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W4The student was selected for verification by the FPS or your school, and you chose to pay a first disbursement of
Pell without documentation (interim disbursement). This code must be updated once verification is complete,
or the COD System will reduce the Pell Grant to zero.
S4The FPS selected the student for verification, but you did not verify the student because they satisfied one of the
exclusions described earlier in the chapter (except the post-enrollment exclusion; see <Blank= next).
Blank4Report a blank if you have not performed verification for other reasons, i.e., because neither the FPS nor
your school selected the student or because the student was selected by the FPS after ceasing to be enrolled at your
school and all (including late) disbursements were made. A blank also applies when you disbursed aid on an initial
transaction not selected for verification, a later transaction is selected, and the student never completes verification.
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Chapter 5
Special Cases
There are unique situations where you will need to exercise your discretion as a financial aid administrator: when
modifying data used to calculate the Student Aid Index (SAI), adjusting a student9s cost of attendance (COA), performing
dependency overrides, resolving conflicting information, reporting cases of fraud, and determining a student to be an
unaccompanied homeless youth.
The following special cases are discussed in further detail in this chapter:
You may choose to exercise professional judgment (PJ) to adjust components of a student9s COA or the data that
determine a student9s SAI to account for a student9s special circumstances.
You might also choose to exercise PJ to account for a student9s unusual circumstances that warrant making a
dependent student an independent student.
You may need to determine if a student should be classified as an unaccompanied homeless youth.
You may need to resolve a discrepancy after receiving conflicting information for a student.
In some cases, you may suspect that a student or employee has fraudulently obtained federal funds and you must
report them to the Department.
Professional Judgment
The FAFSA Simplification Act (the Act) distinguishes between different categories of professional judgment by amending
section 479A of the HEA.
Special Circumstances refer to the financial situations (loss of a job, etc.) that justify an aid administrator adjusting
data elements in the COA or in the SAI calculation.
Unusual Circumstances refer to the conditions that justify an aid administrator making an adjustment to a
student9s dependency status based on a unique situation (e.g., human trafficking, refugee or asylee status, parental
abuse or abandonment, incarceration), more commonly referred to as a dependency override.
A student may have both a special circumstance and an unusual circumstance. Financial aid administrators (FAAs) may
make adjustments that are appropriate to each student9s situation with appropriate documentation. See Dear Colleague
Letter GEN-22-15 for additional guidance and discussion of the changes made by the FAFSA Simplification Act.
Special Circumstances
An FAA may use PJ on a case-by-case basis to adjust the components of a student9s cost of attendance or the data used to
calculate their SAI. This adjustment is valid only at the school making the change.
The law gives some examples of special circumstances that may be considered (HEA Sec. 479A):
Change in employment status, income, or assets;
Change in housing status (e.g., homelessness);
Tuition expenses at an elementary or secondary school;
Additional family members enrolled in college;
Medical, dental, or nursing home expenses not covered by insurance;
Child or dependent care expenses;
Severe disability of the student or other member of the student9s household; and
Other changes or adjustments that impact the student9s costs or ability to pay for college.
This is not an exhaustive list. You may use your discretion to make appropriate, reasonable adjustments to reflect a
student9s situation more accurately. You may also use your discretion to deny a student9s request for adjustment.
However, you may not maintain a policy to deny all requests for special circumstance adjustments. Your institution must
develop policies and a process for reviewing requests for professional judgment. Additionally, your institution must
publicly disclose that students may request an adjustment based on special circumstances. This could include (but is not
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limited to) posting what may be considered a special circumstance on your website, including such information in
communications to students, or adding language on award notifications.
The reason for your decision to approve or deny a request for professional judgment and any subsequent adjustments
must be documented. The documentation must substantiate the special circumstances that differentiate the student4
not conditions that exist for a whole class of students. Documentation can include a documented interview between the
student and the financial aid administrator and supplementary information, as necessary, about the student9s financial
status relating to the special circumstances for which the student is requesting an adjustment. You must resolve any
inconsistent or conflicting information before making any adjustments. An FAA9s decision regarding adjustments is final
and cannot be appealed to the Department.
The law doesn9t allow you to modify either the formula or the tables used in the SAI calculation; you can only
change the cost of attendance components, or the values of specific data elements used in the SAI calculation. In
addition, you cannot adjust data elements or the cost of attendance solely because you believe the tables and formula are
not adequate or appropriate. The data elements that are adjusted must relate to the student9s special circumstances. For
example, if a family member is ill, you might modify the AGI to allow for lower earnings in the coming year or might adjust
assets to indicate that family savings will be spent on medical expenses.
You also cannot use PJ to waive general student eligibility requirements or to circumvent the intent of the law or
regulations. For instance, you cannot use PJ to change FSEOG selection criteria.
Occasionally FAAs have made decisions contrary to the professional judgment provision9s intent. These <unreasonable=
judgments have included, for example, the reduction of income or AGI based on recurring costs such as vacation
expenses, tithing expenses, and standard living expenses (e.g. utilities, credit card expenses, children9s allowances, etc.).
FAAs must make <reasonable= decisions that support the intent of the law. Your school is accountable for all professional
judgment decisions and for fully documenting each decision.
When considering using PJ, an FAA should keep in mind that an income protection allowance (IPA) is included in the SAI
calculation to account for modest living expenses. Before adjusting for an unusual expense, consider whether it is already
covered by the IPA. It is reasonable to assume that approximately 30% of the IPA is for food, 22% for housing, 9% for
transportation expenses, 16% for clothing and personal care, 11% for medical care, and 12% for other family
consumption. The income protection allowance is one of the intermediate values in the FAA Information section of the
output document (labeled as <IPA=). See Chapter 3 for the IPA values and how they impact the student9s SAI calculation.
If you use professional judgment to adjust a data element, you must use the resulting SAI consistently for all Title IV aid
awarded to that student. For example, if for awarding the student9s Pell Grant you adjust a data element that affects the
SAI, that new SAI must also be used to determine the student9s eligibility for aid from the Campus-Based and Direct Loan
programs.
If you make a PJ adjustment, you must set the FAA Adjustment flag. You submit a PJ change electronically, via the
FAFSA Partner Portal or third-party software and may do so without a signature from the student or parent. In the FAFSA
Partner Portal or Electronic Data Exchange (EDE), you must select < yes= for the professional judgment field. The next ISIR
will indicate <Professional judgment processed.=
If you exercise PJ for a student who was selected for verification (by you or the Department), you must complete
verification first. This is to ensure that you have correct information before considering a PJ adjustment. You may,
Note: You must set the FAA Adjustment flag (sometimes called the <PJ Flag=) even in some situations when you
have not exercised professional judgment. Certain FPS requirements, new for the 2024-25 processing cycle and
continuing in the 2025-26 cycle, require you to set the PJ Flag to override FTI received directly from the IRS. The
Department released the following guidance on these unique situations:
Resolving Conflicting Information (Electronic Announcement GENERAL-24-71)
Puerto Rico and other U.S. Territories Dual Tax Filers (Electronic Announcement GENERAL-23-118)
If additional unique situations arise, the Department will post additional guidance in the Knowledge Center.
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however, complete verification and then make the PJ adjustment on the same transaction.
You do not have to verify information that you will entirely remove due to PJ. For example, if a dependent student9s
parents have separated after completion of the FAFSA form and one parent is no longer in the family size, you may decide
to use PJ to remove that parent9s income from the FAFSA form. You do not have to verify that parent9s income prior to
removing it. Also, using PJ does not require you to verify a student9s application if they were not already
selected for verification by the Department or your school.
Finally, a school is not permitted to make a professional judgement for a student after that student has ceased to be
eligible, including when a student is no longer enrolled.
The verification page on the FSA Assessments site has guidance to help you review your PJ and dependency override
procedures; see Activity 2.
Professional Judgment During a Disaster, Emergency, or Economic
Downturn
The FAFSA Simplification Act codified previous guidance from the Department (as issued in earlier Dear Colleague Letters)
to use statutory authority to exercise professional judgment during a disaster, emergency, or economic downturn.
During a qualifying emergency, financial aid administrators may:
determine that the income earned from work for an applicant is zero, if the applicant can provide paper or electronic
documentation of receipt of unemployment benefits or confirmation that an application for unemployment benefits
was submitted; and
make additional appropriate adjustments to the income earned from work for a student, parent, or spouse, as
applicable, based on the totality of the family's situation, including consideration of unemployment benefits.
Acceptable documentation of unemployment should be submitted not more than 90 days from the date it was issued.
However, institutions may use discretion to accept documentation older than 90 days under their general professional
judgment authority if they do not have reason to believe there is conflicting information.
Further, the Department will adjust the program review selection model to account for an increase in the use of
PJ Examples
AVG, Chapter 5, Example 1: A student9s parent had income earned from work of $50,000 in 2023 but is no
longer employed. After receiving documentation confirming this, the FAA at the student9s college decides to
adjust the AGI reported on the student9s FAFSA form for the student9s parents to account for their reduced
income. The FAA also reduces the income earned from work for the student9s parent to zero.
AVG, Chapter 5, Example 2: In 2023, a student had $4,500 in medical expenses that were out-of-pocket costs.
The student is married and has two children, so their IPA is $69,670. Because the student9s expenses were less
than the amount for medical expenses already provided for in the IPA (11% of $69,670 is $7,664), the aid
administrator chose not to adjust the student9s FAFSA form.
AVG, Chapter 5, Example 3: A student9s parents were married when they completed the FAFSA form but have
now divorced. The parents filed their taxes jointly in 2023 but separately in 2024. The student receives more than
50% of their financial support from their mother, even though they do not live with their mother due to college
enrollment. The FAA at the student9s college determines that the mother9s income and asset information should
be reported on the FAFSA form. The FAA decides to collect the mother9s 2024 tax return, since it only contains the
mother9s income information, and use it to update the 2025-26 FAFSA form. The FAA also updates the parent9s
marital status to <Divorced=, family size to reflect that the second parent is no longer in the family, and tax filing
status to accurately reflect the mother9s 2024 tax return.
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professional judgment by schools during the award years applicable to the qualifying emergency.
The Foreign Earned Income Exclusion, Maximum Pell Grant, and PJ
The amount a taxpayer claims as the foreign earned income exclusion counts as untaxed income on the FAFSA form.
Because this appears in untaxed income rather than the AGI, it will not be counted when determining students9 eligibility
for a maximum Pell Grant. As we noted in Dear Colleague Letter GEN-23-11, there will be a C flag on the ISIR that
indicates to schools to review how the amount impacts a student9s eligibility for the maximum Pell Grant prior to awarding
aid. As we instructed in our online Q & As (SAI-Q5 and SAI-Q6) FAAs must review eligibility for applicants (and their spouse
or parent) who reported receiving a foreign earned income exclusion and are eligible for the maximum Pell Grant award. If
an ISIR contains both a Maximum Pell indicator flag and a valid value in the <Foreign Earned Income Exclusion= data field,
we will flag the ISIR for the FAA to review.
The FAA will determine4via manual or estimated SAI calculation4if adding the exempted foreign income to the adjusted
gross income (AGI) would make the student ineligible to receive the maximum Pell Grant award. If that would occur, the
FAA must determine whether it is appropriate to use PJ to account for the foreign income in determining the student9s
eligibility for the maximum Pell Grant. If the FAA decides that it is appropriate, the FAA may move the foreign earned
income amount from untaxed income to AGI or request additional documentation of the foreign income prior to
performing the adjustment. If the FAA decides to add the untaxed foreign earned income to the AGI, the FAA must check
the PJ flag on the ISIR before submitting the correction.
Refusing or Reducing a Loan
FAAs may also use their discretion to refuse or reduce Direct Loan funds if they document the reason, make the
determination on a case-by-case basis, notify the student in writing, and ensure the decision is not due to discrimination
based on race, national origin, religion, sex, income, age, or disability.
Unusual Circumstances
The FAFSA Simplification Act provides a clearer directive for FAAs to assist applicants with unusual circumstances to
adjust dependency status on the FAFSA form to reflect students9 situations more accurately (dependency overrides). Like
other types of professional judgments, institutions must make students aware of their ability to request an adjustment for
Foreign Earned Income Exclusion PJ Example
AVG, Chapter 5, Example 4: A dependent student9s parent has an overseas business that earns income for
which the parent claims the foreign earned income exclusion on Schedule 1 of their IRS Form 1040. The FAA
notices this amount on the ISIR and that the Maximum Pell indicator flag has been set, which means that the FAA
is required to review the case. The FAA does a manual calculation of the student9s SAI with the amount of the
exclusion included as AGI rather than as untaxed income. Because the amount is the maximum that could be
claimed ($120,000 for tax year 2023, transferring the amount from untaxed income to AGI makes the student
ineligible for an automatic maximum Pell Grant. The FAA decides to use PJ to move the amount of the foreign
earned income exclusion to the parent9s AGI.
Refusing or Reducing a Loan
34 CFR 685.301(a)(8)
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unusual circumstances by publicly posting the option on their website.
An FAA may conduct dependency overrides on a case-by-case basis for students with unusual circumstances. An aid
administrator may override only from dependent to independent. If the FAA determines that an override is appropriate,
they must maintain the determination with any supporting documentation.
Under HEA Sec. 480(d)(9), the FAFSA Simplification Act incorporated additional unusual circumstances to consider when a
student is unable to contact a parent or where contact with parents poses a risk to such student.
Unusual circumstances do include (but are not limited to):
Human trafficking, as described in the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7101 et seq.);
Legally granted refugee or asylum status;
Parental abandonment or estrangement; or
Student or parental incarceration.
In such cases an override might be warranted based upon the student9s individual circumstances. These conditions would
also not disqualify a student from being a homeless unaccompanied youth or self-supporting and at risk of homelessness.
However, none of the conditions listed below, singly or in combination, qualify as unusual circumstances meriting a
dependency override.
Unusual circumstances do not include:
Parents refuse to contribute to the student9s education.
Parents will not provide information for the FAFSA or verification.
Parents do not claim the student as a dependent for income tax purposes.
Student demonstrates total self-sufficiency.
Additionally, the FAFSA Simplification Act introduced new requirements for processing and communicating with students
who request an adjustment for unusual circumstances. Schools and financial aid administrators must:
Notify students of the school9s process, requirements, and reasonable timeline to review adjustment requests after
their FAFSA form is submitted;
Provide students with a final determination of their dependency status and financial aid offer as soon as practicable
after reviewing all requested documentation;
Retain all documentation, including documented interviews, related to the adjustment for at least three years after
the student9s last term of enrollment; and
Presume that any student who has obtained an adjustment for unusual circumstances and a final determination of
independence to be independent for each subsequent award year at the same institution unless--
The student informs the institution that their circumstances have changed; or
The institution has conflicting information about the student9s independence.
Documentation is critical 3 schools must ensure that any supporting documentation they collect is adequate to
substantiate the student9s circumstances. Documentation may include (but is not limited to) the following:
a documented interview between the student and the financial aid administrator;
submission of a court order or official federal or state documentation that the student or student9s parents or legal
Dependency Overrides
HEA Sec. 479A(c) and 480(d)(9)
GEN-22-15.
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guardians are incarcerated;
a documented phone call or written statement, which confirms the unusual circumstances with:
a state, county or tribal welfare agency;
an independent living case worker who supports current and former foster youth with the transition to
adulthood; or
a public or private agency, facility, or program servicing the victims of abuse, neglect, assault, or violence.
a documented phone call or written statement from an attorney, guardian ad litem, a court-appointed special
advocate (or similar), or a representative of a TRIO or GEAR UP program which confirms the circumstances and the
person9s relationship to the student;
a documented determination of independence made by a financial aid administrator at another institution in the
same or a prior award year; or
utility bills, health insurance, or other documents that demonstrate a separation from parents or legal guardians.
FAAs may use a dependency override made in a prior award year at the same institution. In fact, the Department
encourages you to use the flexibility in the law to presume a student with a dependency override is independent in
subsequent years unless the student tells you their situation has changed, or you have conflicting information. Though
institutions can ask students if their unusual circumstances or homeless situation has changed each year, they should not
maintain a practice that delays or hinders financial aid for such a student, nor may they require the student to answer
prior to packaging or disbursing aid or require the student to submit additional documentation unless there is conflicting
information that the institution needs to resolve.
To override the student9s dependent status on an initial application through the FAFSA Partner Portal, the FAA should use
the Dependency Override code of <1= (see Volume 4A of the 2025-26 FAFSA Specifications Guide for more information).
To authorize a dependency override on a paper FAFSA form, the FAA marks the bubble for an override, labeled <D/O,= in
the <College Use Only= area, fills in the school9s federal code, and signs. A separate letter attached to the application in
lieu of making the override is not acceptable.
If the student has already submitted a FAFSA form, you can use the FAFSA Partner Portal to authorize or cancel an
override; overrides cannot be done on the FAFSA Submission Summary. If a student had an override done at another
school in the current year, that will be noted with the school9s federal code on the FAFSA Partner Portal. Only the school
performing the override will receive that transaction. If the student adds your school to the transaction or gives you their
data release number (DRN), you can access the record.
Dependency Override Example
AVG, Chapter 5, Example 5: A student is a refugee from Ukraine who qualifies for federal student aid as an
eligible noncitizen. The student9s FAFSA form was rejected because the student is a dependent student and did
not provide data for their parents. When the aid administrator asks the student for their parents9 information, the
student says their parents are in Ukraine and have been displaced due to the upheaval there. The student doesn9t
know how to contact them. The FAA asks the student for documentation and the student says they have a relative
living in the U.S. who can confirm the situation. The FAA, per institutional policy, asks for the relative to either
appear in person and sign a statement confirming the student9s account or to send the aid office a notarized
statement. The relative, who works not far from the school, comes to the aid office, signs the statement, and the
FAA grants the student a dependency override.
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Provisionally Independent Status
Students can indicate on the FAFSA form that they believe they have unusual circumstances that prevent them from
providing parental data. Messaging on the FAFSA form thoroughly informs the student about what warrants a dependency
override and what the results will be for their application. If they complete the screening steps and do not include parental
data, they will receive a provisional status as an independent student and a provisional SAI calculation. The record will be
rejected, pending further action from the student9s FAA. You will have to review the student9s situation and determine if
the student:
Is unaccompanied and homeless;
Merits a dependency override;
Must instead provide parental data; or
Should be permitted to borrow only unsubsidized loans because they can document that their parents have refused
to support them or to provide parental information on the student9s FAFSA.
Dependent Students Without Parent Support
Dependent students whose parents refuse to support them are not eligible for a dependency override, but they may be
able to receive a dependent level Direct Unsubsidized Loan only. For a student to be eligible for this provision you must
document the following:
The student9s parents refuse to complete the FAFSA; or
The student9s parents do not and will not provide any financial support to the student (include the date support
ended).
If the parents refuse to sign and date a statement to this effect, you must get documentation from a third party (the
student is not sufficient), such as a teacher, counselor, cleric, or court.
This situation does not on its own justify a dependency override. However, resolving the situation is at your discretion. If
you decide that a student9s situation does not warrant a dependency override, you must document your decision and
ensure that the student submits a FAFSA form and passes all the eligibility matches. The result will be a rejected
application with no SAI. You can then award the student a Direct Unsubsidized Loan up to the maximum the student
would normally be eligible for depending on his or her grade level (but not the amount a student can get when their
parent is unable to get a Direct PLUS Loan).
Unaccompanied Homeless Youth Determinations
If a student does not have and cannot get documentation from any of the authorities listed under the <Unaccompanied
homeless youth= section in Chapter 2 of this volume, you (the FAA) must document and determine if they are an
unaccompanied youth who is homeless or is self-supporting and at risk of being homeless. Any student who is not yet 24
may qualify for a homeless youth determination. It is important to make homeless youth determinations on a case-by-
case basis.
A student is considered homeless if they lack fixed, regular, and adequate housing. This is broader than just living <on the
street.= It includes but is not limited to:
youth sharing housing with other people temporarily because they had nowhere else to go;
youth living in emergency or transitional shelters, for example, trailers provided by the Federal Emergency
Management Agency after disasters;
youth living in motels, campgrounds, cars, parks, abandoned buildings, bus or train stations, substandard housing, or
any public or private place not designed for humans to live in;
youth living in the school dormitory if they would otherwise be homeless; and
youth who are migrants and who qualify as experiencing homeless because they are living in circumstances
described above.
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The documentation for an FAA9s evaluation of the living arrangements of a student must demonstrate that they meet the
definition of this category of independent student. The determination may be based upon a written statement from, or a
documented interview with, the student that confirms that they are an unaccompanied homeless youth, or
unaccompanied, at risk of homelessness, and self-supporting. Such determination should be made without regard to the
reasons that the student is unaccompanied and/or homeless.
Remember the following when you are making a homeless youth determination:
Ask for help with determining eligibility from local school district homeless liaisons, state homeless education
coordinators, the National Center for Homeless Education (https://nche.ed.gov/higher-education/), or the National
Association for the Education of Homeless Children and Youth (https://naehcy.org/higher-education/). Search for
<Making Student Status Determinations for Unaccompanied Homeless Youth= to find worksheets and tools to help
make your determination.
Relevant information can come from recognized third parties such as private or publicly funded homeless shelters
and service providers, financial aid administrators from another college, college access programs such as TRIO and
GEAR UP, college or high school counselors, other mental health professionals, social workers, mentors, doctors, and
clergy.
Use discretion when gathering information and respect the student9s privacy. Some information, such as that
protected by doctor-patient privilege, is confidential. Also, documents such as police or Child Protective Services
reports are not necessary. Don9t focus on why the student is homeless or unaccompanied but on whether
the evidence shows they are an unaccompanied homeless youth.
Determine eligibility based on the legal definitions provided (see <Homeless youth definitions= below).
Unaccompanied homeless youth may use the address of your school as their own on the FAFSA form.
For students you determine to be unaccompanied homeless youths or unaccompanied, self-supporting youths at risk of
being homeless, update the answer to the <Student Homelessness= question on the FAFSA form to <yes= and select
<Financial aid administrator= as the determiner in the FAFSA Partner Portal or EDE. You may also instruct the student to
make this correction on their own form.
Finally, you should also presume that a student for whom your institution has made a determination of homelessness
continues to be independent in each subsequent year at your institution unless the student tells you their circumstances
Homeless Youth Determination Example
AVG, Chapter 5, Example 6: A student came out to their parents as transgender when they were 14. The
student9s relationship with their parents deteriorated and they told the student to move out. The student reached
out to their high school counselor for help, who asked if the student had some place to go. The parents of the
student's good friend said that the student could stay with them. Though the friend9s family is providing the
student with a place to stay, this is not considered fixed, regular, and adequate nighttime residence as the
friend9s family may revoke their offer for shelter at any time. The student would be considered an unaccompanied
youth who is self-supporting and at risk of homelessness.
The student's relationship with their parents did not improve, and over the next several years the student had
almost no contact with them. When the student completed their FAFSA for the first time, they were unable to
provide parental information but indicated on the form that they have an unusual circumstance. Their FAFSA was
processed with the student as provisionally independent. The FAA at the student9s school spoke to the student
and requested an explanation of their circumstance. The student told the FAA about their situation, and the FAA
asked them to provide documentation. The student was unable to obtain documentation of their homeless youth
determination from their high school counselor. The FAA conducted and documented an interview with the
student to confirm that they are still experiencing homelessness and are self-supporting. The FAA helped the
student correct their FAFSA to indicate that they are a homeless youth with a determination by a Financial Aid
Administrator. A dependency override is unnecessary because the student is considered an independent student
on their FAFSA form due to homelessness.
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have changed or you have conflicting information. You should also consider documentation from an FAA at another
institution that made a documented determination that a student was an unaccompanied homeless youth in the same or
prior award year to be adequate documentation to make such a determination at your institution.
Homeless Youth Definitions
At risk of being homeless4when a student9s housing may cease to be fixed, regular, and adequate, for example,
a student who is being evicted and has been unable to find fixed, regular, and adequate housing.
Homeless4lacking fixed, regular, and adequate housing.
Self-supporting4when a student pays for his or her own living expenses, including fixed, regular, and adequate
housing.
Unaccompanied4when a student is not living in the physical custody of a parent or guardian.
Housing Status Definitions
Fixed4stationary, permanent, and not subject to change.
Regular4used on a predictable, routine, or consistent basis.
Adequate4sufficient for meeting both the physical and psychological needs typically met in the home.
Timing of Determinations of Independence
The FAFSA Simplification Act provides additional guidance on the timing of determinations of independence for certain
student populations (HEA 479D(c)). These include unaccompanied homeless youth or at-risk homeless youth, foster care
youth, orphans, wards of the court, and students with unusual circumstances.
Institutions must review all requests for a determination of independence as quickly as practicable, but no later than 60
days after the student enrolls.
Note that the timeframe in the law is intended to encourage FAAs to make determinations as quickly as practicable. It is
not intended to inhibit FAAs from making such a determination when a student requests one later in an award year. We
encourage you to act on a request for a determination of independence within 60 days of the student making such a
request. Further, you may deny such requests if a student does not provide requested documentation within the 60-day
timeframe.
Conflicting Information
In addition to reviewing application and data match information from the FPS, a school must have an adequate internal
system to identify conflicting information4regardless of the source and regardless of whether the student is selected for
verification4that would affect a student9s eligibility, such as information from the admissions office as to whether the
student has a high school diploma or information from other offices regarding academic progress and enrollment status.
The school must resolve all such conflicting information, except when the student dies during the award year or when
they are no longer enrolled and will not re-enroll; if the student later enrolls, you are again obligated to resolve the
conflicting information.
If your school has conflicting information concerning a student9s eligibility or you have any reason to believe his or her
application information is incorrect, you must resolve the discrepancies before disbursing
Title IV funds and, as with
verification, before making any PJ adjustment. If you discover discrepancies after disbursing Title IV funds, you must still
Requirement to Identify and Resolve Discrepant Info rmation
34 CFR 668.16(f)
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reconcile the conflicting information and take appropriate action under the specific program requirements (depending on
the outcome, funds may have to be returned).
Subsequent ISIRs
You are generally required to review all subsequent transactions for a student for the entire processing year even if you
verified an earlier transaction. An exception to this requirement is if a later transaction comes in after the student is no
longer enrolled at your institution. Review the SAI, C flag, or verification tracking group for changes. Review new
comments or NSLDS information that impacts eligibility for aid. Check any updates or corrections. If the SAI has not
changed and there are no changes in the C flag, verification tracking group, or NSLDS information, no action is generally
required. If the SAI does change but it either doesn9t affect the amount and type of aid received or the data elements that
changed were already verified, no action is required. But if the SAI changes and the pertinent data elements were not
verified, then you must investigate. Of course, any time the C flag changes or NSLDS data have been modified, you must
resolve any conflicts.
Discrepant Tax Data
Financial aid administrators do not need to be tax experts, but there are some issues that even a layperson with basic tax
law information can evaluate. Because conflicting data often involve such information, FAAs must have a fundamental
understanding of relevant tax issues that can impact the need analysis. You are obligated to know (1) whether a person
was required to file a tax return and (2) what the correct filing status for a person should be. The IRS9s online Interactive
Tax Assistant can help with these and other issues by walking the user through a series of questions. IRS Publication 17 is
also a useful resource.
Resolution of Conflicting Information
You must resolve conflicting information prior to disbursing aid to a student enrolled at your school. Even if the conflict
concerns a previous award year, you must still investigate it. You have resolved the matter when you have
determined which data are correct; this might simply be confirming that an earlier determination was the right one. You
must document your findings and include an explanation that justifies your decision.
The verification page on the FSA Assessments site has guidance to help you review your conflicting information
procedures; see Activity 1.
Referral of Fraud Cases
Requirement to Verify Questionable Data
34 CFR 668.54(a)(2)
Discrepant Tax Data Example
AVG, Chapter 5, Example 7: An FAA notices that a dependent student9s parents, who are married and live
together, have each filed as head of household (which offers a greater tax deduction than filing as single or
married). The FAA must ask if that is the right status. Resolution of the conflict could be the parents refiling and
submitting a copy of the amended return or a reasonable explanation of why there is no conflict under IRS rules.
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If you suspect that a student, employee, or other individual has misreported information or altered documentation to
fraudulently obtain federal funds, you must report your suspicions and provide any evidence to the Office of Inspector
General (OIG). See also Volume 2 of the FSA Handbook.
OIG Contact Information
Address: OIG Headquarters, U.S. Department of Education, 400 Maryland Avenue, SW, Washington, DC 20202-1500
Web: https://oig.ed.gov/contact-us
Hotline: https://oig.ed.gov/oig-hotline
Phone: 1-800-MIS-USED (1-800-647-8733)
Hours: M, W 9311 a.m. T, Th 133 p.m.
Regional Offices: An updated listing of regional offices and contact information is available at https://oig.ed.gov/contact-
us.
Reporting Fraud Rings (Distance Education)
Institutions now submit fraud ring complaints through the Department9s OIG encrypted complaint web portal at the URL
address https://oighotlineportal.ed.gov. The portal provides consistency and improves communication delivery. Because
the portal is encrypted, institutions no longer need to encrypt submitted documents.
Additionally, institutions will submit a Fraud Ring Reporting Spreadsheet through the OIG9s complaint process. For more
information on how to report fraud rings or for a copy of the Fraud Ring Reporting Spreadsheet, please review the August
21, 2020 Electronic Announcement, which was updated in November, 2022, to reflect a change in the process.
FSA Feedback Center
Through the FSA Feedback Center, students, parents, and others can submit the following feedback to the Department:
Compliments about a positive experience they have had with the Department, a school, or a federal loan servicer; or
Allegations of suspicious activity by a school or person.
Individuals can also submit complaints about the following to the Department:
Applying for and receiving federal loans, grants, and work study;
Experiences with federal loan servicers, collection agencies, or the Department; and
Schools4their administration of the Title IV programs, marketing and recruitment practices, or misrepresentations of
facts.
OIG Referrals
34 CFR 668.16(g)
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Volume 3
Academic Calendars, Cost of Attendance, and
Packaging
Introduction
This volume of the Federal Student Aid (FSA) Handbook discusses the academic calendar, payment period, and
disbursement requirements for awarding aid under the Title IV student financial aid programs, determining a student9s
cost of attendance, and packaging Title IV aid.
Throughout this volume of the Handbook, the words "we," "our," and "us" refer to the United States Department of
Education (the Department). The word "you" refers to the primary audience of the Handbook, school financial aid
administrators. In other volumes of the Handbook we use "institution," "school," and "college" interchangeably, unless a
more specific meaning is provided. In this volume we consistently use the term "school." <HEA= refers to the Higher
Education Act of 1965, as amended. Title IV refers to the student financial aid programs authorized under Title IV of the
HEA.
We appreciate any comments that you have on this volume as well as the other volumes of the
FSA Handbook. We revise
the text based on questions and feedback from the financial aid community, so please reach out to us about how to
improve the Handbook through the <Contact Customer Support= feature in our Partner Connect9s Help Center clicking on
<FSA Handbook= under the Topic section.
Changes for 2025-2026
There are no major changes in
Volume 3 for 2025-2026. However, we have made minor additions and clarifications to
existing guidance in a few areas, as noted below.
Chapter 1
In Appendix B, we have added guidance on determining enrollment intensity for Pell Grant recipients who are enrolled in
subscription-based programs.
Chapter 2
We have revised the discussion of <Allowable Costs= to clarify that for Pell Grant recipients with an enrollment
intensity below 50%, the cost of attendance (COA) is still based on the full-year costs for a full-time student. In this
same section, we have also removed text noting that the FAFSA Simplification Act made certain changes to COA
components. These changes are no longer new and were previously incorporated into the 2023-2024 FSA Handbook.
Under <Tuition and Fees,= we have added health insurance premiums that are charged to all students as an
additional example of a cost that may be included in this COA component.
We have revised the text under <Costs of Obtaining a License, Certification, or First Professional Credential= to clarify
that the guidance in this section pertains to credentials that are required for a student to practice or participate in
the occupation the program is preparing the student to enter, and have added bar exam fees as an example of one
of the types of costs that may be included in this COA component.
Under <Periods of Non-Attendance,= we have added language to clarify that a period of non-attendance is a period
during which the student is not enrolled and is not otherwise engaged in any activity that is a requirement of the
student9s program of study.
Chapter 3
Under <Packaging Aid for Certain Dependents of Deceased Servicemembers or Public Safety Officers (Pell Grant Special
Rule),= we have removed the note explaining that the Pell Grant Special Rule replaced the Iraq and Afghanistan Service
Grant (IASG) and Children of Fallen Heroes (CFH) provisions. This change is no longer new for 2025-2026.
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Chapter 1
Academic Years, Academic Calendars, Payment Periods, and
Disbursements
Academic Year Requirements
Every eligible program must have a defined academic year. A school may have different academic years for different
academic programs. For example, a school may choose to define the academic year for a term-based program differently
from a non-term program. In some cases, the academic year definition must be different for different programs, such as
in the case of a clock-hour program and a credit-hour program. For
Title IV purposes, the academic year is defined in
weeks of instructional time and credit or clock hours. The program9s academic year does not have to coincide with the
school9s academic calendar (see <Academic year definition and effect on awards= later in the chapter).
A school may treat two versions of the same academic program (day and night, for example) as separate programs and
define different academic years for each version. If a school establishes separate versions of a program, with different
academic years, but allows individual students to take courses from both versions, it must be able to demonstrate which
program the student is actually enrolled in. Generally, to be considered enrolled in a particular program or version of a
program, a student must be taking most of their coursework in that program. Although a school may have different
academic years for different programs, it must use the same academic year definition for all Title IV awards for students
enrolled in a particular program, and for all other Title IV program purposes.
Weeks of Instructional Time in an Academic Year
For both undergraduate and graduate programs, the law and regulations require an academic year to include a minimum
number of weeks of instructional time.
For a program offered in credit hours, the academic year must include at least 30 weeks of instructional time.
For a program offered in clock hours, the academic year must include at least 26 weeks of instructional time.
Note: See Volume 2, Chapter 2 for information about academic year requirements for direct assessment programs, which
do not measure academic progress using credit or clock hours.
The number of weeks of instructional time is based on the period that generally begins on the first day of classes in the
academic year and ends on the last day of classes or the last day of examinations, whichever is later.
Schools that provide 2- or 4-year associate or baccalaureate degree programs may apply to the Department if they want
to request approval to establish a full academic year of less than 30 weeks of instructional time. The Department is
permitted to grant a reduction for good cause to no less than 26 weeks of instructional time. These requests are handled
on a case-by-case basis. To request approval, contact the School Participation Division that oversees your school. A listing
of contact information for the regional School Participation Divisions can be found in the Knowledge Center.
For all Title IV programs, a week of instructional time is any period of seven consecutive days in which 3
At least one day of regularly scheduled instruction or examinations occurs, or, after the last scheduled day of classes
Regulatory Citations
Academic year minimums: 34 CFR 668.3(a)
Weeks of instructional time: 34 CFR 668.3(b)
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for a term or payment period, at least one scheduled day of study for examinations occurs;
or
In a program offered using asynchronous coursework through distance education or correspondence courses, the
school makes available the instructional materials, other resources, and instructor support necessary for academic
engagement and completion of course objectives; and
In a program using asynchronous coursework through distance education, the school expects enrolled students to
perform educational activities demonstrating academic engagement during the week.
The term "asynchronous coursework" refers to coursework that students generally complete on their own schedule, at any
time. This contrasts with "synchronous coursework," in which students and their instructors are in communication at the
same time. For information on distance education and correspondence coursework, see Volume 2, Chapter 2.
Instructional time excludes scheduled breaks and activities that aren't included in the definition of "academic
engagement" (see Volume 5, Chapter 2 3 Part 1 for more information) or periods of orientation or counseling. Therefore,
the weeks of instructional time may be less than the number of calendar weeks that elapse between the first day of
classes and the last day of classes or examinations. Note that the Department has not set a regulatory standard for the
number of hours of instructional time that make up one day of instruction. This has been left to the reasonable
interpretation of schools and their accrediting agencies.
Although most programs are at least one academic year in length, some eligible programs are shorter than an academic
year. See Volume 2, Chapter 2 for more detail on the requirements for such programs.
Weeks of instructional time:
Cannot overlap, and a school cannot use a single day of scheduled instruction, exams, or study time to create more
than one week of instruction (for example, a school may not end a week of instructional time on one day and begin
the next week of instructional time on the same day);
May begin and end on a day other than Monday, provided that each week of instructional time comprises seven
consecutive days (for example, a Wednesday through the following Tuesday) that include at least one day of
scheduled instruction, exams, or study time, as required by the regulations; and
May begin up to six days before the first day of scheduled instruction or exams in a payment period.
Note: All references to <weeks= in the examples that appear throughout this chapter mean weeks of instructional
time as defined above.
Regulatory Citations
Reductions in academic year length: HEA Sec. 481(a)(2)(B) and 34 CFR 668.3(c)
34 CFR 600.2 (academic engagement)
34 CFR 600.2 (distance education)
Volume 3, Chapter 1, Example 1: Counting Weeks of Instructional Time
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Credit or Clock Hours in an Academic Year
For undergraduate educational programs, the law and regulations set the following minimum standards for coursework
earned by a full-time student in an academic year:
For a program measured in credit hours, 24 semester or trimester credit hours or 36 quarter credit hours; or
For a program measured in clock hours, 900 clock hours.
For graduate and professional programs, there is no minimum number of hours in an academic year.
Academic Year Definition and Effect on Awards
The Title IV academic year that a school defines for a program must meet the regulatory minimums for both clock or
credit hours and weeks of instructional time, as described above. In some instances, the defined academic year for a
program may not coincide with the academic calendar of the school. For example, a school might define the academic
year for a program as containing 24 semester hours and 30 weeks of instructional time but have an academic calendar
consisting of four 8-week nonstandard terms (i.e., 32 weeks of instructional time). This would affect the calculation of Pell
Grant awards, as explained in Volume 7.
As discussed later in this chapter and in Volume 8, Chapter 6, the timing of disbursements and, for the Direct Loan
Program, annual loan limit progression will be affected if a program is an academic year in length in credit or clock hours
but not in weeks of instructional time, or for a program longer than an academic year in length, if a student9s completion
of the credit or clock hours in the program9s academic year does not coincide with completion of the weeks of
instructional time in the academic year.
Academic Calendars and Terms
Schools offer programs with many kinds of academic calendars that differ from the traditional fall-spring school year. For
the
Title IV programs, academic calendars may be one of the following types:
standard term,
nonstandard term,
The calendar graphic below illustrates how a school would count weeks of instructional time in a standard
semester term during which classes are held Monday through Friday. In this hypothetical term (the example is not
meant to illustrate any specific calendar year) classes begin on Monday, August 23rd, and end on Friday,
December 10th, with examinations held December 13th-17th.
The circles indicate the points at which each of the 17 weeks of instructional time begin.
There are no classes on Labor Day (September 6th), Veterans Day (November 11th), or during Thanksgiving
break (November 24th-26th), but each week that includes these dates still counts as a week of instructional time
since each includes at least one day of regularly scheduled instruction. The week of exams that begins on
December 13th also counts as a week of instructional time.
If a week in the term has no days of instruction, examination, or (after the last day of classes) study for
examination, that week does not count as a week of instructional time. For example, a week consisting only of
vacation days is not a week of instructional time.
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non-term (includes clock-hour calendars), or
subscription-based.
In a standard term or nonstandard term academic calendar, a term is generally a period in which all classes are
scheduled to begin and end within a set time frame, and academic progress is measured in credit hours.
In a non-term academic calendar, classes do not begin and end within a set time frame, such as a term. Academic
progress in a non-term program can be measured in either credit or clock hours. In some cases (as discussed below), a
program with terms must be treated as a non-term program for Title IV purposes.
A subscription-based academic calendar is used only by subscription-based programs. A subscription-based program
is a term-based program in which the school charges a student for each term on a subscription basis with the expectation
that the student will complete a specified number of credit hours (or the equivalent) during that term. However, classes in
a subscription-based program are not required to begin or end within a specific timeframe in each term, as is the case in a
term-based calendar that is not subscription-based. For more detail on subscription-based programs, see Volume 2,
Chapter 2.
A subscription-based academic calendar consists of "subscription periods" that are either standard terms or substantially
equal nonstandard terms (for guidance on when terms are considered to be substantially equal in length, see <Payment
periods for programs using standard terms or substantially equal nonstandard terms= later in this chapter). Substantially
equal nonstandard terms may be of any length, but if they are not at least nine weeks in length, the program must use
BBAY 3 for purposes of monitoring Direct Loan annual loan limit progression (see
Volume 8, Chapter 6 for more
information on BBAY 3). Nonstandard terms that are not substantially equal in length are not permissible in a
subscription-based academic calendar.
The term "subscription period" is synonymous with "term" and "payment period" (payment periods are covered later in
this chapter). Except for the fact that classes are not required to start and end within a term, the rules and requirements
for term-based programs that are not subscription-based also apply to subscription-based programs. These requirements
include:
minimum and maximum term length restrictions for standard terms (see the discussion in the next section of this
chapter);
requirements for determining full-time enrollment (see Volume 1, Chapter 1);
use of a Scheduled Academic Year (SAY), BBAY 1, BBAY 2, or BBAY 3 for monitoring Direct Loan annual loan limit
progression (see Volume 8, Chapter 6); and
use of Pell Grant formulas 1, 2, or 3 to calculate Pell Grant awards (see Volume 7, Chapter 4).
Whether an academic calendar is standard term, nonstandard term, non-term, or subscription-based has implications for
how aid is awarded and disbursed under the Title IV programs.
Standard Terms: Semesters, Trimesters, and Quarters
Semesters and trimesters contain between 14 and 21 weeks of instructional time. However, a summer term in a program
using semesters or trimesters may contain fewer than 14 weeks. An academic calendar that uses semesters or trimesters
traditionally has three terms, one each in the fall, spring, and summer, two of which comprise an academic year. For
example, in a program using an SAY calendar, fall and spring would comprise an academic year. In a program using a
Subscription-Based Program
34 CFR 668.2(b)
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BBAY calendar, an academic year could consist of any two consecutive terms such as spring-summer or summer-fall.
Academic progress is measured in semester or trimester credit hours, and full time is at least 12 semester or trimester
credits.
Quarters contain between nine and 13 weeks of instructional time. As with programs using semesters or trimesters, a
summer term in a quarter-based program may contain fewer than nine weeks. An academic calendar using quarters
typically includes four terms in the fall, winter, spring, and summer, three of which comprise an academic year. For
example, the fall, winter, and spring quarters would comprise an academic year in a program using an SAY calendar. In a
program using a BBAY calendar, an academic year could be any three consecutive terms, such as spring-summer-fall, or
summer-fall-winter. Academic progress is measured in quarter credit hours, and full time is at least 12 quarter credits.
Semesters may contain as few as 14 weeks and quarters may contain as few as nine weeks. Therefore, a school that
defines the academic year for a program as 24 semester hours or 36 quarter hours and 30 weeks of instructional time
could have fall and spring semesters of 14 weeks each, resulting in 28 weeks of instruction, or fall, winter, and spring
quarters of nine weeks each, resulting in 27 weeks of instructional time. However, because the academic year for a
program that measures academic progress in credit hours must include a minimum of 30 weeks of instructional time, a
school with such an academic calendar would be required to calculate Pell Grant awards using either Pell Grant Formula 2
or Pell Grant Formula 3 (see
Volume 7, Chapter 4).
For Direct Loan purposes, two 14-week semesters or three 9-week quarters could not constitute an SAY or BBAY, since the
number of weeks of instructional time in an SAY or BBAY must generally meet the minimum 30-week statutory
requirement (see Volume 8, Chapter 6). For its fall and spring semesters or fall, winter, and spring quarters to comprise an
SAY or BBAY, the school would need to modify its calendar to ensure that there are at least 30 weeks of instruction in the
fall and spring semesters or fall, winter, and spring quarters combined. For example, the school could have a 16-week fall
semester and a 14-week spring semester. Another option would be for the school to extend the SAY or BBAY to include an
additional term so that the total number of weeks of instructional time meets the 30-week minimum. For instance, the
school could have an SAY consisting of 14-week fall and spring semesters and a 10-week summer term, or a BBAY
consisting of any four consecutive 9-week quarters.
Standard terms need not be of equal length. For example, a school could offer a program using semesters with the
academic year consisting of a 14-week fall semester and a 20-week spring semester, or a program using quarters with the
academic year consisting of a 13-week fall quarter, a 9-week winter quarter, and an 11-week spring quarter.
In addition, the number of weeks in a standard term may vary from year to year over the course of a program. For
example, a school could offer a two-year program with the first academic year consisting of two 15-week semesters, and
the second academic year consisting of two 20-week semesters.
In a standard term academic calendar, a term may contain an occasional class or classes that are longer than the normal
term or that begin or end beyond the normal start or end date of the term, as long as the class or classes do not overlap
another term (see below). However, if classes routinely extend a week or more beyond the normal term start or end
dates, the school must revise the official length of the term.
Generally, if the combined length of a term and an extended class or classes is greater than the maximum number of
weeks allowed for a standard term, the program must be considered a nonstandard term program for
Title IV program
purposes. For example, if a 17-week semester contains a class that does not end until five weeks after the normal
semester end date, the term must be considered nonstandard, because the combined length of the term and the
extended class is 22 weeks, which exceeds the maximum 21 weeks permitted for a semester.
There is an exception to this general rule for standard quarters that are 12 weeks in length. A 12-week quarter may still
be considered a standard term if it contains a class or classes that begin not more than two weeks before the official
beginning date of the term or that end not more than two weeks after the official ending date of the term (for a total
period not to exceed two weeks). For example, a 12-week quarter containing a class that extends two weeks beyond the
normal term ending date may still be considered a standard term, even though the combined length of the term and the
extended class (14 weeks) exceeds the maximum 13 weeks allowed for a quarter.
The limited exception for 12-week quarters preserves a flexibility that was allowed under the policy on standard term
length that was in effect prior to the implementation of the changes described in the November 5, 2019 Electronic
Announcement. Under prior policy a quarter could not exceed 12 weeks, but a quarter with a class or classes that
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extended beyond the normal term beginning or ending dates by not more than two weeks could still be considered a
standard term.
Note that the requirements described above do not apply to standard terms in a subscription-based academic calendar.
As explained earlier, classes in a subscription-based program are not required to begin and end within a term.
Standard terms (including standard terms in a subscription-based program) may not overlap within a program. In addition,
if an extended class overlaps another term in a program that is not a subscription-based program, the program9s
academic calendar must be treated as non-term.
Combining Modules Into a Standard Term
Except for subscription-based programs, in a program using a standard term academic calendar you may combine two or
more consecutive shorter nonstandard terms (often called modules) and treat them as a single standard term such as a
semester or quarter. For example, you might offer a program in a series of modules, each of which is six weeks in length,
with students earning six quarter credits in each module. Although a single 6-week module could not constitute a quarter
(because it contains fewer than the minimum nine weeks required for a quarter), you could choose to treat two
consecutive 6-week modules as a single 12-week quarter.
There are no modules in subscription-based programs for
Title IV purposes.
Intersessions
In certain limited cases for academic programs offered in standard terms, a short nonstandard term may be combined
Standard Term Length
November 5, 2019 Electronic Announcement
Volume 3, Chapter 1, Example 2: Combining Modules
As shown below, a school could choose to group three 5-week modules together and treat them as a 15-week
semester, or it could combine four 4-week modules into a 16-week semester:
Module 1 (5 weeks) + Module 2 (5 weeks) + Module 3 (5 weeks) = 15-week semester
or
Module 1 (4 weeks) + Module 2 (4 weeks) + Module 3 (4 weeks) + Module 4 (4 weeks) = 16-week semester
On the other hand, programs offered in modules may also be treated as nonstandard term or non-term programs.
For instance, in the first of the two examples shown above the school could treat each 5-week module as a
nonstandard term or could consider this to be a non-term program. Whatever academic calendar a school adopts
for a program, it must apply the calendar to all students enrolled in that program and document the program9s
treatment in its policies and procedures manual.
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with a preceding or following standard term and treated as a single standard term. These short nonstandard terms are
often called <intersessions.= For example, a program might be offered in an academic calendar consisting of two 15-week
semesters, fall and spring, with a 4-week intersession between the two semesters. To consider the program as being
offered in standard terms, you must combine the intersession with either the fall semester or the spring semester and
treat the combined intersession and semester as a single term. If you choose to take this approach, the same treatment
must be applied for all Title IV purposes to all students enrolled in the program. In addition, hours taken in the intersession
must count toward a student9s enrollment status for the combined term, and costs for the intersession must be included
in the cost of attendance.
In some cases, an intersession may partially overlap one or more standard terms. If the intersession overlaps just one
standard term, you may still consider the program to be offered in standard terms if you combine the overlapping
intersession with the standard term and treat that combination as a single term, as described above.
If you choose not to combine an intersession with a standard term as described above and instead treat the intersession
as a standalone term, or if an intersession partially overlaps more than one standard term, the program must be treated
as a non-term program for Direct Loans. For Pell Grants and Teacher Education Assistance for College and Higher
Education (TEACH) Grants, you would be required to use Formula 3 if you treat the intersession as a standalone term, or
Formula 4 if an intersession partially overlaps more than one standard term. Regardless of whether you treat an
intersession as a standalone term or combine it with a standard term, you may not have a policy of prohibiting otherwise
eligible students from receiving
Title IV program funds to cover costs associated with enrollment in the intersession.
Intersessions are not permitted in subscription-based programs.
Volume 3, Chapter 1, Example 3, Combining an Intersession With a Standard Term
A school offers a degree program in education with a 4-week intersession between two 15- week semesters:
15-week semester 4-week intersession 15-week semester
The terms don9t overlap. The school chooses to define the academic year for this program as 24 semester hours
and 34 weeks of instructional time.
The school may combine the intersession with one of the standard terms, and treat the program as being offered
in two semesters:
19-week semester
(15-week fall semester + 4-week intersession)
15-week semester
or
15-week semester 19-week semester
(4-week intersession + 15-week semester)
The school could also choose not to combine the terms. In this case, the program would have a 4-week
nonstandard term and two standard terms (semesters). As noted earlier, this means that the school would treat
this as a non-term program for Direct Loan purposes and would use Formula 3 for calculating Pell Grant and
TEACH Grant awards.
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Inclusion of Clinical Work in a Standard Term
Periods of medical and education program clinical work which is conducted outside the classroom may not be included in
a standard term, unless all of the following apply:
All students in the program must participate in the practicum or clinical experience, and they must be required to
complete the practicum or clinical experience as a condition for applying for licensure or authorization to practice the
occupation they intend to pursue;
The school has little or no control over the length or starting and ending dates of the practicum or clinical
experience. This may be due to constraints imposed by outside licensing bodies or the need to accommodate
schedules of entities with which students are being placed (e.g., school districts or hospitals); and
Credit hours associated with the practicum or clinical experience must be associated with the term in which most of
the training occurs, even if the starting and ending dates do not exactly align with the term dates and/or overlap with
another term.
If the clinical work meets all the above criteria, terms which include such clinical work are not required to be considered
nonstandard, nor are such programs required to be considered non-term, even if the clinical work overlaps another term.
This flexibility is limited to required clinical periods associated with standard term programs in medicine (including, but
not limited to, allopathic, osteopathic, nursing, veterinary, dentistry, pharmacy, and physical therapy), and student
teaching required to obtain a state teaching certificate.
See Volume 8, Chapter 3 for additional guidance on certain exceptions to the normal loan period and disbursement timing
rules for Direct Loans when clinical work that meets the criteria described above is included in a standard term.
Nonstandard Terms
Generally, nonstandard terms are terms that are not semesters, trimesters, or quarters. For example, a 5-week term or a
23-week term would be considered a nonstandard term because no standard term can be fewer than nine weeks or
greater than 21 weeks in length. Like standard terms, nonstandard terms may be equal in length or may be of different
lengths. If a program is offered in a combination of standard terms and nonstandard terms, the program is considered to
be offered in nonstandard terms. Also, like standard terms, nonstandard terms may not overlap within a program.
Even if a school calls its terms semesters, trimesters, or quarters, they are considered to be nonstandard terms if they do
not comply with the policy on standard term length, as described earlier. For instance, a 22-week semester or an 8-week
quarter must be treated as a nonstandard term, because a semester cannot contain more than 21 weeks and a quarter
must include a minimum of nine weeks.
Semesters, trimesters, or quarters are also considered to be nonstandard terms if academic progress is not measured in
the manner normally associated with the type of term. For example, if a program is offered in 15-week semesters but
measures academic progress in quarter credit hours, the semesters would be considered nonstandard terms.
Non-Term Characteristics
A program that measures progress in clock hours is always treated as a non-term program.
Except for subscription-based programs, a program that measures progress in credit-hours is considered to have a non-
term calendar if it has:
Courses that do not begin and end within a set period of time such as a term;
Courses that overlap terms;
Self-paced and independent study courses that overlap terms; or
Sequential courses that do not begin and end within a term.
Payment Periods
The payment period is applicable to all Title IV programs except the Federal Work-Study (FWS) Program. For example,
Title IV program disbursements (except FWS payments) must be made on a payment period basis, as discussed in detail
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later in this chapter. Another example is that a student9s satisfactory academic progress (SAP) evaluation must
correspond with the end of a payment period.
The definition of a payment period depends on the kind of academic calendar your school uses and the Title IV program
for which you are disbursing funds. For reference, the payment period definitions described in detail below are
summarized in in the table titled <Payment Period Summary= at the end of this section.
Payment Periods for Programs Using Standard Terms or Substantially Equal Nonstandard Terms
For credit-hour programs with standard terms or with nonstandard terms that are substantially equal in length, the
payment period is the term. Nonstandard terms are considered to be substantially equal in length if no term in a program
is more than two weeks of instructional time longer than any other term in the program.
Payment Periods for Programs With Nonstandard Terms Not Substantially Equal in Length
Nonstandard terms are considered to be not substantially equal in length if any nonstandard term in a program is more
than two weeks of instructional time longer than another term in the same program.
For the Pell Grant, TEACH Grant, and Federal Supplemental Educational Opportunity Grant (FSEOG) programs, the
payment period for a credit-hour program with nonstandard terms that are not substantially equal in length is the term.
For the Direct Loan Program, if a program has nonstandard terms that are not substantially equal in length, the payment
period is the same as described below under <Payment Periods for Clock-Hour and Non-Term Programs.=
Payment Periods
34 CFR 668.4
Substantially Equal in Length
34 CFR 668.4(h)(1)
Volume 3, Chapter 1, Example 4: Payment Periods for Programs With Nonstandard Terms Not Substantially Equal in
Length
For a nonstandard term program, a school may have to use different payment periods for Direct Loans than the
payment periods used for Title IV grants. In this example, we show how the payment periods for a Pell Grant and
a Direct Loan can differ in a program with nonstandard terms that are not substantially equal in length. In this
program, the payment periods for Pell Grants are the terms, while the payment periods for the Direct Loan are
the non-term payment periods. This means that the Direct Loan payment periods will not match up with the
payment periods used for the Title IV grant programs. For example, the first Direct Loan payment period shown
below may not end until the end of the second Pell Grant payment period, depending on when the student
successfully completes the credit hours and weeks of instructional time in the payment period.
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Payment Periods for Clock-Hour and Non-Term Programs
For all clock-hour programs and for credit-hour programs that do not have academic terms, payment periods are defined
based on a student9s successful completion of clock or credit hours and weeks of instructional time, as described below.
As noted earlier, these same payment period requirements also apply when disbursing Direct Loans to students enrolled
in programs with nonstandard terms that are not substantially equal in length.
A student successfully completes clock or credit hours if the school considers the student to have passed the coursework
associated with those hours.
Clock-Hour and Non-Term Program Payment Periods for Programs One Academic Year or Less in Length
The first payment period is the period in which the student successfully completes half of the credit or clock hours
and half of the weeks of instructional time in the program.
The second payment period is the period in which the student completes the remainder of the program.
Clock-Hour and Non-Term Program Payment Periods for Programs More Than One Academic Year in Length
For the first academic year of the program and for any subsequent full academic year, follow the payment period
rules above for a program that is one academic year or less in length, substituting <academic year= for <program.=
Academic Year = 24 Semester Hours and 30 Weeks of Instructional Time
Pell Grant: Payment periods are the nonstandard terms (three disbursements)
Nonstandard term #1: 12 weeks
First payment period
Nonstandard term #2: 6 weeks
Second payment period
Nonstandard term #3: 12 weeks
Third payment period
Direct Loan: Payment periods are determined by credit-hours and weeks (two disbursements)
12 semester hours and 15 weeks
First payment period
12 semester hours and 15 weeks
Second payment period
Note: If you are determining the payment periods for a program for which one of the measures (either clock or
credit hours or weeks of instructional time) is less than an academic year and the other measurement is not , the
program is considered less than an academic year in length, and you follow the payment period rules below for a
program that is one academic year or less in length.
Successfully Completes
34 CFR 668.4(h)(2)
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For any remaining portion of a program that is more than half of an academic year (as measured in both clock or
credit hours and weeks of instructional time), but less than a full academic year4
The first payment period is the period in which the student successfully completes half of the credit or clock
hours and half of the weeks of instructional time in the remaining portion of the program; and
The second payment period is the period of time in which the student successfully completes the remainder of
the program.
For any remaining portion of a program that is half of an academic year or less, the payment period is the remainder
of the program.
Volume 3, Chapter 1, Example 5: Payment Periods for Half-Time Student in a Non-Term Program
The illustration below shows how Pell Grants and Direct Loans would be disbursed for a student enrolled half-time
in a program of 48 semester credits that a full-time student completes in 60 weeks of instructional time. For this
program, the school has defined the academic year as 24 semester credits and 30 weeks of instructional time.
Under the regulations, this half-time student would receive second disbursements after completing half of the
credit hours and half of the weeks of instructional time in the academic year. Because the student in the example
is enrolled only half time, it takes the student 30 weeks of instructional time to successfully complete 12 credit
hours, after which the second Pell and loan disbursements can be made. The student is eligible for a new loan and
a new Pell Grant once the student has successfully completed 24 credit hours and 60 weeks.
First academic year: 24 semester hours
Æ
1st Pell Grant disbursement
1st Direct Loan disbursement
Æ
30 weeks elapsed
Student has completed
12 credits
2nd Pell Grant
disbursement
2nd Direct Loan
disbursement
Æ
60 weeks
elapsed
24 credits
completed
End of first
academic year
Second academic year: 24 semester hours
Æ
New Pell Grant and loan award begin after student completes 24
semester hours and weeks in first academic year
1st Pell Grant disbursement for 2nd year
1st Direct Loan disbursement for 2nd year
Æ
30 weeks elapsed in 2nd
academic year
Student has completed
36 credits
2nd Pell Grant
disbursement for 2nd
year
2nd Direct Loan
Æ
60 weeks
elapsed in 2nd
year
48 credits
completed
End of program
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disbursement for 2nd
year
Volume 3, Chapter 1, Example 6: Payment Periods for Non-Term Programs One Academic Year or Less in Length
For both programs illustrated below, the school defines the academic year as 24 semester hours and 30 weeks of
instructional time. The first program is less than an academic year; the second program is a full academic year.
Program 1: 16 semester hours and 20 weeks (less than an academic year)
Æ
1st payment period:
8 semester hours
and 10 weeks
Æ
2nd payment period:
8 semester hours
and 10 weeks
Program 2: 24 semester hours and 30 weeks (one academic year)
Æ
1st payment period:
12 semester hours
and 15 weeks
Æ
2nd payment period:
12 semester hours
and 15 weeks
Academic year = 24 semester hours and 30 weeks
Volume 3, Chapter 1, Example 7: Payment Periods for Non-Term Programs More Than One Academic Year in Length
For both programs illustrated below, the school defines the academic year as 24 semester hours and 30 weeks of
instructional time. The first program is an academic year with a remaining portion less than half of an academic
year; the second program is an academic year with a remaining portion greater than half of an academic year.
Academic year = 24 semester hours and 30 weeks
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Payment Periods for Clock-Hour Programs With Terms
Although some schools offer clock-hour programs that are divided into terms for institutional purposes, for
Title IV
purposes all clock-hour programs are considered to be non-term programs. Therefore, the payment periods for clock-hour
programs that a school divides into terms are determined in the same way as described above under <Payment Periods
for Clock-Hour and Non-Term Programs.= Because a student enrolled in such a program must successfully complete all the
clock hours in the payment period before the next payment period begins, the payment period starting dates may not
coincide with the starting dates of the terms in the program.
Counting Excused Absences in Clock-Hour Programs Toward Payment Period Completion
In a clock-hour program, you are allowed to count a limited number of excused absences when deciding whether the
student has completed the hours in a payment period. An excused absence may only be counted if the student is excused
from hours that were actually scheduled but were missed and do not have to be made up for the student to receive the
degree or certificate for the program.
For instance, a student in a program that has 450-clock-hour payment periods might miss 20 clock hours and only have
attended 430 clock hours at the point where other students who did not miss any clock hours have received 450 clock
hours of instruction. If your school has an excused absences policy, the 20 missed clock hours are considered excused,
and this student could be paid the next disbursement.
To be counted for
Title IV purposes, excused absences must be permitted in your school9s written policies, and the
number of excused absences that may be counted when determining whether a student completed the hours in a
payment period may not exceed the lesser of4
Program 1: 30 semester hours and 36 weeks
1st payment period
12 semester hours
and 15 weeks
2nd payment period
12 semester hours
and 15 weeks
3rd payment period
6 semester hours
and 6 weeks
one academic year remaining portion of program
There is a single payment period for the remaining portion of the program, since at least one of the measures
(hours and weeks) in the remaining portion is half of an academic year or less.
Program 2: 40 semester hours and 50 weeks
1st payment period
12 semester hours
and 15 weeks
2nd payment period
12 semester hours
and 15 weeks
3rd payment period
8 semester hours
and 10 weeks
4th payment period
8 semester hours
and 10 weeks
one academic year remaining portion of program
There are two payment periods for the remaining portion of the program because both the hours and weeks in
the remaining portion are more than half of an academic year.
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The policy on excused absences of your school9s accrediting agency or, if you have more than one accrediting
agency, the policy of the agency that you designate to the Department as the agency whose accreditation will be
used in determining your school9s eligibility to participate in the Title IV programs (see the guidance in Volume 2,
Chapter 1 on <Dual Accreditation= for more information);
The policy on excused absences of any state agency that licenses your school or otherwise legally authorizes your
school to operate in the state; or
10% of the clock hours in the payment period.
Payment Period Summary
Program Type Direct Loan Pell, TEACH, and FSEOG
Credit-hour programs offered in
standard terms and nonstandard term
programs offered in terms that are
substantially equal in length.
The payment period is the term. The payment period i s the term.
Credit-hour programs offered in
nonstandard terms that are not
substantially equal in length.
The payment period is the period of
time in which the student
successfully completes:
half of the weeks of instructional
time in the academic
year/program less than an
academic year; and
half of the credit hours in the
academic year/ program less
than an academic year.
For the remainder of a program
equal to or less than half of an
academic year, the payment period
is the remainder of the program.
The payment period is the term.
Clock-hour programs and non-term
credit-hour programs.
The payment period is the period of
time in which the student
successfully completes:
half of the weeks of instructional
time in the academic
The payment period is the period of
time in which the student
successfully completes:
half of the weeks of instructional
time in the academic
Excused Absences in Clock-Hour Programs
34 CFR 668.4(e)
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year/program less than an
academic year; and
half of the clock/credit hours in
the academic year/program less
than an academic year.
For the remainder of a program
equal to or less than half of an
academic year, the payment period
is the remainder of the program.
year/program less than an
academic year; and
half of the clock/credit hours in
the academic year/program less
than an academic year.
For the remainder of a program
equal to or less than half of an
academic year, the payment period
is the remainder of the program.
Timing of Disbursements
Except for FWS wages,
Title IV disbursements are made on a payment period basis as described below. Except when
making late disbursements or retroactive payments for completed payment periods (as discussed in Volume 4, Chapter
2), you must disburse the Title IV funds during the payment period to which they apply.
Disbursement Timing in Term-Based Programs Using Credit Hours (Except Subscription-Based Programs)
As noted earlier in the chapter, for the Pell Grant, TEACH Grant, and FSEOG programs the payment period is the academic
term for a student enrolled in a credit-hour program that uses any type of academic term (standard or nonstandard). For
the Direct Loan Program, the payment period is the academic term only if the program uses standard terms or uses
nonstandard terms that are substantially equal in length. If the program uses nonstandard terms that are not substantially
equal in length, a school must use the non-term-based rules for Direct Loan disbursement timing, as discussed in the next
section below.
Except as noted above for the Direct Loan Program, there is no requirement for a student who is enrolled in a credit-hour
term program that is not a subscription-based program to successfully complete a certain amount of coursework in a
payment period before they can receive a disbursement of
Title IV funds in the next payment period. For instance, a
student could receive a Pell Grant or Direct Loan disbursement in the spring term after failing several courses in the fall
term, provided that the student is still making satisfactory academic progress under the school9s policy.
Disbursement Timing in Clock-Hour, Non-Term, and Certain Nonstandard Term Programs
A student who is enrolled in a credit-hour program without terms or in a clock-hour program must successfully complete
Note: We do not cover the requirements for reporting disbursements through the Common Origination and
Disbursement (COD) System or the rules for making early disbursements, late disbursements, or retroactive
payments in this section. For guidance on those topics, refer to Volume 4, Chapter 2. We also do not cover certain
disbursement requirements that are specific to the Title IV grant programs or the Direct Loan Program. For
information on those requirements, see Volumes 6, 7, 8, and 9.
Disbursements by Payment Period
HEA Sec. 428G
34 CFR 668.164(b)
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both the credit or clock hours and the weeks of instructional time in a payment period before receiving a disbursement of
Pell Grant, FSEOG, TEACH Grant or Direct Loan funds for the next payment period. For the Direct Loan Program only, this
same requirement applies to students who are enrolled in programs with nonstandard terms that are not substantially
equal in length.
Effect of Accelerated Progression on Disbursement Timing in a Clock-Hour or Non-Term Credit-Hour Program
The Pell Grant or TEACH Grant amount that a student is eligible to receive for a payment period in a clock-hour or non-
term credit-hour program is based on the number of hours and weeks in the scheduled payment periods for the program
that are established at the beginning of the program based on the program length (as described earlier in this chapter).
These scheduled payment periods do not change, regardless of a student9s rate of progression through a clock-hour or
non-term credit-hour program. This means that if a student completes additional weeks of instructional time or hours
while completing the other measure of a payment period, the actual number of weeks or hours that the student
completes before a disbursement can be made for the next payment period may differ from the number of weeks or hours
in the scheduled payment period used to determine the student9s grant amount for the payment period.
Although a student9s completion of additional weeks or hours in a payment period has no effect on the scheduled
payment periods for purposes of determining Pell Grant and TEACH Grant payment amounts, an undergraduate student
who accelerates in a clock-hour or non-term credit-hour program may have reduced Direct Loan eligibility in the final
academic year of a program. Specifically, if a student enrolled in a program that is greater than one academic year in
length completes additional clock or credit hours prior to the final academic year of the program, this may result in a final
period of study that contains fewer clock or credit hours than the number of hours in the program9s defined academic
year. In this circumstance, the Direct Loan annual loan limit for an undergraduate student must be prorated (reduced).
The principles described above are illustrated by the examples in
Appendix A at the end of this chapter. For guidance on
calculating Pell Grant and TEACH Grant awards for clock-hour and non-term credit-hour programs, see Volume 7. For
information on Direct Loan annual loan limit proration and annual loan limit progression in clock-hour and non-term credit-
hour programs, see Volume 8, Chapters 5 and 6.
If your school is unable to determine when a student has successfully completed half of the credit or clock hours in a
program, academic year, or remainder of a program, the student is considered to have begun the second payment period
of the program, academic year, or remainder of a program at the later of the date (identified by your school) that the
student has successfully completed:
half of the academic coursework in the program, academic year, or remainder of the program; or
half of the number of weeks of instructional time in the program, academic year, or remainder of the program.
Disbursement Timing in Subscription-Based Programs
For the first two subscription periods (terms) that a student attends in a subscription-based program, there is no
requirement for the student to have completed a certain amount of coursework before receiving a disbursement of
Title IV
funds (the same as in any other term-based program using credit hours). However, to receive a disbursement of Title IV
aid for each subsequent subscription period in the program, the student must have completed a cumulative number of
credit hours equal to the total of the number of hours for which the student was enrolled in all previously attended
subscription periods in the program, excluding the number of hours for which the student was enrolled in the most
recently attended subscription period. For more detailed guidance on the disbursement rules for subscription-based
programs, including examples, refer to Appendix B at the end of this chapter.
Multiple Disbursements Within a Payment Period
The regulations governing the Title IV programs generally permit schools to pay Title IV funds at such times and in such
installments within each payment period as will best meet students9 needs. This gives schools the ability to apportion the
payment if doing so will be in the best interest of the student. For example, if a payment period is particularly long, a
school might choose to pay in multiple installments to the extent program requirements permit to ensure that a student
will have funds to pay rent later in the payment period. If a school chooses to schedule multiple Direct Loan
disbursements within a single payment period, the disbursements must be substantially equal. Note also that if the loan
period for a Direct Loan is a single payment period, the loan must be disbursed in at least two installments unless the
school qualifies for an exception to the multiple disbursement requirement. See Volume 8, Chapter 3 for more
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information.
Schools that use payment periods as the basis for their Return of
Title IV Funds calculations should note that making
multiple disbursements within a payment period does not create a new or additional payment period. See Volume 5 of the
FSA Handbook for information on how withdrawal calculations handle multiple disbursements.
Disbursement Rules for Terms With Modules
When a student is enrolled in a term-based program in which the terms are divided into two or more modules, but the
student won9t attend the first module, the date when classes begin for making disbursements is the starting date of the
first module that the student will attend.
For example, the earliest the school can pay a student who is scheduled to begin attendance in the second of three 5-
week modules that make up a semester is 10 days before the first day of the second module (or 30 days after the second
module begins, if the student is a first-time, first-year borrower and the school does not meet the requirements for an
exemption from the delayed disbursement requirement for such students, as described in
Volume 4, Chapter 2).
Volume 3, Chapter 1, Appendix A: Non-Term Examples
Volume 3, Chapter 1, Appendix A, Example 1: Clock-Hour Program Payment Periods 3 Student Must Repeat Course
A student enrolls in a 1-year clock-hour program with an academic year (AY) of 900 clock hours and 26 weeks of
instructional time. The program consists of six successive graded courses, each of which has 150 clock hours. The
scheduled payment periods are one-half of the length of the program in clock hours and weeks of instructional
time: 450 clock hours and 13 weeks of instructional time.
The student in this example fails the second course, but immediately repeats it and passes. The student
successfully completes all other courses in the program.
The school cannot make the second Pell and Direct Loan disbursements until the student has successfully
completed both the clock hours and the weeks of instructional time in the first payment period. Because the
student must repeat the second course of the program (taking an additional three weeks to do so), the school
must reschedule the date of the second Pell and Direct Loan disbursements. The second disbursements will now
be made after the student has successfully completed 450 clock hours and attended for 16 weeks of instructional
time, and the school will need to report the rescheduled second disbursement dates to COD.
Scheduled Payment Periods
450 clock hours AND 13 weeks of instruction 450 clock h ours AND 13 weeks of instruction
Progression through payment periods for disbursements (student cannot receive next disbursement
until successful completion of BOTH hours and weeks in scheduled payment periods)
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Volume 3, Chapter 1, Appendix A, Example 2: Non-Term Credit-Hour Program Payment Periods 3 Additional Weeks
Completed in First Academic Year
A non-term, two-year program of 48 semester hours and 60 weeks of instructional time has an academic year of
24 semester hours and 30 weeks of instructional time. There are four scheduled payment periods, each of which
is equal to one-half of the defined academic year: 12 semester hours and 15 weeks of instructional time.
Students in the program are expected to complete the first 24 hours over 36 weeks of instructional time, and the
final 24 semester hours in 24 weeks of instructional time. Students complete each of hours 1-12 and 13-24 in 18
weeks of instructional time and each of hours of 25-36 and 37-48 in 12 weeks of instructional time.
Scheduled payment periods
First year of program Second year of program
12 semester hours AND 15
weeks of instruction
12 semester hours AND 15
weeks of instruction
12 semester hours AND 15
weeks of instruction
12 semester hours AND 15
weeks of instruction
Progression through payment periods for disbursements (student cannot receive next disbursement
until successful completion of BOTH hours and weeks in scheduled payment periods)
The scheduled payment periods are 12 semester hours and 15 weeks of instructional time, but the student in this
example takes 18 weeks to complete the first 12 hours. Therefore, the second disbursements of the first Pell
Grant award and the Direct Loan for the first academic year of the program cannot be made until the 19th week
of instruction. This is because the next grant or loan disbursement cannot begin until the student successfully
completes both the credit or clock-hours and the weeks of instruction in the previous scheduled payment period.
It takes the student another 18 weeks to complete the second 12 hours in the program, meaning that the first
disbursements of the second Pell Grant award and the Direct Loan for the second academic year of the program
cannot be made until the 37th week of instruction (this corresponds to when the student officially enters the 3rd
scheduled payment period). Based on the scheduled payment periods a student cannot enter the 4th payment
period until the student has completed at least 45 weeks and 36 semester hours (12 semester hours and 15
weeks within each payment period).
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After the student has successfully completed 36 weeks of instruction and 24 semester hours, there are 24 weeks
and 24 hours remaining in the program. The second disbursements of the second Pell Grant award and the Direct
Loan for the second academic year of the program cannot be made until the student officially enters the 4th
scheduled payment period, which occurs after the student has cumulatively completed 36 semester hours and 48
weeks.
Remember that the Pell Grant amount the student is eligible to receive in each of the four payment periods is
always based on the scheduled payment periods of 12 semester hours and 15 weeks of instructional time.
Although the academic year for the program is defined as 24 semester hours and 30 weeks of instructional time,
students are expected to complete the first 24 hours over 36 weeks of instructional time. To ensure that the loan
period for the student9s first Direct Loan covers both measures of the defined academic year, the school must
originate a loan for a loan period covering 36 weeks of instructional time.
The Direct Loan for the second academic year of the program will be originated for a loan period covering 24
weeks of instructional time. Although this is fewer weeks than the number of weeks in the program9s defined
academic year, the number of semester hours remaining in the program (24) equals the number of hours in the
academic year. Therefore, proration of the Direct Loan annual loan limit is not required.
Volume 3, Chapter 1, Appendix A, Example 3: Non-Term Credit-Hour Program Payment Periods 3 More Hours Earned
in the First Academic Year
A school offers a non-term, two-year program of 48 semester hours and 60 weeks of instructional time, with the
academic year defined as 24 semester hours and 30 weeks of instructional time. There are four scheduled
payment periods, each of which is equal to one-half of the defined academic year: 12 semester hours and 15
weeks of instructional time.
Students are expected to complete the first 30 semester hours over 30 weeks of instructional time in the first
period of enrollment. They are then expected to complete 18 semester hours in the last 30 weeks of instructional
time.
Scheduled Payment Periods
First year of program Second year of program
12 semester hours AND 15
weeks of instruction
12 semester hours AND 15
weeks of instruction
12 semester hours AND 15
weeks of instruction
12 semester hours AND 15
weeks of instruction
Progression through payment periods for disbursements (student cannot receive next disbursement
until successful completion of BOTH hours and weeks in scheduled payment periods)
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Volume 3, Chapter 1, Appendix B: Coursework Completion Requirements to Receive Disbursements in Subscription-Based
The scheduled payment periods are 12 semester hours and 15 weeks of instructional time. The second
disbursements of the first Pell Grant award and the Direct Loan for the first academic year of the program are
made after the student has successfully completed both the hours and weeks components of the first scheduled
payment period. In this example, the student has earned 15 hours after completing the 15-weeks in the first
scheduled payment period. The student then earns another 15 hours after completing the 15 weeks in the second
scheduled payment period.
After the student has successfully completed 30 weeks of instruction and 30 semester hours, there are 30 weeks
and 18 hours remaining in the program. The first disbursements of the second Pell Grant award and the Direct
Loan for the second academic year of the program cannot be made until the 31st week of instruction
(corresponds to when the student officially enters the 3rd scheduled payment period).
The second disbursements of the second Pell Grant award and the Direct Loan for the second academic year of
the program cannot be made until the student officially enters the 4th scheduled payment period, which occurs
after the student has cumulatively completed 39 semester hours and 45 weeks. Based on the scheduled payment
periods a student cannot enter the 4th payment period until the student has completed at least 45 weeks and 36
semester hours (12 semester hours and 15 weeks within each payment period)
As in Example 2, remember that the Pell Grant amount the student is eligible to receive in each of the four
payment periods is always based on the scheduled payment periods of 12 semester hours and 15 weeks of
instructional time.
The student9s Direct Loan for the first academic year of the program will be originated for a loan period covering
30 weeks of instructional time, since a student will complete the hours in the defined academic year within that
period.
*Note: The student9s Direct Loan for the second academic year of the program will also be originated for a loan
period covering 30 weeks of instructional time. However, because the number of semester hours remaining in the
program (18) is less than the number of hours in the program9s defined academic year (24), the student is in a
remaining period of study shorter than an academic year. Therefore, the Direct Loan annual loan limit for the
second year of the program (the maximum Direct Loan amount the student may receive for the 3rd and 4th
payment periods) must be prorated.
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Programs
As we explained under <Disbursement timing in subscription-based programs= earlier in this chapter, there is no
requirement for a student to have completed a specified amount of coursework before receiving a disbursement of
Title IV
funds for the first two subscription periods (terms) in a subscription-based program. However, to receive a disbursement
for the third subscription period and for each subsequent subscription period in the program, a student must have
completed a cumulative number of credit hours equal to the total number of hours for which the student was enrolled in
all previously attended subscription periods in the program, excluding the number of hours for which the student was
enrolled in the most recently attended subscription period.
The cumulative number of hours that a student must have completed to receive a disbursement for the third subscription
period and for each subsequent subscription period is based on the student's enrollment status for the program. Each
subscription period that a student attends is associated with a number of credit hours based on the student's enrollment
status. A school establishes an enrollment status (for example, full-time or half-time) that will apply to a student
throughout the student's enrollment in a subscription-based program, except that a student may change their enrollment
status no more often than once per academic year. For example, if the program is a full-time program and the school's
full-time standard is 12 semester or quarter hours, each subscription period will be associated with 12 hours. For a
student receiving Pell Grants in a subscription-based program, the student9s enrollment intensity would correspond to the
enrollment status established for the program and would not vary. For example, in a full-time subscription-based program
the student9s enrollment intensity would be set at 100%, and in a half-time program it would be set at 50%. (See Volume
7, Chapter 3 for guidance on determining Pell Grant enrollment intensity in other types of programs.) As a student
progresses through a subscription-based program, the number of hours associated with each term are added to the
cumulative total needed for the student to receive a disbursement.
For the first two terms in a subscription-based program, a school can make a disbursement of Title IV funds up to 10 days
before the beginning of the subscription period. Beginning with the third subscription period, early disbursement 10 days
before the beginning of the term is allowed only if at that point the student has completed the required number of credit
hours to receive a disbursement for the term. Otherwise, the school cannot make a disbursement until the student has
met the coursework completion requirement.
Note that a student who has not begun attendance in any new coursework during a particular subscription period is
ineligible to receive
Title IV program funds for that period, even if the student would otherwise qualify to receive a
disbursement based on coursework completion requirements. This means, for example, that although there is no
coursework completion requirement for a student to receive a disbursement for the second term of a subscription-based
program, the student would not be eligible for the disbursement if they simply continue attendance in coursework that
they began during the first subscription period without having begun attendance in any new coursework during the
second subscription period. If a disbursement is made to a student who did not begin attendance in any new coursework
during a subscription period, the requirements described under "When a Student Fails to Begin Attendance" in Volume 4,
Chapter 3 of the FSA Handbook apply.
Once the cumulative number of credit hours from earlier subscription periods that is required to receive a disbursement
for a later subscription period equals or exceeds the total number of credit hours required to complete the program, a
student is no longer eligible to receive Title IV funds for the program.
The principles described above are illustrated in the examples that follow.
Volume 3, Chapter 1, Appendix B, Example 1: Subscription-Based Program Course Completion Requirement (Student
Maintains Same Enrollment Status)
A school offers a two-year subscription-based program of consisting of 48 semester hours, with the academic
year defined as 24 semester hours and 30 weeks of instructional time.
The academic year consists of fall and spring semesters, with an optional summer term. In this example, the
student does not attend in the summer term.
The school defines full-time as 12 semester hours per term. The student is enrolled in the full-time version of
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First Academic Year
Subscription period 1: Fall Subscription period 2: S pring
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 0
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 0
As shown above, there is no coursework completion requirement for the student to receive a
Title IV disbursement for the
first and second subscription periods in the program.
Second Academic Year
Subscription period 3: Fall Subscription period 4: S pring
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 12
(= hours enrolled in subscription period 1)
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 24 (=
total hours enrolled in subscription periods 1 & 2)
To receive a disbursement for subscription period 3, the student must have completed a cumulative number of credit
hours equal to the total number of credit hours for which the student was enrolled in all previously attended terms,
excluding the number of hours for which the student was enrolled in the most recently attended term. Thus, the student
cannot receive a disbursement for subscription period 3 until they have completed a total of 12 credit hours, the number
of hours enrolled in subscription period 1. The 12 hours for which the student was enrolled in the most recently attended
term (subscription period 2) are not counted.
To receive a disbursement for subscription period 4, the student must have completed 24 credit hours, the cumulative
number of hours enrolled in subscription periods 1 and 2.
If the student has not completed the 48 hours in the program by the end of subscription period 4, they could receive
Title
IV funds for one additional term, as shown below.
Third Academic Year
Subscription period 5: Fall Subscription period 6: S pring
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 36 (=
total hours enrolled in subscription periods 1, 2, & 3)
Cumulative hours required to receive disbursement: 48 (=
total hours enrolled in subscription periods 1, 2, 3, & 4)
NOT ELIGIBLE FOR
TITLE IV FUNDS
To receive a disbursement for subscription period 5, the student must have completed 36 credit hours, the cumulative
number of hours enrolled in subscription periods 1, 2, and 3.
The student is not eligible to receive any additional Title IV funds after subscription period 5, because the cumulative
number of hours required to receive a disbursement for the next subscription period would be 48, which is the total
number of hours in the program.
the program and does not change enrollment status.
Volume 3, Chapter 1, Appendix B, Example 2: Subscription-Based Program Course Completion Requirement (Student
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First Academic Year 3 full-time program
Subscription period 1: Fall Subscription period 2: S pring
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 0
Credit hours associated with term: 12
Cumulative hours required to receive disbursement: 0
As in Example 1, there is no coursework completion requirement for the student to receive a
Title IV disbursement for the
first and second subscription periods in the program.
Second Academic Year 3 half-time program
Subscription period 3: Fall Subscription period 4: S pring
Credit hours associated with term: 6
Cumulative hours required to receive disbursement: 12
(= hours enrolled in subscription period 1)
Credit hours associated with term: 6
Cumulative hours required to receive disbursement: 24 (=
total hours enrolled in subscription periods 1 & 2)
The student changes to the half-time version of the program in the second academic year. However, because the course
completion requirements to receive a disbursement for a subscription period are cumulative across multiple versions of
the same program (full-time, half-time, etc.), the counting of the hours required for disbursement does not start over
when a student changes to a different version of a program.
As in Example 1, the student must have completed a cumulative total of 12 credit hours (the number of hours enrolled in
subscription period 1) to receive a disbursement for subscription period 3, and a cumulative total of 24 hours (the total
number of hours enrolled in subscription periods 1 and 2) to receive a disbursement for subscription period 4. The
student's change to the half-time version of the program in the second academic year does not affect the cumulative
number of hours required to receive disbursements for subscription periods 3 and 4, because that number is based on the
number of hours enrolled in subscription periods 1 and 2, when the student was enrolled in the full-time version of the
program.
Third Academic Year 3 half-time program
Subscription period 5: Fall Subscription period 6: S pring
Credit hours associated with term: 6
Cumulative hours required to receive disbursement: 30 (=
total hours enrolled in subscription periods 1, 2, & 3)
Credit hours associated with term: 6
Cumulative hours required to receive disbursement: 36 (=
total hours enrolled in subscription periods 1, 2, 3, & 4)
To receive a disbursement for subscription period 5, the student must have completed 30 credit hours, the cumulative
number of hours enrolled in subscription periods 1, 2, and 3. (Note that as a result of the student's change to the half-time
Changes Enrollment Status)
The scenario in this example is the same as in Example 1, except that the student changes to the half-time
version of the program in the second academic year.
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version of the program in subscription period 3, this is 6 fewer hours than the number of hours required to receive a
disbursement for subscription period 5 in Example 1.) The student must have completed a cumulative total of 36 hours to
receive a disbursement for subscription period 6.
If the student has not completed the 48 hours in the program by the end of subscription period 6, they would be eligible
to receive aid for one additional subscription period, as shown below.
Fourth Academic Year 3 half-time program
Subscription period 7: Fall Subscription period 8: S pring
Credit hours associated with term: 6
Cumulative hours required to receive disbursement: 42 (=
total hours enrolled in subscription periods 1, 2, 3, 4 & 5)
Cumulative hours required to receive disbursement: 48 (=
total hours enrolled in subscription periods 1, 2, 3, 4, 5, & 6)
NOT ELIGIBLE FOR
TITLE IV FUNDS
To receive a disbursement for subscription period 7, the student must have completed 42 credit hours, the cumulative
number of hours enrolled in subscription periods 1, 2, 3, 4, and 5.
The student is not eligible to receive any additional Title IV funds after subscription period 7, because the cumulative
number of hours required to receive a disbursement for the next subscription period would be 48, which is the total
number of hours in the program.
Volume 3, Chapter 1, Appendix B, Example 3: Subscription-Based Program Disbursement Timing
A school offers a four-year subscription-based program of consisting of 96 semester hours, with the
academic year defined as 24 semester hours and 30 weeks of instructional time. The school defines full-time
as 12 hours.
The student receives Pell Grants and Direct Loans.
Pell Grants are calculated using Formula 1.
For purposes of monitoring Direct Loan annual loan limit progression, the school uses a Scheduled Academic
Year (SAY) consisting of fall and spring semesters, with the summer term treated as a trailer to the SAY (see
Volume 8, Chapter 6 for more information on SAYs and monitoring Direct Loan annual loan progression).
Attendance in the summer term is optional.
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For the first two subscription periods of the program, there is no coursework completion requirement for the student to
receive a disbursement of Title IV funds. Disbursements are made at the beginning of each subscription period.
To receive a disbursement for the third subscription period and for each subsequent subscription period in the program,
the student must have completed a cumulative number of credit hours equal to the total number of hours for which the
student was enrolled in all previously attended subscription periods in the program, excluding the number of hours for
which the student was enrolled in the most recently attended subscription period.
As shown above, for each of the three subscription periods in the second academic year of the program the student meets
the course completion requirement to receive disbursements at the beginning of the term. For example, the student had
completed a total of 21 credit hours by the end of subscription period #2, which exceeds the minimum 12 hours required
to receive disbursements for subscription period #3.
In the third academic year of the program, the student meets the course completion requirement to receive
disbursements at the beginning of subscription period #6. However, the disbursements for subscription period #7 must
be delayed until the student has completed an additional three credit hours. This is because the student must have
completed a cumulative total of at least 60 credit hours to receive disbursements for subscription period #7, but at the
end of subscription period #6 the student had earned only 57 hours.
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At the end of subscription period #7, the student has earned a cumulative total of 69 credit hours. Because 72 hours are
required for the student to receive a disbursement in subscription period #8, the disbursements for that subscription
period must be delayed until the student has completed an additional three hours. The student has earned a cumulative
total of 84 hours at the end of subscription period #8, which is the number of hours required to receive a disbursement for
subscription period #9. Therefore, the disbursements for the final subscription period in the program can be made at the
beginning of the term.
Volume 3, Chapter 1, Appendix B, Example 4: Subscription-Based Program Disbursement Timing
A school offers a two-year subscription-based program of consisting of 48 semester hours, with the academic
year defined as 24 semester hours and 30 weeks of instructional time. The school defines full-time as 12
hours.
The student receives Pell Grants and Direct Loans.
Pell Grants are calculated using Formula 1.
For purposes of monitoring Direct Loan annual loan limit progression, the school uses Borrower-Based
Academic Year 2 (BBAY 2) consisting of any two consecutive semesters (see Volume 8, Chapter 6 for more
information on BBAYs and monitoring Direct Loan annual loan progression).
The school does not meet the cohort default rate standard that allows Direct Loans for a single term loan
period to be disbursed in one installment (see the discussion under "Direct Loan Disbursements When the
Loan Period is a Single Payment Period" in Volume 8, Chapter 3).
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In Example 4, the student meets the course completion requirements to receive disbursements at the beginning of each
subscription period.
For Direct Loan purposes, the school originates a single-term loan for subscription period #5 (i.e., the loan period
beginning and ending dates correspond to the beginning and ending dates of the subscription period). Because the school
does not meet the cohort default rate standard that would allow for a single-term Direct Loan to be disbursed in one
installment, the student's Direct Loans for subscription period #5 must be disbursed in two substantially equal
installments, with the second disbursement made at the calendar midpoint of the loan period. (Note also that because this
subscription period is a remaining period of study that is shorter than an academic year, the Direct Loan annual loan limit
must be prorated based on the six hours remaining in the program at the end of subscription period #4. See
Volume 8,
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Chapter 5 for information on Direct Loan annual loan limit proration).
Because the student is enrolled in the full-time version of the program, the number of credit hours associated with
subscription period #5 is 12. However, the student attends only six hours (the remaining number of hours in the program
for Title IV purposes). The student's Pell Grant award for subscription period #5 is determined based on an enrollment
intensity of 50%, and the student's enrollment status for that term is reported to NSLDS as half-time.
Note that even if the student has not completed the remaining six hours in the program by the end of subscription period
#5, there is no aid eligibility after that term, because the cumulative number of hours that would be required to receive a
disbursement for the next term is 48, which is the total number of hours in the program.
Volume 3, Chapter 1, Appendix B, Example 5: Subscription-Based Program Disbursement Timing
The details of the program illustrated in Example 5 are the same as for the program described in Example 4.
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In Example 5, the student meets the coursework completion requirements to receive disbursements at the beginning of
the first three subscription periods. However, at the end of subscription period #3 the student has completed a
cumulative total of 21 hours, and 24 hours are required to receive a disbursement for subscription period #4. The school
makes the disbursements for subscription period #4 after the student has completed an additional three hours.
As in Example 4, the school originates a single-term loan for subscription period #5, which is a remaining period of study
that is shorter than an academic year. The Direct Loan annual loan limit must be prorated based on the 21 hours
remaining in the program as of the end of subscription period #4.
The student must have completed a cumulative total of 36 hours to receive a disbursement for subscription period #5.
During subscription period #5 the student completes only an additional six hours, resulting in a cumulative total of 33
hours completed. Therefore, the school makes the disbursements for subscription period #5 as late disbursements after
the student has completed an additional three hours. Because the loan period is equal to a single payment period and
more than half of the payment period has elapsed, the school may disburse the student's Direct Loan for subscription
period #5 in a single late disbursement.
After the student has earned the additional three hours required to receive late disbursements for subscription period #5
(resulting in a cumulative total of 36 hours completed), there are 12 hours remaining in the program. Note that there is no
aid eligibility for the remaining 12 hours, because the cumulative number of hours that would be required to receive a
disbursement for the next term is 48, which is the total number of hours in the program.
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Chapter 2
Cost of Attendance (Budget)
Awards for most of the Title IV programs are based on some form of financial need. Unlike scholarship programs that may
award funds based on academic merit or the student9s field of study, <need-based= grants, loans, and work-study are
based on the student9s demonstrated financial need for assistance. The cost of attendance (COA) is the cornerstone of
establishing a student9s financial need, as it sets a limit on the total aid that a student may receive for purposes of the
Campus-Based, TEACH Grant, and Direct Loan programs, and is one of the basic components of the Pell Grant calculation.
This chapter picks up at the point where the Student Aid Index (SAI) for a student has been determined. See Chapter 3 of
the Application and Verification Guide for more information on the SAI, and Volume 1 for more information on basic
student eligibility requirements. Most schools establish average costs for different categories of students and set these
cost categories in EDExpress or other software that they use to determine awards and package aid. The typical costs that
you establish for your students will be used to calculate their Title IV award amounts and package their aid.
Allowable Costs
The HEA specifies the types of costs that are included in the COA, but each school must determine the appropriate and
reasonable amounts to include for each eligible COA category for its students, based on the criteria described in this
chapter.
The COA for a student is an estimate of that student9s educational expenses for the period of enrollment. As you9ll see, in
most cases you can use average expenses (for students with the same enrollment status) at your school, rather than
actual expenses. For example, for the tuition and fees component, you can use the same average amount for all full-time
students instead of figuring the actual tuition and fees for each individual student. You can have different standard costs
for different categories of students, such as one COA for out-of-state students, who are charged higher tuition, and a
different COA for in-state students, who are charged lower tuition. However, you cannot combine the COA figures for each
separate enrollment status and award aid to a student based on the average COA. Students must be awarded based on a
COA comprised of allowable costs assessed all students carrying the same academic workload.
If a student is enrolled in a program that has extra fees or costs, such as lab fees, you can add those fees to the student9s
cost or use a standard cost that you9ve established for all students in that program. If you establish standard cost
categories, you must apply the cost allowances uniformly to all students in those categories.
There are a variety of methods to arrive at average costs for your students, such as conducting periodic surveys of your
student population, assessing local housing costs or other pertinent data, or other reasonable methods you may devise
which generate accurate average costs for various categories of students.
The types of costs that may be included are the same for all Title IV programs. For the Campus-Based, TEACH Grant, and
Direct Loan programs, the COA, based on the student9s enrollment status, is a student9s cost for the period for which the
aid is intended. For Pell Grants, the COA is always the full-year costs for a full-time student, so you may have to prorate
actual or average costs up for students who are attending less than an academic year (or who are less than full time in a
term-based program) or prorate down for students who are attending for periods longer than an academic year. Note that
though certain components are excluded from the Pell Grant COA for a student who is enrolled on a less-than-half-time
basis, the components that are included in the less-than-half-time Pell Grant COA are still based on the full-year costs for
a full-time student for a Pell Grant recipient with an enrollment intensity below 50%. See Volume 7 for guidance on Pell
Grant requirements.
The types of costs included in the COA are determined by section 472 of the HEA and are the only costs that may be
included in a student9s COA. If a cost is not listed below, it may not be included as part of the COA.
Unless it is specifically noted in the discussion of COA categories below that a particular category applies only to students
who are enrolled at least half time, the types of expenses that may be included in the COA are the same for all students,
regardless of enrollment status.
Tuition and Fees
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This allowance is for the tuition and fees normally assessed for a student carrying the same academic workload. It
includes, for example, graduation fees, if incurred while the student is still enrolled and when required by the program
and paid by all students, and health insurance premiums that are charged to all students.
The tuition and fees allowance may also include costs of attending a required conference, but only if these costs are
included in the standard cost of the program for which the conference is required. Including these costs does not require
exercising professional judgment, as they will be included as a cost of the program for all students in the program.
See <Additional COA Considerations= later in this chapter for information on certain limitations that apply when
determining what may be included in the tuition and fees component.
Books, Course Materials, Supplies, and Equipment
This includes all such costs required of all students in the same program, including a reasonable allowance for the rental
or upfront purchase of a personal computer that the student will use for study for the enrollment period, and for
equipment needed for instruction by telecommunications. The allowance for purchase of computer may include costs for a
computer purchased prior to the enrollment period (for example, a computer that a student bought in the summer for use
in the fall term).
Inclusion of Books and Supplies as Part of the Tuition and Fees COA Component
If the requirements described under <Institutional Charges= in
Volume 4, Chapter 2 are met, the cost of books, course
materials, equipment, and supplies may be included as part of the tuition and fees component of the COA.
Students Must Be Able to Obtain Books and Supplies by the Seventh Day of the Payment Period
If a student could have received a disbursement of Title IV funds 10 days before the beginning of a payment period, and if
the disbursement would have created a credit balance (see Volume 4, Chapter 2 for information on early disbursements
and Title IV credit balances), then by the seventh day of the payment period a school must provide a way for eligible
students to obtain or purchase the books and supplies for the payment period. For more detail, see <Special provisions for
books and supplies= in Volume 4, Chapter 2.
Transportation
The transportation allowance may include costs incurred by a student for transportation between school, residence, and
place of work (including costs associated with operating and maintaining a vehicle used for such transportation), and
other costs for transportation that are required as part of a student9s program of study (for example, transportation to
conferences or medical residency interviews). However, the transportation allowance may not include costs for the
purchase of a vehicle.
Inclusion of Books and Supplies as Part of Tuition
34 CFR 668.164(c)(2)
Special Provision for Books and Supplies
34 CFR 668.164(m)
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Miscellaneous Personal Expenses (Only for Students Enrolled at Least Half Time)
This allowance may be included in the COA only for students who are enrolled on at least a half-time basis.
Miscellaneous personal expenses may include costs incurred by a student for a prior learning assessment (for example, an
exam or a portfolio evaluation).
Living Expenses (Food and Housing)
Food and Housing Allowance for Students Who Are Enrolled at Least Half Time
For all students who are enrolled on at least a half-time basis, schools must include in their COA an allowance for living
expenses, including food and housing (formerly known as <room and board=). The food and housing allowance is based on
the student9s situation, as described below.
For students who choose institutionally owned or operated food services (e.g., board or meal plans), a
standard allowance that provides the equivalent of three meals per day.
For students who do not choose institutionally owned or operated food services, a standard allowance for
purchasing food off campus that provides the equivalent of three meals per day.
For students who reside in institutionally owned or operated housing, standard allowances (one for students
with dependents, and one for students without dependents) based on the greater of the average amount or the
median amount assessed to such students for housing charges.
Although schools must use a standard living expenses allowance based on the greater of the average amount or the
median amount assessed for housing charges, this does not mean that schools must develop the allowance based on
a comparison of the average and median cost of all types of institutional housing across the school. Since costs for
different types of institutional housing may vary widely (for example, double occupancy freshmen dormitories vs.
single occupancy graduate student housing), a school can have different allowances based a comparison of the
average and median costs charged for a specific housing type. For instance, if the greater of the average and median
amounts charged to students living in freshmen dormitories is $15,000 per year, and the greater of the average and
median amounts charged to students living in graduate housing is $20,000 per year, those amounts could be used as
the housing allowances for all students living in each type of institutional housing.
Because schools are free to create as many different types of this allowance as they choose, if the amounts charged
to students for all institutional housing of a specific type are the same or do not differ significantly, such an approach
would likely result in allowances for each housing type that are equal or close to the actual costs charged. Of course,
this does not preclude a school from using professional judgment on a case-by-case basis to include actual costs in
the budget for individual students whose costs for a particular type of institutional housing differ significantly from
the average or median amount that would otherwise be used.
For students living off campus (not in institutionally owned or operated housing), a standard allowance for
rent or other housing costs.
For dependent students residing at home with their parents, a standard allowance for living expenses
determined by the school. The living expenses allowance for these students cannot be zero.
For students living in housing located on a military base or housing for which they receive a military
housing allowance (Basic Allowance for Housing, or <BAH=), a standard allowance for food based on whether the
student chooses to purchase food on-campus or off-campus (as described above), but not for housing costs. This
applies to:
independent students who receive, or whose spouses receive, a BAH or who live on a military base; and
dependent students who are living with parents who are receiving a BAH or who live on a military base.
For all other students, an allowance based on expenses reasonably incurred for housing and food.
Food and Housing Allowance for Less-Than-Half-Time Students
For less-than-half-time students, schools may include an allowance for food and housing in the COA for a limited period.
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For these students, the COA may include (at the option of the school) a food and housing allowance for up to three
semesters or the equivalent, with no more than two semesters or the equivalent being consecutive at any one school. If a
school chooses to include a food and housing allowance in the COA for less-than-half-time students, the allowance is
based on the student9s living situation, as described above for students who are enrolled at least half-time.
Dependent Care Costs
For students with dependents, this allowance covers actual costs expected to be incurred for dependent care during
periods that include but are not limited to class time, study time, field work, internships, and commuting time for the
student. The amount of the allowance should be based on the number and age of the student9s dependents and should
not exceed reasonable cost in the community for the type of care provided. Because students are often unaware of this
allowance, schools should explain the availability of the dependent care allowance when counseling students and tell
them how to request that an allowance for dependent care be included in their COA.
See <Documentation of Exceptional Expenses= later in the chapter for guidance on documenting dependent care costs.
Costs of Obtaining a License, Certification, or First Professional Credential
For students enrolled in programs that require professional licensure, certification, or a first professional credential in
order to practice or participate in the occupation the program is preparing the student to enter, the COA must include an
allowance for the costs of obtaining the license, certification, or credential. Examples of allowable costs include fees
charged to take a licensing exam, costs associated with applying for and obtaining the license or certification, and bar
exam fees for law students pursuing a Juris Doctor (JD) degree. Under this provision, the costs must be incurred during
(not after) a period of enrollment, even if the exam is after the end of the period.
Schools may use either actual or average costs when determining the amount of this allowance. If a school chooses to use
average costs, it must develop a reasonable basis for the average amount using the actual costs of a first professional
credential that the school is aware of for the profession that a program prepares a student to enter.
The allowance may include costs for multiple license or credential test attempts, though schools have discretion to set a
reasonable limit on the number of attempts allowed to be included in a student9s COA.
Costs for Study Abroad Programs
For a student enrolled in a study abroad program approved for credit by the student9s home school, the COA includes
reasonable costs associated with such study as determined by the home school. For example, the COA for a student who
is a U.S. citizen studying at a foreign school may include visa/passport costs.
Disability-Related Expenses
For a student with a disability, the COA includes an allowance for expenses related to the student9s disability. Such
expenses include special services, personal assistance, transportation, equipment, and supplies that are reasonably
incurred and not provided by other agencies.
A student is considered to have a disability if they have a physical or mental impairment that substantially limits a major
life activity, such as if the student is deaf, has a mental disability, is hard of hearing, has a speech or language
impairment, is visually disabled, is seriously emotionally disturbed, orthopedically impaired, autistic, has a traumatic brain
injury, is otherwise health-impaired, or has specific learning disabilities that require special education and related
services.
See <Documentation of Exceptional Expenses= later in the chapter for guidance on documenting disability-related
expenses.
Cooperative Education Program Employment Costs
For students engaged in a work experience through a cooperative education program, the COA includes an allowance for
reasonable costs associated with such employment, as determined by the school.
Fees for Federal Student Loans
For students receiving Direct Loans or loans under any other federal student loan program, the COA includes fees required
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to receive the loans (for example, the loan fee for a Direct Loan). Fees for non-federal student loans may not be included.
You may use either the actual loan fees charged to the student or an average of fees charged to borrowers of the same
type of loan at your school.
COA for Correspondence Students
For students engaged in correspondence study, COA is limited to tuition and fees and, if required, books, course
materials, supplies, and equipment. If the student is fulfilling a required period of residential training, the COA also
includes an allowance for travel, and food and housing costs specifically incurred for the period of residential training. As
explained in
Volume 1, Chapter 1, a student isn9t eligible to receive Title IV aid for correspondence courses unless the
student is enrolled in an associate, bachelor9s, or graduate-degree program.
COA for Incarcerated Students
For confined or incarcerated students, COA is limited to tuition and fees, required books, course materials, supplies, and
equipment, and the cost of obtaining a license, certification, or first professional credential. Remember that an
incarcerated student is ineligible for Direct Loans.
Additional COA Considerations
Periods of Non-Attendance
You may not include in a student9s COA costs (if any) for a period of non-attendance. A period of non-attendance is a
period during which the student is not enrolled and is not otherwise engaged in any activity that is a requirement of the
student9s program of study. For example, if a student does not attend a module in a term that is divided into multiple
modules or does not attend an intersession that falls between two terms, you may not include any costs associated with
that module or intersession. This applies even if the module or intersession forms part of a standard term in which the
student is otherwise enrolled (see Chapter 1 of this volume for more information on the treatment of modules and
intersessions), or if the student is studying for a test or coursework related to an eligible program during the period of
non-attendance (though the costs of such a test itself may be an allowable COA component4see <Costs of Obtaining a
License, Certification, or First Professional Credential= earlier in this chapter).
Adjustments for Special Circumstances
You have the authority to use professional judgment to adjust the COA on a case-by-case basis to allow for special
circumstances. Such adjustments must be documented in the student9s file. (See <Professional Judgment= in Chapter 5 of
the
Application and Verification Guide.)
Limitations to Tuition and Fees Component
Tuition Discounting
In establishing the tuition and fees component of the COA for Title IV aid applicants, you must use an amount that is
required for all students in the same course of study. Therefore, a recipient of Title IV aid cannot be assessed charges that
are higher than what is charged to a student not receiving aid under the Title IV programs.
Offering a discount to students who pay early is not permitted because Title IV recipients may not be able to (and should
not be required to) meet that requirement, and therefore students who do not pay early would effectively be assessed a
higher tuition amount than other students. Of course, it would be permissible for you to provide the discount to all Title IV
eligible students without regard to when their charges are paid. However, doing so would require an adjustment to such
students9 COA.
Overtime Charges
Some schools may assess overtime charges for students who fail to complete their academic programs within the normal
time frame. Section 472 of the HEA defines COA as the tuition and fees normally assessed a student carrying the same
academic workload required of all students in the same course of study. Since overtime charges are not charges that are
normally assessed (they are in addition to normal tuition and fees), they may not be included in a student9s COA for
Title
IV purposes, and therefore Title IV funds may not be used to pay overtime charges, even if a school obtains a student9s (or
parent9s) authorization to do so.
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This restriction applies to both clock-hour and credit-hour programs. For example, some clock-hour programs assess
<overtime charges= for students who don9t complete their programs within an established timeframe. Some credit-hour
programs charge additional tuition or fees for each course a student takes if the student fails to complete a program
within an established timeframe. In both cases, such charges may not be counted in the Title IV COA, and Title IV funds
may not be used to pay for the additional charges.
Finance Charges
You may not use
Title IV funds to pay finance charges or fees that are incurred because a student uses a financing
method provided by the school to pay for educational expenses over time. Because students or families choose to incur
these additional expenses rather than paying the balance due at registration, the additional charges are not considered
educational expenses, and may not be included in a student9s cost of attendance.
As an example, consider a school that charges full-time students $10,000 per semester in tuition, payable either at
registration, or, under an optional payment plan, in four payments of $2,600 each over the course of the semester, for a
total of $10,400. The school may offer the optional payment plan but can9t use Title IV funds to pay for the $400 in
additional costs incurred by students or families who opt to use the plan.
Test Prep Class Costs
You may not include the costs of a test prep class that is not part of a student's eligible program in the student9s COA.
Prohibitions on Charging Fees and Penalties
You may not4
Request from or charge any student a fee for processing or handling any application, form, or data required to
determine eligibility for, and amount of, Title IV HEA program assistance; or
Impose any penalty on a student because of a student9s inability to meet their financial obligations to the school as a
result of the delayed disbursement of the proceeds of a Title IV loan due to compliance with Title IV requirements, or
delays attributable to your school.
Costs for Checking Foreign Diplomas
If you hire a transcription or diploma evaluation service to aid in the process of determining student eligibility, the cost of
evaluating a foreign credential must be incurred as a charge of admission prior to a student's enrollment in an eligible
program and thus cannot be included in the student9s COA. For more detail on checking foreign diplomas, see
Volume 1,
Chapter 1.
Documentation of Exceptional Expenses
The law doesn9t specify what documentation you must collect for expenses such as dependent care or disability-related
expenses. You can document these expenses in any reasonable way, such as documenting an interview with the student
or obtaining a written statement from the student or other appropriate sources.
NCAA Considerations
The <Power Five= conferences (The ACC, Big Ten, Big 12, Pac 12, and SEC) of the National Collegiate Athletic Association
Prohibitions on Charging Fees and Penalties
34 CFR 668.14(b)(3)
34 CFR 668.14(b)(21)
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(NCAA) have voted to expand their athletic scholarships to cover the full COA for athletes. Previously, only the
components listed under <Allowable Costs in General= in this chapter were included in COA. This change only applies to
the schools in the Power Five but it may be adopted by other schools participating in Division I athletics at their discretion.
One exception to the full cost COA is the practice of a school9s paying the costs of an athlete9s insurance against injury to
protect against loss of future income. This expense may not be included in COA (because it is not related to a student9s
educational program), but it is included as other financial assistance (OFA) for the student in the aid packaging process.
For packaging guidance, see Chapter 3 of this volume.
Exclusion of State Aid From COA and OFA
If the source of assistance is a state and is designated by the state to offset a specific component of the student9s COA,
the amount of that assistance may be excluded from both COA and OFA. You may exclude such assistance on a student-
by-student basis, but if it is excluded, it must be excluded for both COA and OFA. If the amount excluded is less than the
allowance provided in the student9s COA, you must exclude the lesser amount.
Costs for Programs That Become Eligible in the Middle of a Year
When awarding aid from programs other than the Direct Loan Program, you may not count toward the student9s COA any
costs incurred in any payment period prior to the payment period during which the program gained
Title IV eligibility.
When awarding aid from the Direct Loan Program, you may not count any costs incurred in periods of enrollment (loan
periods) prior to the period of enrollment during which the program gained eligibility. This means, for example, that if a
program becomes eligible in the spring semester of a fall-spring academic year, you can only include costs incurred in the
spring semester when awarding aid from programs other than the Direct Loan Program. However, if you originate a Direct
Loan for a loan period covering the full academic year, you can include costs incurred during both the fall and spring
semesters when determining the amount of the loan.
You may also not include any costs incurred in payment periods (for non-loan programs) or periods of enrollment (for
Direct Loans) that the student has already completed. For more details on how programs gain Title IV eligibility, see
Volume 2, Chapter 5 of the FSA Handbook.
Changes in Pell Grant COA
For guidance on when changes in the Pell Grant COA require you to recalculate a student9s Pell Grant award, see
Volume
7, Chapter 7.
Costs Waived or Paid by Other Sources
Exclusion of State Aid From COA and OFA
HEA Section 480(j)(3)
DCL GEN-06-05
Change From <EFA= to <OFA=
Dear Colleague Letter GEN-23-11
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When a specific component of a student9s COA is waived or explicitly paid by another source, special treatment may be
necessary. In some situations, the student is assessed the normal tuition and fees charge with an offsetting credit issued.
In other situations, the student is never charged tuition and fees at all. Although this section discusses this concept in
terms of tuition and fee charges, it applies to any of the components of a student9s COA.
In some cases, such as under Workforce Innovation and Opportunity Act (WIOA) programs, a student9s tuition and fees are
paid by another organization or are waived. The student9s costs are based on what the school is actually charging the
student, as specified in the agreement between the school and the student.
If the student is charged for the tuition and fees, even if the charge is eventually paid by someone other than the student
(e.g., a scholarship agency or other source of aid), then that tuition and fee amount is included in the COA in most
circumstances. The tuition and fees payment would then be counted as OFA. The charge is documented in the same way
as for any non-WIOA student (for instance, in your school9s contract with the student or in the agreement with the WIOA
agency). If your school charges the student for tuition and fees, your school would have to expect the student to pay the
charge if the WIOA agency or other source of assistance doesn9t pay on the student9s behalf.
If the student is never charged for tuition and fees, then the COA wouldn9t include the tuition and fees component. Some
WIOA agreements with schools provide that the school can9t charge the tuition and fees to the student, even if WIOA
doesn9t cover the costs. If your school is prohibited under such an agreement from charging tuition and fees to the
student, then the tuition and fees aren9t included in the student9s COA, and, therefore, that amount would not be included
as OFA.
Even if there9s no tuition and fees component, the student9s budget still includes the other costs listed previously, such as
an allowance for living expenses. The option to either include the cost and aid in both COA and OFA versus excluding both
from COA and OFA only applies to non-federal sources of assistance, and only when that assistance is designated to offset
specific components of COA (e.g., tuition, housing, and food).
WIOA Reimbursement Contracts
Some WIOA contracts operate on a reimbursement basis; that is, the student must fulfill the terms of the contract before
WIOA will reimburse the school for tuition and fee costs. If the student doesn9t fulfill the terms of the contract, the school
is left with an unpaid tuition and fees charge. The school isn9t permitted to hold the student liable for the unpaid tuition
and fees. Contracts are established this way to offer schools an incentive to properly train and place students enrolled in
the training programs. However, if a tuition and fees charge is included in a
Title IV aid recipient9s budget, the student
would be liable for any outstanding charges that are not reimbursed by WIOA. Therefore, schools that enter into
reimbursement contracts must remove the tuition and fees component from the Title IV budget because, under these
contracts, schools are prohibited from holding the student liable for outstanding charges.
Effects of Waivers on COA
If your school treats a waiver as a payment of tuition and fees that have been charged to a student, then the waiver is
considered OFA and the full amount of the tuition and fees are included in a student9s COA.
On the other hand, if the student is never assessed the full charges, the waiver is not considered to be financial aid, and
only the charges actually assessed the student would be included in the student9s COA.
Volume 3, Chapter 2, Example 1: Housing and Food Waiver
A school saves some of its resident assistant jobs for students with exceptional financial need. All resident
assistants receive a waiver of housing and food charges. If a student who is employed as a resident assistant
quits the job, the waiver is removed, and the student must pay the housing and food charges. All students at the
school have housing and food charges in their COA. For students who are resident assistants because of their
financial need, the school must count the housing and food waiver as OFA. The waiver would not be counted as
untaxed income, but if included in the student9s adjusted gross income (AGI), such a waiver would be reported on
the Free Application for Federal Student Aid (FAFSA®) form as <grant and scholarship aid reported to the IRS= and
would be excluded from total income in the SAI formula.
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COA for a Distance Education Student
The law prohibits you from making a distinction based on the mode of instruction when determining the COA for a student
receiving all or part of their instruction through distance education. However, you have the authority to use professional
judgment to adjust the COA on a case-by-case basis to allow for special circumstances. For example, you may exclude
transportation costs if you determine that such costs will not be incurred by a student. Such adjustments must be
documented in the student9s file. See <Professional Judgment= in Chapter 5 of the Application and Verification Guide for
further guidance.
Costs for Full Program Charged at Start
A school may charge the total tuition cost for a program at the beginning of the first period of enrollment. If the program
is longer than an academic year, for Direct Loans and Campus-Based aid the tuition costs apply only to the first period of
enrollment. For example, if a school charges the entire $10,000 tuition cost for a program up front, the $10,000 will be
included in the first academic year9s COA when packaging Direct Loans and Campus-Based aid but would not be included
in the second academic year9s COA components. For Pell Grants, you must prorate these charges to reflect the academic
year in accordance with the procedures outlined in
Volume 7.
See also the example of apportioning costs that are charged up front in Volume 4, Chapter 2 of the FSA Handbook.
However, it9s important to understand that the example in Volume 4 illustrates prorating total costs that are charged up
front for purposes of determining the amount of aid that may be credited to a student's account and the amount that
must be paid to the student as a credit balance. This is a separate issue from the determination of the COA that would be
used in calculating the specific aid amounts that the student is eligible to receive.
Campus-Based, TEACH Grant, and Direct Loan Programs: Costs Based on Actual Period of Enrollment
As explained earlier in this chapter, the COA for Pell Grants is always based on the full-year costs for a full-time student
(see Volume 7 for more information). In contrast, the COA used to package Campus-Based aid, TEACH Grants, and Direct
Loans is for the student9s actual period of enrollment. Therefore, if the period of enrollment for which a student9s aid is
intended is longer than the 9-month academic year for which costs are normally determined, you must use a higher COA
that includes living expenses, such as food and housing, for the longer period of time. If the student will be attending for
less than nine months, you must use a lower COA. You can choose to prorate the allowances you use for nine months, or
you can calculate the cost in any other reasonable way.
As an example, if a student is completing a program of study by taking a half-time course load for the fall semester at
your school, and that9s the only term that the student will be attending in the award year, you could use the actual tuition
and fee charges for the student9s costs. If you use average costs for living expenses for a 9-month academic year for
students in that program, you may divide your average costs by the number of terms in the academic year to find the
Volume 3, Chapter 2, Example 2: In-State Tuition Voucher
A school charges all full-time students the same tuition charge. However, in-state students receive a voucher to
cover the difference between what most states consider in-state versus out-of-state tuition. The school has two
options:
The first option would be to include the same tuition charge in the full-time COA for all students and include
the amount of the voucher as OFA in the financial aid packages for in-state students.
The second option would be to exclude the amount of the voucher from both COA and OFA because the
voucher must be used to explicitly pay a specific component of the COA.
Regardless of the option the school chooses, it must apply the option consistently.
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cost for this enrollment period (assuming the terms are substantially equal in length).
Important: When calculating COA for periods other than nine months, you must still use the calculated 9-month
SAI. There are no alternate SAIs comparable to the alternate Expected Family Contributions (EFCs) that were used
prior to the 2024-2025 award year for periods other than nine months. See the Application and Verification Guide
and Chapter 3 of this volume for more information.
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Chapter 3
Packaging Aid
In this chapter we explain how to package a student9s aid once you9ve received the student9s FAFSA form information,
including the student aid index (SAI), and have calculated the student9s aid eligibility. The general rule in packaging is
that the student9s need-based aid must not exceed the student9s financial need, and total financial aid and other financial
assistance (OFA) must not exceed the student9s cost of attendance (COA). If you discover that a student9s aid package
exceeds the student9s financial need or COA, you must attempt to adjust the aid package to eliminate the overaward. See
Volume 4, Chapter 3 for guidance on handling overawards and overpayments.
Packaging Overview
For some
Title IV programs, eligibility is limited to students who have financial need. Students are considered to have
financial need if their COA exceeds their SAI. These <need-based= programs include the Federal Pell Grant, Federal
Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Direct Subsidized Loan programs.
The total aid that a student receives from need-based programs may not exceed the student9s financial need. Pell Grants
are the first source of aid for students with financial need. A student9s eligibility for aid from the other need-based
programs is then determined by subtracting the student9s SAI and OFA (including the student9s Pell Grant) from the COA
(see <Treatment of Negative SAIs= later in the chapter for guidance on packaging need-based aid for students with
negative SAIs):
COA 3 SAI 3 OFA = remaining need
For other
Title IV programs, eligibility is not based on the student9s financial need. These <non-need-based= programs
include the Teacher Education Assistance for College and Higher Education (TEACH) Grant, Direct Unsubsidized Loan, and
Direct PLUS Loan programs. A student9s eligibility for non-need-based aid is determined by subtracting OFA (including any
need-based aid) from the COA:
COA 3 OFA = eligibility for non-need-based aid
As explained later in this chapter, non-need-based aid may be used to replace the SAI.
Depending on individual circumstances, students may receive only need-based aid, only non-need-based aid, or a
combination of both types of aid. In general, the total amount of need-based aid cannot exceed the student9s financial
need and the total amount of all aid cannot exceed the student9s COA. However, there are some exceptions to the normal
packaging process under certain circumstances or for certain
Title IV programs, as we explain later in this chapter.
The COA for the Campus-Based, TEACH Grant, and Direct Loan programs is based on the student9s enrollment status and
costs for the period for which the aid is intended. The COA used for the Pell Grant Program is always the full-year costs for
a full-time student, so you may have to prorate actual or average costs up for students who are attending less than an
academic year (or who are part-time in a term-based program) or prorate down for students who are attending for periods
longer than an academic year (see Volume 7 for more information).
The process of awarding aid without exceeding the student9s financial need (for need-based aid) or COA (for total aid
received) is traditionally called packaging. Packaging is a process that varies from school to school, depending on the
types of scholarship and other aid available at the school, and the characteristics of the student population. Schools may
have different packaging philosophies, but they generally try to find the best combination of aid to meet the financial
need of their students.
To help you package federal student aid with your other aid awards, EDExpress includes a packaging module. You can
enter information about your school9s student aid programs and set up factors to be considered in packaging, and then
use the software to automate the packaging process. Most schools use some form of packaging software, whether
EDExpress or software from a commercial vendor. You are not required to use EDExpress to package Title IV awards, and
you do not have to report the student9s aid package to the Common Origination and Disbursement (COD) system.
No Alternate SAIs for Periods Other Than Nine Months
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Prior to the 2024-2025 award year, the HEA allowed schools to use alternate expected family contributions (EFCs) when
packaging aid for periods other than nine months. The FAFSA Simplification Act eliminated this provision. Beginning with
the 2024-2025 award year, when packaging aid for any period that is not nine months, schools must use a student9s
calculated 9-month SAI in the formula to determine eligibility for need-based aid, as described above (that is, COA 3 SAI 3
OFA = need). As a result of this change, students who are enrolled for periods shorter than nine months will have less
financial need than would have been the case in the past when using an alternate (smaller) EFC for such periods. See
Volume 8, Chapter 3 for more information on how this change may affect Direct Subsidized Loan eligibility for students
receiving loans for periods of enrollment (loan periods) shorter than nine months.
Treatment of Negative SAIs
A student may have a calculated SAI that is a negative number as low as -1,500. Also, as explained in Chapter 3 of the
Application and Verification Guide, certain students will automatically receive a -1,500 SAI. When packaging need-based
aid for students with negative SAIs, schools must convert any negative SAIs to zero for awarding purposes. This means
that a negative SAI will not increase the amount of need-based aid a student can receive. Note that a negative SAI also
does not increase the amount of non-need-based aid that a student may receive because the SAI is not a factor in
determining eligibility for aid that isn9t based on financial need.
Packaging Rules
Pell Grants as the First Source of Aid
Pell Grants are the first source of aid for a student, and packaging
Title IV funds begins with determining a student9s Pell
Grant eligibility, as described in Volume 7. A correctly determined Pell Grant is never adjusted to take into account other
forms of aid. When awarding aid from the other Title IV programs, you must ensure that the student9s need or COA is not
exceeded.
In some cases, a student9s aid package may include a Pell Grant and non-
Title IV aid (for example, institutional aid or
private education loans), but no other types of Title IV aid, and the combination of the Pell Grant and the other aid may be
large enough to exceed the student9s COA. For instance, the National Collegiate Athletic Association9s (NCAA's) rules for
athletic aid may permit a school to award athletic aid that covers a student9s full COA (see <NCAA Considerations= in
Chapter 2 of this volume for more information). In this case, the student is still eligible for the full amount of the Pell
Grant. However, you can9t award any Title IV funds other than the Pell Grant.
Note that in some cases a student9s SAI may be higher than the COA, resulting in no financial need, but the student may
still qualify for a calculated Pell Grant or a minimum Pell Grant (see Volume 7, Chapter 2 for more information on Pell
Grant eligibility criteria). As an example, consider a student with an SAI of 6,650, a COA of $5,500, and a calculated Pell
Grant amount of $745. In this circumstance the student is still eligible for the full Pell Grant amount (as long as it doesn9t
exceed the COA), but you may not award any other types of need-based Title IV aid.
If a student9s aid package includes a Pell Grant, other types of Title IV aid, and non-Title IV aid, and the total aid amount
exceeds the student9s COA, the student still qualifies for the full Pell Grant amount, but you must adjust the other Title IV
aid to ensure that the COA is not exceeded.
In the circumstances described above you may (but are not required to) adjust non-
Title IV aid over which you have
control in accordance with your school9s policies.
No Alternate SAIs and Treatment of Negative SAIs
DCL GEN-23-11
DCL GEN-24-05
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Pell Grant Lifetime Eligibility Used
Before awarding a Pell Grant, you must check the COD common record or COD website to make sure students close to the
600% Pell Grant lifetime limit are not packaged in such a way as to exceed 600% of the LEU; to do so would be to
overaward the student. The Department will also provide weekly reports in the SAIG mailbox (message class PGLEXXOP,
where XX=year) for your school9s Pell-eligible students that have a Pell LEU greater than or equal to 450%. See
Volume 7,
Chapter 8 for more detail on the effects of various levels of Pell Grant LEU.
Considering Grants and Subsidized Loans First
The law requires aid administrators to determine whether a student is eligible for aid from certain other Title IV programs
that would reduce the need for borrowing. If your school participates in the Federal Pell Grant Program, you must include
the student9s estimated Pell Grant eligibility as OFA when making Campus-Based awards, whether or not the student has
received the Pell Grant at the time you make your Campus-Based award.
Similarly, you must determine an undergraduate student9s Pell Grant eligibility before originating a Direct Subsidized or
Unsubsidized Loan for that student, and you must package Campus-Based funds and Direct Subsidized Loans before
Direct Unsubsidized Loans. In addition, you must determine an undergraduate student9s maximum Direct Subsidized Loan
eligibility before originating a Direct Unsubsidized Loan for the student (see Volume 8, Chapter 1 for an explanation of the
difference between Direct Subsidized Loans and Direct Unsubsidized Loans). However, if a student has received a
determination of need for a Direct Subsidized Loan that is $200 or less, you have the option of including that amount as
part of a Direct Unsubsidized Loan and are not required to originate a separate Direct Subsidized Loan for the student.
For a dependent student, you may originate and disburse a parent Direct PLUS Loan without determining the student9s
Pell Grant and Direct Subsidized Loan eligibility. However, if the student on whose behalf the parent is borrowing receives
Pell Grant funds and/or other types of aid for the same period of enrollment, that other aid must be considered when
determining the Direct PLUS Loan amount that the parent is eligible to borrow. The amount of a parent Direct PLUS Loan
cannot exceed the student9s COA minus other financial assistance that the student has received.
Determining Pell Grant eligibility is not relevant when awarding Direct PLUS Loans to graduate or professional students,
but you must determine a graduate or professional student9s maximum Direct Unsubsidized Loan eligibility before you
originate a Direct PLUS Loan for the student.
Requirement to Consider Federal Pell Grants First
34 CFR 685.200(a)(1)(iii)
Volume 3, Chapter 3, Example 1: Basic Packaging
A dependent second-year undergraduate student has a COA of $12,500 and an SAI of 2,500 for the current year.
The SAI is subtracted from the COA, leaving the student with $10,000 in unmet need:
$12,500 COA
- 2,500 SAI
$10,000 need
The aid administrator begins by awarding a Pell Grant and applying an outside scholarship before awarding
Campus-Based aid. The student9s OFA is a $5,500 Pell Grant and a $400 outside scholarship:
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$12,500 COA
- 2,500 SAI
- 5,500 Pell Grant*
- 400 Scholarship
$4,100 remaining need
*The $5,500 Pell Grant amount shown in this example is for illustrative purposes only and is not intended to
represent the actual Pell Grant amount that a student would be eligible to receive. See
Volume 7 for guidance on
the determination of Pell Grant awards.
Subtracting the SAI and OFA from the COA leaves $4,100 in remaining need. The student has sufficient need for
the maximum awards that the aid administrator can make under the school's policy for Campus-Based funds:
$800 FSEOG, and $1,800 in FWS employment:
$12,500 COA
- 2,500 SAI
- 5,500 Pell Grant
- 400 Scholarship
- 800 FSEOG
- 1800 FWS
$1,500 remaining need
The aid administrator finishes the packaging process by awarding a Direct Subsidized Loan in the amount of
$1,500 to fully meet the student9s financial need. As a dependent second-year student, the student9s combined
Direct Subsidized Loan and Direct Unsubsidized Loan limit is $6,500 (maximum of $4,500 subsidized). The
financial aid package now fully covers the student9s financial need of $10,000. However, the student could also
receive up to $2,500 in Direct Unsubsidized Loan funds to replace the SAI and completely cover the COA.
$12,500 COA
- 5,500 Pell Grant
- 400 scholarship
- 800 FSEOG
- 1,800 FWS
- 1,500 Direct Subsidized Loan
- $2,500 Direct Unsubsidized Loan
$0 remaining need
As noted earlier in the chapter a negative SAI is converted to zero for packaging purposes. For instance, if a
student with $15,000 COA and a -500 SAI receives a $7,500* Pell Grant, remaining need for other need-based
programs will be $7,500:
$15,000
- 0
- $7,500
$7,500 remaining need
*Note: The $7,500 maximum Pell Grant award is a fictitious amount used for illustrative purposes only. It is not
intended to represent the actual maximum Pell Grant award for any particular award year.
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Campus-Based Aid
You should consider several things when developing a packaging policy. For instance, some schools give more grant
assistance to beginning students, who may have more difficulty adjusting to campus life, increasing the proportion of
loans and work-study in subsequent years. For the Campus-Based Programs and other programs where the available
funds may not be sufficient to meet every eligible student9s need, some schools decide to give a higher proportion of aid
to the neediest students. Other schools award funds as an equal proportion of each student9s need.
Many schools use software, such as the Packaging module in EDExpress, that can be configured to implement the school9s
packaging philosophy. For instance, EDExpress allows you to specify the order in which aid sources are to be applied to
the student9s unmet need, and to set overall percentage limits on the amount of gift (grants and scholarships) and self-
help aid that will be included in the aid package.
Use Net FWS Earnings When Packaging
To determine the net amount of a student9s FWS earnings that will be available to help pay for the student9s costs, you
must subtract estimated taxes and job-related costs from the student9s gross FWS earnings (see
Volume 6, Chapter 2).
FSEOG and Pell Grant LEU
A student who receives a Pell Grant at any time in the award year may be awarded an FSEOG for that award year; the
student does not have to receive a Pell Grant in the same payment period as the FSEOG. For example, in the case of a
student who receives a Pell Grant only for the fall semester due to reaching their lifetime eligibility used (LEU), the
student may be awarded an FSEOG for both the fall semester and subsequent spring semester.
Students who have reached or exceeded 600% of their Pell Grant LEU may still be eligible to receive FSEOG. However,
they must be considered in the second selection group (see <Selecting FSEOG recipients= in
Volume 6, Chapter 6).
You must keep documentation of the eligible SAI that was calculated for the student, and you must confirm Pell Grant
eligibility prior to disbursement of the FSEOG. For more details on Pell Grant LEU, see Volume 7, Chapter 8.
Packaging TEACH Grants
TEACH Grants are not considered to be need-based aid. The amount of a student9s TEACH Grant, in combination with the
student9s OFA from all other Title IV programs, may not exceed the COA. You may optionally use a TEACH Grant to replace
the SAI (see the <Substituting for the SAI= section later in this chapter).
Direct Loan Packaging Considerations
Before you originate a Direct Subsidized Loan or Direct Unsubsidized Loan for an undergraduate student, you must
determine the student9s eligibility for a Pell Grant.
Before you originate a Direct Unsubsidized Loan for an undergraduate student, you must determine the student9s
maximum Direct Subsidized Loan eligibility.
You may originate a Direct Subsidized Loan only for the amount of the student9s financial need (that is, the student9s
COA minus the student9s SAI and OFA).
A student may qualify for a combination of both Direct Subsidized Loans and Direct Unsubsidized Loans.
The parent of a dependent student can take out a Direct PLUS Loan to pay for the student9s COA (assuming that the
parent meets the Direct PLUS Loan eligibility requirements). There is no fixed loan limit for Direct PLUS Loans, but
Direct PLUS Loans cannot be made for an amount that exceeds the student's COA, less other financial aid received.
If the student is independent, or if a dependent student9s parent is ineligible for a Direct PLUS Loan, the student is
eligible for additional Direct Unsubsidized amounts.
Direct Unsubsidized Loans and Direct PLUS Loans can be used to replace the SAI, as well as to cover the student9s
unmet need.
Direct Subsidized Loans are available only to undergraduate students.
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Direct PLUS Loans are available to parents of dependent undergraduate students and to graduate and professional
students. Note that a Direct PLUS Loan does not count against a graduate/professional student9s Direct Unsubsidized
Loan annual or aggregate loan limits.
You may not limit Direct Loan borrowing by students or parents on an across-the-board or categorical basis (for more
information, see <Refusing to Originate a Loan or Originating for Less Than Maximum Eligibility= in Volume 8, Chapter
1).
Packaging When a Student Chooses Not To Borrow Direct Subsidized Loans or Direct Unsubsidized Loans
If a graduate Direct PLUS Loan borrower has not requested the maximum Direct Unsubsidized Loan amount for which they
are eligible, you must:
Notify the borrower of their maximum Direct Unsubsidized Loan eligibility;
Provide the borrower with a comparison of the maximum interest rates for Direct Unsubsidized Loans and Direct
PLUS Loans;
Explain when a Direct Unsubsidized Loan enters repayment and when a Direct PLUS Loan enters repayment; and
Give the borrower the opportunity to request the maximum Direct Unsubsidized Loan for which they are eligible.
If a dependent student for whom a parent is borrowing a Direct PLUS Loan chooses not to apply for a Direct Subsidized or
Unsubsidized Loan, the Direct Subsidized/Unsubsidized Loan amount that the student would have been eligible to receive
is not counted as OFA when determining the amount of the Direct PLUS Loan. The same principle applies when a
graduate or professional student is eligible for a Direct Unsubsidized Loan but chooses to borrow only a Direct PLUS Loan.
Packaging Aid for Certain Dependents of Deceased Servicemembers or Public Safety Officers (Pell Grant Special Rule)
Volume 3, Chapter 3, Example 2: Graduate/Professional PLUS Packaging
A student enrolls in a graduate-level program with a total COA of $31,000. The student has an annual loan limit of
$20,500 for Direct Unsubsidized Loans and is also eligible for Direct PLUS Loans.
Eligibility for Direct Unsubsidized Loans is determined by subtracting OFA from the COA. The SAI is not taken into
consideration. The student has already been awarded a graduate scholarship of $5,000. Subtracting this OFA from
the COA leaves $26,000 in unmet costs that the school partially covers by awarding the student a $20,500 Direct
Unsubsidized Loan. The student now has $5,500 in remaining costs.
$31,000 COA
- 5,000 scholarship
- 20,500 Direct Unsubsidized Loan
$5,500 remaining costs
As with Direct Unsubsidized Loans, eligibility for Direct PLUS Loans is determined by subtracting OFA from the
COA. Subtracting the scholarship and Direct Unsubsidized Loan from the COA allows the student to receive a
Direct PLUS Loan for $5,500 to fully cover the COA.
$31,000 COA
-5,000 scholarship
-20,500 Direct Unsubsidized Loan
-5,500 Direct PLUS Loan
$0 remaining costs
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The Special Rule in Section 401(c) of the HEA allows certain students whose parents or guardians died while serving on
active duty in the U.S. Armed Forces or while serving as public safety officers to receive the maximum Pell Grant award,
regardless of their calculated SAI. However, all other Title IV aid for these students must be based on their calculated SAI.
See Volume 7, Chapter 1 for the specific eligibility requirements that must be met for a student to receive the maximum
Pell Grant amount under the Special Rule, and guidance on identifying eligible students.
Substituting for the SAI
A school may substitute certain types of aid for the student9s SAI. Forms of aid that may replace the student9s SAI include
Direct Unsubsidized Loans, TEACH Grants, Direct PLUS Loans, state loans, private education loans, or any other non-need-
based loans. Note that annual loan limits for Direct Unsubsidized Loans still apply, and the total aid received (including
amounts used to replace the SAI) cannot exceed the COA.
Volume 3, Chapter 3, Example 3: Pell Grant Special Rule Packaging
A full-time independent third-year undergraduate student meets the eligibility criteria under the Special Rule (as
described in Volume 7, Chapter 1) to receive the maximum Pell Grant award. The student has a COA of $15,000
and an SAI of 9,000 for the award year. The packaging process begins with the maximum Pell Grant award of
$7,500*. Although the Pell Grant amount exceeds the student9s financial need of $6,000 (as determined by
subtracting the SAI of 9,000 from the $15,000 COA), no overaward is created because the student qualifies for the
maximum Pell Grant award under the Special Rule.
The student has no eligibility for additional need-based aid, but the school awards a Direct Unsubsidized Loan in
the amount of $7,500 to fully cover the student9s COA:
$15,000 COA
-7,500 Pell Grant
-7,500 Direct Unsubsidized Loan
$0 remaining costs
*The $7,500 maximum Pell Grant award is a fictitious amount used for illustrative purposes only. It is not intended
to represent the actual maximum Pell Grant award for any particular award year.
Regulatory Citations
34 CFR 685.200(e)
34 CFR 686.21(d)
Note: Although the cited regulations refer to the expected family contribution, these provisions continue to apply
for purposes of substituting certain types of aid for the SAI.
Volume 3, Chapter 3, Example 4: Replacing the SAI With Unsubsidized Loan Funds: Dependent Student
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A first-year dependent student has a COA of $10,800 and an SAI of 8,000, so the student9s financial need is
$2,800:
$10,800 COA - 8,000 SAI = $2,800 financial need
The student is not eligible for a Pell Grant, and the school does not participate in the Campus-Based Programs.
The combined Direct Subsidized Loan and Direct Unsubsidized Loan annual loan limit for a first-year dependent
student is $5,500 (maximum $3,500 subsidized). The student qualifies for a $2,800 Direct Subsidized Loan to fully
cover their financial need.
Eligibility for a Direct Unsubsidized Loan is determined by subtracting OFA from the COA (the SAI is not taken into
consideration):
$10,800 COA - $2,800 Direct Subsidized Loan = $8,000 Direct Unsubsidized Loan eligibility
This full amount cannot be covered with a Direct Unsubsidized Loan because of the $5,500 combined Direct
Subsidized Loan/Direct Unsubsidized Loan annual loan limit. However, the student is eligible to borrow an
additional $2,700 in the form of a Direct Unsubsidized Loan to cover part of the SAI:
$5,500 combined subsidized/unsubsidized annual loan limit - $2,800 Direct Subsidized Loan = $2,700 in
remaining Direct Unsubsidized Loan eligibility under the annual loan limit
The student9s parents could then borrow a Direct PLUS Loan. As with Direct Unsubsidized Loans, eligibility for
Direct PLUS Loans is determined by subtracting OFA from the COA:
$10,800 COA - $2,800 Direct Subsidized Loan - $2,700 Direct Unsubsidized Loan = $5,300 in Direct PLUS Loan
eligibility
The Direct PLUS Loan would cover the remaining portion of the SAI and fully cover the COA:
$10,800 COA - $2,800 Direct Subsidized Loan - $2,700 Direct Unsubsidized Loan - $5,300 Direct PLUS Loan = $0
unmet cost
As an alternative to the student taking out the $2,700 Direct Unsubsidized Loan, the student9s parent could
borrow up to $8,000 in the form of a Direct PLUS Loan to replace the SAI and fully cover the COA:
$10,800 COA - $2,800 Direct Subsidized Loan = $8,000 in Direct PLUS Loan eligibility
Another option (to eliminate the need for the student to incur any student loan debt at all) would be for the
student9s parent to take out a Direct PLUS Loan in the amount of $10,800 to cover the full COA.
Volume 3, Chapter 3, Example 5: Replacing the SAI With Unsubsidized Loan Funds: Independent Student
A first-year independent student has a COA of $9,000 and an SAI of 2,050, resulting in financial need of $6,950:
$9,000 COA 3 2,050 SAI = $6,950 financial need
The student is eligible for a $5,450 Pell Grant*, and the school also awards a $1,000 FSEOG. This leaves the
student with remaining need of $600, which can be covered with a Direct Subsidized Loan:
$9,000 COA 3 2,050 SAI - $5,450 Pell Grant - $1,000 FSEOG = $500 Direct Subsidized Loan eligibility
The student9s financial need is now fully covered by the Pell Grant, FSEOG, and Direct Subsidized Loan.
The combined Direct Subsidized Loan and Direct Unsubsidized Loan annual loan limit for a first-year independent
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Other Financial Assistance (OFA)
In contrast to Pell Grants, you must take other aid into account when awarding TEACH Grants, Campus-Based aid, or
Direct Loans. As noted earlier, the other aid that must be considered is called <other financial assistance= (OFA). OFA is
generally used in the same way for the Direct Loan Program as for the TEACH Grant and Campus-Based programs.
However, there are differences in the treatment of AmeriCorps benefits, as discussed later in this chapter.
In general, OFA as defined for the Direct Loan, Campus-Based, and TEACH Grant programs refers to aid from the
Title IV
programs, as well as other grants, scholarships, loans, and wages from need-based employment that you can reasonably
anticipate at the time you award aid to the student, whether the assistance is awarded by the school or by an individual
or organization outside the school.
If aid is excluded from either OFA or COA, that amount must be excluded from both OFA and COA. For Direct Loans, the
regulations specify that OFA is aid that the student will receive for the same period of enrollment as the loan. As noted in
Chapter 1, it9s usually best to originate a loan for a period that matches the academic year or other period that you9re
using to award funds from other
Title IV programs. The amount of a private education loan which exceeds the SAI when
substituting for the SAI is considered OFA.
When classifying non-
Title IV sources of aid, if a student receives the award because of postsecondary enrollment (for
example, a scholarship from a local social club that requires a student to be attending a postsecondary school), it counts
as OFA if it is not considered wages for employment according to federal or state rules, or if it is considered wages and is
based on need. Any amount that appears as income on the tax return will also be included on the appropriate line on the
FAFSA form in the section for student income. If the award is considered wages for employment but is not based on need,
then it is not OFA and it remains in income.
Compensation that a student athlete receives under a name, image, and likeness (NIL) contract is a non-need-based
source of income and therefore is not considered OFA.
Table 1 at the end of this section provides examples of what is and is not considered OFA.
student is $9,500 (maximum $3,500 subsidized).
The student can also receive a Direct Unsubsidized Loan in the amount of $2,050 to replace the SAI and fully
cover the COA:
$9,000 COA - $5,450 Pell - $1,000 FSEOG - $500 Direct Subsidized Loan = $2,050 Direct Unsubsidized Loan
eligibility
The aid package now fully covers the student9s COA:
$9,000 COA - $5,450 Pell - $1,000 FSEOG - $500 Direct Subsidized Loan - $2,050 Direct Unsubsidized Loan = $0
unmet cost
*The $5,450 Pell Grant amount shown in this example is for illustrative purposes only and is not intended to
represent the actual Pell Grant amount that a student would be eligible to receive. See
Volume 7 for guidance on
the determination of Pell Grant awards.
Estimated Financial Assistance
Campus-Based: 34 CFR 673.5(c)
Direct Loans: 34 CFR 685.102(b)
HEA: Sec. 428(a)(2)(C)(ii)
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Prepaid Tuition Plans
Prepaid tuition plans are not considered OFA. Instead, they are treated the same as Coverdell education and 529 savings
accounts. For more detail see the discussion of qualified education benefits or education savings accounts under the
heading <Student Assets (22)= in the
Application and Verification Guide, Chapter 2.
OFA Provided by a State
If the assistance provided by a state is not considered
Title IV assistance and is designated by the state to offset a specific
component of the student9s COA, the amount of that assistance may be excluded from both COA and OFA. You may
exclude such assistance on a student-by-student basis, but if it is excluded, it must be excluded for both COA and OFA. If
the amount excluded is less than the allowance provided in the student9s COA, you must exclude the lesser amount.
Counting Need-Based Earnings as OFA
For students who have jobs, only net earnings from need-based employment are considered OFA. <Need- based
employment= means employment that is awarded by the school itself or by another organization to a student based on
financial need to meet educational expenses for the award year.
A Federal Work-Study job is clearly a form of need-based student aid. Employment with a state is considered OFA if that
employment is based on the student9s financial need for assistance to pay for educational expenses.
Non-need-based earnings are not to be considered as OFA for the current award year because they will be reported as
income on the FAFSA form for a subsequent award year and will be used in calculating the future SAI. An example of non-
need-based employment would be a student's job with a private employer such as a local grocery store. Another example
would be a job cleaning the labs in the chemistry department on campus, if the chemistry department hired the student
using non-need-based criteria and funds.
Exclusion of Emergency Financial Assistance From OFA
Under the
FAFSA Simplification Act, emergency financial assistance provided to a student is excluded from OFA when
awarding Title IV funds. For this purpose, emergency financial assistance includes any grant or loan aid (whether
institutional funds or aid from some other non-Title IV source) paid to a student for unexpected expenses, if those
expenses are associated with one of the allowable COA components as described in Chapter 2 of this volume. This could
include, for example, unexpected expenses for food; housing; course materials or equipment; or transportation (for
instance, transportation between campus and home for a death or family emergency), since those expense categories are
allowable COA components. The school is responsible for determining whether an unexpected expense is associated with
a COA component. In addition, the expenses must not already be included in one of the student9s COA components. Note
also that the determination as to whether emergency financial assistance is warranted is made by the school based on an
individual student9s circumstances and need not be tied to a state or federal declaration of a disaster or emergency.
Before providing aid to a student who has requested emergency financial assistance, a school must document the
request, including the unexpected expense that prompted the request, and should retain the documentation in the
student9s file for the normal record retention period (see Volume 2, Chapter 7 for information on record retention
requirements).
Treatment of NIL compensation in awarding Title IV assistance: GEN-21-08
Exclusion of State-Provided Assistance
HEA Sec. 480(j)
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Exclusion of Federal Veterans Education Benefits From OFA
Chapter 103 of Title 10, United States Code (Senior Reserve Officers9 Training Corps)
Chapter 106A of Title 10, United States Code (Educational Assistance for Persons Enlisting for Active Duty)
Chapter 1606 of Title 10, United States Code (Selected Reserve Educational Assistance Program)
Chapter 1607 of Title 10, United States Code (Educational Assistance Program for Reserve Component Members
Supporting Contingency Operations and Certain Other Operations)
Chapter 30 of Title 38, United States Code (All-Volunteer Force Educational Assistance Program, also known as the
<Montgomery GI Bill4active duty=)
Chapter 31 of Title 38, United States Code (Training and Rehabilitation for Veterans with Service-Connected
Disabilities)
Chapter 32 of Title 38, United States Code (Post-Vietnam Era Veterans Educational Assistance Program)
Chapter 33 of Title 38, United States Code (Post-9/11 Educational Assistance)
Chapter 35 of Title 38, United States Code (Survivors9 and Dependents9 Educational Assistance Program)
Section 903 of the Department of Defense Authorization Act, 1981 (10 U.S.C. 2141 note) (Educational Assistance
Pilot Program)
Section 156(b) of the <Joint Resolution making further continuing appropriations and providing for productive
employment for the fiscal year 1983, and for other purposes= (42 U.S.C. 402 note) (Restored Entitlement Program for
Survivors, also known as <Quayle benefits=)
The provisions of Chapter 3 of Title 37, United States Code, related to subsistence allowances for members of the
Reserve Officers Training Corps
Note: The above list of federal veterans education benefits to be excluded from OFA previously included benefits
received under the Veterans Retraining Assistance Program (VRAP) and the Veterans Rapid Retraining Assistance Program
(VRRAP). As a result of a change made by the FAFSA Simplification Act, only federal veterans education benefits that are
specifically listed in the HEA may be excluded from OFA. Because benefits received under the VRAP and VRRAP programs
are not included in the statutory list of federal veterans education benefits to be excluded from OFA, they have been
removed from this list.
Volume 3, Chapter 3, Table 1: Examples of Other Financial Assistance
Counted as OFA
Any educational benefits paid because of enrollment
in postsecondary education, such as:
Pell Grants;
Direct Subsidized Loans (gross amount,
including origination fees);
Direct Unsubsidized and PLUS Loans (gross
amount, including origination fees), except
amounts used to replace the SAI (see below);
Long-term need-based loans, including loans
made by the school (but not short-term
emergency loans 3 see <Not counted as OFA=);
Not Counted as OFA
Wages from non-need-based employment
(including compensation received by student
athletes under NIL contracts);
Veterans education benefits listed in the
Appendix at the end of this chapter;
When awarding Campus-Based or TEACH Grant
funds, the amount of any Direct Subsidized
Loan that is equal to or less than the amount of
the student9s AmeriCorps national service
education awards or post-service benefits paid
for the student9s COA;
When determining eligibility for Direct
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Recalculation
Any time a student begins attendance in at least one course but does not begin attendance in all the courses they were
scheduled to attend and on which eligibility for
Title IV Aid was based, the school must recalculate the student9s eligibility
for Pell Grants and TEACH Grants, based on the revised enrollment intensity (for Pell Grants) or enrollment status (for
TEACH Grants) and COA. For the Campus-Based programs, if a change in a student9s enrollment status results in a change
in the student9s COA, the school must recalculate the student9s eligibility based on the revised COA. In this circumstance,
the $300 overaward tolerance under the Campus-Based programs does not apply (see <Campus-Based Overaward
Threshold= later in this chapter for more information).
A school may adopt a recalculation policy that is stricter than what the regulations require (for example, a policy that
requires recalculation up to a census date or any time within a term or period of enrollment). If a school adopts a policy of
Grants, including FSEOG and state grants;
Scholarships, including athletic scholarships
and scholarships that require future
employment but are given in the current year;
Employer reimbursement of employee9s tuition;
Waivers of tuition and fees;
Fellowships or assistantships, except non-need-
based employment portions of such awards;
Income from insurance programs that pay for
the student9s education;
Net income from need-based employment such
as FWS;
AmeriCorps awards or post-service benefits
(except when determining eligibility for Direct
Subsidized Loans);
McNair Postbaccalaureate Achievement
Program;
TEACH Grants (except amounts used to replace
the SAI - see <Not counted as OFA=);
Private education loans (except amounts used
to replace the SAI - see <Not counted as OFA=);
and
Funds received through income share
agreements (see the Note below) that are used
to finance a student9s expenses for
postsecondary education.
Subsidized Loans, AmeriCorps national service
education awards or post-service benefits;
The amounts of any TEACH Grants, Direct
Unsubsidized Loans, Direct PLUS Loans, and
non-federal non-need-based loans, including
private, state-sponsored, and institutional
loans, that are used to replace the SAI
(amounts that exceed the SAI must be treated
as OFA);
Foster care benefits received under Title IV,
Part E, of the Social Security Act, including
education and training vouchers and room and
board that students receive as extended foster
care benefits under Section 477 of the Social
Security Act; and
Emergency financial assistance provided to a
student (for example, emergency grants or
short-term emergency loans) for expenses that
are associated with an allowable COA
component and not otherwise included in the
student9s COA.
Note: A student loan originator's income share agreement (ISA) that is used to finance a student's
postsecondary education expenses is considered to be a private education loan. For more information see
the March 2, 2022 Electronic Announcement posted in the Knowledge Center.
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recalculating Pell Grants and TEACH Grants when a student9s enrollment intensity or status changes within a term or
period of enrollment, the policy must be applied consistently to all students. Therefore, if your school chooses to
recalculate Pell Grants and TEACH Grants for a student whose enrollment intensity or enrollment status in a program
increases (for example, from half-time to full-time), it must also recalculate for a student whose enrollment intensity or
status decreases.
Once you have recalculated a student9s eligibility,
Title IV funds in excess of the amount the student is eligible to receive
must be returned or re-awarded, as applicable. For guidance on handling excess cash resulting from recalculations of aid
eligibility due to enrollment intensity or status changes, see Volume 4, Chapter 1.
Recalculation and Direct Loans
If a student9s enrollment status changes after the student has already received one or more Direct Loan disbursements,
no recalculation of the previously disbursed Direct Loan amount is required. For information on how changes in enrollment
status may affect a student9s eligibility to receive pending Direct Loan disbursements, see
Volume 8, Chapter 1.
Recalculation and Pell Grants
Since Pell Grants are always based on the full-time COA, recalculation means that you are looking at the student9s revised
enrollment intensity. For more detail on recalculating Pell Grants, see
Volume 7, Chapter 7.
Recalculating COA
When performing a recalculation a school may not include in the COA costs associated with any classes the student failed
to begin. In addition, in determining a student9s COA a school may not include any costs for a period when the student
was not enrolled in and attending any
Title IV eligible classes (other than costs for a brief period between regularly
scheduled terms or semesters). Note that some components of COA are not included if a student is enrolled less than half
time (see Chapter 2 of this volume).
A school that performs a Return of
Title IV Funds calculation on a period of enrollment basis for a student enrolled in a
program offered in modules may not include in the recalculated COA any costs associated with a future payment period
for which the student has not confirmed attendance at the time of withdrawal and that does not start within 45 days.
COA Changes Between or Within Payment Periods
A school may have a policy of recalculating awards only when the COA changes from one payment period to the next, and
not when the COA changes within a payment period. For example, a school could recalculate awards because of changes
to a student9s tuition and fee costs or living situation (e.g., when a student moves off campus) between payment periods.
However, schools also have the option to establish a policy of recalculating financial aid awards when a student9s costs
change within a payment period. For instance, if a student with no dependents moves from a dormitory to off-campus
housing at midterm, a school could choose to recalculate the student9s award for that payment period. For Pell Grant
purposes, such a policy is acceptable if it9s carried out for all students whose costs change within the payment period.
Note that schools are not limited to one or the other of the policies described above. Schools may have a policy of
recalculating awards when there is a change in costs at any time during an award year (whether within a payment period
or between payment periods), as long as the recalculation policy is carried out for all students whose costs change.
Schools may not recalculate the payment for a payment period that took place before the cost change. For instance, if a
student lives in the dormitory during the first quarter and then moves off campus for the second and third quarters, the
recalculation would only affect the payments for the second and third quarters.
Crossover Periods
Crossover periods are payment, award, or loan periods that overlap two award years. With one exception, you may
choose which award year SAI to use for a student. The exception is that when awarding FWS to a student not attending
classes, the SAI for the next period of enrollment must be used.
Table 2 at the end of this section summarizes the options for handling crossover payment periods in the
Title IV programs.
Note that for the award year selected, the student must have an official SAI calculated by the FAFSA Processing System
(FPS), and for a Pell Grant the FPS must also have processed a valid Institutional Student Information Record (ISIR) or
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FAFSA Submission Summary.
Pell Crossover Issues
For Pell Grant purposes, you may assign crossover payment periods to the award year that best meets the needs of your
students and maximizes a student9s eligibility over the two award years in which the crossover payment period occurs.
You may assign the Pell Grant award to a different award year than the award year used for awarding the rest of the
student9s
Title IV aid. For more detail on calculating Pell Grant awards in crossover, summer, mini-session, and transfer
situations, see/Volume 7, Chapter 5.
Crossover Period SAIs and Title IV Aid
In a crossover payment period, when using Pell Grant funds from a different award year than the award year used to
award other Title IV aid, you must use the same SAI, COA, and need for all programs except the Pell Grant Program. For
Pell Grants, you use the SAI, COA, and need for the award year from which the student will be paid, and use the amount of
Pell Grant funds received in determining remaining need when packaging aid from other Title IV programs.
Packaging Veterans Benefits, AmeriCorps, Vocational Rehabilitation Funds, and BIA Grants
Veterans Education Benefits
For
Title IV purposes, federal veterans education benefits, as defined under Section 480(c) of the HEA, are not treated as
Volume 3, Chapter 3, Table 2: Awarding Title IV Aid for Crossover Periods
Title IV
Program
Applicable
crossover
period
Choice of award
year SAI?
Use same
award year
SAI for all
students in
crossover
period?
Use same
award year,
SAI, COA, and
need to award
student other
Title IV aid?
Use funds
from the
same award
year as
SAI?
Choice of
academic year
for annual
loan limit
regardless of
award year
SAI used?
Pell
Grant
Payment
period Yes No Not applicable Yes Not applicable
FWS Award
period
Yes, if student is
attending classes. (If
student is not
attending, you must
use SAI for next
period of enrollment)
No Yes, except for
Pell Grant
No,
disbursement
from award
year in which
hours were
worked
Not applicable
FSEOG Payment
period Yes No Yes, except for
Pell Grant No Not applicable
Direct
Loans
Loan
period Yes No Yes, except for
Pell Grant
Not
applicable
Yes, for term-
based credit-
hour programs
using SAY. Not
relevant for
BBAY.
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OFA. You can ask the student to identify the specific program under which they are receiving their veterans education
benefits. Veterans education benefits are also not to be counted as income, and therefore are not reported as income on
the FAFSA form. For a list of federal veterans education benefits that are to be excluded from OFA, see the Appendix at
the end of this chapter.
Noneducational veterans benefits are also not counted as OFA. Noneducational veterans benefits include Death
Pension and Dependency and Indemnity Compensation (DIC) benefits, and income from the Veteran9s Affairs Student
Work-Study Allowance Program (VASWSAP). The student must report these noneducational benefits as nontaxable income
on the FAFSA form.
AmeriCorps Benefits
AmeriCorps benefits are not included as OFA when determining eligibility for Direct Subsidized Loans, but they are
counted as OFA when determining eligibility for Direct Unsubsidized Loans.
When packaging Campus-Based or TEACH Grant awards, you may exclude from the OFA any portion of a Direct
Subsidized Loan that is equal to or less than the amount of the student9s AmeriCorps benefits.
Vocational Rehabilitation Funds
If you have a student who qualifies for both
Title IV funds and for vocational rehabilitation assistance funds, you should
determine the student9s aid package without including costs related to the student9s disability in the student9s COA, and
Veterans Benefits Not OFA
August 13, 2009 Electronic Announcement
HEA 480(c)
Volume 3, Chapter 3, Example 6: Packaging When a Student Receives AmeriCorps Benefits
A third-year dependent student has a COA of $15,000 and an SAI of 2,400, and is receiving a $5,100 Pell Grant*,
$3,000 in AmeriCorps benefits and $1,000 in FSEOG. Because AmeriCorps benefits are not counted as OFA when
determining eligibility for Direct Subsidized Loan, you may award the student $5,500 in Direct Subsidized Loan
funds:
$15,000 COA 3 2,400 SAI 3 $5,100 Pell Grant* 3 $1,000 FSEOG = $6,500 Direct Subsidized Loan eligibility (limited
to $5,500 because of the annual loan limit)
In contrast, AmeriCorps benefits are considered OFA when determining eligibility for Direct Unsubsidized Loans.
Therefore, the student may receive an additional $455 in Direct Unsubsidized Loan funds to replace part of the
SAI and fully cover the COA:
$15,000 COA 3 $5,100 Pell Grant* 3 $1,000 FSEOG 3 $3,000 AmeriCorps benefits 3 $5,500 Direct Unsubsidized
Loan = $400 Direct Unsubsidized Loan eligibility
*The $5,100 Pell Grant amount shown in this example is for illustrative purposes only and is not intended to
represent the actual Pell Grant amount that a student would be eligible to receive. See
Volume 7 for guidance on
the determination of Pell Grant awards.
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without including anticipated vocational rehabilitation assistance as OFA. In this way, a student with disabilities will be
offered the same aid package as a student who is in the same financial situation but who doesn9t have disabilities; the
student with disabilities will also receive the maximum amount of vocational rehabilitation aid to which they are entitled.
If the vocational rehabilitation agency doesn9t fully meet the student9s disability costs, you may wish to include the unmet
disability expenses in the student9s COA and increase the aid award.
Vocational Rehabilitation Agreements with State Agencies
Some state vocational rehabilitation agencies have established agreements with schools that specify how vocational
rehabilitation assistance will be coordinated with other forms of financial aid. Check with your school9s vocational
rehabilitation coordinator to see if it has such an agreement.
Although vocational rehabilitation funds shouldn9t be considered OFA when you initially package aid for a student, you
must coordinate funds available from the vocational rehabilitation agency and from institutional, state, and federal
student financial assistance programs to prevent an overaward. The amount of assistance from the vocational
rehabilitation agency must be documented in the student9s file.
Coordination With Bureau of Indian Affairs Grants
When packaging Campus-Based aid for a student who is or may be eligible for a Bureau of Indian Affairs (BIA) grant, you
must first develop a financial aid package without considering any BIA funds. If the total aid package4after BIA funds are
added4does not exceed the student9s need, no adjustment may be made to the aid package. If the total package plus the
BIA grant does exceed need, you must eliminate the excess in the following sequence: loans, work-study awards, and
grants other than Pell Grants (you may not reduce a Pell Grant or BIA grant). You may alter this sequence of reductions
upon the student9s request if you believe it would benefit the student. We encourage you to consult with area officials in
charge of BIA postsecondary financial aid when packaging
Title IV funds with BIA grants.
Coordination of BIA Grants With Campus-Based Aid
34 CFR 673.6
Volume 3, Chapter 3, Example 7: Vocational Rehabilitation Packaging
A third-year dependent undergraduate with no financial need will receive $4,000 in vocational rehabilitation aid
for the academic year. The original COA at the student9s school is $5,000. In determining the original COA, the
school coordinates funding with the vocational rehabilitation agency and chooses to exclude all disability-related
expenses that will be covered by the vocational rehabilitation aid. However, the student has $2,000 in additional
disability-related expenses that the vocational rehabilitation aid will not cover, so the school increases the COA to
$7,000 and awards the student a Direct Unsubsidized Loan for that amount.
Although the combined amount of the $7,000 Direct Loan and the $4,000 in vocational rehabilitation aid exceeds
the COA, there is no overaward. This is because the $7,000 COA does not include $4,000 in disability-related
expenses that are covered by the student9s vocational rehabilitation aid. Since the $4,000 in vocational
rehabilitation aid is not covering any component of the COA, it must also not be counted as OFA. However, if the
school had not initially excluded from the COA all the disability-related expenses that were covered by the $4,000
in vocational rehabilitation aid, the amount of the vocational rehabilitation aid that exceeded the excluded
disability expenses would have to be counted as OFA.
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Treatment of Overawards
If, at any time during the award period, a student receives additional OFA that was not considered in calculating the
student9s eligibility for Campus-Based aid, and if the OFA combined with the expected financial aid will exceed the
student9s need, the amount in excess of the student9s need is considered an overaward.
The treatment of overawards in the Direct Loan Program depends on whether the loan has been fully disbursed. If you
discover that there will be an overaward before Direct Loan funds are disbursed, you must eliminate the overaward
through the packaging process by canceling or reducing the amount of the Direct Loan, or by canceling or reducing other
aid over which you have direct institutional control.
If the overaward occurs after Direct Loan funds have been disbursed to the borrower, there is no Direct Loan overaward
that needs to be addressed; however, you might need to adjust the student9s aid package to prevent an overaward of
Campus-Based funds.
See
Volume 4, Chapter 3, for a full discussion of overawards for all programs.
Campus-Based Overaward Threshold
Campus-Based aid need not be reduced if the overaward doesn9t exceed $300, which is the overaward threshold for all
Campus-Based programs. Note that the $300 threshold is allowed only if an overaward occurs after Campus-Based aid
has been packaged and the school was unaware the student would receive additional funds. The threshold does not allow
a school to deliberately award Campus-Based aid that, in combination with other resources, exceeds the student9s
financial need.
Prohibition on Using Pell To Pay Loans
If a Pell Grant recipient9s aid package includes a loan and the package must be adjusted to prevent an overaward, the Pell
Grant funds can9t be used to pay back the loan. A payment on a student loan isn9t an educational expense.
Other Packaging Considerations
Initially Ineligible Programs That Gain Eligibility
If a previously ineligible program later gains
Title IV eligibility, you may award non-loan Title IV aid to students who are
already enrolled in the program retroactive to the beginning of the payment period in which the program becomes
eligible, and you may award Direct Loans retroactive to the beginning of the period of enrollment (usually the academic
year) in which the program becomes eligible, assuming that all other student, program, and school eligibility requirements
are met. You may not award Title IV aid for payment periods (non-loan programs) or periods of enrollment (Direct Loans)
that a student has already completed at the time the program gains eligibility.
Financial Aid Offers and Notification Requirements
Many schools use a financial aid offer, in either paper or electronic format, to notify students of their proposed aid
package. Whether you use a paper letter or other electronic means such as email, you must fulfill the consumer
information requirements, as described in
Volume 2, Chapter 6. You are also responsible for certain notifications and
authorizations at the time of disbursement, as described in Volume 4, Chapter 1.
Schools may choose to use the College Financing Plan, developed by the Department as a standardized form to simplify
cost and financial aid information provided to prospective students.
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