Department Provides Guidance for Federal Disaster Relief

The U.S. Department of Education recently issued a Dear Colleague letter GEN-04-04 providing additional guidance to Title IV participants affected by a federally declared disaster. The new guidance expands on previous Dear Colleague letters and information in the Federal Student Aid Handbook; it explains ways in which schools, lenders and guarantors may administer Title IV programs to accommodate the exceptional circumstances created by the disaster.

Schools and lenders should note that any deviation from federal regulations — even when related to a well-publicized, federally declared disaster — should be documented with a clear summary of the alternate process.

GEN-04-04 provides guidance regarding the following issues:

Lost student records
If records and documentation are lost and irretrievable due to a federally declared disaster, the school must document that the records were lost in the disaster. The school will not be held responsible, however, for records that cannot be retrieved or reconstructed.

Need analysis
Special aid provided to the disaster victims will not be counted as income or other assistance for purposes of calculating the Expected Family Contribution.

Satisfactory academic progress
Students who fail to meet the standards of satisfactory academic progress due to a federally declared disaster may be considered exceptions from those standards under the “other special circumstances” provisions of 34 CFR 668.34(c)(3). The school must document the student's records with the circumstances that support the exception.

Leaves of absence
If a student is directly affected by a federally declared disaster, that student is not required to request a leave of absence in writing. The school must document its reason for granting the leave of absence, and why it did not require the request to be in writing.

Loan disbursements
Lenders are authorized to not disburse loan funds based on the disbursement schedule originally supplied by a school if the lender has been informed that the school has delayed opening or has ceased operations due to a federally declared disaster. Schools are urged to provide revised disbursement schedules to lenders. Students are not required to reapply for loan funds. Schools, lenders and guarantors are strongly encouraged to work together to update loan periods, anticipated graduation dates, and other pertinent loan data to ensure that students promptly receive the loan funds to which they are entitled.

In-school borrowers
Students whose loans reflect an in-school status should retain that status even if their half-time enrollment is interrupted by a federally declared disaster. The period during which the student is not attending classes due to the disaster should not cause the student's loans to enter grace or repayment. The in-school status should be retained until the student either re-enrolls in the next regular enrollment period or until the student withdraws, whichever is earlier.

Repayment borrowers
Lenders may grant a three-month administrative forbearance to borrowers affected by a disaster. While lenders must document the reason for the forbearance, they do not need to obtain supporting documentation or any forbearance request from the borrower.

In-school deferment
Students whose loans reflect an in-school deferment status should retain that status even if their qualifying enrollment is interrupted by a federally declared disaster. Students should retain the in-school deferment status until they either re-enroll in the next regular enrollment period or withdraw, whichever is earlier.

Additional guidance
Federal case-management teams offer additional guidance related to disaster relief on a case-by-case basis. Schools should contact their specific case-management teams with questions and to obtain specific guidance related to the following issues:

• Deadlines and time frames related to Return of Title IV provisions.
• Required reporting for campus security and Equity in Athletics Disclosures.
• Issues related to study-program eligibility and student eligibility for Title IV funds if the academic year is shortened by a disaster.
• The timing of post-withdrawal disbursements.
• Credit balances.
• The timing and applicability of required notices and authorizations.
• Borrower requests for loan cancellation.
• School eligibility, financial-responsibility standards and administrative-capability issues.

For additional information or answers to your questions about GEN-04-04, contact USA Funds’ policy department.