Paper FATs and Capitalized Interest

  The U.S. Department of Education (ED) recently released a Dear Colleague Letter (DCL), GEN-00-12, authorizing schools to use data from the National Student Loan Data System (NSLDS) to monitor the financial aid history for all students, including those who transfer mid-year.  Effective July 1, 2000, schools may obtain student eligibility information for mid-year transfer students directly from NSLDS rather than obtaining a paper Financial Aid Transcript (FAT) from the prior school.  For mid-year transfers, the DCL clarifies that schools must access NSLDS no earlier than 30 days prior to the beginning of the first payment period for which the school expects to pay the student Title IV aid.  While using NSLDS instead of requesting paper FATs is still optional, ED strongly encourages schools to use the new option and request paper FATs only when absolutely necessary.  The DCL describes the agreement reached at negotiated rulemaking which would eliminate the use of paper FATs.  If the proposed changes to regulations are finalized, they would be effective beginning July 1, 2001.  In the meantime, schools must continue to comply with current regulations.

 The DCL also clarifies, in a question and answer format, the way NSLDS reports capitalized interest and the effect of such capitalization on aggregate loan limits.  The DCL specifically notes that capitalized interest is not included in determining aggregate loan limits.  NSLDS makes any necessary adjustments when it reports aggregate amounts on SARs and ISARs, as well as on the NSLDS web screens.  Schools may use these reported amounts when determining a students eligibility for additional loans.

 Questions regarding this DCL can be directed to ED's SFA Customer Support Service at 1-800-433-7327 or by e-mail at CSB@ed.gov.  A copy of this DCL can be found on ED's web site at http://ifap.ed.gov.  If you are unable to access this web site and would like a hard copy of the letter, please contact Stacey Roberts at (801) 321-7211.  Any questions related to this Bulletin should be directed to the UHEAA Policy and Training Department at (801) 321-7166 or by e-mail at cjudd@utahsbr.edu.