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2008 NCHELP Training Conference

2008 NCHELP Training Conference

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2008 NCHELP Training Conference

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  1. 2008 NCHELP Training Conference Legislative and Regulatory Update November 3, 2008 Pamela Moran

  2. Agenda • Legislation Update • Loan Access Initiatives • Regulations Update

  3. Legislation

  4. Legislation Update • Higher Education Reconciliation Act (HERA) (P.L. 109-171) – February 8, 2006 • College Cost Reduction and Access Act (CCRAA)(P.L. 110-84) – September 27, 2007

  5. Legislation Update • Ensuring Continued Access to Student Loans Act (ECASLA) (P.L. 110-227) – May 7, 2008 • Higher Education Opportunity Act (P.L. 110-315) (HEOA) – August 14, 2008 • H.R. 6889 (P. L. 110-350) – October 7, 2008

  6. HERA • Reauthorized FFEL Program until 2012 • Increased Loan Limits • Phase-Out of Borrower Origination Fees • Grad/Prof PLUS Introduced

  7. HERA • Aligned Repayment Plans –FFEL/DL • Disbursement Relief – Cohort Default Rate Waivers for Schools • Reduced PLUS Interest Rates

  8. HERA • Identity Theft Discharge • Military Deferment • Loan Rehabilitation Relief – FFEL/DL

  9. HERA • Consolidation Loan – Married/In-school/Early Conversion eliminated • School-as-Lender/Use of Lender Trustee • Lender Reduced Insurance/“Negative SAP”

  10. CCRAA • Reduced FFEL/DL Interest Rates for Undergrad Subsidized Loans • New Income-Based Repayment Plan –FFEL/DL • New Public Service Loan Forgiveness - DL

  11. CCRAA • Revised Deferments: • Economic Hardship – Changed Eligibility Standards • Military Service Expanded and Post-Active Duty Added

  12. CCRAA • Lender (Offsets): • Exceptional Performer Status Eliminated • Insurance Reduced • Loan Fees Increased • Special Allowance Payments Reduced • Origination Auction for PLUS (First-time Parent PLUS)

  13. CCRAA • Guaranty Agency (Offsets): • Collection Retention Allowance Reduced • Account Maintenance Fees

  14. ECASLA • Increased FFEL/DL Annual and Aggregate Loan Limits • Parent PLUS Grace Period/Relief

  15. ECASLA • Lender-of-Last Resort Authority Enhanced • ED Granted Authority to Purchase Loans and Participation Interest in Loans to ensure FFEL loan access

  16. ECASLA FFEL/DL LOAN LIMITS – • New $2,000 annual Unsub Stafford loan amount for dependent undergraduate students • Additional $2,000 Unsub Stafford annual loan amount for dependents with no PLUS, independent undergrads, and for non-degree preparatory coursework for undergrad programs

  17. ECASLA FFEL/DL LOAN LIMITS - unchanged • $7,000 Additional Unsub Stafford for non-degree preparatory coursework for grad/professional programs • $7,000 Additional Unsub Stafford for non-degree teacher certification coursework

  18. ECASLA FFEL/DL LOAN LIMITS - • Increased Aggregate total for dependent undergrads from $23,000 to $31,000 (no more than $23,000 subsidized) • Increased Aggregate total for independent undergraduate students from $46,000 to $57,500 (no more that $23,000 subsidized)

  19. ECASLA FFEL/DL LOAN LIMITS - • Aggregate total for graduate/professional remains at $138,500 (no more than $65,000 subsidized)

  20. ECASLA PLUS Loan Changes - • Optional delayed repayment start date for parent PLUS borrowers based on dependent’s enrollment status • Extenuating circumstances for PLUS adverse credit may include delinquency of up to 180 days on mortgage or medical bill payments

  21. ECASLA- Loan Access Initiatives FFEL Lender-of-Last-Resort - • Mandates LLR coverage for all loan types –Subsidized and Unsubsidized Stafford and PLUS for parents and graduate/professional students • Authorizes institutional designation for LLR through June 30, 2009

  22. ECASLA-Loan Access Initiatives ED FFEL Loan Purchase Authority - • Terms and conditions established by the Secretary in consultation with Treasury and OMB • May produce no “net” cost to the Federal government • Includes no advance funding for lenders

  23. ECASLA-Loan Access Initiatives • Loan Purchase Commitment Program - • ED Commitment to purchase eligible 2008-2009 FFEL loans through September 30, 2009 from any FFEL lender/holder • Loans must be fully disbursed to be purchased • 45-day advance notice from lender of loans to be sold

  24. ECASLA-Loan Access Initiatives • Loan Participation Purchase Program - • ED Commitment to purchase “participation interests” in eligible 2008-2009 FFEL loans • Purchase provides liquidity to lender • To terminate ED interest, lender repays ED by redeeming loans or selling them to ED

  25. ECASLA-Loan Access Initiatives Go to www.ifap.ed.gov and hit ECASLA link for ECASLA DCLs and Legislative and Legal Notices, Electronic Announcements, and Implementation Webinars on Loan Purchase Programs

  26. HR 6889- Loan Access Initiatives Extends Loan Purchase Programs through 2009-2010 academic year

  27. Higher Education Opportunity Act (HEOA) Reauthorization of the HEA • Signed into law August 14, 2008 • Authority for insurance of FFEL loans and to make Consolidation Loans extended to 2014 • Provisions effective August 14, 2008, unless otherwise specified

  28. HEOA -Implementation • Six Hearings Concluded 10/15/09 • Notice Announcing Formation of Committees and Soliciting Nominations for Non-Federal Negotiators – 11/08 • Committees Established - 12/08 • Negotiations – 2/09 – 4/09

  29. HEOA -Implementation • NPRM Prepared/Cleared by OMB – 4/09-7/09 • NPRM Published - 8/09 • Comment Period Ends – 9/09 • Final Regulations Prepared/Cleared by OMB – 9/09-10/09 • Final Regulations Published – 11/1/09

  30. HEOA –Student Loan ProgramsBorrowers • Estimated Financial Assistance Excludes all Veterans’ Education Benefits • Servicemembers Civil Relief Act (SCRA) applied to FFEL and Direct Loan Borrowers - 6% interest rate cap during active duty service beginning date of enactment - Does not apply to PLUS endorsers

  31. HEOA – Borrowers • SCRA - continued - Borrower must make written request - Related special allowance change for loans first disbursed on/after July 1, 2008

  32. HEOA – Borrowers • PLUS Loan deferment for: - in-school period - up to six months for post-half-time enrollment period

  33. HEOA – Borrowers • PLUS Loan deferment - At specific request of parent PLUS borrower based on dependent’s status • Granted automatically to grad/prof borrower for post-enrollment period with required notice

  34. HEOA – Borrowers • Capitalization of PLUS Loan deferment-related accrued interest may be paid monthly or quarterly or capitalized no more frequently than quarterly for all borrowers

  35. HEOA – Borrowers • PLUS Loan “adverse credit standard” clarified for special extenuating circumstances to be existing regulatory standard

  36. HEOA – Borrowers • Income-Based Repayment limited to borrower with defaulted loans assigned to ED • Rehabilitation of defaulted loans limited to one opportunity – borrower-based eligibility continues unless redefault on previously rehabilitated loan

  37. HEOA – Borrowers • Loan Forgiveness expanded, if Congress appropriates funds, for: -Early Childhood Educators -Nurses -Foreign Language Specialists -Librarians -Higher Qualified Teachers serving students who are limited English proficient, from low-income communities, and from underrepresented populations

  38. HEOA – Borrowers • Loan Forgiveness expanded, if Congress appropriates funds, for: -Child Welfare Workers -Speech-Language Pathologists and Audiologists -School Counselors -Public Sector Employees -Medical Specialists -Mental Health Professionals

  39. HEOA – Borrowers • Loan Forgiveness expanded, if Congress appropriates funds, for: -Dentists -Nutrition Professionals -STEM Employees -Physical Therapists -Occupational Therapists -Superintendents, Principals, and other Administrators -Civil Legal Assistance Attorneys

  40. HEOA – Borrowers • Total and Permanent Disability discharge available, July 1, 2010, subject to regulations: - If borrower unable to engage in substantial gainful activity based on documented medical or mental impairment expected to result in death, or has lasted or can be expected to last for continuous period of not less than 60 months • Reinstatement authorized if new title IV loan or income exceeds poverty line

  41. HEOA – Borrowers • Total and Permanent Disability discharge available for applications received on/after August 14, 2008: - If borrower provides Department of Veterans Affairs (DVA) documentation showing DVA determination that borrower unemployable due to service-connected condition. No other medical documentation required.

  42. HEOA – Borrowers via Direct Loan Program for Service Including 8/14/08 • “No Interest Accrual” for no more than 60 months for Direct Loan borrowers who: - are serving on active duty during war or other military operation or national emergency, or in qualifying National Guard duty during the same, and - are serving in an area of hostility that qualifies for special pay

  43. HEOA – Borrowers via Direct Loan Program for Service Including 8/14/08 • FFEL borrowers may consolidate or reconsolidate FFEL consolidation loan in Direct Loan program to qualify for benefit

  44. HEOA – Borrowers via Direct Loan Program • “Public Service Job” for Direct Loan Public Service Loan Forgiveness amended: - government job excludes time in US Congress - jobs in public health, public interest law services, and faculty teaching in “high needs areas” clarified

  45. HEOA – Borrowers via Direct Loan Program • “Public Service Job” (cont.): - childhood education as separate category, including Head Start and State-funded pre-kindergarten • Applies to service on/after 10/1/2007

  46. HEOA – Schools • Institutions of Higher Education (IHE) and IHE-affiliated organizations must adopt “codes of conduct” governing relationships with financial institutions • Specific student/family disclosure requirements for IHEs with preferred lender arrangements for FFEL and/or private education loans (minimum information requirements and model disclosure to be provided by ED)

  47. HEOA – Schools • Preferred Lender List (PLL) requirements added to institutional PPA for IHEs with PLL arrangements for title IV and/or private education loans • Specific IHE and IHE-affiliated organization reporting requirements to ED on PLL arrangements

  48. HEOA – Schools • Specific disclosure requirements for Direct Loan schools • Marketing limitations on preferred lender arrangements for private education loans • New FAA professional judgment authority to offer dependent student Unsub Stafford if parent discontinues financial support and refuses to complete FAFSA

  49. HEOA – Schools • Entrance Counseling for first-time FFEL and DL borrowers added to law--consistent with regulations, except: • Borrower’s acknowledgement of receipt and understanding required • Must explain interest accrual/capitalization and borrower’s option to pay interest

  50. HEOA – Schools • Entrance Counseling --consistent with regulations, except: • Must define half-time enrollment status at the school and impact of less-than-half-time status • Must explain importance of office contacts when withdrawing • Must provide information on NSLDS and how to access