Higher Education Reauthorization

1. HigherEducation Reauthorization A NASSGAP Perspective By Lisa Fuller & Chas Treadwell Co-chairs, NASSGAP Federal Relations Committee NASSGAP Fall 2002 Conference

2. Reauthorization-What Is It? • A type of legal plea bargaining (think Enron, WorldCom, etc.) • Something Bob Villa shows you on “This Old House” • Renewal of all federal higher education programs • All of the above

3. Why Is There a “Reauthorization”? • Job security for 10,000 bureaucrats and lobbyists • The moons of Jupiter have aligned with Halley’s Comet • Without it, every federal higher education program ceases to exist October 1, 2003

4. When Is Reauthorization? • Every so often, when the moons of Jupiter… • Way too often- how else can those 10,000 lobbyists defend their billings? • Every 5-6 years, depending on…

5. What Factors Will Influence Reauthorization? • Federal deficit spending • State revenue shortfalls • Rising college costs • Reduced Pell Grant purchasing power • Continuing “gaps” in college participation • Growth in merit aid • Demographics

6. Who Are The Players? • House and Senate authorizing subcommittees/committees • Higher education associations • U.S. Department of Education(ED), OMB, the White House • All other interested parties in the western world

7. What Is The Likely Timeline? Possible scenarios: • Fall 2002- House subcommittee Web site w/ December 31,2002 deadline for initial input of issues/suggestions • Spring 2003-ED releases its FY 2004 budget and reauthorization recommendations; congressional hearings • Summer 2003-possible House draft bill

8. 1998 NASSGAP Recommendations- A Look At The Past • LEAP: two-tiered, 2-1 @ $75 million trigger • NEISP: expand • Paul Douglas: transfer tracking to ED; allow admin. retention from collections; cancel repayment for students curtailed

9. 1998 NASSGAP Recommendations (Cont’d.) • FAFSA: state-specific FOTW • Tax Policy: expand federal tax benefits for saving plans, loan interest, employer aid; state education IRAs • Need Assessment: create commission

10. 1998 NASSGAP Recommendations (Cont’d.) • Campus based: increase transfer flexibility; simplify refunds • Regulations: neg reg for all; 120 day review ; fewer regs • Loans: refinance interactivity w/FFEL/FDSL; elim 30 day disbursement for low default colleges; elim single term multi disbursements; ED support for both FFEL & FDSL; use FAFSA as loan app

11. What Are The Other Players Recommending for 2003 Reauthorization?LEAP/SLEAP (formerly SSIG): • Continue LEAP and increase funding

12. Preliminary 2003 Reauthorization Recommendations From Others • entitlement • front load • add bonus grant (options) • raise maximum/minimum Pell Grants:

13. Preliminary Reauthorization Recommendations From Others (Cont’d.) • keep toll-free number; • remove 25% incarcerated student limit; • require FAFSA ID only for paid preparers; • eliminate taxation of student aid. General Provisions:

14. Preliminary Reauthorization Recommendations From Others (Cont’d.) • ATB definition expansion– include students completing 6 college credits with at least “C” grade; • Require ED, not colleges, to provide students w/state aid info; • Eliminate campus voter registration material distribution; • Eliminate drug-related student eligibility suspension.

15. Preliminary Reauthorization Recommendations From Others (Cont’d.) • require ED/IRS automated verification demo by 2004 with all by 2007; • continue but evaluate Quality Assurance and Experimental Sites; • 25% transfer among campus-based programs; • $500 overaward tolerance

16. Preliminary Reauthorization Recommendations From Others (Cont’d.) • legal guardian=parent • exclude EIC • $1,000 asset protection for students • TANF check-off box on FAFSA • Eliminate SNT and automatic zero EFC Federal Methodology:

17. Preliminary Reauthorization Recommendations From Others (Cont’d.) • 529 plan values= asset of parent • Exclude LEAP from Title IV refund formula • FAO override of return of funds • assess VA as resource @ 50% • adjust refund policy: > 50% attendance = 100% of earned aid

18. Preliminary Reauthorization Recommendations From Others (Cont’d.) • Raise loan limits to $7,000 for all UG • Ditto for grads to $10,000(sub) & $15,000(unsub) • Colleges can approve lower limits for classes of students Loans:

19. Preliminary Reauthorization Recommendations From Others (Cont’d.) • Option: raise limits only for co-signers • Variable grace periods via economic conditions • Retain single holder consolidation rule • Repayment flexibility, but limit gov’t subsidy to 15 years

20. Preliminary Reauthorization Recommendations From Others (Cont’d.) • Limit lender/guarantor fiscal gains • ED pays G-fee to GA for borrower--have borrower pay G-fee upon graduation/leaving • Eliminate/reduce O-fee • Equalize terms/conditions/loan forgiveness

21. Preliminary Reauthorization Recommendations From Others (Cont’d.) • Require GAs and lenders (not colleges) to conduct all entrance/exit counseling • Allow GAs to collect FDSL/Perkins defaults; lenders buy FDSL and Perkins loans • Lengthen cohort default rate period • Permit lenders to use undocumented forbearance • GA financing formula tweaks

22. Preliminary Reauthorization Recommendations From Others (Cont’d.) • Make GU Partnerships part of TRIO w/ experience points and loss of single cohort focus • Insert a ceiling on GU professional development GEAR UP program:

23. FED UP Technical Amendments Bill • House bill did not pass; Senate bill introduced • Contains : • --6th year for GEAR UP; • --LEAP out of refunds; • --30 day and single term disbursement rules; • --clarify home schooled/college aid eligibility; • --forbearance flexibility for lenders; • -- new ED law scholarship

24. NASSGAP “Hot Buttons” for Current Reauthorization • “Let Our LEAP Grow”-- raise maximum awards/authorized funding • “Take Our Douglas, Please!”-- transfer collections to ED • “If You Pay It, They Will Come”-- Allow Free state FOTW link

25. Current NASSGAP “Hot Buttons” (Cont’d.) • “We’ve Only Just Begun- GEAR UP” • raise GEAR UP authorized funding; • keep GEAR UP current structure; • decouple GEAR UP scholarship minimum award from Pell maximum

26. Other NASSGAP Member Ideas • Add spouse SSN to FAFSA to help verification • Reduce student contribution rates in FM • Add state grant agencies to neg reg groups in law

27. Other NASSGAP Member Ideas (Cont’d.) • Provide aid eligibility to students taking course from both 4yr & 2yr colleges

28. Other NASSGAP Member Ideas (Cont’d.) • O-fee elimination; • increase limits by class year; • repayment extensions; • restore 30 day/multiple disbursement waiver for low default colleges Loans:

29. Next Steps • Win the Powerball Mega-Lottery and share it with NASSGAP members so we can watch reauthorization from the comfort of our own island in the South Pacific • Absent that…

30. Next Steps (Cont’d.) • Federal Relations Committee drafts NASSGAP prelim paper for member review/exec committee approval; recommendations submitted as preliminary to FED UP Web site by 12/31/02 • NASSGAP comments on state-related recommendations made by others

31. Next Steps (Cont’d.) • NASSGAP solicits invitations for congressional testimony • NASSGAP joins alliances with similar objectives

32. Your Questions/Comments? THANK YOU!!