Regulations - The Missing Puzzle Piece Of Financial Aid Compliance

2017/2018 Transition: Burdensome For Financial Aid

Amy Glynn, VP of Financial Aid & Community InitiativesBy Amy Glynn

Transitioning to the 17-18 aid year is going to be one of the most burdensome efforts you’ve ever faced, financial aid. As with the rollout of any new aid year, financial aid in 17-18 will undergo changes compared to 16-17. Updates to year references, changes to verification, C Codes being added or removed, new founding options—things change. They have to change, to keep up with our changing industry, changing student demands, and more. So why is this year going to be particularly burdensome?

A Perfect Storm: PPY & Early FAFSA

The shift to prior-prior year (PPY) tax information on the Federal Application For Student Aid (FAFSA) has caused a perfect storm in terms of conflicting information. Never before—and hopefully never again—has the potential for conflicts across aid years on the FAFSA been so high.

For one time only, 39 answers on a student’s FAFSA should exactly match from 16-17 to 17-18. If a student provides information that isn’t an exact match, and PELL eligibility between the years falls outside of tolerance levels established by the Department of Education (ED), a C Code 399 may be generated, flagging the student’s Institutional Student Information Record (ISIR) and halting fund disbursement immediately.

C Code 399’s Impact: Office Workload

Only students with a PELL-eligible Expected Family Contribution (EFC) in 17-18 could potentially be flagged with a C Code 399, says ED. In the 2014-2015 aid year 8.2 Million students received a PELL grant. If only 15% of those Pell grant recipients were flagged as containing conflicting information outside the threshold, that would mean 1,230,000 C Code 399 flags for aid offices across the country to clear. This could be a mountain of work.

C Code 399 lmpacts Your Neediest Students

How do we make this as easy as possible on students, while simultaneously ensuring all administrative requirements are met? Understanding what will be required of us as schools is crucial. I consider it a three-step process: Identify, Research, and Resolve. Remember, each singular step will have its own task list.

Step 1: Identify

This will be problematic for any Financial Aid Office that doesn’t plan to load ISIR files to their Student Information System (SIS) until November, January, or even April. Institutions are required to immediately halt future aid disbursements and work study payments from the time that the C Code 399 is generated by ED and processed to the school.

How will you know to hold aid disbursement if you have no visibility into what ISIRs your office has received? You will either need to upgrade early or find another way to identify students who have a 399. If you are a school that does not load all ISIR records to your SIS, you’ll need to find a way to review the suspended/held records to determine if you have ISIRs for both years.

Step 2: Research

Once the students who have been flagged with a C Code 399 have been identified, if resolution is required then all future disbursements of aid for both aid years (16/17 and 17/18) must be suspended.  To resolve, you’ll need to review the ISIRs to determine which data elements hold discrepancies from one aid year to the next. Does your SIS currently offer functionality to locate these discrepancies? It’s a good question to ask them. Finding the discrepancies will be a bit like playing ‘Where’s Waldo,’ as you’ll have to compare up to 39 fields per year until you find the conflicting information.

Next you’ll need to determine if any documentation exists on-file to clear the conflict.  Documentation can take different forms. For example, successful transfer of tax information with an 02 Data Retrieval Code in either aid year will work. Additionally, a tax transcript, and—late-breaking from ED—a copy of the tax return, also count to clear conflicts for 399.

If documentation is not currently available to clear the conflict, you’ll need to notify the student of your request that they provide necessary additional documentation. This communication should also include the details students will need to understand the situation—it’s highly unlikely they’ll know anything about C Code 399 or conflicting information, and will have questions.

Situations where a C Code 399 flag is not required are outlined in a flowchart from the ED, titled Guidance to Date.

Step 3: Resolution

Once all of the documentation needed to resolve the instance of a C Code 399 is in possession by your office, the entire file needs to be reviewed. This review is made to ensure that both aid years are using the appropriate financial data to determine eligibility of aid. ISIR corrections need to be identified, processed, and awards adjusted. Adjustments will require student notification, and if the EFC has increased returns may be required and students reported as being in over-award of need-based aid. This step is likely where your office would prefer to spend more of its time, counselling students on the changes, answering their questions, and helping them find a successful path forward.

Non-Compliance Repercussions

If you do not stop disbursements of aid, resolve the conflicting information, and adjust awards accordingly, ED is authorized to take action. Your office may be audited in terms of over awards, under awards, conflicting information, ineligible disbursements, and potential demonstration of administrative incompetence.  Fines may be levied, heightened cash monitoring may be enforced, and additional reviews may occur.

We have to believe the long-term positive impacts on students and Financial Aid Offices will be much greater than the potential negative impacts that could occur in this one transition year. But it’s certainly going to be one tumultuous year as we all work through this.

Learn how you can easily find and resolve C Code 399 >