# Presentation: 852407

## Federal Update

-          	Jeff Baker                                              David A. Bergeron
- Federal Student Aid                                                    Dan Madzelan
- Office of Postsecondary Education
- U.S. Department of Education
- National Association of
- Student Financial Aid Administrators
- Washington, DC   July 9, 2007

## Federal UpdateAgenda

- Fiscal Year 2008 Budget
- Legislative Update
- Negotiated Rulemaking
- Accreditation
- Academic Competitiveness & National SMART Grants
- General Provisions
- Student Loans
- Administrative Issues
- Compliance Issues
- Dear Colleague Letters
- Upcoming Training and Conferences

## Title IV Program Budgets     Appropriations

*** President's FY 2008 Budget Submission **

## Title IV Program Budget Aid Available

*** President's FY 2008 Budget Submission**

## Title IV Program BudgetsStatus of Appropriations

## Fiscal Year 2008 Budget Proposals 

- Fiscal Year 2008 Budget Proposals

## Fiscal Year 2008 Budget Strategy

- Increased Federal investment in the Pell Grant program
- More valuable Academic Competitiveness Grants (ACG)
- Early notification efforts

## Fiscal Year 2008 Budget Proposals 

- Pell Grants
- Increase maximum Pell Grants to $4,600 effective for 2008-09 award year
- $550 increase with mandatory funding;
- $200 per year additional through 2012 when the maximum award would reach $5,400
- Year round Pell Grants at eligible 2- and 4-year degree-granting institutions
- Limit Pell Grant eligibility to the equivalent of 16 semesters
- Eliminate tuition sensitivity rule in Pell Grant Program

## Fiscal Year 2008 Budget Proposals, con’t.

- Academic Competitiveness Grants
- Increase ACG awards by 50% for the 2008-09 award year
- 1st year awards $1,125
- 2nd year awards $1,950

## Fiscal Year 2008 Budget Proposals, con’t.

- Need Analysis
- Exclude Section 529 savings and investment accounts from need analysis
- Implement a consent-based approach to matching applicant data on the FAFSA with the IRS

## Fiscal Year 2008 Budget Proposals, con’t.

**Student Loans**
- Increase annual Stafford loan limits for juniors and seniors to $7,500
- Reduce:
- interest subsidies to lenders by 1⁄2 percent
- default insurance from 97% to 95%
- guaranty agency default collection payments
- Increase consolidation lender fee to 1%
- Move guaranty agency account maintenance fees to a unit cost basis

## Pending Legislation 

- Pending Legislation

## Legislative UpdateReauthorization of the Higher Education Act

- First Higher Education Extension Act of 2007 (Public Law 110-44)
- Extends the Higher Education Act through July 31, 2007
- Senate Reauthorization Bill

## Legislative UpdateBudget Reconciliation

| H.R. 2669 | S. xxxx |
| --- | --- |
|  Eliminates tuition sensitive award rule |  Eliminates tuition sensitive award rule |
|  Provides mandatory funding to increase discretionary maximum award by $200 for  AY 08-09 and 09-10; $300 for AY 10-11; $500 for AY 11-12 |  Creates a new mandatory  “Promise Grants” program for Pell Grant eligible students that apply before July 1 each award year.  Secretary sets award amounts.  |
|  Allows 2 Pell Grants in an award year for students attending year-round in degree or certificate programs |  Requires 2 Pell Grants in an award year for students attending year-round in degree or certificate programs |
|  Retains unlimited eligibility
 | Caps Pell Grant eligibility at 18 semesters regardless of enrollment status |

- Pell Grants

## Legislative UpdateBudget Reconciliation

| H.R. 2669 | S. xxxx |
| --- | --- |
|  Requires student’s academic year to be  the institutionally determined class standing. |  Allows student’s academic year to be the institution’s determination |
|  Extends eligibility to certificate programs at 2- and 4-year degree-granting institutions |  Extends eligibility to certificates that require more than a year to complete. |
|  Part-time students eligible for awards with amounts proportionally reduced |  Students enrolled at least half-time eligible for awards |
|  Removes citizenship requirement |  Removes citizenship requirement |
|  No change |  Authorizes a National SMART Grant for a 5th year in a 5-year program |

- Academic Competitiveness & National SMART Grants

## Legislative UpdateBudget Reconciliation

| H.R. 2669 | S. xxxx |
| --- | --- |
|  Loan forgiveness.  Up to $5000; $1000 per year of service to borrowers working in areas designated as national need including: early childhood education; foreign language specialists; librarians, highly qualified bilingual education teachers; child welfare workers; speech-language pathologists; national service or public employees engaged in public safety, public health, emergency management, or public interest law. |  Loan forgiveness.  Cancel balance of Direct Loans for non-defaulted borrower who made 120 payments after 10/1/2007 and have public service jobs; reimburse all payments for years when borrower AGI is less than $65,000 for full-time job in government or emergency management; health; education; law enforcement; early childhood education; social work; service to the disabled or elderly; legal services; library science or faculty member at a Tribal college. |
|  Creates new income-based repayment program by creating a partial economic hardship deferment for borrowers whose annual repayments exceed 15% of AGI minus 150% of the poverty line.  Unpaid amounts are forgiven after 20 years. |  Replaces income-sensitive and income-contingent repayment plans with an income-based repayment plan under which monthly payments cannot exceed 15% of the borrower’s AGI minus 150% of the poverty. Unpaid balance forgiven after 25 years. |

- Student Loans

## Legislative UpdateBudget Reconciliation

| H.R. 2669 | S. xxxx |
| --- | --- |
|  Reduce special allowance payments (SAP) on new student and consolidation loans by 55 BP and 85 BP on PLUS loans  |  Reduce SAP on new loans by 50 BP on “for-profit” loan holders and 35 BP for “non-profit” loan holders |
|  Reduce lender default insurance from 97% to 95%; eliminates exceptional performer |  Keep lender default insurance at 97%; keeps exceptional performers |
|  Converts GA funding to a unit cost model |  Converts GA funding to a unit cost model |
|  Reduces amount of GA retention per dollar collected on defaulted loans from 23% to 16% |  Reduces amount of GA retention per dollar collected on defaulted loans from 23% to 16% |
|  Modifies economic hardship definition to take into account family size |  Modifies economic hardship definition to take into account family size |

- Student Loans

## Legislative Update

- Other Legislation
- College Student Relief Act of 2007 (H.R. 5; S. 282)
- Pell Grant Equity Act of 2007 (H. R. 990*)
- Student Loan Sunshine Act (S. 486; H.R. 890*)
- Student Financial Aid Data Privacy Protection Act (S. 1401)
- Loan Forgiveness:
- Speech Pathologists (H.R. 1394)
- Head Start Teachers (S. 883; H.R. 1779)
- Nurses (H.R. 2572)
- Tribal College Faculty & Staff (S. 481)
- Civil Legal Assistance Attorneys
- * passed House; awaiting Senate action

## 2006-07 NegotiatedRulemaking 

- 2006-07 NegotiatedRulemaking

## 2006-2007 Negotiated Rulemaking

- 2008-2009 & subsequent award years
- Federal Register notice
- Published on August 18, 2006
- Regional hearings
- Berkeley, CA		September 19
- Chicago, IL			October 5
- Orlando, FL			November 2
- Washington, DC		November 9

## 2006-2007 Negotiated Rulemaking

- Calendar
- Sessions:		December 2006 						February – June 2007
- NPRMs:		June – July 2007
- Comments:		August – September 2007
- Final regulations:	November 1, 2007
- Effective Date:	July 1, 2008  						(possible early 						implementation)

## 2006-2007 Negotiated Rulemaking

- Four negotiating committees were established:
- Accreditation
- General Provisions
- Academic Competitiveness & National SMART Grants
- Loans

## 2006-2007 Negotiated RulemakingAccreditation

- 1st Meeting
- February 21-23, 2007
- 2nd Meeting
- March 26-28, 2007
- 3rd Meeting
- April 24-26, 2007
- 4th Meeting
- June 1, 2007

- Due process
- Substantive change
- Monitoring
- Student achievement
- Taking mission into consideration in applying standards
- Transfer of credit
- Definition of key terms

**Major Issues**

## Accreditation

- The Secretary has informed the Senate HELP Committee that she does not intend to issue regulations on accreditation at this time.

## 2006-2007 Negotiated RulemakingGeneral Provisions

- 1st Meeting
- February 7-9, 2007
- 2nd Meeting
- March 14-16, 2007
- 3rd Meeting
- April 18-20, 2007
- Reached consensus on the package

- Consistent definitions of terms related to enrollment status, academic level, and independent study
- Addressing inconsistencies in the award of aid in nonstandard and nonterm programs
- Cash management improvements related to:
- Recovery of funds not claimed
- Permissions for electronic disbursements
- Late, late disbursements

**Major Issues**

## General Provisions NPRMDefinitions

- Uniform definitions for a number of terms that apply to all Title IV programs
- Defines “independent study” for direct assessment programs.

## General Provisions NPRMTitle IV Disbursements

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

## General Provisions NPRM Cash Management

- Recovery of Unclaimed Title IV Funds
- Electronic Disbursements of Title IV funds
- Late, late disbursements
- Minor Prior-Year Charges
- Loan Cancellation Notice & Affirmative Confirmation of Loan
- Excess Cash

## General Provisions NPRMOther Provisions

- Student Does Not Begin Attendance
- Postwithdrawal Disbursements of Grant Funds
- Minimum Period for Certifying a Loan
- Annual Loan Limit Progression
- Single disbursement for Perkins Loan and FSEOG awards
- Pell Grant Calculations

## General Provisions NPRM

- Negotiating committee reached consensus
- NPRM will reflect the proposed regulatory language agreed to by committee
- Once published, comments can be submitted as follows:
- Go to _[http://](http://www.regulations.gov/)__[www.regulations.gov](http://www.regulations.gov/)_
- Select “Department of Education” from the agency drop-down menu, then click “Submit”

## General Provisions Tentative Calendar

- NPRM:  July 2007
- 45-day comment period
- Final rules:  November 1, 2007
- Effective date:  July 1, 2008 with possible early implementation

## 2006-2007 Negotiated RulemakingACG & National SMART Grants

- 1st Meeting
- February 5-7, 2007
- 2nd Meeting
- March 5-7, 2007
- 3rd Meeting
- April 16-18, 2007
- Negotiating committee did not reach consensus

- Rigorous secondary school programs
- Mandatory institutional participation
- GPA requirements
- Academic Year progression
- Majors

**Major Issues**

## ACG & National SMART Grants

- Academic Year Progression
- Transfer Student
- Alternative Methods for Determining Weeks of Instructional Time
- Limitations on Determining Weeks of Instructional Time
- Student Request to Determine Academic Year Level

## ACG & National SMART Grants

- Grade Point Average (GPA)
- Numeric Equivalent
- Transfer GPA
- ACG
- National SMART Grants

## ACG & National SMART Grants

- Prior Enrollment in a Postsecondary Educational Program and Student Eligibility

## ACG & National SMART Grants

- Eligible Majors
- Documenting Major
- Determination of Eligible Majors

## ACG & National SMART Grants

- Rigorous Secondary School Program of Study
- Successful Completion of a Rigorous Secondary School Program of Study
- Recognition of a Rigorous Secondary School Program of Study

## ACG & National SMART Grants NPRM

- Negotiating committee did not reach consensus
- Once published, comments can be submitted as follows:
- Go to _[http://](http://www.regulations.gov/)__[www.regulations.gov](http://www.regulations.gov/)_
- Select “Department of Education” from the agency drop-down menu, then click “Submit”

## ACG & National SMART Grants Calendar

- NPRM:  July 2007
- 60-day comment period
- Final rules:  November 1, 2007
- Effective date:  July 1, 2008 with possible early implementation

## 2006-2007 Negotiated RulemakingLoans Committee

- Prohibited Inducements
- Preferred Lenders
- Identity Theft
- Perkins
- Mandatory assignment
- Child and Family Service Cancellation
- "Reasonable and Affordable" Collection Costs

**1****st**** Meeting**
- December 2006
**2****nd**** Meeting**
- February 5-7, 2007
**3****rd**** Meeting**
- March 12-14, 2007
**4****th**** Meeting**
- April 18-20, 2007

**Major Issues**

## In cases of alleged identity theft, loan holders may grant administrative forbearance and waive credit bureau reporting
Counseling required for graduate/professional PLUS Loan borrowers
Eliminates maximum 12-month loan period for annual loan limits
Limits frequency of capitalization for Consolidation Loan borrowers
Allows loan holders to grant deferments based on another loan holder’s eligibility determination

- Counseling required for graduate/professional PLUS Loan borrowers
- Eliminates maximum 12-month loan period for annual loan limits
- Limits frequency of capitalization for Consolidation Loan borrowers
- Allows loan holders to grant deferments based on another loan holder’s eligibility determination

- Loans CommitteeFFEL & DL Issues

## Loans Committee  FFEL Issues

- Cannot deny or impede choice of lender
- Must contain at least 3 unaffiliated lenders
- Disclose method/criteria for inclusion
- Provide comparative information on lenders
- Ensure same lender benefits offered to all borrowers

- Prominent statement advising borrowers they are not required to use school’s preferred lender
- Cannot assign a lender to first-time borrowers
- No unnecessary certification delays for borrowers not using lender on school’s list

- Use of preferred lender lists

## Offer, directly or indirectly, points, premiums, payments or other inducements to any school to secure FFEL applications, loan volume or placement on a preferred lender list
Pay referral or processing fees to another lender or other party
Pay conference or training registration, transportation and lodging costs for school or school-affiliated organization employees

- Pay referral or processing fees to another lender or other party
- Pay conference or training registration, transportation and lodging costs for school or school-affiliated organization employees

- Pay entertainment expenses related to lender-sponsored activities for employees of school or school-affiliated organization
- Undertake philanthropic activities in exchange for FFEL applications, volume or placement on lender list
- Provide staffing services to a school except on a short-term, emergency basis

- Loans CommitteeFFEL Issues

- Prohibited Inducements -- Eligible Lenders CANNOT:

## Assistance comparable to that provided to a DL school by the Secretary
Student aid/financial literacy outreach
Meals, refreshments and receptions, reasonable in cost, in conjunction with meetings, training or conferences if provided to all participants

- Student aid/financial literacy outreach
- Meals, refreshments and receptions, reasonable in cost, in conjunction with meetings, training or conferences if provided to all participants

- Toll-free numbers for FFEL info
- Reduced origination fees
- Reduced interest rates
- Payment of Federal default fees
- Borrower benefits-repayment incentive
- Items of nominal value

- Loans CommitteeFFEL Issues

-      Prohibited Inducements --  Eligible Lenders MAY:

## Loan holder may use accurate and complete photocopy of death certificate to grant a discharge
Total and Permanent Disability
Establishes a prospective conditional discharge period
Clarifies eligibility requirements
Restructures the regulations to mirror application process

- Total and Permanent Disability
- Establishes a prospective conditional discharge period
- Clarifies eligibility requirements
- Restructures the regulations to mirror application process

- Loans Committee All 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

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

- Loans Committee  FFEL & Perkins Issues

## Clarifies eligibility requirements for Child & Family Service Agency Cancellation
Defines “reasonable” Collection Costs:
30% for first collection effort
40% for second collection effort
40% for litigation
Mandatory Assignment of Defaulted Perkins Loans, upon request, if:
Outstanding balance of $100 or more
Default has persisted for seven or more years
No payment received in preceding 12 months

- Defines “reasonable” Collection Costs:
- 30% for first collection effort
- 40% for second collection effort
- 40% for litigation
- Mandatory Assignment of Defaulted Perkins Loans, upon request, if:
- Outstanding balance of $100 or more
- Default has persisted for seven or more years
- No payment received in preceding 12 months

- Loans Committee Perkins Issues

## Loans CommitteeNPRM

- Comments on Loans NPRM must be received by August 13, 2007
- Submit comments at: Federal eRulemaking Portal – _[http://](http://www.regulations.gov/)__[www.regulations.gov](http://www.regulations.gov/)_
- OR
- Postal Mail, Commercial Delivery or Hand Delivery:
-  **Gail McLarnon, **
**                      ****U.S. Department of Education          ****	****	****    1990 K Street, NW, Room 8026 **
**    ****Washington, D.C. 20006**

## Loans CommitteeCalendar

- NPRM:  June 12, 2007
- Comment Period Ends:  August 13, 2007
- Final rules:  November 1, 2007
- Effective date:  July 1, 2008 with possible early implementation

## http://www.ed.gov/policy/highered/reg/hearulemaking/2007/nr.html

- 2006-2007 Negotiated Rulemaking

- Web site:

## Administrative Issues

- Compliance Update

## Preferred Lenders

- Preferred lenders lists are allowed
- No automatic referrals.
- Must process any loan request made by a student or parent regardless of lender
- May not have unreasonable delays.

- Publications, scripts and staff training should comply
- Violations could bring sanctions
- Does not apply to FFEL/Direct Loan choice

## Alternative Loans

- Alternative loans must be included as “estimated financial assistance” if:
- Enrollment is a condition for the loan
- Does not matter where loan proceeds are sent or  whether school certified enrollment
- May replace EFC
- Think about it like an outside scholarship

## NSLDS Access

- Web access to the National Student Loan Data System (NSLDS) was suspended for some Title IV student aid program participants on April 17.
- To ensure privacy is protected and that access to NSLDS is used only for authorized purposes.

- Web search now requires SSN, Name, and DOB.
- Ability for schools to add new users reinstated.
- Guaranty agency web access reinstated.
- Some lender web access reinstated.
- State grant agency access reinstated.
- Lender ELT access still on hold.

## FAFSA/CPS Processing

## FAFSA4caster

- FAFSA4Caster was developed to:
- Foster early awareness with the financial aid application process and form
- Serve as an early analysis tool informing college affordability
- Reduce the time required to submit the "official" financial aid application in the student's senior year of high school

## FAFSA4caster

-  FAFSA4caster will:
- Automatically generate a Federal Student Aid PIN for use when signing the FAFSA
- Instantly calculate eligibility for federal student aid
- Generate a FAFSA—a FAFSA populated with student FAFSA4caster data will be available when the student is ready to file the official FAFSA

## Slide 58

**Notes:**
Note each section on the home page provides you with important information.
(CLICK) Section A - Getting Started provides important information about what financial aid is, but it also provides you information about what you need before you start filling out the FAFSA4caster
(CLICK) Section B - Using the FAFSA4caster provides information on the benefits of using this tool and access to the FAFSA4caster tool
(CLICK) Section C - What’s Next.  Now that you’ve submitted the FAFSA4caster, Section C will provide information about what to expect next and help you to transition from FAFSA4caster to FAFSA on the Web.  Also, provides information about other non-federal aid, links to scholarship searches, and more.......
(CLICK) Now, let click Begin Now to see the FAFSA4caster tool!

## Now that we have calculated your EFC you can see what your college education may cost for attending a certain type of college in the United States. We will use your estimated EFC of 1060 and the national average for cost of attendance at each type of school. 

**Congratulations, THERESA! **
- FAFSA4caster has successfully calculated the information you submitted.
- Below you will see an estimated Expected Family Contribution (EFC). The EFC is not the amount of money that your family must provide. Rather, you should think of the EFC as an index that colleges use to determine how much financial aid you would receive if you were to attend their school.
- When you officially apply for financial aid, the colleges you list on your Free Application for Federal Student Aid (FAFSA) will determine your eligibility and then send you award information that identifies the aid they have determined you may receive. This award information will vary from college to college because the cost of attending each is different.
**Your estimated EFC is 1060. **
- Now that we have calculated your EFC you can see what your college education may cost for attending a certain type of college in the United States. We will use your estimated **EFC of 1060** and the national average for cost of attendance at each type of school.

## 2008-2009 Paper FAFSA

- New Color rotation
- Yellow, Orange, Blue, Green
- Color rotation for 2008-2009 is
- 159 CVU Orange (students)
- 263 CVU Purple (parents)

## 2008-2009 Paper FAFSA

- FAFSA Questions
- Question order remains the same
- No new questions added
- No questions deleted

**Notes:**
Refer to specific examples in the FAFSA that demonstrate the changes from “school” to “FAFSA” 
ISIR Record Layout will follow paper FAFSA order 

## 2008-2009 Changes

- Real-Time PIN
- Issued upon request (FOTW or PIN Site)
- Valid for FAFSA unless subsequent SSA match fails
- Number of School Choices
- Increased to ten on FOTW
- Remains four on paper
- Non-Filers with income “above” IRS filing amount
- Questioned on FOTW
- Reject if submitted
- FAA can override

## 2008-2009 Changes

- Students with Dependency Overrides will be Renewal eligible
- Unofficial EFC will be calculated for ISIRS rejected only due to missing signature
- Professional Judgment Confirmation
- Spanish Products – Paper and Web

## Recent Letters & Announcements

## Dear Colleague Letters

- CB-07-13  Reallocation Form and Process
- CB-07-12  FISAP Form and Instructions
- CB-07-11  FWS Minimum Wage
- CB-07-08  FWS Community Service Requirements
- GEN-07-03  Consolidation Loan Process Issues
- GEN-07-02  ACG/SMART Amounts and Majors
- P-07-01  2007-08 Payment Schedules

**Notes:**
The benefits of using FAFSA4caster go beyond early estimates. A Renewal FAFSA will be waiting when you log on to FAFSA on the Web and officially apply for federal student aid, pre-filled with much of the information that you provided while using FAFSA4caster. Other benefits include – 
An opportunity to become familiar with the student aid lifecycle and the defined roles for all of the financial aid players – students and families, schools, banks and lenders. 
Information about the matches we conduct with certain federal agencies, allowing you an opportunity to resolve issues prior to applying for federal student aid. 
Automatic generation and e-mail of a Federal Student Aid PIN in time for use on FAFSA on the Web. 
A streamlined and intuitive process - built in logic that will serve up questions based on responses to earlier questions and tailored to your circumstances. FAFSA4caster contains only the data elements required to determine federal eligibility. 
It's Quick! – it will take approximately 20-25 minutes to complete, resulting in a "real-time" estimated EFC. 

## Conferences & Training

## Conferences

- School’s Portal under “Resources and Training”
- No sign-on necessary
- Preview of upcoming FSA conferences, agendas, hotel and travel information.

- _[www.fsaconferences.ed.gov](http://www.fsaconferences.ed.gov/)_

## 2007 Federal Student Aid Conferences

-  New Orleans
-   October 30th thru November 2nd
-  San Diego
-   November 26th – November 29th

## www.ed.gov/offices/OSFAP/training/index.html/

- _[www.ed.gov/offices/OSFAP/training/index.html](http://www.ed.gov/offices/OSFAP/training/index.html)__/_

## Training on 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

## Training on the Web

- 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

## THANK YOU