Dear Mr. Boswell,
No worries on the time, I am just so appreciative of your time and interest. I am happy to provide some additional information. I have gotten clearer on the issues that I am asking about since I first posted here.
Part I
First, your questions...
1) "... any idea why the school lost its status?" My understanding is they chose to let go of their status. I have since talked to a number of Australia universities and there appears to be a feeling that the US regulations are onerous and that there has been discussions between financial aid professionals in the Australia university field that there are a number of Australian universities who plan to go off the list (perhaps converting from "eligible" to "deferment status" as RMIT is). Though in the case of RMIT it appears that they stayed on the list until their current students who came in under US Financial Aid graduated.
2) "...interested to know more about your situation." We are an American family, residing in Singapore. My children have 529s through Scholarshare in California. My daughter graduated in June 2017, and is taking a gap year. She has been researching universities in Canada and Australia focusing only on universities that were "eligible" on the Federal School Code list. She saw that the list was updated quarterly and monitored it and saw that one university in Canada that had been on, was later off, and then back on at a later time.
She has now focused her interest on Australian universities, found a degree program she was interested in at RMIT, saw that they were on the Federal School Code list, sent in an application and then received the email I quoted in my first post. That coupled with the Canadian University that she had seen on and off the list then raised the question of what happens if a 529-funded student starts at an "eligible" school, that later becomes a "deferment only" or all together ineligible school, while the student is mid-program. This led to the question that I posted earlier. Does this answer your questions?
Part II
Can 529 funds be used at a "deferment only" institution?
I understand that 529s can be used at "An eligible educational institution is generally any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education." Do "deferment only" institutions meet the definition of institutions "eligible to participate in a student aid program administered by the U.S. Department of Education"? They are "participating" enough to still have a university OPE ID (Office of Postsecondary Education Identification) assigned by the U.S. Department of Education. Is this sufficient?
Part III
Who is the final authority in response to the questions in Part I and II. I suspect the IRS, but I am not sure how to get to that information. The following are further enquiries I have made since my first post to the Savingforcollege.com forum.
Scholarshare
RMIT in Australia suggested that I talk to the 529-fund manager. I sent Scholarshare two enquiries.
1) The first inquiry to Scholarshare asked about universities going on and off the list. They responded:
"Publication 970, the Internal Revenue Service (IRS) document that defines Eligible Institutions, is silent on the subject that you describe. For your convenience, we embedded the link, here, to the Publication 970 (http://www.irs.gov/pub/irs-pdf/p970.pdf).
As such, we can only suggest that you consult with a qualified tax advisor, the IRS or contact FAFSA directly for further clarification on your questions."
2) The second inquiry to Scholarshare was to ask question about whether 529s can be used at "deferment only" institutions. They responded:
"As such, we can state that you, the Plan Participant, maintains complete control of the funds within your account and you can withdraw the money at any time for any reason. This would include paying for your daughter’s education at RMIT University in Melbourne. However, we cannot confirm that the University meets the requirements established by the Internal Revenue Service. Understanding a particular University’s status and applying that status to the tax code, is considered tax advice, an action which goes beyond the scope of the Plan’s authority."
FAFSA
I had an online chat with FAFSA and shared the email content from RMIT that I included with my first post here and this was their response:
"First: The school is essentially information you that they will no longer participate in or offer federal financial aid. If the student has any federal loans then they may be eligible to put the loans into deferment status while they are enrolled at that school. The student however cannot receive federal aid there. In regards to the 529: the school is requesting that you speak to the facilitators of your 529 account or whichever financial organization you have your 529 plan through. They are requesting that you speak with that organization and inform them of the schools change in status regarding their participation with federal title IV financial aid programs to confirm that your funds for the 529 can still be used at that school. The U.S. Department of Education has no jurisdiction over the administration of these programs. For more information, including information about eligible schools, you should contact the agency responsible for administering the program in your state."
Qualified Tax Advisor
I have been in contact with my qualified tax advisor and she, like you has not encountered these questions before.
Thank you for reading this. I hope that I did not provide too much. Again thank you for your time and interest. Appreciate very much the support and look forward to hearing further from you.
Warm regards,
Suzanne
