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U.S. Department of Education Clarifies the Ability to Benefit Cut Made by Congress

Jul 23, 2012

By Vickie Choitz and Marcie Foster

As of July 1, a newly-enrolled college student without a high school diploma or a recognized equivalent will no longer be able to qualify for federal student financial assistance through “ability to benefit (ATB)” provisions. This includes Pell Grant aid and federal student loans. The eligibility change is part of the Consolidated Appropriations Act for 2012, which Congress passed in December 2011. A few days before the change took effect, the U.S. Department of Education issued a “Dear Colleague” letter clarifying student eligibility under the ATB elimination.

The letter reviews the existing federal definition of a recognized high school equivalency for federal financial aid purposes. It also provides a “grandfathering test” that postsecondary institutions can use to determine if a student without a high school diploma or a recognized equivalent could still be eligible for federal student aid, and it includes several scenarios illustrating when a student might be eligible under the grandfathering provisions.

The letter is clear that any student enrolled in or registered for an aid-eligible program of study at a Title IV eligible institution any time prior to July 1, 2012, can still establish eligibility for student financial aid through the ATB options (schools must document prior enrollments). These students did not have to be receiving student financial assistance previously. The ATB options for grandfathered students still include:

  • Passing an independently administered, Department of Education approved ATB test;
  • Completing at least six credit hours, or the equivalent coursework (225 clock hours), that are applicable toward a degree or certificate offered at a postsecondary institution; or
  • Completing a state process approved by the Secretary of Education (no state process has ever been submitted for the Secretary’s approval).

Students without a high school diploma or a recognized equivalent who are newly enrolled after July 1, 2012, no longer can establish aid eligibility through these options; they must earn a high school diploma (or recognized equivalent) to be eligible for federal student aid.

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