Application Processing System Update Marilyn LeBlanc Director of Application Processing

1. Application Processing System Update Marilyn LeBlanc Director of Application Processing Michele Brown Director of Applicant Products and Customer Service

2. Today’s Topics • Implementation of the 2005 Higher Education Reconciliation Act (HERA) for 2006-07 and 2007-08 • FAFSA • Application Processing System • 2007-08 Application Processing System Changes • Paper FAFSA • Paper SAR, online SAR, and ISIR • FAFSA on the Web and the Federal Student Aid PIN Web site • FAFSA on the Web Worksheet and Student Application Resources • Application Edits • NSLDS Financial Aid History Information • Important Dates

3. Implementation of HERA Provisions 2006-07 and 2007-08 The FAFSA The Application Processing System

4. HERA of 2005 • Other interest sessions that include HERA information • Session 5 - ACG and National SMART Grant: Student Eligibility and Academic Year Issues • Session 6 - ACG and National SMART Grant: Transfer Student and Rigor/Major Issues • Session 10 - General Provisions Update: Changes made by the HERA

5. HERA of 2005 • Other interest sessions that include HERA information • Session 11 - Return of Title IV Funds: HERA Policy and Implementation Changes • Session 15 - NSLDS: Changes for 2006 and 2007 • Session 17 - ACG/SMART: Reporting from CPS to COD; Funding Levels and Institutional Reports • Session 20 - FFEL and Direct Loan Policy Update

6. HERA Implementation Approach and Considerations • Many provisions effective beginning in 2006-07 • Implementation approach and considerations – • Limit amount of change to 2006-07 Central Processing System, the FAFSA, SAR and ISIR • Implement changes as quickly as possible • Provide customer software providers enough time for development • Leverage existing functionality wherever possible

7. New Grant Programs Implementation for 2006-07 and 2007-08

8. HERA of 2005 • HERA Created Two New Grant Programs • Academic Competitiveness Grant (ACG) • National Science and Mathematics Access to Retain Talent (SMART) Grant • Implementation goal was to design a process to help schools identify students who are potentially eligible for ACG

9. Academic Competitiveness Grant2006-07 Implementation • On July 1, 2006, sent letters and e-mails to all 2006-07 applicants (Web and paper filers) who appeared to meet minimum ACG requirements • E-mails and letters informed applicants how to provide ACG information – • Web site • Federal Student Aid Information Center (FSAIC)

10. Academic Competitiveness Grant2006-07 Implementation • Web site “screens” applicants (U.S. citizen, Pell eligible) and asks “Did or will student complete high school program of study after 1/1/05?” • If student answers ‘yes’ to this question, Web displays additional ACG questions • FSAIC Customer Service Representatives will follow similar process on the phone to collect ACG data

11. Academic Competitiveness Grant2006-07 Implementation • When ACG information is submitted – • Student Aid Report (SAR), with comments, sent to student • Central Processing System (CPS) notifies all institutions of student’s potential ACG eligibility via – • Comment codes on ISIR, and • Flat file

12. Academic Competitiveness Grant2006-07 Implementation • ISIRs sent in new “pushed” message class (IGAA07OP) to all institutions listed on the transaction • Flat file sent in new message class (ED2007OP) • Includes: SSN, Name ID, ISIR Transaction Number, student’s name and date of birth, answers to ACG questions, rigorous program code

13. Academic Competitiveness Grant2006-07 Implementation • On or after July 1, 2006 • Students who apply using– • Online Application – FAFSA on the Web “screens” applicants for potential eligibility and gives applicants option to provide ACG information • Paper Application – No change to paper 2006-07 FAFSA; filers sent comment on SAR directing them to Web site or FSAIC to provide ACG information • FAAs can enter ACG information in FAA Access to CPS Online

14. Academic Competitiveness Grant2007-08 Implementation • FAFSA on the Web and FAA Access to CPS Online will “screen” applicants for potential eligibility and give students and FAAs option to provide ACG information • Paper filers who appear to be potentially eligible for ACG will be sent a comment on the SAR directing them to FSAIC to provide additional information over the phone

15. Academic Competitiveness Grant2006-07 and 2007-08 Implementation • SARs, with comments, sent to students • ISIRs sent in existing message class IGSA0XOP or IGSG0XOP to all institutions listed on the transaction • Flat file sent in new message class (ED200XOP) • Student ACG data may be viewed on – • FAFSA on the Web • FAA Access to CPS Online

16. Need Analysis Changes Implementation for 2006-07 and 2007-08

17. Need Analysis Changes • Simplified Needs Test (SNT) and automatic zero Expected Family Contribution (EFC) Criteria • Active Duty Military Independence Criterion • Treatment of Qualified Education Benefits • Treatment of Small Business Assets • 2007-08 Income Protection Allowances (IPA) and Asset Assessment Rates

18. SNT and Auto Zero EFC Criteria • SNT and automatic zero EFC – • Only parent’s type of tax return filed considered for dependent students • Means-tested federal benefit program an alternative to tax return requirement • Automatic zero EFC only – • Income threshold increased to $20,000

19. SNT and Auto Zero EFC Criteria 2006-07 Implementation • On May 19, 2006, two changes made to CPS – • For dependent students, updated system to look only at type of tax return parent filed to qualify for SNT or automatic zero EFC • Increased automatic zero EFC income parameter in system from $16,000 to $20,000 for – • Parents of dependent students • Independent students with dependents other than a spouse

20. SNT and Auto Zero EFC Criteria 2006-07 Implementation • CPS reprocessed students who applied for aid prior to May 19th and now meet new HERA criteria for SNT or automatic zero EFC • Applicants who applied on or after May 19 had new criteria applied to their application data

21. SNT and Auto Zero EFC Criteria 2006-07 Implementation • New means-tested federal benefits program criteria • Students may now qualify for SNT or automatic zero EFC if they or their parents (or anyone in the household) – • Received benefits from a means-tested federal program • Meet relevant income thresholds

22. SNT and Auto Zero EFC Criteria 2006-07 Implementation • 2006-07 Web and paper FAFSA not revised to collect means-tested federal benefit information • If institution learns that member of student’s household received a means-tested federal benefit, correct to ‘Yes’ FAFSA question 34 or 72 (was student or parent eligible to file a 1040A or 1040EZ?)

23. SNT and Auto Zero EFC Criteria 2007-08 Implementation • New SNT/automatic zero EFC criteria (tax return and auto zero income parameter) rolled forward into 2007-2008 CPS • Means-tested benefits questions will be asked on both 2007-08 paper and online FAFSA

24. Treatment of Qualified Education Benefits • Qualified Education Benefits • Consistent treatment • Now treated as an asset • 2006-07 Implementation • No change to paper or Web instructions • 2007-08 Implementation • Paper and online FAFSA instructions for investment net worth questions will describe how to report qualified education benefits

25. Treatment of Small Business Assets • Exclude family-owned and controlled small businesses from asset net worth • 2006-07 Implementation • No change to paper or Web instructions • 2007-08 Implementation • 2007-08 paper and online FAFSA instructions for investment questions describe how to report family-owned and controlled small businesses

26. IPA and Asset Assessment Rates2007-08 Only • Increase in Income Protection Allowances • From $2,200 to $3,000 for dependent students • From $5,000 to $6,050 for independent students (single) without dependents and married students (without dependents) with a spouse enrolled at least ½ time • From $8,000 to $9,700 for independent (married) students without a dependent whose spouse is not enrolled • Decrease in Asset Assessment Rates • From 35% to 20% for dependent students and independent students without dependents • From 12% to 7% for independent students with dependents other than a spouse

27. Student Eligibility Implementation for 2006-07 and 2007-08

28. Definition of an Independent Student • Students serving on active duty in the U.S. Armed Forces for other than training purposes are now considered independent

29. Definition of an Independent Student2006-07 Implementation • No change to paper or online FAFSA • If institution becomes aware that an otherwise dependent student is serving on active duty it must submit a “dependency override” to CPS • CPS will recalculate EFC using independent student formula

30. Definition of an Independent Student2006-07 Implementation • New SAR comment (comment code 119) informing dependent students of new active duty military independence criterion – • Comment on SARs sent to dependent students as part of May 19, 2006 reprocessing • Comment on SARs for all dependent student applications and corrections submitted on or after May 19th

31. Definition of an Independent Student2007-08 Implementation • Paper and online FAFSAs will include new dependency status question in Step 3

32. Drug Offenses • Student eligibility provision modified –students lose eligibility for federal student aid only if the drug-related offense for which they were convicted occurred during a period of enrollment for which the student was receiving Title IV aid

33. Drug Offenses2006-07 Implementation • On July 1, 2006, revised – • Drug question wording and instructions on FAFSA on the Web • Drug Conviction Worksheet on the Web • FSAIC automated response system • Question on paper FAFSA not reworded, but paper filers will receive SAR with revised paper Drug Conviction Worksheet

34. Drug Offenses2006-07 Implementation • All students who applied on or before June 30, 2006 (paper and Web) and answered ‘Yes’ (either ‘2’ - partial ineligibility, or ‘3’ - full ineligibility) to drug question, or left question blank – • Received e-mail or letter about change to drug conviction provision • Instructed to – • Complete revised Drug Conviction Worksheet • Correct their response to the drug question, if necessary

35. Drug Offenses 2007-08 Implementation • Both paper and online FAFSA drug offense wording updated • Help text on FAFSA on the Web updated

36. 2007-08 FAFSA and Application Processing System Changes

37. 2007-2008 Application Processing System Changes • Processing Statistics • Paper FAFSA • Paper SAR, Online SAR, and ISIR • FAFSA on the Web • FAFSA on the Web Worksheet • Toolkit/Student Resources

38. 2007-2008 Application Processing System Changes • Federal Student Aid PIN Web Site • Renewal Application Process • FAA Access to CPS Online • New Application Edits • NSLDS Aid History Information • Important 2007-08 Dates • 2007-08 Web Demonstration Site

39. Application Volumes 2005-06 and 2006-07 Processing Statistics • 12,012,071 • 2005-06 FAFSAs processed as of October 29, 2005 • 12,151,736 • 2006-07 FAFSAs processed as of October 29, 2006 That’s a 1.16% increase

40. Application Processing StatisticsPaper vs. Electronic Filers through Week 44 For 2006-07 – • 94.3% of applications filed electronically • 5.7% of applications filed on paper FAFSA

41. Application Processing Statistics • Applications received by State • For 2005-06 and 2006-07 • Available in Excel and PDF formats on IFAP • http://ifap.ed.gov/eannouncements/0816AppsbyState.html • Applications received by school • For 2005-06 and 2006-07 • Available in Excel and PDF formats on IFAP • http://www.ifap.ed.gov/eannouncements/0816AppsbySchool.html

42. The 2007-08 Paper FAFSA • 60-day public comment period ended on 8/7/06 • Final 30-day comment period ended on 9/18/06 • FAFSA approved on 9/29/06

43. The 2007-08 Paper FAFSA • 2007-08 FAFSA • Yellowfor Students Pantone 108 CVU • Purple for Parents Pantone 263 CVU • New packaging • Cover and Notes pages 1 through 6 • Form pages numbered 7 through 10 • Expanded instructions, one page of “Tips”

44. The 2007-08 Paper FAFSA • States that do not specify priority deadline dates have been moved to the top of the list on front page

45. The 2007-08 Paper FAFSA • Enrollment status question 25 reformatted and will follow “grade level in college?” • Notes for question 25 describe enrollment status choices

46. The 2007-08 Paper FAFSA • Work-study and loan questions (27 and 28 on 2006-07 FAFSA) combined and reformatted into single question (#26) to create space for new questions required by HERA • Notes for question 26 describe work-study and loan choices

47. The 2007-08 Paper FAFSA • Four college and housing code choices • Colleges re-numbered on the paper FAFSA to 97a – 97h • Web continues to include six college and housing code choices

48. The 2007-08 Paper and Online SAR • Paper SAR • Yellow in color • DRN in top right hand corner of SAR; same position as online SAR • ‘BLANK’ printed when answer left blank, but is required • SAR information on the Web • Changing return address to FederalStudentAidFAFSA@cpsemail.ed.gov • Changing e-mail subject line to “FAFSA Results – 2007-2008 SAR”

49. 2007-08 Institutional Student Information Record (ISIR) • 2007-08 ISIR record layout posted on 8/4/2006 • ISIR will follow order of 2007-2008 paper FAFSA • Includes new data elements for new FAFSA questions and reformatted responses to questions • Date fields incremented

50. 2007-08 Institutional Student Information Record (ISIR) • Will include up to six school and housing codes • Will continue to include new ACG Comment Codes (267 – 271) • ACG flat file will be sent along with ISIRs • No new message classes • 2007-08 ISIR in flat file format only (no XML ISIR)