ILASFAA Federal Update April 18, 2008 Jeff Baker Federal Student Aid U.S. Department of Education.

ILASFAAFederal Update

April 18, 2008

Jeff BakerFederal Student Aid

U.S. Department of Education

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Legislation and Budget

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LEGISLATION

College Cost Reduction and Access Act (CCRAA) Pub.L. 110-84

Reauthorization S 1642 passed full Senate on July 24,

2007 HR 4137 passed full House on February

7, 2008 In conference, final bill expected in May

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FY 2007 FY 2008 FY 2009*(AY 07-08) (AY 08-09) (AY 09-10)

Pell Grant $13,660,711,520 $16,256,000,000 $18,941,100,000 (Max Award) $4,310 $4,731 $4,800

FSEOG $ 770,932,800 $ 757,464,800 -$ FWS $ 980,354,430 $ 980,491,815 $ 980,500,000 Perkins $ 65,470,680 $ 64,327,222 $ - LEAP $ 64,986,570 $ 63,851,677 $ - ACG/SMART $ 850,000,000 $ 395,000,000 $ 960,000,000

* President's FY 2009 Budget Request

Program

Title IV Program Budgets Appropriations and

Budget Request

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Title IV Program Budgets Aid Available

FY 2008 FY 2009(AY 08-09) (AY 09-10)

Pell Grant $ 16,428,110,000 $ 18,180,200,000 (Max Award) $4,731 $4,800

FSEOG $ 958,816,000 $ -

FWS $ 1,171,395,000 $ 1,171,400,000

Perkins $ 1,103,398,000 $ -

LEAP $ 161,555,000 $ -

ACG/SMART $ 700,000,000 $ 760,000,000

TEACH $ 86,000,000 $ 114,000,000

Loans $ 70,345,247,000 $ 74,536,800,000

TOTAL $ 90,954,521,000 $ 94,762,400,000

Program

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College Cost Reduction and Access Act

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Student BenefitsGrant Programs

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Federal Pell Grant Increases discretionary appropriated Pell

Grant award amount using mandatory funds. Full-time awards increased by –

$ 490 for 2008-09 and 2009-10.Maximum Award $4,731

$ 690 for 2010-11 and 2011-12. $1,090 for 2012-13.

2008-2009 Payment Schedule Released on January 14, 2008 (See DCL P-08-01)

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TEACH Grants

“Teacher Education Assistance for College and Higher Education Grants”

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

completing program, as a -

Highly Qualified Teacher At a Title I school In a specified subject area.

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TEACH Grants Subject Areas –

Mathematics Science A foreign language Bilingual education Special education As a reading specialist Other ‘high-need’ fields

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TEACH Grants Student must:

Be completing coursework necessary to begin a career in teaching, or

Plans to complete coursework necessary to begin a career in teaching.

Graduate degree alternatives for teacher or retiree with experience in a shortage area.

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TEACH Grants 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 enrollment.

If converted to loan – Does not count against annual or aggregate

maximums. Interest accrued from date of grant disbursement.

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TEACH Grants Award, when combined with other assistance

cannot exceed cost of attendance (No EFC).

All Title IV student eligibility requirements –Regular StudentCitizen or Eligible Non-CitizenNot in DefaultSatisfactory Progress

FAFSA required.

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TEACH Grants Student Eligibility – Academic Standard

Above the 75th percentile on one battery of an admissions test, such as:

SAT, ACT, GRE, etc.

OR

GPA of at least 3.25 for each payment period— From high school for first year students. From college for other students.

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Student BenefitsNeeds Analysis and EFC

Calculation

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Need Analysis and EFC Calculation

Income Protection Allowances in EFC formulas.Modifies the way student income protection

allowances are calculated and updated.Not parent income protection allowances

Will result in lower EFC. Effective with the 2009-2010 award year.

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Need Analysis and EFC Calculation Auto-Zero and Simplified Needs Test

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 the 2009-2010 award year.

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Need Analysis and EFC Calculation Excludes from specified list of “untaxed income” -

Welfare payments Untaxed Social Security Benefits Earned income credit amounts Special fuel tax credit Excluded foreign income


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Need Analysis and EFC Calculation Adds to independent student definition –

Is in foster care or a ward of the court, at any time when the individual is 13 years of age or older.

Is 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.


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Need Analysis and EFC Calculation Excludes ‘special combat pay’ from income. Qualified education benefit (529 plan) owned by

dependent student is an asset of the parent. Distributions from 529 plans excluded from other

financial assistance. Effective for the 2009-2010 award year.

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Borrower Benefits

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FFEL and Direct LoansInterest Rates

Reduces interest rates on undergraduate subsidized loans only from current 6.8% to –

6.0% for loans disbursed on or after July 1, 20085.6% for loans disbursed on or after July 1, 20094.5% for loans disbursed on or after July 1, 20103.4% for loans disbursed on or after July 1, 2011Beginning July 1, 2012, rates revert to 6.8%.Unsubsidized Stafford Loans and all Staffords

for grad students remain at 6.8% fixed.

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FFEL and Direct LoansIncome Based Repayment

Stafford and Student PLUS loans.Borrower’s maximum annual repayment amount

no more than 15% of the difference AGI and 150% of the poverty line based on family size.

If negative amortization, government pays interest on subsidized loans for up to three years.

Unpaid amounts are forgiven after 25 years.Effective July 1, 2009.

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Direct Loans (FFEL)

Forgiveness for Public Service EmployeesDirect Loan borrower who –

Makes 120 monthly payments, starting after October 1, 2007, and

Is employed in public service during period when the 120 payments were made.

FFEL borrowers may consolidate into Direct Loans to get benefit but 120 payments must have been in Direct Loans.

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Direct Loans (FFEL)Forgiveness for Public Service Employees

Payments count if made under – Income Contingent Repayment. Income Based Repayment. Other repayment plans, if payments are

at least equal to 10-year standard repayment amount.

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Perkins, FFEL, and Direct LoansMilitary Deferments

HERA Military Deferment – All Title IV loans, not just loans that were

made on or after July 1, 2001. Removes three year time limit. Adds a 180 day period after demobilization.

New deferment for up to 13 months following end of service for certain borrowers who were in school or grace when called to active duty.

Effective October 1, 2007.

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Offsets from FFEL Program

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FFEL Lenders and Guaranty Agencies Reduction of FFEL lender insurance from current

97% to 95% for loans first disbursed on or after October 1, 2012.

Reduction of FFEL guaranty agency defaulted loan collections retention rate from 23% to 16%, effective October 1, 2007.

Reduction of FFEL lender special allowance payments (SAP) by 55 basis points (40 for non-profit lenders).

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Special FFEL PLUS Loan Auction Pilot

Requires an “auction” for the origination of FFEL parent PLUS loans. Starting on July 1, 2009. New parent PLUS borrowers only. State by state auction looking for lowest

special allowance rates. Two “winning” lenders will be the only FFEL

lenders new parent PLUS borrowers can use.Based upon state where dependent student

is enrolled.

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NegotiatedRulemaking

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2007-2008 Negotiated Rulemaking

Loan Issues Committee Three Negotiated Rulemaking Sessions

Jan 14-16, Feb 4-6, March 4-6, and April 14-16

NPRM to follow Comment Period Final Rule by November 1, 2008 Implementation July 1, 2009

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Loan Issues Committee Issues Income-based Repayment Plans (IBR) (FFEL

and Direct Loans)

Public Service Loan Forgiveness (FFEL and Direct Loans)

Economic Hardship and Military Service Deferments (FFEL, Direct Loans, and

Perkins)

Definition of Not-for-Profit Holder

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Teach Grant Committee Conducted three Negotiated Rulemaking

SessionsJan 8 – 10, Jan 22-24, and Feb 6 – 8

Consensus Met NPRM on March 21 Comment Period ends on April 21 Final by June 1, 2008 Implementation July 1, 2008

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2007-2008 Negotiated RulemakingTeach Grant Committee Issues

Eligible Institution and Eligible Program Four Year Service Requirement Entrance and Exit Counseling Define – Highly Qualified Teacher Title I School Other ‘high-need’ fields Completing coursework necessary to begin a

career in teaching.

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2006-2007 Negotiated Rulemaking Loans - NPRM Published July 12

Final Published November 1 ACG/SMART - NPRM Published - August 7

Final Published October 29 General Prov. - NPRM Published August 8

Final Published November 1 Effective Dates: July 1, 2008

Possible early voluntary implementation

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Cash management improvements:

Recovery of funds not claimed

Permissions for electronic disbursements

Elimination of Late, Late Disbursements

General Provisions

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Consistent definitions of enrollment status and academic level (grad/undergrad)

Addressing inconsistencies in the award of aid in nonstandard and nonterm programs

Aligns disbursements for all Title IV grant and loan programs (with a few exceptions)

General Provisions

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ACG and National SMART

Rigorous secondary school programs Mandatory institutional participation GPA requirements Academic Year progression Eligible Majors

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Title IV Loan Programs

Perkins Loans Mandatory assignment

Prohibited Inducements Preferred Lenders

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Mandatory Assignment of Defaulted Perkins Loans

Schools hold more than $400 million in Perkins Loans that have been in default for 5 or more years

Little collection activity seen on these loans.

ED streamlined the voluntary assignment procedures, to encourage schools to assign their aged, defaulted loans

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Mandatory Assignment of Defaulted Perkins Loans

Secretary may require assignment of a Perkins Loan if—

Outstanding principal balance is $100 or more,

In default for 7 or more years, and

No payment has been received in past 12 months

ED will notify schools when to assign loans.

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School 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

Includes “school as lender”

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Preferred Lenders School may choose to have preferred lender(s) list (includes web processes)List must have at least 3 unaffiliated

lendersMust disclose method/criteria for lender

inclusion on the listMust provide comparative information on

borrower benefits offered by listed lenders

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Preferred LendersMust include prominent statement advising

borrowers that use of school preferred lender not required

Cause any unnecessary delays in certification for borrowers not using one of the school’s preferred lenders

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Prohibited Inducements Affects FFEL lender and guaranty agency

eligibility and participation in the program.

Creates concept of “rebuttable presumption” for prohibited and allowed activities.

Includes a non-exhaustive list of prohibited activities.

Includes a list of allowed activities.

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Prohibited InducementsProhibited activities include:Payments to prospective borrowers, including

prizes and additional financial aidPayments or other benefits to a school, school-

affiliated organization, or individual for loan applications, volume of loans made, or placement on a preferred lender list

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Prohibited Inducements Prohibited activities include:

Payments or other benefits to student lender reps on campus or other solicitors to secure loan applications from prospective borrowers

Payment of referral or processing fees to another lender or other party

Payment of conference or training registration, transportation, and lodging costs for school or school-affiliated organization employees

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Prohibited Inducements Prohibited activities include: Providing staffing to a school except on a short-

term, emergency basis

Payment of entertainment expenses related to lender-sponsored activities for school or school-affiliated employees

Undertaking philanthropic activities in exchange for FFEL applications, volume, or placement on a school’s preferred lender list

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Prohibited Inducements Allowed activities include:

Assistance to schools comparable to that provided DL schools by the Secretary

Support or Participation in student aid/financial literacy outreach with schools and guaranty agencies

Toll-free numbers for FFEL info and school loan data transmission

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Prohibited InducementsAllowed activities include:

Reasonable costs of meals, refreshments, and receptions for meeting, training, or conferences if open to all attendees

Reduced origination fees and interest rates

Payment of Federal Default Fees

Borrower benefits under repayment incentive programs

Items of nominal value

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Prohibited Inducements Allowed GA activities include:

Payments for default aversion activities approved by the Secretary.

Payments for expenses related to participation in GA’s governing board, official advisory committee, or for other official GA-sponsored activities.

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Training

On going Training• Financial Aid Basics

–Held at regional offices• Fundamentals for Title IV

–This is for newly certified schools• Creating a library

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Financial Aid Professionals Portal under “Resources and Training”

No sign-on necessary

www.fsaconferences.ed.gov

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TFAP

www.ed.gov/offices/OSFAP/training/index.html/

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Training via the Web

COD Basics for Direct Loans

NSLDS Data Overview

Available as Podcasts

Applicant data resolution

•Identifying information sources with FAA Access

•Resolving data issues

Saved WebcastsAvailable Through Web Screening

Webinar on the College Cost Reduction and Access Act (CCRAA)

Two Webinars on New Regulations

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Upcoming FSA Training Teach Grant Operational Webinar – April 10

Direct Loan and COD Webinars – April 8 and 15

Spring 2008 Stand Up training in regional offices and some college campuses

April 15 through June 16

CCRAA

New Federal Regulations posted November 2007

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Upcoming FSA Training Federal Student Aid Conferences –

October 28 - 31, 2008 Hyatt Regency Dallas Dallas, Texas

December 2-5, 2008 Paris/Bally's Las Vegas, Nevada

ILASFAA Federal Update April 18, 2008 Jeff Baker Federal Student Aid U.S. Department of Education.

Documents

Transcript of ILASFAA Federal Update April 18, 2008 Jeff Baker Federal Student Aid U.S. Department of Education.