Federal Update Jeff Baker, Federal Student Aid November 12, 2013
CASFAA December 9, 2008 Federal Update Jeff Baker Federal Student Aid U.S. Department of Education.
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Transcript of CASFAA December 9, 2008 Federal Update Jeff Baker Federal Student Aid U.S. Department of Education.
CASFAADecember 9, 2008
Federal Update
Jeff BakerFederal Student Aid
U.S. Department of Education
2
Dependency Overrides
33
Students Seeking Dependency Overrides
The Problem – Some students who are likely eligible for a
dependency override cannot find a school to consider an override at the time they need to submit a FAFSA.
Web FAFSA products to not allow a dependent student to submit without parental information.
44
Students Seeking Dependency Overrides
The Solution – Students who are unable to provide
parental data will be able to submit their application through FOTW by indicating they believe that they have a special circumstance.
55
Students Seeking Dependency Overrides
Application can be submitted for processing and all appropriate matches will be performed No EFC will be calculated These records will have a “special
circumstances” flag. School makes the determination after
obtaining documentation.
6
FFEL Loan Purchase Programs
7
Program Objectives Ensure that eligible students and parents
receive federal student loans for the 2008-2009 academic year
Support the FFEL Program as a successful private/public partnership
Ensure no net cost to the federal government
No statutory authority to provide advance funding
ED’s commitment has value in financial markets.
8
FFEL Loan Purchase Programs Participation Purchase Program for partially disbursed 2008-
2009 FFEL loans through September 30, 2009.
Loan Purchase Program for fully disbursed 2008-2009 FFEL loans through September 30, 2009.
Participation Purchase Program for partially disbursed 2009-2010 FFEL loans through September 30, 2010.
Loan Purchase Program for fully disbursed 2009-2010 FFEL loans through September 30, 2010.
9
FFEL Loan Purchase Programs Financial Conduit Program
Investors buy Asset Backed Commercial Paper (ABCP) with FFEL loans as collateral.
Lenders “sell” loans to conduit manager. Lender uses net funds used to make new FFEL Program
loans. Lender continues to service loans. Lender may “re-purchase” loans.
Loans may be sold to other parties, ORED Purchases Loans.
10
Higher Education Opportunity Act
11
HEOA - Pell Grants
Year Round Awards – Up to two full scheduled awards within on award year. Effective with the 2009-10 award year.
Life-Time Limit - Limits the duration of a student’s eligibility to 18 semesters. Effective with the 2008-09 award year
12
HEOA - Pell Grants
Provides a maximum Pell Grant award to any Pell eligible student (Pell eligible EFC) whose parent or guardian was a member of the Armed Forces and died in Iraq or Afghanistan after September 11, 2001. Effective with the 2009-10 award year.
TEACH Grant Program High need fields when agreement to serve
was completed will remain valid even if field no longer approved
Categories of extenuating circumstances under which a recipient of a TEACH Grant may be excused from fulfilling the service obligation can be established by regulations
13
14
HEOA – Student Loans
Changes Cohort Default Rate Calculation From two years to three years Transition Period 30% Penalty Rate
Increases “disbursement relief” CDR to 15%. Effective October 1, 2011
15
HEOA – Student Loans
Removes VA Educational Benefits from “Estimated Financial Assistance” for loans and from “Resources” for campus-based aid. Effective with the 2010-11 award year.
16
HEOA – Student Loans
Dependent students eligible for unsubsidized without parental FAFSA information. Effective on enactment – August 14,
2008 Paper FAFSA or EDE Submission Special process for Direct Loans
17
Perkins Loans
Increases annual and aggregate loan limits – Annual $5,500 for undergrad Annual $8,000 for grad Aggregate $60,000 for grad Aggregate $27,500 for upper division
undergrad $11,000 for all othersEffective with the 2008-09 award year.
18
Dec ’08 – Announcement of Formation of Committees and Solicitation of Nominations for Negotiators
Dec ’08 – Committees Established
Feb thru April ’09 – Negotiations
Aug ’09 – NPRM Published in the Federal Register
Nov ’09 – Final Rule Published
Jul ’10 – Rules Become Effective
HEOA – Regulations
19
Recent Legislation
20
Higher Education Reconciliation Act (HERA) – February 8, 2006
College Cost Reduction and Access Act (CCRAA) – September 7, 2007
Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) – May 7, 2008 Extended by HR 6899
Higher Education Opportunity Act (Reauthorization) – August 14, 2008
Recent Legislation
21
ACG and National SMART Grants Eligible Non-Citizens Eligible At least half-time enrolment Students in certificate programs eligible, if
program is at least one year in length and offered at a two or four-year degree granting institution.
Awards based on student’s grade level instead of “academic year”
Effective July 1, 2009 – by HEOA
22
Grade LevelBase
AmountAdditional
Unsubsidized
1st-yr Dependent $3,500 $2,000
2nd-yr Dependent $4,500 $2,000
Upper Division Dep. $5,500 $2,000
1st-yr Independent $3,500 $6,000
2nd-yr Independent $4,500 $6,000
Upper Division Indep. $5,500 $7,000
Graduate/Professional $8,500 $12,000
FFEL/DL Annual Loan Limits
23
FFEL and DL Interest Rates
Reduced interest rates on undergraduate subsidized loans only from current 6.8% to
6.0% for loans disbursed on or after 7/1/2008 5.6% for loans disbursed on or after 7/1/2009 4.5% for loans disbursed on or after 7/1/2010 3.4% for loans disbursed on or after 7/1/2011
Beginning 7/1/2012, rates revert to 6.8% Unsubsidized Stafford Loans and all
Stafford's for graduate students remain at 6.8% fixed
24
Need Analysis Increases student income protection
allowances Excludes from specified list of untaxed
income -- Welfare payments Earned income credit amounts Special fuel tax credit Excluded foreign income Untaxed Social Security Benefits
Effective for 2009-2010
25
Dependency Criteria Independent student definition –
Is an orphan, in foster care, or a ward of the court, or was at any time when the student was 13 years of age or older.
Is, or was, an emancipated minor or is in legal guardianship in the student’s state of legal residence.
Has been verified as an unaccompanied youth who is a homeless child or youth.
Effective for 2009-2010
26
Auto Zero EFC and SNT Increases Auto Zero EFC income level from
$20,000 to $30,000 (indexed to CPI)
Increases time from 12 to 24 months for receipt of means tested benefits
Adds Dislocated Worker in addition to type of tax return and means tested benefits
Effective for 2009-2010
27
Professional Judgment Dependency Overrides
Adds dislocated worker and homelessness as examples of when an FAA can use professional judgment
Provides that an FAA can use a dependency override made by another FAA within the same award year
Both effective for the 2009-2010 award year
28
2007-2008 Rulemaking
TEACH Grant NPRM Published March 24, 2008 Final Rule Published June 23, 2008 Rules Effective July 1, 2008
Title IV Loan Programs NPRM Published July 1, 2008 Final Rule Published October 23, 2008 Rules Effective July 1, 2009
29
2007-08 TEACH Final
Effective for the 2008-2009 award year. Must be repaid as Direct Unsubsidized Loan
if student does not – Teach for at least four years within
eight years of ceasing enrolment in the TEACH Grant eligible program, as a - Highly Qualified Teacher At a Title I school In a specified subject area.
“In for a dollar, in for four years.”
30
2007-08 TEACH Final
Up to $4,000 per year for first undergraduate or post-baccalaureate (non degree) program - $16,000 aggregate
Up to $4,000 per year for graduate student - $8,000 aggregate
Prorated amounts for less than full-time enrolment
Award, when combined with other assistance, cannot exceed cost of attendance (No EFC)
31
2007-08 TEACH Final
TEACH Grant recipient must teach in a high-need field in the majority of classes taught.
“Other” high-need fields must be listed in the Department of Education’s Nationwide Listing of Teacher Shortage Areas at the time the recipient begins qualified teaching.
32
2007-08 TEACH Final
Institutional Eligibility See DCL GEN-08-07, posted to IFAP on
June 3, 2008 Institutional Choice whether to participate An institution that offers one or more
TEACH Grant-eligible programs may participate in the TEACH Grant Program
33
TEACH Grant Statistics
Number of Approved TEACH Grant Schools 611Number of Originating and Disbursing Schools 179Amount of Originations Number of TEACH Originations $12,992,725Number of TEACH Originations 3,754Actual Disbursement Amount $4,639,083Average TEACH Grant Award $3,462ATS Notes Received 5,821
34
34
2007-2008 Loans Final
Definition of Not-for-Profit Holder FFEL Only
Income-based Repayment Plans FFEL and Direct Loans
Public Service Loan Forgiveness Direct Loan only
Economic Hardship and Military Service Deferments FFEL, Direct Loans, and Perkins
35
2006-2007 RegulationsSchool Lender Relationships
(Effective 7-1-08)
36
FFEL Loan Certification
A school may not: Refuse or delay certification based on
borrower’s choice of lender or GA Assign lender to first-time borrower Refuse to certify or certify a reduced
amount; except on a case-by-case basis Includes “school as lender”
37
School may choose to have preferred lender list (includes web processes)
List must have at least 3 unaffiliated lenders Must disclose method/criteria for lender
inclusion on the list Must provide comparative information Must include prominent statement advising
borrowers that use of school preferred lender not required
FFEL Preferred Lender Lists
38
Prohibited Inducements Affects FFEL lenders and guaranty agencies
Creates concept of “rebutable presumption” for prohibited and allowed activities
Includes a non-exhaustive list of prohibited activities
Includes a list of allowed activities
39
A Rational Approach to Federal Student Aid
40
Mandates
“ The entire financial aid system—including federal, state, institutional, and private programs—is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it.”
- The Secretary of Education’sCommission on the Future of Higher Education
41
Mandates
Congress, in passing the HEOA, required the Department of Education to issue a report on efforts to simplify the FAFSA that includes looking at the elimination of income data elements, as well as other items.
Issues – Federal Student Aid The application is complex and
intimidating. Much of the data are unverifiable. Current EFC formula is arbitrary,
difficult to understand, lacks clarity and relevance, and subject to “gaming.”
Result of application (EFC) is “how much the student will NOT receive.”
Multiplicity of programs is confusing.
43
Principles for Reform Access to Aid
Application will request information that is easily obtainable and verifiable.
Application will only ask questions necessary to determine eligibility and award levels.
Federal Student Aid Targets the neediest students; Is independent of other aid; Is predictable; Is portable, and Distributes aid through fewer programs.
44
A Simplified FAFSA
Only ask for information needed to determine federal aid eligibility, aid types, and amounts.Two pages - no instruction pages(s).Fewer than 30 questions –
- Identification - Dependency- Contact Information - Income / Exemptions- Eligibility - Certifications- Colleges and states to which information will be sent
45
Simple FAFSA
46
Rational Approach Establish–
Federal Student Aid Target (FSAT)
Federal Student Aid Commitment (FSAC)
Consolidate aid programs into one grant (Pell), one loan (DL/FFEL) and one work study (FWS) program.
47
Federal Student Aid Target (FSAT)
Maximum amount of federal subsidized aid (Pell Grant, subsidized loans, and FWS).
Amount increases annually by CPI.
For example –-100% of average Tuition & Fees, Books & Supplies, and Meals & Housing at community colleges.
48
Federal Student Aid Commitment (FSAC)
Student’s portion of FSAT based on AGI and IRS Number of Exemptions, related to HHS Poverty Levels.
Example: -- Grants up to 250% of poverty level gets maximum award amount; Sub loans and FWS up to 400% of poverty level;
49
Unsubsidized Aid Includes unsubsidized Stafford and
PLUS loans;
Applies only after all other aid is awarded;
Covers difference between cost of attendance and all other sources of aid;
Includes annual loan limits for unsubsidized Stafford.
50
Policy/Budget Considerations
Select “Dials” FSAT: percentage of cost of
attendance at which type of school FSAC: percentages of HHS poverty
level to be used for grant, subsidized loan, and work study
Determine “Levers” Maximum spending with current
allocations Optimized spending to ensure access
and success
51
0
2,000
4,000
6,000
8,000
10,000
12,000
Pell Sub Loan
Pell Max = $4,800
Sub Loan Max = $5,500
Examples of Dials and Levers
0
2,000
4,000
6,000
8,000
10,000
12,000
Lowto $0
$3Kto
$6K
$9Kto
$12K
$15Kto
$18K
$21Kto
$25K
$29Kto
$32K
$36Kto
$40K
$44Kto
$48K
$51Kto
$55K
$58Kto
$62K
$68Kto
$71K
$73Kto
$80K
above$88K
Pell Sub Loan
Pell Max = $4,800
Sub Loan Max = $6,000
-
2
4
6
8
10
12
14
Lowto $0
$3 to$6
$9 to$12
$15to
$18
$21to
$25
$29to
$32
$36to
$40
$44to
$48
$51to
$55
$58to
$62
$68to
$71
$73to
$80
above$88
Income Level (in thousands of $)
Aid
(in
th
ou
san
ds
of
$)
Pell Grants
Subsidized Loans
0
2,000
4,000
6,000
8,000
10,000
12,000
Pell Sub Loan
Pell Max = $4,800
Sub Loan Max = $5,200
Unsubsidized Unsubsidized
Unsubsidized Unsubsidized
52
1 2 2 3 4 5 6 7 8 More than 8
AGIMarried w/
Spouse Including Child
Income Cut-Off $21,000 $29,000 $36,000 $45,000 $55,000 $64,000 $73,000 $82,000 $92,000 $92,000
Low to $0 3,400 3,600 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $1 to $3,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $3,001 to $6,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $6,001 to $9,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $9,001 to $12,000 2,800 2,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $12,001 to $15,000 1,950 2,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $15,001 to $18,000 1,100 2,100 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $18,001 to $21,000 400 1,500 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $21,001 to $25,000 - 800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $25,001 to $29,000 - 400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $29,001 to $32,000 - - 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $32,000 to $36,000 - - 3,000 3,900 4,000 4,100 4,200 4,300 4,400 4,500 $36,001 to $40,000 - - - 2,600 3,100 3,200 3,300 3,400 3,500 3,600 $40,001 to $45,000 - - - 2,000 2,100 2,200 2,300 2,400 2,500 2,600 $45,001 to $48,000 - - - - 1,500 1,800 1,900 2,000 2,100 2,200 $48,001 to $51,000 - - - - 1,200 1,400 1,500 1,600 1,700 1,800 $51,001 to $55,000 - - - - 900 1,000 1,100 1,200 1,300 1,400 $55,000 to $58,000 - - - - - 800 900 1,000 1,100 1,200 $58,001 to $64,000 - - - - - 600 600 700 800 1,000 $64,001 to $68,000 - - - - - - 600 700 700 900 $68,001 to $71,000 - - - - - - 500 500 700 800 $71,001 to $73,000 - - - - - - 500 500 700 700 $73,001 to $82,000 - - - - - - - 400 600 600 $82,001 to $87,000 - - - - - - - - 500 500 $87,001 to $92,000 - - - - - - - - 400 400
"Single Persons, or Married w/ no
Children" "Families w/ a minimum of one Child"
Simple Look-Up Table(For Illustrative Purposes Only)
53
What Does This Mean For Students?
A FAFSA that encourages access; Real-time feedback on probable
Federal Student Aid; Better awareness of state and
institutional value-added aid, and Predictability for persistence.