Reauthorization of the Higher Education Act

© 2014 NASFAA

Reauthorization of the Higher Education Act

WFAA Conference

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The National Association of Student Financial Aid Administrators

© 2014 NASFAA 2

Reauthorizationof Higher Education Act

• Law mandates reauthorization every 5-7 years

– Higher Education Opportunity Act passed in 2008

• Reauthorization should occur in 2014

– It won’t happen on time

– The process has started, but there will not be a final bill

• Predictions on timing

– An automatic one-year extension will be granted at end of 2014

– Initial legislation has been released in both House and Senate, but markups are unlikely in this Congress

– Election recess and a lame duck Congress will slow progress

– Maybe start to see real movement in spring of 2015

© 2014 NASFAA 3

NASFAA’s Reauthorization Task Force

• Began work in January 2012

• Consisted of 17 members from all sectors and regions

• Forty listening sessions around the country

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Total Comments

Need Analysis24%

Loans 23%

Programs7%

R2T49%

Miscellaneous8%

Pell Grant6%

Verification5%

Cam

pus-

Base

d A

id2%

Total Comments

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NASFAA’s Reauthorization Task Force

• Developed 60 comprehensive recommendations approved by the NASFAA Board

• Recommendations submitted to both the House and Senate Education Committees in the fall of 2013

• Document will continue to be updated, as the timetable for reauthorization is fluid

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RTF Spin-off Task Forces

Public Service Loan Forgiveness Task Force• Report released in July 2014

• Key recommendations to strengthen the PSLF program

– Forgiveness limits: 100% up to $57,500 and 50% of remainder up to $138,500 total forgiveness

– Keep untaxed

– Increase awareness

– Make data public

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Consumer Information Task Force• Report released in August 2014• Key recommendations to improve consumer information

– Eliminate annual notice and use College Navigator– Repeal student unit record ban

– Examine usefulness of campus safety and fire safety reports, etc.

– Eliminate non Title IV-related disclosures (e.g., Constitution Day, voter registration, etc.

– Exempt graduate programs from inapplicable requirements

– Require consumer testing for all new consumer information requirements

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Campus-Based Allocation Formula Task Force

• Report released in August 2014

• Four recommendations to modify the campus-based aid allocation formula– Reconstruct income bands to more accurate reflect student

need

– Eliminate the base guarantee with phase-in protection

– Restructure FSEOG fair share formula to be based on Pell funding received by institution with phase-in protection

– Increase the assumed self-help for undergraduates in FWS and Perkins fair share formulas from 25% to 35% with phase-in protection

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Task forces starting work in fall 2014

• R2T4

• Competency-Based Education

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Higher Education Affordability Act

• Senate Democrats’ first draft of reauthorization bill• HEAA introduced on June 25th • Key provisions:

– PPY– Year-round Pell– Eliminates student loan origination fees– Early notification of potential financial aid packages– Streamline repayment programs: a 10-yr plan, and an

income-based plan– Borrowers more than 150 days delinquent auto-enrolled in

IBR– Full school certification of private loans– Private student loans can be discharged in bankruptcy

© 2014 NASFAA 11

Senators Alexander/Bennet FAST Act

• Financial Aid Simplification and Transparency (FAST) Act• Introduced on June 19th • Eliminates the FAFSA

– Only asks for a student’s family size and adjusted gross income from two years prior

• Implements a one grant/one loan system• Streamlines the repayment process into two programs:

– A standard 10-year repayment and an income-based repayment

• Introduces a “look-up” table that uses family size and PPY to find the Pell Grant award amount– Provides early information to students and families

• Institutional authority to limit loans

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House GOP Reauthorization

• Released four bills:– Simplifying the Application for Student Aid Act

– Empowering Students Through Enhanced Financial Counseling Act (Passed)

– Strengthening Transparency in Higher Education Act (Passed)

– Advancing Competency Based Education Demonstration Project Act (Passed)

• These bills begin to address the committee’s four guiding principles:– Empowering students and families to make informed decisions

– Simplifying and improving student aid

– Promoting innovation, access, and completion

– Ensuring strong accountability and a limited federal role

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• Simplifying the Application for Student Aid Act

– Mandates the use of PPY income in federal need analysis

– Not yet marked up

• Strengthening Transparency in Higher Education Act

– Replaces College Navigator with a new site called College

Dashboard

– ED would maintain the site, and it would have institutional

level information related to basic facts about an institution,

such as: sector, web address, enrollment, completion, costs,

financial aid, and cohort default rates

– Passed the full House

© 2014 NASFAA 14


Empowering Students Through Enhanced Financial Counseling Act• Replaces one-time entrance counseling requirement with

annual counseling that must be completed before student accepts the loan

• Passive confirmation of loans would no longer be allowed

• Exit counseling is expanded to include borrower-specific information Calls for annual counseling of Pell recipients

• ED required to offer consumer-tested, on-line counseling

• Requires Parent PLUS counseling

• Passed the full House

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Other Reauthorization Marker Bills

• What is a marker bill?– Legislation that gets introduced to promote an idea or set of ideas,

but without the intent of immediate Congressional action

• Recent marker bills:– Pell Grant Protection Act (Sen. Hirono)

– Student Loan Borrower Bill of Rights (Sen. Durbin)

– Bank on Students Emergency Loan Refinancing Act (Sen. Warren)

– CHANCE Act (Sen. Landrieu)

– Simplifying Financial Aid for Students Act (Sen. Booker)

– College Affordability & Innovation Act (Sens. Murphy & Schatz)

• It’s clear that Congress is interested in student aid issues

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Other “Hot Topics” for Reauthorization

• What is going to happen to the undergraduate interest subsidy?

• What is going to happen to the Campus-Based Loan programs, including the Perkins Loan Program?

• What will be done to address regulatory burden?

Reauthorization of the Higher Education Act

Documents

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