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Pamela Moran Office of Postsecondary Education U.S. Department of Education PowerPoint Presentation
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Pamela Moran Office of Postsecondary Education U.S. Department of Education

Pamela Moran Office of Postsecondary Education U.S. Department of Education

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Pamela Moran Office of Postsecondary Education U.S. Department of Education

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  1. Federal Update Pamela Moran Office of Postsecondary Education U.S. Department of Education November 5, 2007 2007 NJASFAA Fall Conference

  2. Agenda • Legislation • Recent Regulations • Negotiated Rulemaking • Recent Dear Colleague Letters • Default Rates • Conferences • Appendices: FAFSA and FAFSA4caster, Delivery System, and Other Announcements

  3. Legislation

  4. Legislation • Reauthorization • Senate passed July 24, 2007 • House not yet passed • P.L. 110-93 • Enacted September 30, 2007 • Permanently extends the waiver authority in the Higher Education Relief Opportunities for Students Act of 2003 • P. L. 110-84 - College Cost Reduction and Access Act (Budget Reconciliation Act) • Enacted September 27, 2007

  5. Legislation: CCRAAACG and National SMART Grants • Makes no changes to the ACG and National SMART Grant Programs

  6. Legislation: CCRAAFederal Pell Grants • Eliminates Federal Pell Grant “tuition sensitivity” as of July 1, 2007 Effective: July 1, 2007

  7. Legislation: CCRAAFederal Pell Grants • Increases Pell Grant award by – • $ 490 for 2008-09 and 2009-10 • $ 690 for 2010-11 and 2011-12 • $ 1,090 for 2012-13 Effective: 2008-2009 award year

  8. Legislation: CCRAAFederal Pell Grants • Increases applicable to students eligible based on the maximum award set in an appropriations act • For 2008-09, if appropriations act sets a $4,310 maximum award, sets Scheduled Awards: • Maximum $4,800 • Minimum $890 • Does not increase the number of eligible students Effective: 2008-2009 award year

  9. Legislation: CCRAA Teacher Education Assistance for College and Higher Education (TEACH) Grants • Is effective starting in 2008-2009 • Provides $4,000 for each academic year • Has aggregate maximums • $16,000 for first baccalaureate student or postbaccalaureate, nondegree student • $8,000 for graduate student Effective: 2008-2009 award year

  10. Legislation: CCRAATEACH Grants • Student eligibility for grant • If a current enrolled student: • Is Title IV eligible; • Has 3.25 GPA or statutory alternatives; and • Is completing, or plans to complete, coursework necessary to begin a career in teaching • If a current or prospective teacher, seeking a graduate degree: • Is a teacher or retiree with expertise in a shortage area; or • Is or was a teacher with high quality alternative certification, e.g., Teach for America Effective: 2008-2009 award year

  11. Legislation: CCRAATEACH Grants • Sign agreement to serve: • Must teach at Title I school • Must teach • Mathematics • Science • Foreign language • Bilingual education • Special education • High-need field approved by the Secretary • Must be treated as a Direct Unsub Stafford Loan to be repaid if student does not teach Effective: 2008-2009 award year

  12. Legislation: CCRAACollege Access Challenge Grants • Provides funds to States or others to be spent on efforts to increase college access • Must be matched two to one • $66 million for each of FY 2008 and FY 2009 Effective: October 1, 2007

  13. Legislation: CCRAANeed Analysis • Income protection allowance • Modifies the way income protection allowance is calculated and updated • Auto-Zero and Simplified Needs Test • Adds “dislocated worker” in addition to type of tax return and means tested benefits • Increases from 12 to 24 months for means tested benefits • Increases Auto Zero EFC income level from $20,000 to $30,000 (indexed) Effective: 2009-2010 award year

  14. Legislation: CCRAANeed Analysis • Redefines “untaxed income” by not listing: • Welfare benefits • Earned income credit amounts • Special fuel tax credit • Excluded foreign income • Untaxed social security benefits • But retains “any other untaxed income and benefits” in listing • Excludes additional child tax credit claimed Effective: 2009-2010 award year

  15. Legislation: CCRAANeed Analysis • Adds to independent student definition • Is in foster care or a ward of the court at any time when the individual is 13 years of age or older • Is an emancipated minor or is in legal guardianship as determined by a court • Has been verified in the year in which applying to be an unaccompanied youth who is a homeless child or youth, or is at risk of homelessness Effective: 2009-2010 award year

  16. Legislation: CCRAANeed Analysis • Excludes ‘special combat pay’ from income • Provides that a qualified education benefit (529 plan) owned by dependent student is an asset of the parent • Excludes distributions from 529 plans from estimated financial assistance Effective: 2009-2010 award year

  17. Legislation: CCRAAPJ and Dependency Overrides • Adds dislocated worker and homelessness as examples of when an FAA can use professional judgment • Provides that an FAA can use a dependency override made by another FAA within the same award year Effective: 2009-2010 award year

  18. Legislation: CCRAAFFEL and Direct Loans • Interest rates • Reduces interest rates on undergraduate subsidized loans from 6.8 percent to 3.4 percent by 2012 • Begins reductions with loans first disbursed on or after July 1, 2008 • Beginning in 2013 the rate reverts back to 6.8 percent • No increase in loan limits Effective: July 1, 2008

  19. Legislation: CCRAAFFEL and Direct Loans • Revises economic hardship definition • Changed from borrower’s earnings being less than 100 percent of the poverty level for a family size of two to earnings being 150 percent of poverty level for the borrower’s family size • Now requires that borrower must be working fulltime and is earning less than the greater of– • Federal minimum wage (annualized) • 150 percent of poverty level for borrower’s family size Effective: October 1, 2007

  20. Legislation: CCRAAPerkins, FFEL, and Direct Loans • Changes the current military deferment • Applies to all Title IV loans, not just loans that were made on or after July 1, 2001 • Removes three-year time limit. • Adds a 180-day period after demobilization • Adds a new deferment for up to 13 months following end of service if borrower was in school, or was in school within 6 months, when called to active duty • Continues qualification based on serving during a war or in a national emergency Effective: October 1, 2007

  21. Legislation: CCRAAFFEL and Direct Loans • Adds income-based repayment plan • Applies to Stafford, Student PLUS loans, and Consolidation (if Consolidation does not include excepted Parent PLUS) • Borrower’s maximum annual repayment amount is no more than 15 percent of the difference between the borrower’s AGI and 150 percent of the poverty line based on family size. • If negative amortization, government pays interest on subsidized loans for 3 years. • Unpaid amounts (except PLUS) are forgiven after 25 years. Effective: July 1, 2009; conforming change, July 1, 2008

  22. Legislation: CCRAAFFEL and Direct Loans • Public service employees loan forgiveness • Any Direct Loan (Stafford, PLUS, Consolidation) borrowers • Is not in default • Has made 120 monthly payments • Is employed in public sector during entire repayment period • FFEL consolidation into Direct Loans to get benefit, but all payments in Direct Loans Effective: October 1, 2007

  23. Legislation: CCRAAFFEL and Direct Loans • A borrower is eligible to consolidate an FFEL Consolidation Loan into a Direct Loan to participate in the public service loan forgiveness program. Effective: July 1, 2008

  24. Legislation: CCRAAFFEL Lenders and GAs • Reduce FFEL lender special allowance payments (SAP) by 55 basis points • 40 for nonprofit lenders • Increase lender loan fee from 0.5 percent to 1.0 percent • Reduce FFEL guaranty agency retention on default collections from 23 percent to 16 percent • Reduce GA account maintenance fee from 0.1 percent to 0.06 percent Effective: October 1, 2007

  25. Legislation: CCRAAFFEL Lenders and GAs • Elimination of Exceptional Performer Designation for FFEL lenders, lender servicers, and guaranty agencies Effective: October 1, 2007

  26. Legislation: CCRAAFFEL Lenders and GAs • Reduce FFEL lender insurance on defaulted loans from 97 percent to 95 percent for loans first disbursed on or after October 1, 2012. Effective: October 1, 2012

  27. Legislation: CCRAAFFEL • Authorizes • FFEL Competitive Loan Auction Pilot • Study of auction method for the origination or selling of student loans • Date of enactment through June 30, 2009 for implementation • Pilot with FFEL Parent PLUS loans for new borrowers for loans first disbursed on or after July 1, 2009 • Is State by State Effective: July 1, 2009

  28. Recent Regulations

  29. Recent Final Regulations • 9/11 Survivors Discharge Final Regulations • Published September 28, 2007 • Perkins, FFEL, and Direct Loans • Spouses and Parents Loans Discharged based on death or total and permanent disability • Not clear if there are any remaining eligible survivors: have paid off loans

  30. NegotiatedRulemaking

  31. Negotiated Rulemaking2006-2007 • Notices of proposed rulemaking (NPRM) published: • Loans – June 12 • ACGs and National SMART Grants – August 7 • General Provisions – August 8 • Final regulations by November 1, 2007 • Effective dates: July 1, 2008 • Possible early voluntary implementation

  32. Loan • FFEL/DL • ID theft • Entrance counseling for PLUS borrowers • Maximum length of loan period • Determination of deferment eligibility by one loan holder

  33. Loan • FFEL • Eligible lender trustee relationships • Frequency of capitalization for consolidation loan borrowers (already in DL) • Preferred lender • Prohibited inducements • FFEL/DL/Perkins • Use of true & exact copy of death certificate • Prospective discharge for TPD purposes

  34. Loan • FFEL/Perkins • Standardize NSLDS reporting • Retention of disbursement records • Certification of E-signatures for assigned MPNs

  35. Loan • Perkins Loan • Clarify eligibility requirements for child & family service agency cancellation • Define “reasonable” collection costs • Mandate assignment of defaulted Perkins Loans

  36. Loan Maximum Loan Period (FFEL and DL) • Eliminate 12-month loan period maximum • Flexibility in non-term and nonstandard term program loan certification • Flexibility in rescheduling “stop out and return” disbursements within allowed 180-day period

  37. Loan Loan Counseling for Grad/Prof Borrowers (FFEL/DL) • Required counseling before PLUS certification for eligible Stafford non-applicants • Opportunity for Stafford Loan must be given before receipt of PLUS loan

  38. Loan Loan Counseling for Grad/Prof Borrowers • Initial counseling required for PLUS borrowers • Exit counseling required for Stafford/PLUS combination borrowers

  39. Loan School FFEL Loan Certification (All FFEL Schools) - • FFEL schools may not: • Refuse/Delay certification based on choice of lender or GA • Assign lender to first-time borrower in award packaging or through other methods

  40. Loan School FFEL Loan Certification (All FFEL Schools) - • FFEL schools may not: • Engage in pattern or practice of discrimination to deny FFEL access • Refuse to certify/reduce except on case-by-case, documented basis with written reason provided to borrower

  41. Loan School FFEL Preferred Lender List - • Regulations require: • List containing minimum of 3 unaffiliated lenders • “Unaffiliated” means no common control or ownership; no common directors, trustees, or general partners

  42. Loan School FFEL Preferred Lender List - • Regulations require: • School to disclose method and criteria for lender inclusion on list • Provide comparative information on borrower benefits offered by listed lenders (ED will provide model format)

  43. Loan School FFEL Preferred Lender List - • Regulations require: • School to include prominent statement advising use of of school’s preferred lender not required • Update at least annually

  44. Loan School FFEL Preferred Lender List - • Regulations: • Require that School not include on list a lender that solicited and provided school or school-employee benefits • Specify school may include lender solicited to offer best borrower benefits

  45. Loan School FFEL Preferred Lender List - • Regulations require that school: • Not assign lender to first-time borrower • Not cause any unnecessary delays in certification for borrowers not using a school preferred lender

  46. Loan FFEL Lender Prohibited Inducements- • Regulations forbid lender to provide, directly or through an agent, points, premiums, payments or other inducements to a school or any other party to secure FFEL applications or loan volume

  47. Loan FFEL Lender Prohibited Inducements - • No payments to prospective borrowers, including prizes and additional financial aid • No payments to schools, school-affiliated org, or individuals to secure applications, loan volume, or placement on preferred lender list • No service on lender advisory boards and related payments to school or school-affiliated org employees

  48. Loan FFEL Lender Prohibited Inducements - • No payments to student lender reps or other campus solicitors to secure apps from prospective borrowers • No payment of conference or training registration, transportation, and lodging costs for school or school-affiliated org employees • No payment of entertainment expenses for the same

  49. Loan FFEL Lender Prohibited Inducements - • No philanthropic activities or payments for FFEL applications or loan volume, or placement on preferred lender list • No staffing services to schools except on short-term, non-recurring emergency basis, including compensated and third-party contractual services

  50. Loan FFEL Lender Permitted Activities - • Assistance to schools comparable to Secretary’s assistance to Direct Loans • Support and participation in student aid and financial literacy outreach with schools and GAs, excluding in-person school-based counseling • Reasonable costs of meals, refreshments, and receptions for meeting, training, or conferences if open to all attendees