ED Provides Guidance and Options for Originating Summer-Only Direct Loans; Updates on Paper FAFSA Processing, V4-V5 Verification, FPP Submissions
By Maria Carrasco, NASFAA Staff Reporter
The Department of Education (ED) on Thursday, via an electronic announcement, provided guidance for awarding summer term loans if schools are unable to submit corrections and obtain a valid Institutional Student Information Record (ISIR) before the end of the loan period, and also provided updates on issues related to 2024-25 FAFSA processing.
Since the batch institutional corrections functionality won’t be available until the “first half” of August, some schools that treat the summer term as a “header” to their fall-spring academic year have expressed concerns about their ability to originate Direct Loans based on 2024-25 FAFSA data for a summer-only loan period if they are unable to process corrections before the end of the summer loan period.
During NASFAA's National Conference, at an open forum session with the department, members directly asked ED to consider options for awarding summer term loans, which have been impacted by the delayed 2024-25 FAFSA rollout.
In response, ED has now provided three options for schools that are concerned about not being able to complete FAFSA corrections and obtain a valid ISIR before the end of a summer “header” term loan period.
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A school could originate a summer-fall loan (or a summer-fall-spring loan) instead of a summer-only loan once it obtains the valid ISIR after the batch corrections functionality becomes available. Once the loan has been originated, the school could then make a retroactive disbursement for the summer payment period based on the valid ISIR.
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A school could originate a summer-only Direct Loan within its system, prior to the end of the loan period, using an estimate of the student’s loan eligibility based on its own system’s calculation of the effects of corrections.
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A school could also make individual FAFSA corrections through the FAFSA Partner Portal (FPP) but ED noted that it would not be practical to make a large number of corrections through this method.
Full details on the three options are provided in the electronic announcement.
ED also reminded schools that regardless of the option used to award Direct Loans to a student for a summer 2024 loan period, no loan disbursements can be made until the school receives a valid ISIR and that a student must still meet all general and program-specific eligibility requirements. The EA also reminds schools that corrections or updates to the origination record may be required if the valid ISIR information differs from the estimated information used at the time of the loan origination.
ED also released updates to an EA released on Tuesday, regarding ISIRs that are selected for verification due to flags for possible fraudulent activity, which require schools to complete V4 or V5 verification on affected students. In the EA, ED announced they would be sending files containing a report of individuals who are suspected of identity fraud for the 24-25 award year to the institution’s FTI mailbox starting the week of July 15, 2024. As of today, ED expects those files to be sent by the end of this week. Subsequent files will continue to be sent every two weeks.
In another update, ED indicated an additional roadblock for the processing of paper FAFSA forms, which was added to an EA originally released May 10, 2024. ED previously announced that they were in the final stages of testing for processing the paper FAFSAs, but have recently identified issues that have delayed the launch of this functionality. They give no estimated timeline for when the processing of paper FAFSAs will begin.
On the same EA, ED also announced that the issue preventing the Primary Destination Point Administrator (PDPA) role from submitting corrections for their institution has been fixed. PDPAs may now log in to the FPP to submit corrections.
Publication Date: 7/12/2024
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