TEG Fall 2005 Program Update

LOIS P. R. HOLLIS

Assistant Commissioner

for Student Services

JANE I. CALDWELL

Director of Grants and

Special Programs

LESA W. MOLLER

Director of Loan Program

Operations

Telephone:

(512) 427-6340

(800) 242-3062

Fax:

(512) 427-6420

Web Sites:

September 20, 2005

TO:Directors of Student Financial Aid

FROM:Jane Caldwell

SUBJECT:Program Update4: Tuition Equalization Grant (TEG) Program

Introduction.

Bills passed by the 79th Legislature, Regular Session, impacted many of our state financial aid programs. Although we previewed the changes at our regional workshops in June and July, we now have more information to share with you. We’ve had time to study the statutes, confer with legal counsel and draft new program rules. This memo is the second in a series, the purpose of which is to give you more detailed information about one or more of the programs impacted by recent legislation. We hope you will find them helpful.

Each program has a primary contact which will be listed in the relevant Program Update memo. Please do not hesitate to get in touch if you have questions.

These issues will also be covered in our December 12 workshop in Austin. We’ll let you know via the TASFAA listserv when workshop registration is open

Previous Program Update Memos.

1TexasCollege Work-Study ProgramE-Mailed 9/12/2005

2TEXAS Grant ProgramE-Mailed 9/12/2005

3Hazlewood Exemption ProgramE-Mailed 9/13/2005

Contents.

Requirements for Initial Award Recipients1

Requirements for Renewal Award Recipients1

Funding TEXAS Grants through TEG2

Transfer of funds2

Program contacts3

Program rules to be adopted in October4

Frequently asked questions13

Enclosures

Program Review 3

The Tuition Equalization Grant (TEG) Program

Private institution awards are impacted by House Bill 1172, and therefore they must be sensitive to the effective date of that bill, June 18, 2005 as well as the September 1 effective date for Senate Bill 1227.

The following tables reflect the program requirements for students, based on whether they are renewal or initial year recipients in 2005-6 and based on the date their awards were made. Remember, funds are awarded when they are offered to the students.

a) Requirements for Renewal Award Recipients

b) Requirements for Initial Award Recipients

* An institution’s hardship policy may state that it is a hardship for freshmen to acquire an overall GPA of 2.5 by the end of their first year in college.

(c) Funding of TEXAS Grantsthrough Tuition Equalization Grants Appropriation

As a compromise for the decision to phase independent/private institutions out of TEXAS Grants, the Legislature appropriated additional funds for the Tuition Equalization Grant (TEG) Program. In 2005-2006 and in 2006-2007 TEXAS Grant awards at private institutions will be paid for using a portion of the funds appropriated for TEG. TEG funding increased from $71 million per year to $105 million per year to cover this additional use of funds and leave ample money available for TEG awards.

You will draw your TEXAS Grant funds through Ernest Jacquez, and the funds you award for TEXAS Grants will be TEXAS Grant money.

Initial Year TEXAS Grant funds that are Not Awarded as of 9/1/2005. Since independent/private institutions are not allowed to make additional initial year TEXAS Grant awards on or after September 1, 2005, any unexpended initial year money set aside for TEXAS Grants as of that date must be released by the institution. As soon as you notify Ernest of the amount of initial year TEXAS Grants that you had not awarded by 9/1/2005, he will notify Lesa Brooks and Renée Jones and this money will be moved to your TEG program allocation. You will not lose the money, but it will be converted from TEXAS Grant to TEG.

Unexpended TEXAS Grant Renewal Funds. As you know, TEXAS Grant regulations give priority to renewal students, and they require institutions to hold renewal funds for returning students at least until October 1. Beginning with that date institutions may choose to release a portion or all of their un-awarded renewal TEXAS Grant funds so that those funds may also be added to your TEG allocations. To release funds, notify Ernest of the amount being released. He will notify Lesa Brooks and Renée Jones and this money will be moved to your TEG program allocation. You will not lose the money, but it will be converted from TEXAS Grant to TEG.

(d) Transfer of Funds.

A rider to the Appropriations Act (Rider 45, page III-53 of Senate Bill1) authorizes the CB to allow institutions to transfer the lesser of 10 percent or $10,000 of the funds located to them between the Texas College Work-Study Program, TEXAS Grant Program, and the Tuition Equalization Grant Program. Since TEXAS Grants for independent/private institutions are funded through the TEG Program, the 10% limit is not relevant between those two programs. However, transfers between TEG and TCWSP are controlled by the limits indicated in the rider.

If your institution chooses to exercise this option, you need to notify the appropriate member of our staff. If you are moving money to the TCWSP you’ll need to notify Renée Jones in writing (an e-mail is acceptable) so that she can adjust your Work-Study allocation and notify Lesa Brooks about the transfer.

Example:

Original allocations:

TEG$300,000

TCWSP$ 50,000

Option 1: The school chooses to transfer as much as possible from TEG to TCWSP. 10% of TEG is $30,000, so the max they could transfer would be $10,000. The school would need to notify Lesa in writing of the desire to move funds from TEG to TCWSP. Lesa would notify Renée.

Option 2: The school chooses to transfer as much as possible from TCWSP to TEG. 10% of TCWSP is $5000, so they could transfer up to $5000 from TCWSP to TEG by notifying Renée in writing, who would also notify Lesa.

Contacts

The primary contact for the TEG Program is

Lesa Brooks ;

Box 12788

Austin, TX 78711-2788

Phone: 512.427-6332 or 1-800-242-3062, ext. 6332

If you are unable to reach her, contact Renée Jones at

Renée Jones ;

Box 12788

Austin, TX78711-2788

Phone: 512.427-6329 or 1-800-242-3062, ext. 6329

CHAPTER 22. GRANTS AND SCHOLARSHIP PROGRAMS

SUBCHAPTER B. PROVISIONS FOR THE

TUITION EQUALIZATION GRANT PROGRAM

Section

22.21.Authority and Purpose.

22.22.Definitions.

22.23.Institutions.

22.24.Eligible Students.

22.25.End of Eligibility.

22.26.Hardship Provisions for Persons Awarded TEG for the First Time on or after September 1, 2005.

22.27.[22.25.]Award Amounts and Uses.

[22.26.]Adjustments to Awards made through Central Processing.]

22.28.[22.27.]Adjustments to Awards made through Campus-Based Processing.

22.29.[22.28.]Retroactive Disbursements.

22.30.[22.29.]Allocation and Reallocation of Funds.

22.31.Authority to Transfer Funds.

22.32. [22.30]Dissemination of Information and Rules.

22.21.No change

22.22.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1)Awarded – offered to a student.

(2) [(1)]Board –the Texas Higher Education Coordinating Board.

[(2)Central processing – An approach to administering a grant program by having institutions submit application information to the Board, which then issues funds to students in keeping with a schedule specified by the institution in the application data.

(3)Commissioner – the Commissioner of Higher Education, the Chief Executive Officer of the Board.

(4)Cost of attendance – a Board-approved estimate of the expenses incurred by a typical financial aid student in attending a particular college or university. It includes direct educational costs (tuition, fees, books, and supplies) as well as indirect costs (room and board, transportation, and personal expenses).

(5)Degree or certificate program of four years or less – a baccalaureate degree or certificate program other than in architecture, engineering or any other program determined by the Board to require more than four years to complete.

(6)Degree or certificate program more than four years – a baccalaureate degree or certificate program in architecture, engineering or any other program determined by the Board to require more than four years to complete.

(7)Disbursement date – the date on which the Boardgenerates a voucher requesting a grant disbursement for an institution.

(8) [(5)]Encumbered funds – program funds that have been offered to a specific student, which offer the student has accepted, and which may or may not have been disbursed to the student.

(9)Exceptional financial need – the need an undergraduate student has if his or her expected family contribution is less than or equal to $1000.

(10)Enrollment on at least a half-time basis – for undergraduates, enrolled for the equivalent of six or more semester credit hours. For graduate students, enrolled for the equivalent of 4.5 or more semester credit hours.

(11) [(6)]Expected family contribution – the amount of discretionary income that should be available to a student from his or her resources and that of his or her family, as determined following the federal methodology.

(12) [(7)]Full-timeenrollment [student] – for undergraduates, enrollment [a person who is enrolled or is expected to be enrolled] for the equivalent of twelve or more semester credit hours. For graduate students, enrollment [a person who is enrolled or expected to be enrolled]for the equivalent of nine or more semester credit hours.

(13) [(8)]Financial need – the cost of attendance at a particular public or private institution of higher education less the expected family contribution. The cost of attendance and family contribution are to be determined in accordance with Board guidelines.

(14)Graduate student – a person who has been awarded a baccalaureate degree.

(15)Initial award – the first Tuition Equalization Grant awarded to a specific person.

[(9)Half-time student – For undergraduates, a person who is enrolled or is expected to be enrolled for the equivalent of six or more semester credit hours. For graduate students, a person who is enrolled or expected to be enrolled for the equivalent of 4.5 or more semester credit hours.]

[(10)Issue Date – the date on which the Board’s centralized processing system generates a voucher requesting a grant disbursement for specific students,]

(16) [(11)]Period of enrollment – the term or terms withina[the current] state fiscal year (September 1-August 31) for which the student was enrolled in an approved institution and met all the eligibility requirements for an award through this program.

(17)Private or independent institution – any college or university defined as a private or independent institution of higher education by Texas Education Code, Section 61.003.

(18)Program – the Tuition Equalization Grant Program.

(19) [(12)]Program Officer – The individual named by each participating institution’s chief executive officer to serve as agent for the Board. The Program Officer has primary responsibility for all ministerial acts required by the program, including maintenance of all records and preparation and submission of reports reflecting program transactions. Unless otherwise indicated by the administration, the director of student financial aid shall serve as Program Officer.

(20) [(13)]Resident of Texas – a resident of the State of Texas as determined in accordance with Chapter 21, Subchapter B, of this title (relating to Determining Residence Status). Nonresident students who are eligible to pay resident tuition rates are not residents of Texas.

(21) [(14)]Tuition Equalization Grant need (TEG need) – the total amount of TEG[Tuition Equalization Grant] funds that full-time students at an approved institution would be eligible to receive if the program were fully funded.

(22)Undergraduate – an individual who has not yet received a baccalaureate degree.

22.23.Institutions.

(a)Eligibility.

(1)Any college or university defined as a private or independent institution of higher education by Texas Education Code, Section 61.003, or that is located in Texas and meets the same program standards and accreditation as public institutions of higher education as determined by the Board, except theological or religious seminaries, are eligible to participate in the TEG[Tuition Equalization Grant] Program.

(2)No institution may, on the grounds of race, color, national origin, gender, religion, age, or disability exclude an individual from participation in, or deny the benefits of the program described in this subchapter.

(3)Each participating institution must follow the Civil Rights Act of 1964, Title VI (Public Law 88-353) in avoiding discrimination in admissions.

(b)Approval.

(1)Agreement. Each approved institution must enter into an agreement with the Board, the terms of which shall be prescribed by the Commissioner.

(2)Approval Deadline. An institution must be approved by April 1 in order for qualified students enrolled in that institution to be eligible to receive grants in the following fiscal year.

(c)Responsibilities.

(1)Probation Notice. If the institution is placed on public probation by its accrediting agency, it must immediately notify the Board andadvise grant recipients of this condition and maintain evidence in each student’s file to demonstrate that the student was so informed.

(2)Disbursements to Students.

(A)Documentation. The institution must maintain records to prove the receipt of program funds by the student or the crediting of such funds to the student’s school account.

(B)Procedures in Case of Illegal Disbursements. If the Commissioner has reason for concern that an institution has disbursed funds for unauthorized purposes, the Board will notify the institution and offer an opportunity for a hearing pursuant to the procedures outlined in Chapter 1 of this title (relating to Agency Administration). Thereafter, if the Board determines that funds have been improperly disbursed, the institution shall become primarily responsible for restoring the funds to the Board. No further disbursements of grants or scholarships shall be permitted to students at that institution until the funds have been repaid.

(3)Reporting.

(A)Requirements/Deadlines. All institutions must meet Board reporting requirements in a timely fashion.

(i)Such reporting requirements shall include reports specific to allocation and reallocation of grant funds (including the Financial Aid Database Report) as well as progress and year-end reports of program activities.

(ii)Each participating institution shall have its TEG [Tuition Equalization Grant] Program operations audited on a regular basis by an independent auditor or by an internal audit office that is independent of the financial aid and disbursing offices. Reports on findings and corrective action plans (if necessary) are due to the Board by April 15 each year for institutions on annual audit schedules, and every other April 15 for institutions on biannual audit cycles. Biannual reports must cover operations for the prior two years.

(B)Penalties for Late Reportsand / or Late Refunds.

(i)An institution that postmarks or electronically submits a progress report a week or more after its due date will be ineligible to receive additional funding through the reallocation occurring at that time.

(ii)The Commissioner may penalize an institution by reducing its allocation of funds in the following year by up to 10 percent for each [progress] report that is postmarked or submitted electronically more than a week late. The penalty may also be invoked if the report is timely, but refunds owed to the Program by the institution are not made to the Board or the State Comptroller’s Office within one week after due.

(iii)The Commissioner may assess more severe penalties against an institution if any report is received by the Board more than onemonth after its due date. The Commissioner may penalize an institution by reducing its allocation of funds in the following year by up to 10 percent for each late refund of grant funds. If grant funds are returned more than a week after the announced return date, they will be considered late.[The maximum penalty for a single year is 30 percent of the school’s allocation. If penalties are invoked in two consecutive years the institution may be penalized an additional 20 percent.]

(iv)The maximum penalty for a single year is 30 percent of the school’s allocation. If penalties are invoked in two consecutive years, the institution may be penalized an additional 20 percent.

(C)Appeal of Penalty. If the Commissioner determines that a penalty is appropriate, the institution will be notified by certified mail, addressed to the Program Officer and copied to the Financial Aid Director. Within 21 days from the time that the Program Officer receives the written notice, the institution must submit a written response appealing the Board’s decision, or the penalty shall become final and no longer subject to an appeal. An appeal under this section will be conducted in accordance with the rules provided in Chapter 1 of this title (relating to Agency Administration).

(4)Program Reviews. If selected for such by the Board, participating institutions must submit to program reviews of activities related to theTEG[Tuition Equalization Grant] Program.

22.24.Eligible Students.

To receive an award through [the program described in] the TEG [Tuition Equalization Grant] Program, a student must:

(1)be enrolledfor a minimum number of semester credit hours,[at least half-time in an approved institution] which requires: [;]

(A)if the student received a TEG in an academic year prior to 2005-2006 or was awarded a TEG for the 2005-2006 academic year prior to September 1, 2005, enrollment on at least a half-time basis; or

(B)if the student was awarded his or her initial TEG award on or after September 1, 2005, full-time enrollment;

(2)show financial need;
(3)maintain satisfactory academic progress[, as defined by the institution,] in his or her program of studywhich requires: [;]

(A)if the person received a TEG in an academic year prior to 2005-2006 or was awarded a TEG for the 2005-2006 academic year prior to September 1, 2005, the person must meet the academic progress requirements as set by the institution; or