[Oasfaa] Clarification on 12-Consecutive-Month Rule for Preparatory Coursework

[Mc Conahay, Pamela K.]

On Nov 2, 2005, NASFAA published an article titled "Clarification on the
12-Consecutive-Month Rule for Preparatory Coursework".  We discussed
this clarification in our 4-year sector meeting at the SWASFAA Annual
Conference and as a group, we weren't happy.  In short, the article
indicated that before giving Stafford Loan to a student completing
preparatory coursework to gain admission to a degree or certificate
program, a school must research the student's loan history and if the
student had received a loan, and ascertain whether any of the prior
loans were for preparatory coursework.  This was to prevent a student
from taking advantage of the preparatory coursework provision more than
once;  the preparatory coursework provision is a once in a lifetime
exception, not something that can be used to take preparatory coursework
before entering a bachelor's degree and then again for a master's
degree, etc.).   Our concern was that the prior loans could be many
years outside the record retention period, and we could be going in
circles asking for information that no one has any more.  
 
I expressed our collective displeasure to Jeff Baker during his federal
update on the last day of the conference.  Unfortunately, Jeff wasn't
aware of the Nov 2 article, so we couldn't engage in our usual arguing
which we both enjoy so much and you all love to watch.   Sorry we
couldn't provide our usual comic relief (I try, I really do).  
 
Even though I sandbagged him at SWASFAA, Jeff generously offered to look
at the issue when he got back to D.C.   He's evidently done that because
NASFAA published an article on January 10, 2006  that "updates and
supersedes the Nov 2 article".  
 
The Jan 10 article reiterated the same information but added an
important paragraph about how to track this (see all caps below)  :  

 "There is currently no mechanism in NSLDS indicating that a student has
previously borrowed under the preparatory coursework provision.  When
asked how a school is expected to track student borrowing udner this
provision, ED indicated the following:
 
1.  If a student has already borrowed under this provision for another
academic program at the same school, ED expects the school to know about
that prior borrowing and to deny additional Stafford Loan eligibility
accordingly.
 
2.  For students borrowing under the preparatory coursework provision
for the first time at your school, ED has indicated that your school
should have some kind of mechanism in place to prevent borrowing
multiple times under this provision.  
 
If at the time the school certifies or originates a Stafford Loan the
student's NSLDS record indicates that he or she has not borrowed a
Stafford Loan at any time in the past, no additional followup is
necessary.  The school may approve the student's Stafford Loan
eligibility accordingly.  On the other hand, if either the school's
records or the NSLDS record reflects a previously borrowed Stafford Loan
amount, additional follow-up is necessary.  Regardless of the loan's
outstanding principal balance and even if the loan has been paid in
full, the school will need to ascertain the conditions under which the
previous Stafford Loan was borrowed.  
 
In regards to a specific tracking method, ED remains flexible,
indicating that the school may best determine how it will track and
document student borrowing to ensure compliance with the preparatory
coursework provision.  UNDER ONE METHOD, FOR EXAMPLE, THE SCHOOL MIGHT
ASK AFFECTED STUDENTS, AND HAVE THEM RESPOND IN WRITING (PAPER OR
ELECTRONIC) WHETHER OR NOT THEY HAVE EVER PREVIOUSLY RECEIVED STAFFORD
LOAN FUNDS FOR PREPARATORY COURSEWORK EITHER AT YOUR SCHOOL OR AT
ANOTHER SCHOOL.    Whatever the school's chosen method, it would need to
document the student's file prior to approving additional Stafford Loan
funds for the student.  "  
 
As part of our process to document that the student is pursuing
preparatory coursework, we use the attached "Special Student
Certification".  The student and the academic advisor have to tell us
for what purpose the non-degree seeking "special"  student is taking
coursework because it isn't always preparatory to entering a degree
program.     In addition to monitoring our own records to make sure the
student hasn't used up the preparatory coursework exemption at our own
institution, we're adding a statement to the form to have the student
certify whether he has already used up his preparatory coursework
exemption.  I've attached a copy of our form in case anyone wants to
"borrow' any of it.  (Note: it's extremely rare for a student to be
admitted as 'special' seeking entry into a bachelor's program at our
institution, usually it is a student with a B.A. taking coursework to be
able to enter a Master's program.  That's why our form addresses those
students.)  

I want to personally thank Jeff for checking this out and for giving us
a reasonable method to comply with this guidance.  I'll try to find
something more fun to argue with him about before NASFAA.  
 
 
Pam McConahay 
Assoc. Dir., Compliance, Training & Lender Relations 
University of Oklahoma Financial Aid Services 
1000 Asp Avenue, Room 216 Norman OK 73019-4078
(405) 325-4617  Fax (405) 325-7608 
pmcconahay at ou.edu 

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