National Association of Student Financial Aid Administrators

Slide 1 © NASFAA 2011

NYSFAAANYSFAAA

Federal UpdateFederal UpdateMay 13, 2011May 13, 2011

Agenda• Context

• Fiscal Year 2011

• Fiscal Year 2012

• Budget Resolution

• Debt Ceiling

• NASFAA Advocacy

Budget Context

FY 2011 Budget

FY 2012 Budget

DebtCeiling

Budget Characterization

Media Circus

Horse Trading

Passing the Buck

Budget Characterization

http://today.yougov.com/news/2011/04/04/congress-and-spending/

YouGov Poll – April 2011

Public Says…

FY 2011 Budget Is…

DONE!!!

FY2011 Budget, In Review

• Last short-term continuing resolution (CR) expired April 14th – This was 4th CR, cumulative total of $12 billion in cuts

• On February 19th House of Representatives passed H.R. 1, a 7-month CR– Cut $100 billion from FY 2011 requested levels – Cuts maximum Pell Grant by $845– Eliminates funding for FSEOG and LEAP

• H.R 1 failed in the Senate and Senate’s alternative bill also failed

FY2011 Budget, In Review

How Does It Impact Student Aid?

• Pell Cuts and/or Changes in Long-Term CR– Maximum $5,550 maintained—VICTORY– Elimination of Year-Round Pell – Crossover regulation lifted for summer 2011

• Other Changes– 0.2% percent cut across-the-board– SEOG cut by $20 million– Eliminate LEAP and Byrd Scholarships– Cut $25 million from TRIO; $20 million from GEAR UP– Cut $1.6 million from Javits Fellowships

FY 2012 Budget Process

• President Releases Budget Request - Done

• Budget resolution process - In Process

• Budget Conference Report

• President submits detailed budget request to Congress

• Appropriations Committees draft bills

• Appropriations bills voted on and passed

• $20 billion shortfall for 2012-13

• If take no action now, maximum grant could have been reduced to $3,240 (a loss of $2,310) for 2012-13

• Budget reflects changes in existing Pell program and cuts to offset the expense of retaining a Pell maximum award of $5,550

Pell Program Outlook

The Pell Protection ActPresident Obama’s FY 2012 Request

Elimination of 2nd Scheduled Awards

• Effective 2011-12, occurred in FY 2011 CR

• Higher costs than expected

• No federal data on acceleration

• Savings of $8 billion in 2011-12 and $60 billion over next 10 years

Elimination of Subsidized Loans for Graduate Students

• Effective 2012-13

• Graduate students only

• Subsidies are not well-targeted

• Subsidies don’t encourage enrollment

• Savings of $2 billion in 2011-12 and $29 billion over next 10 years

FAFSA and Verification, 2012-13

• Savings of $340 million in FY 2012

• Applicants who filed tax return before FAFSA will be directed to use IRS data retrieval

– If use data retrieval, verification of that data is met

– If do not use data retrieval, or subsequently change data:

• Must explain why to school, and

• May be required to verify with IRS-supplied documentation

Simplify Loan Servicing for Split Loans

• 6 million students have split loans

• Would allow all federal student loan payments to be made to one federal loan servicer

• Not the same as consolidation

• Financial incentive to borrowers to participate

• Savings of $2 billion in 2012-13

Restructure the Perkins Loan Program

• Similar language as last year’s proposal

• Lower cost alternative to private loans

• Unsubsidized, 6.8% interest rate

• Loan funds increase from $1 billion to $8.5 billion

• Savings of $6.8 billion over 10 years

Other Proposals

• Eliminate LEAP

• Extend American Opportunity Tax Credit

• Funding at FY2010 levels for FWS, FSEOG, GEAR UP

• Small funding increase for TRIO programs

• Replace TEACH Grant program with Presidential Teaching Fellows program

• $1.25 billion over 5 years to reward states and institutions that help more students earn degrees

FY 2012 Budget Resolution

• Released last month by Chairman Ryan (R-WI)

• The Path to Prosperity: Restoring America’s Promise

• Cuts $6.2 trillion in government spending, compared to President Obama’s FY 2012 request

• Reduces deficit by $4.4 billion, compared to President Obama’s FY 2012 request

• Repeal and defund HCERA

For Pell, the assumptions are:

- Lower the maximum award (apparently to pre-ARRA levels which we believe is FY 2008 levels – apx. $17 billion

- Limit Pell grants to 6 years (12 semesters)

- Eliminate College Cost Reduction and Access Act of 2007 [CCRAA] provisions, including auto-zero, IPA amounts.

- Eliminate administrative fees paid to participating institutions. 

- Elimination of HCERA could include mandatory Pell savings and strengthened IBR provisions.

FY 2012 House Budget Resolution

Debt Ceiling

• Debt Ceiling: Cap set by Congress on the amount of debt the federal government can legally borrow

– Current is $14.294 trillion

– Will likely reach this amount by May 16th, but Aug 2 extension

• Congress will have to vote to raise debt ceiling

– This is typical, done so 10x since 2001

– Likely tough fight on this ahead

What’s Going On Right Now?

• What does the Senate Say?

• House 302 (a) Allocations?

Advocacy

• Build relationships with your lawmakers now by delivering information sheets on how their constituents—the students and families you serve—benefit from the student aid programs.

• Follow the latest legislative developments by reading Today’s News, the NASFAA Advocate, and following us on the NASFAA Facebook page and the Save Student Aid Facebook page.

• Share with NASFAA all your correspondence with lawmakers so we can support you and understand how to better work with your Congressional delegates.

• Visit NASFAA’s “Take Action Page” to stay up-to-date on NASFAA’s latest calls to action.

QUESTIONS?

mccleanm@nasfaa.org OR policy@nasfaa.org