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Annmarie Weisman Training Officer

Federal Update November 7, 2012 . Annmarie Weisman Training Officer. Topics. College Choice Tools s tudentaid.gov Default Rates Executive Order 13607 Financial Aid Shopping Sheet Regulatory Activity Recent Statutory Changes ATB Pell Duration of Eligibility Grace Period Subsidy

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Annmarie Weisman Training Officer

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  1. Federal Update November 7, 2012 Annmarie Weisman Training Officer

  2. Topics • College Choice Tools • studentaid.gov • Default Rates • Executive Order 13607 • Financial Aid Shopping Sheet • Regulatory Activity • Recent Statutory Changes • ATB • Pell Duration of Eligibility • Grace Period Subsidy • Subsidized Loan Limits • Verification, etc. • Questions & Answers

  3. College Choice Tools 3

  4. College Navigator

  5. College Choice: ScoreCard

  6. 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 Grant s and Scholarships Net price After Grants Work Options Loan Options Other Options Including Family Contribution Contact information Custom Message

  7. studentaid.gov 7

  8. Federal Student Aid Websites

  9. Solution: StudentAid.gov

  10. FSA Social Media Twitter YouTube Facebook

  11. Cohort Default Rates

  12. What is the CDR Calculation? • A cohort default rate is the % of the number of the school’s FFEL and DL borrowers who enter repayment in one Federal Fiscal Year (October 1 - September 30) who default in that federal fiscal year or by the end of the: • next federal fiscal year (2 year rate) • next two federal fiscal years (3 year rate) • Begins with 2009 cohort

  13. HEOA Changes • Increased monitoring from two to three years • Establishes a three-year transition period for sanctions • On 9/17/12 - released the FY 2010 2-Year Cohort Default Rates to schools (average = 9.1%) • On 9/24/12 - released the FY 2009 3-Year Cohort Default Rates to schools (average = 13.4%)

  14. 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% 1st official 3 year rates released 9/2012

  15. Transition Period

  16. Executive Order (EO) 13607 Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses and other Family Members GEN-12-10 EA – 6/29/12

  17. E.O. 13607 • Signed April 27, 2012 • Designed to ensure information, support and protections put in place for those students enrolled in post-secondary programs receiving federal military educational benefits • Schools participating in certain federal military education benefits enter into an agreement/understanding with DOD and VA • 6/29/12 EA provides a link to recorded webinar and the executive order

  18. E.O. 13607 • GEN-12-10 provides a series of Q & As to address how TIV schools can comply with EO 13607 • Standardized cost form – ED’s “Shopping Sheet” • Aid Information – provides sample language • State Authorization and recruitment – follow existing ED regulations around state authorization, misrepresentation, recruitment and incentive compensation • Accreditation – follow accreditation requirements • Readmission – follow ED’s guidelines for returning service members

  19. E.O. 13607 • GEN-12-10 provides a series of Q & As to address how TIV schools can comply with EO 13607 • Withdrawals – treat VA and DOD funds similar to R2T4 and nonTIV schools develop refund policy similar to R2T4 • Individual education plans – definitions/terms, degree requirements and transfer hour procedures • Advising points of contact – basic understanding of benefits and services for military/service and family members and contact information for additional help

  20. Financial Aid Shopping Sheet GEN-12-12 GEN-12-17 EA – 9/11/12

  21. Shopping Sheet – 2013-2014 • ED developed model format to deliver financial aid information to students - section 484 of HEOA • Encouraged to be used by schools starting in 13/14 • Designed to be used for undergraduate programs, but can be used for any program • Especially helpful for 1st year students

  22. Shopping Sheet – 2013-2014 • Required to be used by schools that agree to comply with E.O. 13607 (principles of excellence) • Provide prospective veteran/service member students with personalized form that contains standardized information describing program costs and costs that may be covered by available Federal educational benefits and financial aid

  23. Regulatory Activity 24

  24. Regulatory Activity (“Neg Reg”) • Loans I • Pay as You Earn • Total and permanent disability (TPD) • Loans II • Stand alone Direct Loan regulations • FFEL origination elimination • Reasonable and affordable payments for defaulted loan rehabilitation 25

  25. Regulatory Activity • Teacher Preparation • TEACH Grant • Title II accountability and reporting systems • Pell Grant • Finalization of Summer Cross-Over Interim Rule • Fraud Prevention • New NegReg Process • Early in 2013 26

  26. 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 27

  27. Pay As You Earn • Income Contingent Repayment (ICR) Plan • Statutory - Direct Loan Only • Regulatory defined formula • Complex • Loan amount and income • Remaining balance forgiven after 25 years. • Limited “take-up” rate 28

  28. Pay As You Earn Pay As You Earn Plan Repayment Plan • Amend ICR regulations to – • Reduce maximum annual payment about from 15% of discretionary income to 10% • Reduce forgiveness time from 25 years to 20 years • Available to more borrowers • Negotiated rulemaking concluded in March, 2012 • NPRM Published July 17, 2012 • Final rule publication date Nov 1. • Possible Early Implementation 29

  29. Recent Statutory Changes 30

  30. Ability-to-Benefit (ATB)

  31. Ability-to-Benefit (ATB) • EliminatesTitle IV eligibility for students without ahigh school diploma (or equivalent) • Recognized equivalent includes: • GED • State certificate passing State authorized exam State considers same as HSD • Academic transcript of successful completion of at least a 2-year program acceptable for full credit toward a Bachelor’s degree • Excelled academically in HS and meets admission policy into at least an AA degree • Home schooled students

  32. ATB Exception • Students who attended a Title IV eligible program of study prior to July 1, 2012 OR officially registered for a TIV eligible program prior to July 1, 2012 AND later attended that program may continue to qualify under one of the ATB alternatives – • Passing an independently administered, approved ATB test • Successfully completing at least six credit hours or 225 clock hours

  33. ATB Exception (cont.) • Receipt of Title IV aid prior to July 1, 2012 not required to qualify for ATB exceptions • School must document student qualifies for use of ATB alternative using NSLDS, transcripts, other documentation from previous school indicating enrollment in eligible program • GEN-12-09 - provides a “grandfather” test and various scenarios to assist determine if a student qualifies for an ATB alternative

  34. Federal Pell Grant Program

  35. Pell Lifetime Eligibility Used (LEU) • Reduces the duration of a student’s eligibility to receive Pell Grant to 12 semesters (600% - 6 full Scheduled Awards) • Applies to all students effective with the 2012-13 award year • Calculation includes all earlier years of the student’s receipt of Pell/BEOG • NO “grandfather” clause

  36. Pell - LEU • Add each of the annual percentages of a student’s scheduled award that was actually disbursed to the student • If LEU >500% but <600%, partial eligibility • Once LEU reaches 600%, student no longer eligible for Pell • May also impact FSEOG eligibility

  37. Pell - LEU • If <100% eligibility remaining, handle award like a transfer student • Pay up to full amount allowed in first payment period/term • Pay remaining balance in subsequent payment periods • Do NOT spread out percentage evenly over remaining periods • May round cents but cannot exceed 600%

  38. Pell – Scheduled Award • Based on the statutory maximum award amount for the year and the student’s EFC (and COA) • Amount student would be eligible for if enrolled FT for a full academic year • 2013-14 – Maximum Award = $5,550 • If EFC = 0, scheduled award = $5,550 • If EFC = 1,000, scheduled award = $4,550 • Annual Award is the amount of scheduled award received by the student • Consider < FT, < full academic year, R2T4, etc.

  39. Pell Grant Duration of Eligibility • Examples – • Student’s Scheduled Award was $5,550, but only received $2,775 because only enrolled for one semester, will have used 50% of that award year’s scheduled award • Student who was enrolled ¾ time for the entire award year would have used 75% of his scheduled award

  40. Pell Duration of Eligibility • Calculate the equivalency by adding together each of the annual % of a student’s scheduled award that was actually disbursed to the student • LEU – Lifetime Eligibility Used • The example student’s LEU is 125% of the total 600%. • Once LEU reaches 600%, student is no longer eligible. • If LEU > 500%, but < 600%, partial eligibility 41

  41. Declining Pell – DCL GEN-12-18 • Students can decline all/part of their Pell awards or return some previously received Pell funds to preserve future eligibility • Student cannot return Pell from a prior award year • Student must provide a signed, written statement indicating that they are declining/returning Pell funds for which they are otherwise eligible and that those funds may not be available once the award year ends • School must submit any required adjustment records for the student to the COD System

  42. Federal Direct Loan Program GEN-11-16

  43. Upfront Rebates Elimination of Direct Loan Incentives • Terminates repayment incentives (“upfront rebate”) to encourage on-time repayment of loans • Effective for loans 1st disbursed on or after July 1, 2012 • Still allows interest rate reduction to borrowers who repay electronically

  44. Grace Period Interest Subsidy • Temporarily eliminates the interest subsidy on Direct Subsidized Loans during the six month grace period • Applies to new Direct Stafford Loans when the 1st disbursement is made on or after July 1, 2012 and before July 1, 2014

  45. Aggregate Loan Limits If a dependent student’s parent is denied a PLUS, the student can borrow up to the annual independent loan levels. • Additional amounts do not count against dependent aggregate loan limits • Amounts able to borrow as dependent student (i.e. 1st year dependent student can borrow $3,500 – base sub/unsub and $2,000 additional unsub) would still count against dependent aggregate loan limits. • Undergrads total aggregate = $57,500

  46. Graduate Students • Loan Subsidy eliminated for graduate students* • Effective for loan periods starting on/after 7/1/2012 • Annual limits unchanged, all unsubsidized ($20,500) *Subsidy still available for preparatory coursework and teacher certification programs

  47. Subsidized Loan Limitation • When a 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 • Applies to “new borrowers” on or after July 1, 2013. • Special calculation of 150% for transfer students • Special calculation for less than fulltime students

  48. Subsidized Loan Limitation • 150% of the published length of the program • 1st instance could be as early as December 2013 because of short-term programs • Borrower responsible for interest (new borrowers with loans on or after July 1, 2013) • Loans can lose their subsidy

  49. Subsidized Loan Limitation • FSA will track, calculate, and inform • Likely to be codes and comments on ISIRs • COD Editing • Schools will need to provide program information, including CIP code, length of program, and possibly more • Probably as part of COD reporting • Starting in 13-14 (possibly only for new borrowers)

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