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Changing Times of Alphabet Soup: Updates on the Acts and Regulations from Washington, DC

Changing Times of Alphabet Soup: Updates on the Acts and Regulations from Washington, DC. Speakers: Members of the MASFAA Government Relations Committee. College Cost Reduction and Access Act (CCRAA). Important News from Washington!. CCRAA…. Signed into law September 27, 2007.

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Changing Times of Alphabet Soup: Updates on the Acts and Regulations from Washington, DC

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  1. Changing Times of Alphabet Soup:Updates on the Acts and Regulations from Washington, DC Speakers: Members of the MASFAA Government Relations Committee

  2. College Cost Reduction and Access Act (CCRAA) • Important News from Washington!

  3. CCRAA… Signed into law September 27, 2007 Budget reconciliation measure

  4. Pell GrantsSecs. 101, 102(a) and 102(b) • Eliminates tuition sensitivity effective July 1, 2007 (see P-07-02) • Increases the maximum authorized amount: • $4,800 for award years 2008-2009 and 2009-2010 (increase of $4900); • $5,000 for award years 2010-2011 and 2011-2012 (increases of $690); • $5,400 for the 2012-2013 award year (increase of $1,090).

  5. Teacher Education Assistance for College and Higher Education (TEACH) GrantsSec. 104 • New grant program for current or prospective teachers attending eligible institutions, effective July 1, 2008 • Grants may be made up to $4,000 per academic year • $16,000 maximum for undergraduate degreeor post-baccalaureate program • $8,000 maximum for master’s degree

  6. TEACH Eligibility • Minimum GPA of 3.25 on a zero to 4.0 scale; or • Scored above the75th percentile on at least one of the undergraduate, post-baccalaureate, or graduate school admission tests AND • (for bachelor’s degree or post-baccalaureate program) completing or plans to complete coursework and other requirements necessary to begin a career in teaching • (for master’s degree) is a teacher or retiree from another occupation with expertise in a field in which there is a shortage of teachers, or is or was a teacher using high-quality alternative certification routes

  7. TEACH Recipient Obligations • Applicant must serve as a full-time “highly qualified” teacher for at least 4 academic years within 8 years after completing education; • Teach in a public or other qualified nonprofit private elementary or secondary school; and • Teach in a high-need field OR ELSE… • The TEACH Grant(s) are converted to unsubsidized Direct Loan(s)

  8. College Access Challenge Grant ProgramSec. 801 • New 2-to-1 matching grant program for States and qualifying philanthropic organizations in each of the fiscal years 2008 and 2009

  9. Challenge-supported activities include: • Postsecondary education information and career preparation for students and families • Instruction and education on postsecondary education financing options that promote financial literacy and debt management • Assistance in completing the FAFSA or other common forms • Need-based grant aid for students • Professional development for guidance counselors at middle and secondary schools, and financial aid administrators and college admissions counselors at institutions of higher education to help give student better guidance on how to prepare for and navigate through college

  10. Need AnalysisSec.104 • Sets specific increases in the student Income Protection Allowance (IPA) for years 2009-2013 • Applies to dependent and independent students • After 2012-2013, IPA is thereafter tied to the Consumer Price Index • Parent IPA is linked to the Consumer Price Index as of 2009-2010 • Expands eligibility for the Simplified Needs Test and the Automatic Zero EFC • Eliminates consideration of certain untaxed income

  11. Loan Deferment Changes • Economic hardship Deferment • Military deferment

  12. Economic Hardship DefermentSec. 304(a) • Changes from 100% of the poverty line for a family of two to 150% of the poverty line depending on borrower’s family size • No debt burden criterion for the deferment • Effective Date: October 1, 2007

  13. Military DefermentSecs. 202, 204 • Available to FFELP, Direct and Perkins borrowers regardless of disbursement date • 3-year limit on military deferment removed • Deferment extended 180 days following demobilization • Effective Date: October 1, 2007

  14. Repayment Implications • Public Service Loan Forgiveness • Stafford Loan Interest rate Reduction • Income-based repayment Plan

  15. Public Service Loan ForgivenessSecs. 203, 401 • Balance of interest and principal canceled after 10 years • Not in Default • Borrowers in public service during which they have made 120 monthly payments in Direct Lending (FFELP borrowers must consolidate into DL - any payments made in FFELP would not count) • Borrowers must still be in public service at the time of loan cancellation • Eligible under income-based, standard, or income contingent repayment plans

  16. Public Service? • Public service jobs include: • full-time jobs in public emergency management, government, public safety, public law enforcement, public health, public education, public early childhood education, public child care, social work in a public child or family service agency, public services for individuals with disabilities, public services for the elderly, public interest legal services (including prosecution or public defense), public library services, public school library sciences, other public school-based services or a tax exempt organization under 501(c)(3), or teaching as a full-time faculty member of a Tribal College or University or other faculty teaching in high-needs areas as determined by ED. • Effective Date: payments made after October 1, 2007

  17. Stafford Loan Interest rate ReductionSec. 201(a) • Phased-in rate reduction for undergraduate subsidized Stafford Loans (FFELP and Direct) from 6.8 % to 3.4% over 4 years • 6.0% on or after July 1, 2008 and before July 1, 2009 • 5.6% on or after July 1, 2009 and before July 1, 2010 • 4.5% on or after July 1, 2010 and before July 1, 20011 • 3.4% on or after July 1, 2011 and before July 1, 2012

  18. Income-Based Repayment Plan“Partial Financial Hardship”Sec. 203 • Borrower can request that payments do not exceed… • 15 percent of difference between borrower’s AGI and 150 percent of the poverty line for her/his family size, divided by 12 • Parent PLUS borrowers are not eligible for this plan, including borrowers with consolidation loans that have underlying parent PLUS loans

  19. Income-based repayment Plan“Partial Financial Hardship” cont. • Other terms of the Plan: • Borrower’s eligibility evaluated annually • Education Department pays interest on subsidized loans for the first 3 years • Remaining balance of loan canceled after 25 years if the borrower made consistent monthly payments under a regular or reduced repayment plan or was in economic hardship deferment • Effective Date: July 1, 2009

  20. Lender/Guarantor ImpactsSecs. 301, 302, 305, 306, 701 • Reductions in guaranty agency collection retention and account maintenance fees • Reductions in lender insurance percentage and Special Allowance Payments • Increase in lender origination fees • Elimination of Exceptional Performer Status • Creation of pilot program to auction FFEL parent PLUS loans

  21. Higher Education Act (HEA) Reauthorization Update • Senate HEA Amendments passed July 24, 2007 • House bill may become available as early as November 7

  22. 2006-2007 Negotiated Rulemaking Update Final rules released during the week of October 29, 2007

  23. Loan Provisions • Prohibited inducements • Preferred Lender Lists • Other provisions

  24. Resources • House Committee on Education and Labor • Information for Financial Aid Professionals (IFAP) • National Association of Student Financial Aid Administrators (NASFAA) • National Council of Higher Education Loan Programs (NCHELP) • Association of American Universities (AAU)

  25. Questions?Comments?

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