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U.S. Department of Education Federal Update

U.S. Department of Education Federal Update. Dan Klock Federal Student Aid. 1. Appropriations and Budget Legislative Update Cohort Default Rates Direct Loan Transition IRS Data Retrieval Two Pells In One Award Year Regulatory Update Other. Today’s Topics. 2.

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U.S. Department of Education Federal Update

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  1. U.S. Department of EducationFederal Update Dan Klock Federal Student Aid 1

  2. Appropriations and Budget Legislative Update Cohort Default Rates Direct Loan Transition IRS Data Retrieval Two Pells In One Award Year Regulatory Update Other Today’s Topics 2

  3. Appropriations andProgram Budget 3

  4. Title IVAppropriations 4

  5. Title IV Aid Available 5

  6. Legislative Update 6

  7. Legislative Update 7

  8. FFEL/Direct LoanCohort Default Rates 8

  9. National Student Loan Default Rates 9

  10. Pennsylvania Default Rates(FY 2006 - FY 2008) 2006 2007 2008 Rate X.X% X.X% X.X% Borrowers in Repayment 86,788 96,517 Borrowers in Default 3,212 4,056 10

  11. HEOA Changes • Increases CDR monitoring period from two to three years • Increases disbursement relief threshold from 10 percent to 15 percent • Increases sanction threshold default rate from 25 percent to 30 percent • Establishes transition period to implement sanctions

  12. What is the CDR Calculation? Currently, a school’s cohort default rate is: The percentage of the number of the school’s FFEL and Direct Loan borrowers who enter repayment in one Federal Fiscal Year who default in that Federal Fiscal Year or by the end of the next Federal Fiscal Year. Beginning with the 2009 cohort will be: Borrowers who default in that Federal Fiscal Year or by the end of the next two Federal Fiscal Years.

  13. FY-09 FY-10 125 230 5,000 FY-09 FY-10 FY-11 125 230 250 5,000 2-Year Versus 3-Year Calculation The Numerator is the number of borrowers from the denominator who default within a cohort period The Denominator is the number of borrowers who enter repayment within a cohort period 3555000 .071 or 7.1% 6055000 .121 or 12.1%

  14. Transition Period

  15. Direct Loan Transition 15

  16. Direct Loan Transition • Legislation: Health Care and Education Reconciliation Act of 2010 • 100% Direct Loans July 1, 2010 and forward • Earliest disbursement date drives remaining FFELP activity 16

  17. Direct Loan Transition • Some things are the same • Virtually ALL Title IV regulations • Origination/Certification • Loan types/Interest Rates*/Repayment** • Counseling • Promissory Note *FFELP PLUS 8.5%...DL PLUS 7.9 **Income Contingent unique to DL 17

  18. Direct Loan Transition • Some things are different • Loan benefits unique to DL • Actual disbursement • Origination fee/rebate • Funding/Cash • Additional locations to a main campus • Reconciliation • Program requirement 18

  19. Legislation • Higher Education Opportunity Act of 2008 Pub. L. 110-315 (effective 2009-2010) • More grant aid to needy students • Eligibility for a second Scheduled Award in an award year to accelerate completion 19

  20. Direct Loan Transition • Contracted with 4 additional servicers • ACS (current servicer) • Nelnet • Sallie Mae • Great Lakes Education Loan Services • AES/PHEAA • Will “service” borrowers only…no origination responsibility 20

  21. Direct Loan Transition Can a school select the servicer with whom they wish to work? • No. Loans will be disbursed to all servicers systemically as they book How will a school know which servicer has a particular loan? • By looking at the loan in NSLDS 21

  22. IRS Data Retrieval 22

  23. IRS-FSA Concept Federal Student Aid (FSA) and the Internal Revenue Service (IRS) developed a non-consent solution to simplify FAFSA completion. Tax filer retrieves own data No Consent Voluntary Will allow some applicants to retrieve their income tax data from the IRS. IRS data can be automatically transferred to FOTW. 23

  24. Option to Access IRS Information 24

  25. Get My Federal Income Tax Information 25

  26. Federal Income Tax Information Provided 26

  27. 27

  28. ISIR Codes and Flags • CPS will set flags and comment codes to indicate that student and/or parent transferred IRS data into FOTW • Comment codes will appear in – • FAA Information section of the ISIR • Student Inquiry section of FAA Access • Flags and codes set based on certain conditions. 28

  29. IRS Request Flag Values 29

  30. Implementation Schedule • 2009-10 IRS process began in January 2010. • Pilot to test proof of concept. • 2010-11 IRS data share will begin in September of 2010. • 2011-12 IRS data share expected to begin with start-up in January 2011. • Within a couple of weeks electronic tax filing. • Within several weeks of paper tax filing. 30

  31. Enhancements Under Construction! • Add data retrieval process to Corrections on the Web • Add Spanish language version or enable Spanish FOTW filers to use retrieval process 31

  32. Two Pells in an Award Year 32

  33. Legislation Higher Education Opportunity Act of 2008 Pub. L. 110-315 (effective 2009-2010) More grant aid to needy students Eligibility for a second Scheduled Award in an award year to accelerate completion 33

  34. Negotiated Rulemaking Team V-General and Nonloan Programmatic Issues in 2009 Notice of proposed rulemaking: August 21, 2009 Final regulations: October 29, 2009 Effective date: starting with the 2010-2011 Award Year Dear Colleague Letter 34

  35. Pell Constants Unchanged by Two Pells • Scheduled Award: • Is the amount that a full-time student would receive for a full academic year based on the student’s EFC and COA. • Prorated by payment period based on hours and weeks of instructional time attended. • Payment periods • Payment for a payment period calculations 35

  36. Pell Constants Changed by Two Pells and no longer true • Student may receive only one Scheduled Award in an award year. • Student is always eligible for payment as less-than-half-time student. • Institution may assign a crossover payment period to either award year as a general policy or on a case-by-case basis. 36

  37. Eligible Student • Is enrolled at least as a half-time student • Is enrolled in an eligible program leading to a bachelor’s or associate degree or other recognized educational credential. • An exception to the degree or certificate is provided for students with intellectual disabilities. • The program must be greater than one academic year in length—in both hours and weeks of instructional time. 37

  38. Eligible Student • Is enrolled in credit or clock hours attributable to the student’s second academic year in the award year • Has successfully earned sufficient hours in the award year that some hours in payment period are attributable to the second academic year in that award year • Is a major change from proposed regulations 38

  39. Crossover Payment Period • Must assign the payment period to the award year in which the student receives the greater payment. • Must make assignment to the award year with the greater payment regardless of whether the payment for the first award year would be from the first or second Scheduled Award of that award year. 39

  40. If Law Had Not Changed - Semester Example Student may only receive up to ONE Scheduled Award within an Award Year. Assume student’s 2009-2010 Scheduled Award is $5,350 and will be $5,550 for 2010-2011. Fall 2009$2,675 Spring 2010$2,675 Summer 2010$0 100% 2009-10 AY 2009-10 Award Year Summer 2010$2,775 Fall 2010$2,775 Spring 2011$0 100% 2010-11 AY 2010-11 Award Year 40

  41. New Law - Semester Example Student may receive up to TWO Scheduled Awards within an Award Year. Assume student’s 2009-2010 Scheduled Award is $5,350 and will be $5,550 for 2010-2011. Fall 2009$2,675 Spring 2010$2,675 Summer 2010$2,675 150% 2009-10 AY 2009-10 Award Year Fall 2010$2,775 Spring 2011$2,775 Summer 2011$2,775 150% 2010-11 AY 2010-11 Award Year 41

  42. New Law - Semester Example Student may receive up to TWO Scheduled Awards. Student’s Scheduled Award is $5,350 for the Award Year. Summer 2009$2,675 Fall 2009$2,675 Spring 2010$2,675 Summer 2010$2,675 2009-10 Award Year 200% 2009-10 AY 42

  43. Other Information 43

  44. Awards for Children of Deceased Military Service MembersMilitary For any student whose parent or guardian was a member of the U.S. Armed Forces and died as a result of military service in Iraq or Afghanistan after September 11, 2001. If undergrad and Pell eligible EFC, all Title IV aid awarded using zero EFC. If not Pell eligible EFC, undergraduate student gets an “Iraq/Afghanistan Service Grant” award the amount of maximum Pell for enrollment status. All other Title IV aid awarded using calculated EFC. 44

  45. Department of Defense Match • In May 2010, began matching applicant records in CPS against DoD file • 2009-10 applicants – • Calls and e-mails to FAA’s • Letters to students • 2010-11 applicants – • New DoD Flag set on ISIRs • Letters to students • To ensure all eligible students are awarded aid appropriately, FAA’s must pay attention to new ISIR flag • DCLs posted on IFAP provide operational guidance 45

  46. Parent PLUS and FAFSA • Beginning 2011-2012 student must file FAFSA for Parent PLUS Loan • 98 percent already file • COD will monitor • Need to perform database matches to verify that student is eligible • Social Security Number • Citizenship Status • Selective Service • NSLDS for defaults and overpayments 46

  47. Professional Judgment Authority and guidance • Spelled out in Sec. 479A of HEA • No regulations • Department is prohibited from regulating • DCLs offer clarification on specific issues 47

  48. Professional Judgment Recent special guidance • Dear Colleague Letter GEN-09-04; issued April 2, 2009 • Encourages FAAs to consider special circumstances during these challenging economic times • Dear Colleague Letter GEN-09-05; issued May 8, 2009 • Letters to all recipients of unemployment insurance benefits that can be used as documentation 48

  49. Experimental Sites Initiative Federal Register Notice Changed Approach Solicited ideas for possible experiments Must be real experiments Control and experimental groups Rigorous evaluation and reporting Possibility to impact change to law, rules, etc. 49

  50. Experimental Sites Initiative Received100 suggestions for possible experiments Some duplicates or close enough Some schools can do under current rules Some “out of bounds” Staff Reviewed about 35 Staff will recommend six to ten 50

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