Legislative and Department of Education Update Spring 2014 Lori S. Hartung Regional Sales Manager

1. Legislative and Department of Education Update Spring 2014 Lori S. Hartung Regional Sales Manager Todd, Bremer & Lawson, Inc. P.O. Box 36788 Rock Hill, SC 29732-0512 800.849.6669 lori.hartung@tbandl.com

2. Overview • Congress • Budget Process • HEA Reauthorization • Statistics • Perkins Regulatory Changes • Department Initiatives • Department Publications

3. Congress

4. 2014: It’s An Election Year • Congressional elections mean legislative action will be sparse • Major items introduced likely to introduced, but won’t pass unless strong bi-partisan agreement • Higher Education Act reauthorization • Immigration Reform • Tax Reform • Gun Control • ESEA

5. The 113th Congress House Senate* 55Democrats* 45 Republicans Previous Congress: 53 Democrats 47 Republicans * Dems include two independents who caucus with D’s • 232 Republicans • 200 Democrats • 2 vacancies • Previous Congress at its end: • 241 Republicans • 190 Democrats • 4 Vacancies

6. Senate HELP Committee Leadership • Health, Education, Labor & Pensions Com. • Tom Harkin (D-IA) Still Chairman, Still Chairs Appropriations Subcommittee on Labor, HHS, Education • Ranking Republican… Lamar Alexander (R-TN)

7. House Education & Workforce Leadership: Chairman Kline (R-MN) Ranking Dem. Miller (CA) Higher Ed Subcommittee Ranking Dem. Hinojosa (TX) Higher Ed Subcommittee Chairwoman Foxx (R-NC)

8. Fiscal year 2014 started on 10/1/13. Congress failed to pass appropriations bills to fund government operations prior to start of FY CR passed 10/16/13 only through 1/15/14 Bipartisan Budget Act 2013 Signed into law 12/26/13 Budget

9. Budget • Bipartisan Budget Act 2013 (H.J. Res. 39) • Effort between Senator Patty Murray (D-WA) and Congressman Paul Ryan (R-WI). • The bill does set spending levels for FY 2014 and FY 2015 of $1.012 trillion and $1.014 trillion • The resolution restores $63 billion in sequester cuts over two years, spread evenly between defense and nondefense programs • It offsets these gains with $85 billion in deficit reduction over the next decade. 

10. The Perkins FY2014: • No funds appropriated for Perkins FY2014 because President didn’t ask for them, appropriations bills done in secret, followed 2013 pattern • BUT: Perkins remains popular in Congress, the Program continues at least through FY 2015, and the Department advises that schools should make loans- no excess cash! • Schools can transfer funds from Work Study to Perkins revolving fund

11. Budget • Gov’t funded thru FY 14 working on FY 15 • President published his budget in March • Congressional Budget resolution – House passed on 4/10/14 • Senate doesn’t plan to do Budget resolution for FY15 because the Ryan/Murray agreement set discretionary spending for 2015.

12. Budget- Issues • Appropriations Committees take their allocations and divides money among all programs. • Last time all 12 Appropriations bills passed individually before beginning of new fiscal year was 1994. • Labor/HHS unlikely to be considered until after the elections this fall.

13. Budget – Perkins Loans • Where does Perkins sit in all of this? • President’s FY15 Budget proposal – Create new Unsubsidized Perkins Loan Program – More of the Same… • Same interest rate as Direct • Serviced by ED, rather than schools • Allocation formula based on enrollment and grad rate of Pell eligible borrowers • Likely will go no where in Congress

14. Perkins Future • Federal Perkins Loan program will continue until 9/30/15. • HEA needs to be reauthorized by 9/30/15 • Schools should continue to lend Perkins and limit excess cash • COHEAO working diligently on HEA Reauthorization

15. COHEAO

16. Perkins HEA-COHEAO Action • COHEAO: Preserve and Improve Perkins • Hearings continue in House and Senate • COHEAO submitted its Campus Flex proposal, interest shown in it • Final action not expected before 2015 or 2016, maybe longer • Other ideas still welcome • COHEAO will make new proposals if necessary • Big Issue: does the program “sunset?”

17. COHEAO’s Campus Flex Proposal • Single Appropriation for all three campus-based aid programs: Work Study, Supplemental Educational Opportunity Grants and Perkins Loans • Characteristics for each maintained but simplified. • Schools allocate funds between programs according to students’ needs for each academic year. • Appropriations transfers between programs allowed • Perkins Loans stay the same, except grace period of six months as with other federal loans. • Consolidate cancellations and consider income threshold • Adjust campus-based program allocation formulas to ensure fair distribution of appropriations.

18. COHEAO 2014 Priorities • Restore Funding for Perkins Cancellation • Preserve and Improve Perkins in HEA Reauthorization • Work on Improvements to TCPA • Work with CFPB on campus-related Issues • Work with ED on Cash Management Rules

19. Statistics

20. Not So Fun Facts • 7 in 10 college seniors who graduated in 2012 had student loan debt, with an average of $29,400 for those with loans. • about one-fifth (20%) of their debt is comprised of private loans,

21. Not So Fun Facts • State averages for debt at graduation ranged widely in 2012, from $18,000 to $33,650 • High-debt states remain concentrated in the Northeast and Midwest, • low-debt states mainly in the West and South.

22. Not So Fun Facts

23. Regulations

24. New Regulations • New regulations published 11/1/13 • Effective 7/1/14 • Topics include: Title IV Rehab issues, Assignment, Deferment & Cancellation

25. Perkins Regulatory Changes • Satisfactory Repayment Arrangement • 674.2 (b) • For purposes of regaining eligibility… …the making of six on-time, consecutive, voluntary, full monthly payments… • “On-time” means a payment made within 20 days of the scheduled due date.

26. Perkins Regulatory Changes • Enrollment reporting process • 674.19 (f) Fiscal procedures and records • (f) Enrollment reporting process. (1) Upon receipt of an enrollment report from the Secretary, an institution must update all information included in the report and return the report to the Secretary— (i) In the manner and format prescribed by the Secretary; and (ii) Within the timeframe specified by the Secretary.

27. Perkins Regulatory Changes • Closed School • 674.33 (g)(4)(i)(B) • Did not complete the program of study at that school because the school closed while the student was enrolled, or the student withdrew from the school not more than 120 days before the school closed. The Secretary may extend the 120-day period if the Secretary determines that exceptional circumstances related to the school’s closing justify an extension. Exceptional circumstances for this purpose may include, but are not limited to…

28. Perkins Regulatory Changes • Graduate Fellowship • 674.34(f) • (f)(1) To qualify for a deferment for study as part of a graduate fellowship program pursuant to paragraph (b)(1)(ii) of this section, a borrower must provide the institution with a statement from an authorized official of the borrower’s graduate fellowship program certifying— (i) That the borrower holds at least a baccalaureate degree conferred by an institution of higher education;

29. Perkins Regulatory Changes (ii) That the borrower has been accepted or recommended by an institution of higher education for acceptance on a full-time basis into an eligible graduate fellowship program; and (iii) The borrower’s anticipated completion date in the program. (2) For purposes of paragraph (b)(1)(ii) of this section, an eligible graduate fellowship program is a fellowship program that—

30. Perkins Regulatory Changes (i) Provides sufficient financial support to graduate fellows to allow for full-time study for at least six months; (ii) Requires a written statement from each applicant explaining the applicant’s objectives before the award of that financial support;

31. Perkins Regulatory Changes (iii) Requires a graduate fellow to submit periodic reports, projects, or evidence of the fellow’s progress; and (iv) In the case of a course of study at a foreign university, accepts the course of study for completion of the fellowship program.

32. Perkins Regulatory Changes • Loan Rehabilitation • 674.39 (2) A loan is rehabilitated if the borrower— (i) Requests rehabilitation; and (ii) Makes a full monthly payment— as determined by the institution— within 20 days of the due date, each month for 9 consecutive months.

33. Perkins Regulatory Changes • Loan Assignments w/o SS# • 674.50 Section 674.50(e)(1) is amended by removing the words ‘‘is submitted for assignment under 674.8(d)(3)’’ and adding, in their place, the words ‘‘was made before September 13, 1982’’. • Means schools can assign loans made before 9/13/82 if they do not have a borrower’s Social Security number.

34. Perkins Regulatory Changes • Cancellation Break in Service • 674.52 (c) (c) Break in service. (1) If the borrower is unable to complete an academic year of eligible teaching service due to a condition that is covered under the Family and Medical Leave Act of 1993 (FMLA) (29 U.S.C. 2601, et seq.), the borrower still qualifies for the cancellation if—

35. Perkins Regulatory Changes (i) The borrower completes one half of the academic year; and (ii) The borrower’s employer considers the borrower to have fulfilled his or her contract requirements for the academic year for purposes of salary increases, tenure, and retirement.

36. Perkins Regulatory Changes (2) If the borrower is unable to complete a year of eligible service under §§ 674.56, 674.57, 674.59, or 674.60 due to a condition that is covered under the FMLA, the borrower still qualifies for the cancellation if the borrower completes at least six consecutive months of eligible service. (Nurse/Med Tech, Child Family Service, Early Intervention, Firefighter, Tribal College, Librarian, Speech Pathologist, Law Enforcement, Military, and Volunteer Service)

37. Perkins Regulatory Changes • Cancellation Progression • 674.52(g) (g) Switching cancellation categories. A borrower who qualifies for a cancellation under one of the cancellation categories in §§ 674.53, 674.56, 674.57, or 674.59 receives cancellation of 15 percent of the original principal for the first and second years of qualifying service, 20 percent of the original principal for the third and fourth years of qualifying service, and 30 percent of the original principal for the fifth year of qualifying service. If, after the first, second, third, or fourth complete year of qualifying service— …

38. Current Neg. Reg. 2014 • “Program Integrity” • Finished May 20th, Regulations effective 7/1/15. • Agenda includes: • Cash Management – how and how long Title IV funds used by institution; Campus debit cards & Bank Accounts • PLUS Loan adverse credit definition • Clock to credit hour conversion/foreign campuses • State authorization of distance education

39. Publications

40. Dept of ED Initiatives • College Scorecard • Designed by the Department of Education & the National Center for Education Statistics • To provide better information to students and parents about college affordability and value http://collegecost.ed.gov/scorecard/

41. New Consolidation Process • Electronic Announcements • 11/27/13, 1/7/14, 3/21/14, and 5/20/14 • Four TIVA’s to handle – borrower chooses who to consolidate with. • Great Lakes, PHEAA, Nelnet, and Sallie Mae • Schools must complete contact and delivery method preferences with the TIVA’s

42. NSLDS Enrollment Reporting • Electronic Announcement • 2/24/14 • Delays required use date from 7/1/14 to 10/1/14 • New NSLDS enrollment reporting file layouts. • Dear College Letter GEN-14-7

43. TPD Notification • Electronic Announcement • 5/13/14 • In 2014 the Department will end the e-mail notification of the TPD File • Notification will be made through SAIG (student Aid Internet Gateway) • Schools must enroll for the new services “designation point”.

44. Perkins Cancellation Reimbursement • Electronic Announcement • May 13. 2014 • There is no reimbursement (no $ appropriated) • The Department did calculate what would have been reimbursed for AY 12-13 • Keep for your records

45. Direct Loan Interest Rates • Electronic Announcement • 5/15/14 • For loans made between 7/1/14 – 6/30/15 • Direct Undergrad 4.66% • Direct Grad 6.21% • Direct Plus 7.21%

46. Department Announcements • Perkins Loan Program 6/30/13 Default Rates • “Orange Book” found on www.ifap.ed.gov site • 6/30/13 aggregate default rate 11.23% up from 8.32% in 2011 • (11.08% in 2012) • However: # borrowers in repayment decrease by 109,437 or 25.9% • # of borrowers in default increased by 19 or 0.05%

47. Questions?