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ILASFAA Federal Update April 18, 2008 Jeff Baker Federal Student Aid U.S. Department of Education. Legislation and Budget. LEGISLATION College Cost Reduction and Access Act (CCRAA) Pub.L. 110-84 Reauthorization S 1642 passed full Senate on July 24, 2007

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Ilasfaa federal update april 18 2008 jeff baker federal student aid u s department of education

ILASFAA

Federal Update

April 18, 2008

Jeff Baker

Federal Student Aid

U.S. Department of Education



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





Student benefits grant programs
Student BenefitsGrant Programs


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)


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.


TEACH Grants

  • Subject Areas –

    • Mathematics

    • Science

    • A foreign language

    • Bilingual education

    • Special education

    • As a reading specialist

    • Other ‘high-need’ fields


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.


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.


TEACH Grants

  • Award, when combined with other assistance cannot exceed cost of attendance (No EFC).

  • All Title IV student eligibility requirements –

    • Regular Student

    • Citizen or Eligible Non-Citizen

    • Not in Default

    • Satisfactory Progress

  • FAFSA required.


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.


Student benefits needs analysis and efc calculation
Student BenefitsNeeds Analysis and EFC Calculation


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.


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.


  • 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

    • Effective for the 2009-2010 award year.


    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.

    • Effective for the 2009-2010 award year.


    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.



    FFEL and Direct Loans

    Interest Rates

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

    • 6.0% for loans disbursed on or after July 1, 2008

    • 5.6% for loans disbursed on or after July 1, 2009

    • 4.5% for loans disbursed on or after July 1, 2010

    • 3.4% for loans disbursed on or after July 1, 2011

    • Beginning July 1, 2012, rates revert to 6.8%.

    • Unsubsidized Stafford Loans and all Staffords for grad students remain at 6.8% fixed.


    FFEL and Direct Loans

    Income 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.


    Direct Loans (FFEL)

    Forgiveness for Public Service Employees

    • Direct 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.


    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.


    Perkins, FFEL, and Direct Loans

    Military 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.



    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).


    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.


    Negotiated rulemaking
    NegotiatedRulemaking


    2007 2008 negotiated rulemaking
    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


    2007 2008 negotiated rulemaking1
    2007-2008 Negotiated Rulemaking

    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


    2007 2008 negotiated rulemaking2
    2007-2008 Negotiated Rulemaking

    Teach Grant Committee

    • Conducted three Negotiated Rulemaking Sessions

      • Jan 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


    2007 2008 negotiated rulemaking3
    2007-2008 Negotiated Rulemaking

    Teach 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.


    2006 2007 negotiated rulemaking
    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


    2006 2007 negotiated rulemaking1
    2006-2007 Negotiated Rulemaking

    General Provisions

    • Cash management improvements:

      • Recovery of funds not claimed

      • Permissions for electronic disbursements

      • Elimination of Late, Late Disbursements


    2006 2007 negotiated rulemaking2

    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)

    2006-2007 Negotiated Rulemaking

    General Provisions


    2006 2007 negotiated rulemaking3
    2006-2007 Negotiated Rulemaking level (grad/undergrad)

    ACG and National SMART

    • Rigorous secondary school programs

    • Mandatory institutional participation

    • GPA requirements

    • Academic Year progression

    • Eligible Majors


    2006 2007 negotiated rulemaking4
    2006-2007 Negotiated Rulemaking level (grad/undergrad)

    Title IV Loan Programs

    • Perkins Loans

      • Mandatory assignment

    • Prohibited Inducements

    • Preferred Lenders


    Mandatory assignment of defaulted perkins loans
    Mandatory Assignment of Defaulted Perkins Loans level (grad/undergrad)

    • 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


    Mandatory assignment of defaulted perkins loans1
    Mandatory Assignment of Defaulted Perkins Loans level (grad/undergrad)

    • 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.


    School ffel loan certification
    School FFEL Loan Certification level (grad/undergrad)

    • 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”


    Preferred lenders
    Preferred Lenders level (grad/undergrad)

    • School may choose to have preferred lender(s) list (includes web processes)

      • List must have at least 3 unaffiliated lenders

      • Must disclose method/criteria for lender inclusion on the list

      • Must provide comparative information on borrower benefits offered by listed lenders


    Preferred lenders1
    Preferred Lenders level (grad/undergrad)

    • Must 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


    Prohibited inducements
    Prohibited Inducements level (grad/undergrad)

    • 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.


    Prohibited inducements1
    Prohibited Inducements level (grad/undergrad)

    • Prohibited activities include:

      • Payments to prospective borrowers, including prizes and additional financial aid

      • Payments 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


    Prohibited inducements2
    Prohibited Inducements level (grad/undergrad)

    • 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


    Prohibited inducements3
    Prohibited Inducements level (grad/undergrad)

    • 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


    Prohibited inducements4
    Prohibited Inducements level (grad/undergrad)

    • 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


    Prohibited inducements5
    Prohibited Inducements level (grad/undergrad)

    • Allowed 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


    Prohibited inducements6
    Prohibited Inducements level (grad/undergrad)

    • 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.


    Training
    Training level (grad/undergrad)


    On going training
    On going Training level (grad/undergrad)

    • Financial Aid Basics

      • Held at regional offices

    • Fundamentals for Title IV

      • This is for newly certified schools

    • Creating a library


    www.fsaconferences.ed.gov


    TFAP Training”

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


    Training via the web
    Training via the Web Training”

    • COD Basics for Direct Loans

    • NSLDS Data Overview

    • Available as Podcasts

      • Applicant data resolution

        • Identifying information sources with FAA Access

        • Resolving data issues


    Saved webcasts
    Saved Webcasts Training”

    • Available Through Web Screening

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

      • Two Webinars on New Regulations


    Upcoming fsa training
    Upcoming FSA Training 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


    Upcoming fsa training1
    Upcoming FSA Training Training”

    • Federal Student Aid Conferences –

      • October 28 - 31, 2008

      • Hyatt Regency Dallas

      • Dallas, Texas

      • December 2-5, 2008

      • Paris/Bally's

      • Las Vegas, Nevada


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