FEDERAL UPDATE

White House Initiative on Tribal Colleges and Universities

"Strengthening Academic Competitiveness for Tribal Colleges and
Universities"

November 29, 2007

Minneapolis, Minnesota

Joel V. Harrell, Director, Special Initiative Services

Federal Student Aid

U.S. Department of Education

Federal Update

Agenda

Legislation and Budget

Negotiated Rulemaking

Training

BUDGET AND LEGISLATION

Title IV Program Budgets Appropriations

  --------------- ------------------ ------------------ ------------------
  Program         FY 2006            FY 2007            FY 2008\*

                  (AY 06-07)         (AY 07-08)         (AY 08-09)

  Pell Grant      \$ 13,045,230,000  \$ 13,660,711,520  \$ 15,439,000,000

  (Max Award)     \$4,050            \$4,310            \$4,600

  FSEOG           \$ 770,932,800     \$ 770,932,800     \$ -

  FWS             \$ 980,354,485     \$ 980,354,430     \$ 980,492,000

  Perkins         \$ 65,470,363      \$ 65,470,680      \$ -

  LEAP            \$ 64,987,000      \$ 64,986,570      \$ -

  ACG/SMART       \$ 790,000,000     \$ 850,000,000     \$ 1,180,000,000
  --------------- ------------------ ------------------ ------------------

\* President\'s FY 2008 Budget Submission

Title IV Program Budget Aid Available

  -------------------- ------------------------ -------------------------
  Program              FY 2007                  FY 2008\*

                       (AY 07-08)               (AY 08-09)

  Pell Grant           \$ 14,028,000,000        \$ 15,176,000,000

  (Max Award)          \$4,310                  \$4,600

  FSEOG                \$ 975,000,000           \$ -

  FWS                  \$ 1,175,000,000         \$ 1,175,000,000

  Perkins              \$ 1,104,000,000         \$ -

  LEAP                 \$ 165,000,000           \$ -

  ACG/SMART            \$ 730,000,000           \$ 1,180,000,000

  Loans                \$ 65,999,000,000        \$ 72,895,000,000

  TOTAL                \$ 84,176,000,000        \$ 90,426,000,000
  -------------------- ------------------------ -------------------------

Title IV Program Budgets

# Title IV Program Budgets Status of Appropriations

  ---------------- ------------------ ------------------ ------------------
  Program          FY 2007            FY 2008            FY 2008

                   (AY 07-08)         House Subcommittee Senate Committee

  Pell Grant       \$13,660,711,520   \$15,660,000,000   \$14,487,000,000

  (Max Award)      \$4,310            \$4,700            \$4,310

  FSEOG            \$ 770,932,800     \$ 770,932,800     \$ 770,932,800

  FWS              \$ 980,354,430     \$ 980,354,430     \$ 980,492,000

  Perkins          \$ 65,470,680      \$ 65,470,680      \$ 65,470,680

  LEAP             \$ 64,986,570      \$ 64,986,570      \$ 64,986,570

  ACG/SMART        \$ 850,000,000     \$ 920,000,000     \$ 920,000,000
  ---------------- ------------------ ------------------ ------------------

Legislation Update

LEGISLATION

College Cost Reduction and Access Act (CCRAA) Pub.L. 110-84

Third Higher Education Extension Act of 2007

Reauthorization

S 1642 passed full Senate on July 24, 2007.

HR 3746 introduced in House on October 4, 2007.

Continuing Resolution Pub. L. 110-92

College Cost Reduction and Access Act (CCRAA)

Student and Borrower Benefits

[Pell, ACG and SMART]{.underline}

Eliminates Pell Grant tuition sensitivity award rule, as of date of July
1, 2007.

Increases Pell Grant award by --

\$ 490 for 2008-09 and 2009-10

\$ 690 for 2010-11 and 2011-12

\$1,090 for 2012-13.

No changes to ACG and National SMART Grant Programs.

[TEACH Grants]{.underline}

"Teacher Education Assistance for College and Higher Education Grants"

Effective for 2008-2009

Must be repaid as Direct Unsub Loan if student does not teach.

Up to \$4,000 per year for first undergraduate or post-baccalaureate
(non degree) student -\$16,000 aggregate and \$4,000 per year for
graduate student - \$8,000 aggregate.

[TEACH Grants]{.underline}

School Eligibility --

Provides high quality teacher preparation and professional development
services.

Provides pedagogical course work, or assistance in the provision of such
coursework.

Provides supervision and support services to teachers.

[TEACH Grants]{.underline}

Student Eligibility --

Completing coursework necessary to begin a career in teaching.

Plans to complete coursework necessary to begin a career in teaching.

Completing coursework for a graduate degree.

3.25 GPA --equivalencies

[TEACH Grants]{.underline}

Student Eligibility --

Agrees to teach for at least four years within eight years of completing
program, as a --

"Highly Qualified Teacher" in a Title I special subject area school

[TEACH Grants]{.underline}

Subject Areas --

Mathematics

Science

A foreign language

Bilingual education

Special education

As a reading specialist

Other 'high-need' fields

Otherwise grant must be repaid as a Direct Unsubsidized Loan with
interest from date(s) of original disbursement.

[Need Analysis and EFC Calculation]{.underline}

Income Protection Allowance

Modifies the way income protection allowances are calculated and
updated.

Effective with the 2009-10 award year

[Need Analysis and EFC Calculation]{.underline}

Auto-Zero and Simplified Needs Test

Increases Auto Zero EFC income level from \$20,000 to \$30,000
(indexed).

Adds Dislocated Worker in addition to type of tax return and means
tested benefits.

Increases time from 12 to 24 months for means tested benefits.

Effective for the 2009-10 award year.

[Need Analysis and EFC Calculation]{.underline}

Excludes from specified list of "untaxed income" -

Welfare payments

Earned income credit amounts

Special fuel tax credit

Excluded foreign income

Untaxed Social Security Benefits

Effective for the 2009-2010 award year.

[Need Analysis and EFC Calculation]{.underline}

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.

Has been verified as an unaccompanied youth who is a homeless child or
youth.

Effective for the 2009-2010 award year.

[Need Analysis and EFC Calculation]{.underline}

Excludes 'special combat pay' from income.

Qualified education benefit (529 plan) owned by dependent student is an
asset of the parent.

Distributions from 529 plans excluded from other financial assistance.

Effective for the 2009-2010

[FAA Discretion --Professional Judgment and Dependency
Overrides]{.underline}

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.

Both effective July 1, 2009

[FFEL and Direct Loans]{.underline}

Interest Rates --

Reduces interest rates on FFEL and DL [undergraduate subsidized
loans]{.underline} from 6.8% to 3.4% by 2012. Beginning in 2013 the rate
reverts back to 6.8. First reduction begins with loans first disbursed
on or after July 1, 2008.

No increases in loan limits.

[FFEL and Direct Loans]{.underline}

Economic Hardship Deferment --

Changed one of the conditions from borrowers earnings being less than
100% of the poverty level for a family size of two, to 150% of poverty
level for the borrower's family size.

Effective October 1, 2007

[Perkins, FFEL, and Direct Loans]{.underline}

Current (HERA) Military Deferment --

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.

New deferment for up to 13 months following end of service if borrower
was in school or grace when called to active duty.

Effective October 1, 2007

Income Based Repayment (July 1, 2009)

Stafford and Student PLUS loans.

Borrower's maximum annual repayment amount no more than 15% of the
difference AGI and 150% of the poverty line based on family size.

If negative amortization, government pays interest on subsidized loans
for up to three years.

Unpaid amounts are forgiven after 25 years.

[FFEL and Direct Loans]{.underline}

Increased options to consolidate FFEL loans into a Direct Consolidation
Loan for purpose of new Direct Loan only Public Service loan forgiveness
program.

Effective July 1, 2008.

[Direct Loans (FFEL)]{.underline}

Forgiveness for Public Service Employees --

Direct Loan borrowers who --

Had made 120 monthly payments.

Starting on October 1, 2007

Employed in public service during entire repayment period.

FFEL borrowers may consolidate into DL to get benefit but all payments
must have been in DL.

College Cost Reduction and Access Act (CCRAA)

Offsets

[FFEL Lenders and Guaranty Agencies]{.underline}

Reduction of FFEL lender insurance to 95% for loans first disbursed on
or after October 1, 2012.

Reduces FFEL guaranty agency retention percentage from 23% to 16%,
effective October 1, 2007.

[FFEL Lenders and Guaranty Agencies]{.underline}

Reduction of FFEL lender insurance to 95% for loans first disbursed on
or after October 1, 2012.

Reduces FFEL guaranty agency retention percentage from 23% to 16%,
effective October 1, 2007.

[FFEL Lenders and Guaranty Agencies]{.underline}

Elimination of Exceptional Performer Designation for FFEL lenders,
lender servicers, and guaranty agencies effective October 1, 2007.

Extension for lenders until expiration of current designation.

[Special FFEL Auction Pilot]{.underline}

Authorizes study of auction method for the origination or selling of
student loans.

Starting on July 1, 2009 with FFEL PLUS Loans for parents (new borrowers
only).

State by State Auction looking for lowest special allowance rates.

Two "winning" lenders will be the only parent PLUS lenders in that state
for new parent PLUS borrowers.

Negotiated Rulemaking

Negotiated Rulemaking

For 2009-2010 & subsequent award years

CCRAA Implementation and possible other issues.

One or two committees depending on issue to be negotiated

2007-2008 Negotiated Rulemaking

Hearings:

November 2 -- New Orleans

November 16 - Washington

November 29 -- San Diego

2006-2007 Negotiated Rulemaking

For 2008-2009 & subsequent award years.

Four negotiating committees were established:

Accreditation

Loans

General Provisions

ACG and National SMART Grants

2006-2007 Negotiated Rulemaking

Accreditation

The Secretary has decided that we will not issue regulations on
accreditation at this time.

2006-2007 Negotiated Rulemaking

Notices of Proposed Rulemaking (NPRM) published:

Loans -- July 12

ACG and National SMART -- August 7

General Provisions -- August 8

Final Rules Published:

Loans -- November 1

ACG and National SMART Grants -- October 29

General Provisions -- November 1.

Effective Dates: July 1, 2008

Possible early voluntary implementation

2006-2007 Negotiated Rulemaking

General Provisions

not claimed

Permissions for electronic disbursements

Elimination of Late, Late Disbursements Cash management improvements:

Recovery of funds

2006-2007 Negotiated Rulemaking

General Provisions

Consistent definitions of terms -Enrollment status, academic level, and
independent study.

Addressing inconsistencies in the award of aid in nonstandard and
nonterm programs.

2006-2007 Negotiated Rulemaking

GENERAL PROVISIONS

Aligns disbursements for all Title IV grant and loan programs (with a
few exceptions)

Defines "independent study" for direct assessment programs.

2006-2007 Negotiated Rulemaking

ACG AND NATIONAL SMART

Rigorous secondary school programs

Mandatory institutional participation

GPA requirements

Academic Year progression

Majors

2006-2007 Negotiated Rulemaking

TITLE IV LOAN PROGRAMS

Perkins Loans

Mandatory assignment

Prohibited Inducements

Preferred Lenders

2006-2007 Negotiated Rulemaking

TITLE IV LOAN PROGRAMS

Counseling required for Grad PLUS

Eliminates maximum 12-month loan period

Limits frequency of capitalization for Consolidation Loan borrowers

Allows loan holders to grant deferments based on another loan holder's
eligibility determination

2006-2007 Negotiated Rulemaking

TITLE IV LOAN PROGRAMS

Use of photocopy of death certificate to grant a discharge.

Identity Theft

Total and Permanent Disability

2006-2007 Negotiated Rulemaking

TITLE IV LOAN PROGRAMS

Requires loan holders to report enrollment/loan status information to
NSLDS by Secretary's deadline

Requires the Retention of Disbursement Records & Certification of
E-signatures for Assigned MPNs

Mandatory Assignment of Defaulted Perkins Loans

Schools hold more than \$400 million in Perkins Loans that have been in
default for 5 or more years.

Little collection activity seen on these loans.

ED streamlined the voluntary assignment procedures, to encourage schools
to assign their aged, defaulted loans.

Mandatory Assignment of Defaulted Perkins Loans

Secretary may require assignment of a Perkins Loan if---

Outstanding principal balance is \$100 or more,

Loan has been in default for 7 or more years, and

No payment has been received in past 12 months.

ED will notify schools when to assign loans.

Preferred Lenders

School may choose to have preferred lender(s) list (includes web
processes).

List must have at least 3 unaffiliated lenders.

Must disclose method/criteria for lender inclusion on the list.

Must provide comparative information on borrower benefits offered by
listed lenders.

Preferred Lenders

Must include prominent statement advising borrowers that use of school
preferred lender not required.

Cause any unnecessary delays in certification for borrowers not using
one of the school's preferred lenders

School FFEL Loan Certification

A school may not:

Refuse or delay certification based on borrower's choice of lender or
GA.

Assign lender to first-time borrower.

Refuse to certify or certify a reduced amount; except on a case-by-case
basis, documented, and reason must be provided in writing to borrower.

Includes "school as lender".

Prohibited Inducements

Affects FFEL lender and guaranty agency eligibility and participation in
the program.

Creates concept of "rebuttable presumption" for prohibited and allowed
activities.

Includes a non-exhaustive list of prohibited activities.

Includes a list of allowed activities.

Prohibited Inducements

Prohibited activities include:

Payments to prospective borrowers, including prizes and additional
financial aid.

Payments or other benefits to a school, school-affiliated organization,
or individual for loan applications, volume of loans made, or placement
on a preferred lender list.

Prohibited Inducements

Prohibited activities include:

Payments or other benefits to student lender reps on campus or other
solicitors to secure loan applications from prospective borrowers

Payment of referral or processing fees to another lender or other party.

Payment of conference or training registration, transportation, and
lodging costs for school or school-affiliated organization employees.

Prohibited Inducements

Prohibited activities include:

Providing staffing to a school except on a short-term, emergency basis.

Payment of entertainment expenses related to lender-sponsored activities
for school or school-affiliated employees.

Undertaking philanthropic activities in exchange for FFEL applications,
volume, or placement on a school's preferred lender list.

Prohibited Inducements

Allowed activities include:

Assistance to schools comparable to that provided DL schools by the
Secretary.

Support or Participation in student aid/financial literacy outreach with
schools and guaranty agencies.

Toll-free numbers for FFEL info and school loan data transmission

Prohibited Inducements

Allowed activities include:

Reasonable costs of meals, refreshments, and receptions for meeting,
training, or conferences if open to all attendees.

Reduced origination fees and interest rates.

Payment of Federal Default Fees

Borrower benefits under repayment incentive programs.

Items of nominal value.

Prohibited Inducements

Allowed GA activities include:

Payments for default aversion activities approved by the Secretary.

Payments for expenses related to participation in GA's governing board,
official advisory committee, or for other official GA-sponsored
activities.

Training

Financial Aid Professionals Portal under "Resources and Training"

No sign-on necessary

TFAP

Training via the Web

R2T4 on the web

COD Basics for Title IV grants

Calculating the EFC

Applicant data resolution

Identifying information sources with FAA Access

Analyzing the ISIR

Resolving data issues

Additional Web Training

FISAP Training

NSLDS Data Overview

Data sources and reporting

Calculating remaining Aggregate loan limits and remaining eligibility

NSDLS Eligibility Monitoring

Transfer monitoring

Pre/Post Screening

POP

Upcoming FSA Training

Webinaron the College Cost Reduction and Access Act (CCRAA)

Late fall or early winter.

Webinarson new regulations

Late fall or early winter.

In-person training on both in Spring 2008.

CONTACT INFORMATION

Joel V. Harrell, Director

Special Initiative Services

\(404\) 562-6295

Joel.Harrell@ed.gov