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David Bergeron Jeff Baker U.S. Department of Education

Federal Update November 27, 2012. David Bergeron Jeff Baker U.S. Department of Education. Topics. President's 2020 Goal Title IV Program Budget College Choice Tools studentaid.gov and Social Media Default Rates Regulatory Activity Statutory Changes Verification Experimental Sites

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David Bergeron Jeff Baker U.S. Department of Education

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  1. Federal Update November 27, 2012 David Bergeron Jeff Baker U.S. Department of Education

  2. Topics • President's 2020 Goal • Title IV Program Budget • College Choice Tools • studentaid.gov and Social Media • Default Rates • Regulatory Activity • Statutory Changes • Verification • Experimental Sites • PLUS Loans • Gainful Employment • Questions? - Sessions

  3. President’s 2020 Goal(Lessons from the Data) 3

  4. President Obama’s 2020 Goal

  5. The US has Fallen Behind Globally Percentage of Adults Age 25-34 with Postsecondary Education

  6. Higher Education Is an Imperative

  7. Higher Education Is an Imperative

  8. Higher Education Enrollment:2008-2011

  9. Graduation Rates: 2008-2011 4-Year Institutions 2-Year Institutions

  10. Tuition and fee growth is outpacing Income

  11. Affordability and Quality • The Administration has outlined a blueprint to address college access, affordability, quality and completion: • Make landmark federal investments in higher education • Galvanize the shared responsibility of States, institutions and the federal government • Provide students and families with the tools they need to plan for and afford college

  12. Federal Investments • Increasing Pell Grants - President Obama has raised the maximum Pell Grant award to $5,635 for the 2013-2014 award year • Total Pell Grant recipients have increased by 50% since 2008 – from 6 million students in 2008 to more than 9.5 million today • Direct Savings to Help Students - Conversion to Direct Loans saved $68 billion dollars over 10 years, of which $40 billion has gone directly to students

  13. Federal Investments • Help Students Manage Debt - • Income-Based Repayment will allow students to cap repayment of loans at 10% of monthly income • Public Service Loan Forgiveness supports students pursuing public service careers. • The President has called on Congress to freeze student interest rates at 3.4%. • Double Work-Study Jobs - Doubling the number of federally funded work-study jobs over the next five years

  14. Federal Investments • Easing Access to Federal Aid • Simplification of the FAFSA has helped fuel a 30% increase in applications since 2009 • More than 21 million students will submit a FAFSA this year • Expand Education Tax Credits • Propose to make permanent The American Opportunity Tax Credit (AOTC) provides 9.4 million students and families with up to $10,000 for four years of college.

  15. Shared Responsibility • Race to the Top – College Affordability and Completion • A $1 billion competition to drive systemic State reforms that lead to increased affordability, quality and productivity at colleges of all levels • First in the World Innovation Fund • A $55 million investment in individual colleges and nonprofit organizations to develop, validate or scale up innovative and effective strategies for boosting productivity and enhancing quality

  16. Shared Responsibility • Campus-Based Aid Reform • Revision of the campus-based aid programs to provide $10 billion in aid for students at institutions that most effectively serve students, contain costs, and demonstrate positive educational and employment outcomes

  17. Program Budget andSequestration

  18. Title IV Aid Available * President’s FY 2013 Budget Request

  19. College Choice ToolsKnow Before You GoKnow Before You Owe(Session 2)

  20. College Navigator Tool

  21. College Scorecard College Scorecard An online tool that will make it easier for students and families to compare colleges by comparing information such as: net price; graduation rates; default rates; student loan debt; and earnings potential

  22. Financial Aid Shopping Sheet Student Specific Information: Institutional Metrics: Graduation rate under “Student Right-to-Know” Most recent cohort default rate Median debt for completers Loan repayment information Cost of Attendance Elements Grants and Scholarships Net price After Grants Work Options Loan Options Other Options Including Family Contribution Contact information

  23. studentaid.govand Social Media(Session 28) 23

  24. Federal Student Aid Websites

  25. Solution: StudentAid.gov

  26. FSA Social Media Twitter YouTube Facebook

  27. FFEL/Direct LoanCohort Default Rates(Sessions 12, 13 and 20)

  28. What is the CDR Calculation? • A 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 (October 1 through September 30) who default in that federal fiscal year or by the end of the next federal fiscal year

  29. HEOA Changes • Increases the CDR monitoring period from two to three years. • Beginning with the 2009 cohort, the calculation will be: • Borrowers who default in that federal fiscal year or by the end of the next two federal fiscal years • FY 2009 3-year rate is 13.4% • Establishes a three-year transition period for sanctions

  30. Transition Period

  31. Regulatory Activity

  32. Regulatory Activity • Loans I (Session #8) • Final rule published November 1, 2012. • Pay as You Earn • Direct Loan Income Contingent Repayment Plan Option • Possible Early Implementation of Pay • Total and permanent disability application simplification • Some SSA Determinations

  33. Pay As You Earn • Income Based Repayment (IBR) Plan • Statutory - FFEL and Direct Loan • Maximum annual payment amount is 15% of discretionary income • Remaining balance forgiven after 25 years. • New Law (SAFRA) – Effective 2014 • Maximum annual payment amount is 10% of discretionary income • Remaining balance forgiven after 20 years. • New Borrowers on or after July 1, 2014

  34. Pay As You Earn • Pay As You Earn Plan Repayment Plan • Amend ICR regulations to – • Reduce maximum annual payment amount from 15% of discretionary income to 10% • Reduce forgiveness time from 25 years to 20 years • Available to more borrowers • New borrowers as of October 1, 2007 • Received a Direct Loan on or after October 1, 2011

  35. Regulatory Activity • Loans II • Stand alone Direct Loan regulations. • FFEL origination elimination • Reasonable and affordable payments for defaulted loan rehabilitation

  36. Regulatory Activity • Teacher Preparation • TEACH Grant • Title II accountability and reporting systems • Pell Grant • Finalization of Summer Cross-Over Interim Rule • Fraud Prevention • New Neg Reg Process • Early in 2013 37

  37. Statutory Changes

  38. Ability-to-Benefit(ATB) (Session 3) • Consolidated Appropriations Act, 2012 – • EliminatedTitle IV eligibility for students without ahigh school diploma or equivalent (unless the student was homeschooled) • Beginning with the 2012-2013 award year • See DCL GEN-12-01 and DCL GEN-12-09

  39. Ability-to-Benefit(ATB) • Equivalent of a high school diploma: • A GED • A State certificate that is recognized by the state as the equivalent of a high school diploma • Successful completion of at least a two-year program that is acceptable toward a BA • Documentation that the student excelled academically in high school. Enrollment must be for an associate degree or equivalent

  40. Ability-to-Benefit(ATB) • Exception: • Students who are or were, enrolled in a Title IV eligible program anytime prior to July 1, 2012, may continue to qualify under one of the ATB alternatives • Approved ATB test • Completion of six credit or 225 clock hours

  41. Pell Duration of Eligibility (Sessions 4 and 10) • Consolidated Appropriations Act, 2012 – • Establishes the duration of a student’s eligibility to receive Pell Grant to be 12 semesters or its equivalent. • Effective with the 2012-2013 award year. • Applies to all students • Includes all years of the Pell/Basic Grant Program • Back to the 1973-1974 Award Year • See DCL GEN-12-01 and various Electronic Announcements and Tech References

  42. Pell Duration of Eligibility • Calculate the 12 semester equivalency by adding together each of the annual percentages of a student’s scheduled award that was actually disbursed to the student • Results in LEU – Lifetime Eligibility Used • Once LEU reaches 600%, student no longer eligible for Pell Grant funding • If LEU more than 500% but less than 600%, partial eligibility for the award year

  43. Grace Period Interest Subsidy • Consolidated Appropriations Act, 2012 • Temporarily eliminates the interest subsidy on Direct Subsidized Loans during the six month grace period • Applies to new Direct Stafford Loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014 • Accrued grace period interest not paid will be capitalized • Borrower could have some loans with interest subsidy and some without when in grace period

  44. No Subsidized Loans for Grad Students • The Budget Control Act of 2011 – • Ended the eligibility of graduate and professional students for Subsidized Loans • Effective for loans made for loan periods beginning on or after July 1, 2012 • Subsidized Loans for loan periods beginning before July 1, 2012 remain unchanged • COD will enforce

  45. Subsidized Loan Limitation • P.L. 112-141 – • Established a limit of how many years a student may receive subsidized loans • Applies to “new borrowers” on or after July 1, 2013 • When student has received subsidized loans for 150% of the published time of the academic program – • The student may not receive any additional subsidized loans, and • The subsidized loans received from July 1, 2013 on lose their subsidy

  46. Subsidized Loan Limitation

  47. Subsidized Loan Limitation • Transfers – • Students maximum time to receive subsidized loans is established based on the length of the program the student is enrolled in • Remaining subsidized eligibility is calculated by subtracting from maximum eligibility the time the student has already received subsidized loans

  48. Subsidized Loan Limitation • Transfer Examples – • Student receives three years of subsidized loans while enrolled in a two-year program • Student transfers to a four-year BA program • Student has three years of remaining subsidized loan eligibility • Student receives three years of subsidized loans while enrolled in a four-year BA program • Student transfers to a two-year AA program • Student has no remaining subsidized loan eligibility

  49. Subsidized Loan Limitation • FSA will track, calculate, and inform students and institutions. • Likely to be codes and comments on SARs and ISIRs. • COD editing and enforcement. • Schools will need to provide program information, including length of program • Probably as part of COD reporting

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