eligible for additional Stafford loan funds in spite of having flags on their files. To resolve these files, the school will have to review each flagged student's file to see if he or she is eligible for additional Stafford loan funds. What is the main litmus test for determining if the student is eligible for additional funds? As long as the student had not exceeded his or her applicable pre-ECASLA Stafford aggregate loan limit(s), it's probably safe to award additional Stafford loan funds (within the new annual and aggregate limits, of course) for the current academic year.

NSLDS is planning to implement the increased aggregate loan limit warning edits by mid-August 2008. This will help reduce the number of postscreening SAR/ISIR transactions.

Pre-ECASLA aggregate limits exceeded
As stated above, NSLDS may have incorrectly flagged some students' ISIRs as having exceeded Stafford aggregate loan limits. However, the flags may be correct on some students' files.

A student borrower who inadvertently exceeded his or her applicable pre-ECASLA Stafford aggregate loan limit — and, as a result, is not currently eligible for additional Title IV aid — does not automatically regain eligibility because ECASLA may have raised that limit.

Per private guidance TG received from Pam Moran of ED's Office of Postsecondary Education, "A borrower is subject to the annual and aggregate loan limits that exist in the law at the time the borrower received the inadvertent overaward. Therefore, to regain eligibility, the borrower must take some action. That action, as the regulations provide in 34 CFR 668.35(d), is to repay the excess loan amount in full or to make satisfactory arrangements with the holder of the loan to repay the excess amount."

Since the student borrower must take action to resolve a situation in which he or she has inadvertently exceeded a Stafford annual or aggregate loan limit, the school cannot award additional Stafford loan funds (or any other Title IV aid) until the student borrower has regained Title IV eligibility.

See the Common Manual, Subsection 6.11.E (Exceeding Loan Limits) for more details on regaining Title IV eligibility after exceeding a Stafford annual or aggregate loan limit. The newly updated Electronic Common Manual is available for download on TG Online at www.tgslc.org/policy/integrated_online_manual.cfm.

You may review the entire July 23, 2008, electronic announcement on IFAP at http://ifap.ed.gov/eannouncements/0723NSLDSPostscreening0809.html.

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.