Awarding Campus- CHAPTER

2
Based Aid

NEED-ANALYSIS FORMULAS Maximum Campus-Based Aid

The Higher Education Act of 1965 (HEA), as amended, provides a Calculation
single methodology for determining the Expected Family Contribution Financial Need
(EFC) and cost of attendance (COA) for all Student Financial _ Aid from other SFA programs
and resources
Assistance (SFA) programs. Need-analysis and COA are discussed in
= Maximum Campus-Based aid
Volume 1 - Student Eligibility. If the student’s COA exceeds his or her
EFC, the student has need.

Before awarding aid from campus-based programs, the financial

aid administrator must take into account aid the student will receive Consolidated Overaward
from other SFA Programs. The administrator must also take into Provisions Cite
34 CFR 673.5
account other resources that the school makes available to its students,
resources about which he or she knows, or resources that the
administrator can reasonably anticipate at the time aid is awarded to
the student. An aid administrator may not award or disburse aid from
a campus-based program if that aid, when combined with all other
resources, would exceed the student’s need.

If, at any time during the award period, the student receives
additional resources that were not considered in calculating the
student’s eligibility for campus-based aid and if these resources
combined with the expected financial aid will exceed the student’s
need, the amount in excess of the student’s need is considered an
overaward.

RESOURCES
Resources, as defined by the campus-based regulations, include but
are not limited to:

• funds a student is entitled to receive from a Federal Pell Grant;

• William D. Ford Federal Direct Loans (Direct Loans);

• Federal Family Education Loans (FFEL’s);

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• long-term loans made by the school, including Federal Perkins

Loans (short-term emergency loans are not considered to be a
resource);

• grants, including Federal Supplemental Educational

Opportunity Grants (FSEOGs), state grants, and ROTC living
allowances;

• scholarships, including athletic scholarships and ROTC

scholarships, and scholarships that require future employment
but are given in the current year;

• waivers of tuition and fees;

• fellowships or assistantships;

• veterans educational benefits paid under Chapters 30, 31, 32,

and 35 of Title 38 of the U.S. Code;

• income from insurance programs that pay for the student’s

education;

• net income from need-based employment; and

• AmeriCorps funds (national service education awards or post-

service benefits under Title I of the National and Community
Service Act of 1990).

“Need-based employment” means employment that is awarded by

the school itself or by another entity to a student who demonstrates a
financial need for those funds for the purpose of defraying
educational costs of attendance for the award year. Only income from
need-based employment may be considered as a resource.

The net amount of a student’s Federal Work-Study (FWS) earnings

that will be available to help pay for his or her COA, the school must
subtract estimated taxes and job-related costs from the student’s gross
FWS earnings (see Volume 6 - Federal Work Study). Any portion of the
above resources that is included in the calculation of the student’s EFC
is not considered to be a resource.

The school may treat a Federal PLUS Loan, Direct PLUS Loan,
unsubsidized Federal Stafford Loan, Direct Unsubsidized Loan, state-
sponsored loan, or a private loan as a substitute for a student’s EFC.
However, if the sum of the loan amounts received exceeds the
student’s EFC, the excess is a resource.

Non-need-based earnings are not to be considered as a resource

for the current award year because they will be reported as income on
the Free Application for Federal Student Aid (FAFSA) for the subsequent
award year.

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Under the new campus-based regulations 34 CFR 673.5(c)(4), Loan Resource Exclusion Cite
you may, as an option when packaging aid, exclude as a resource a 34 CFR 673.5(c)(4)
portion of a subsidized Stafford Loan up to the amount of the
This regulatory change was effective July
student’s Chapter 30 veterans education benefits (paid under the
1, 2000, although schools were allowed to
Montgomery GI Bill) and/or AmeriCorps funds. For an example of implement this regulation on or after Octo-
how this exclusion factors into a student’s financial aid package, see ber 28, 1999.
volume 1. (Chapter 30 veterans education benefits and AmeriCorps
awards must be excluded from estimated financial assistance when
determining a student’s eligibility for a subsidized Stafford Loan.)

Noneducational veterans benefits are not counted as a resource or

estimated financial assistance, as they are already counted in the EFC
formula as nontaxable income. Noneducational veterans benefits
include Death Pension and Dependency and Indemnity
Compensation (DIC) benefits.

OVERAWARDS
A financial aid administrator may not award or disburse aid from a
campus-based program if that aid, when combined with all other
resources, would exceed the student’s need. If a student who has
already been awarded a financial aid package later receives additional
resources that cause his or her financial aid package to exceed his or
her need, the amount in excess of the student’s need is considered an
overaward.

There is now a $300 overaward threshold for all campus-based

programs. The $300 threshold is allowed only if an overaward occurs
after campus-based aid has been packaged. The threshold does not
allow a school to deliberately award campus-based aid that, in
combination with other resources, exceeds the student’s financial
need.

STEPS TO TAKE IF THE RESOURCES EXCEED NEED

If a school learns that a student has received additional resources
that were not included in calculating the student’s eligibility for aid
from the Perkins Loan, FWS, or FSEOG Program that would result in
the student’s total resources exceeding his or her financial need by
more than $300, the school must take the following steps:

1. If the student’s aid package includes a loan under the FFEL or

Direct Loan Program, the school must first follow the
overaward requirements that are presented in SFA Handbook:
Direct Loan and FFEL Programs Reference. Also, a school may
attempt to reduce or eliminate the overaward by changing the
function of an unsubsidized loan (a Stafford Loan, a
nonfederal loan, or the parents’ PLUS Loan) from covering
need to replacing the EFC. (However, if the sum of the loan
amounts exceeds the student’s EFC , the excess must be
treated as a resource.)

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2. If there is no FFEL or Direct Loan in the student’s aid package

or if the school eliminates the FFEL or Direct Loan overaward
and if, in either case, the student’s total resources still exceed
the student’s need by more than $300, the school must
recalculate the student’s need to determine whether he or she
has increased need that was not anticipated when the school
awarded aid to the student. If the student’s need has increased
and if the total resources do not exceed the increased need by
more than $300, the school is not required to take any
additional action.

3. If the school recalculates the student’s need and determines

that the student’s need has not increased or that his or her
need has increased but that the total resources still exceed his
or her need by more than $300, the school must cancel any
loan or grant (other than a Pell Grant) that has not already
been disbursed.

4. If the student’s total resources still exceed his or her need by

more than $300 and his or her resources include a Perkins
Loan and/or FSEOG, the amount that exceeds the student’s
need by more than $300 is a Perkins Loan or FSEOG
overpayment.

For a student employed under the FWS Program, if the school

recalculates the student’s need and determines that the student’s need
has increased and if the total resources do not exceed that increased
need by more than $300, the school may use FWS funds to pay the
student until the FWS award has been earned or until the student’s
increased need has been met. In addition, the school may continue
employing the student under FWS after the full amount of the FWS
award has been earned and the student’s financial need has been met;
however, the school may pay the student with FWS funds only up to
the time the income from need-based employment exceeds the
student’s financial need by more than $300. At that point, FWS funds
may no longer be used to pay the student. The school may continue to
employ the student, but funds other than FWS funds must be used to
pay the wages.

OVERPAYMENTS
A student is liable for any overpayment of a Perkins Loan or
FSEOG; the school is also liable for any overpayment that was caused
by the failure of the school to follow the procedures in 34 CFR Part
668, Part 673, Part 674, Part 675, or Part 676. If the school makes a
Perkins Loan or FSEOG overpayment for which it is liable, it must
restore an amount equal to the overpayment plus any administrative
cost allowance claimed on that amount to its Perkins Loan fund for a
Perkins Loan overpayment or to its FSEOG account for an FSEOG
overpayment.

If the school makes an overpayment of Perkins Loan advances or

FSEOG for which it is not liable (for example, when a student has

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made a mistake on the application), the school must promptly attempt Coordination with BIA Grants Cite
to recover the overpayment by sending a written notice to the student 34 CFR 673.6
requesting the repayment of the amount of the overpayment. The
notice must state that, if the student fails to repay the overpayment, or
fails to make arrangements satisfactory to the holder of the
overpayment debt to repay the overpayment, the student will be
ineligible for additional SFA funds until final resolution of the
overpayment.

If a student claims that the school has made a mistake in

determining the Perkins Loan or FSEOG overpayment, the school
must consider any information provided by the student and determine
whether the objection is warranted.

If the school made an FSEOG overpayment for which it is not

liable, and the federal share of an FSEOG overpayment is $25 or more,
the school may be required to refer the overpayment to the U.S.
Department of Education for collection. A school must refer the
FSEOG overpayment case to the Department’s Student Receivables
Division for collection if all of the following conditions apply to the
overpayment:

• the school has sent the required notice to recover the

overpayment,

• the school determines that the student’s objection (if any) is not
warranted,

• either the school has failed to collect the FSEOG overpayment

or the student has failed to make arrangements satisfactory to
the school to repay the overpayment, and

• the federal share of an FSEOG overpayment is $25 or more.

If the school is required to refer the FSEOG overpayment to the

Department for collection, the school must identify the Federal share
of the overpayment; the student’s name, most recent address, and
telephone number; and other relevant information. See volume 1 for
additional information. After referring the overpayment case to the
Department for collection, the school is not required to make any
further attempt to collect the FSEOG overpayment. If the school is
unable to collect the overpayment and the federal share is less than
$25, the school is not required to make any further attempt to collect
the overpayment.

COORDINATION WITH BUREAU OF INDIAN AFFAIRS

GRANTS
To determine the amount of campus-based aid for a student who is
or may be eligible for a BIA grant, a school must first develop a
financial aid package without considering any BIA funds. If the total
aid package—after BIA funds are added—does not exceed the

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student’s need, no adjustment may be made to the aid package. If the

total package plus the BIA grant does exceed need, the school must
eliminate the excess in the following sequence: loans, work-study
awards, and grants other than Pell Grants. (The school may not reduce
a Pell Grant or BIA grant.) The school may alter this sequence of
reductions upon the student’s request if the school believes the change
would benefit the student. In determining the amount of financial
need for a student eligible for a BIA grant, a financial aid
administrator is encouraged to consult with area officials in charge of
BIA postsecondary financial aid.

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