Campus-Based Underuse Penalty Waiver Deadline is February 7 – Reminder: Schools May Transfer Funds from Work-Study to Perkins

Prepared by: Wes Huffman (whuffman@wpllc.net)

On Friday, the Office of Federal Student Aid published an electronic announcement reminding institutions of higher education that the deadline to apply for the “Underuse Penalty Waiver” in the Campus Based Programs is February 7, 2014.  The announcement states the following:

In accordance with sections 413(d)(2), 442(d)(2), and 462(i)(4) of the Higher Education Act of 1965 as amended (HEA), if a school returns more than 10 percent of its Federal Perkins Loan (Perkins Loan), Federal Work Study (FWS), or Federal Supplemental Educational Opportunity Grant (FSEOG) allocations, respectively, for an award year, the allocation for the second succeeding award year for that program is reduced by the dollar amount returned from the earlier year unless the school requests an underuse penalty waiver.

The notice provides information on calculating any Underuse Penalties via the FISAP and the Campus-Based Tentative Funding Worksheets for 2014-2015.  Those worksheets will be posted to the eCampus-Based (eCB) Web site by the end of January.

Perkins Loan administrators and financial aid officers should be aware that a portion of Campus Work Study funds can be transferred to an institutions’ Perkins revolving fund. These transfers can provide more aid for students and offer an alternative to the Underuse Penalty.

The full announcement is available online: http://www.ifap.ed.gov/eannouncements/010314ReminderCB1415UnderusePenaltyWaiverDue020714.html