# Presentation: 067395

## NASFAA National Conference

-      Washington State Convention & Trade Center
- Seattle, Washington
- July 5 - 8, 2006

## Federal Student Loans: Program Update

-  Federal Family Education Loan Program
-  William D. Ford Federal Direct Loan Program
- Dan Madzelan
- U.S. Department of Education

## Recent Legislation  

-  Higher Education Reconciliation Act of 2005 —
-    P.L. 109-171, February 8, 2006 (HERA)
-  Emergency Supplemental Appropriations Act for
-    Defense, the Global War on Terror, and Hurricane
-    Recovery, 2006 — P.L. 109-234, June 15, 2006

## Not-So-Recent Legislation  

-  Student Loan Interest Rates —
-    P.L. 107-139, February 8, 2002
** **Taxpayer-Teacher Protection Act of 2004 —
-    P.L. 108-409, October 30, 2004

## Soon-to-be-Recent Legislation  (?)

-   College Access and Opportunity Act of 2005 —
-     H.R. 609, Passed by House on March 30, 2004
**  **Departments of Labor, Health and Human Services,
-     and Education, and Related Agencies Appropriations
-    Act, 2007 — H.R. 5647, Reported by House
-    Appropriations Committee on June 20, 2006

## Disclaimer

-    The Department has not yet issued regulations to implement the provisions of the Higher Education Reconciliation Act of 2005.  Program participants, including institutions, lenders, and guarantee agencies, should implement the provisions of the Act in accordance with subregulatory guidance provided by the Department in Dear Colleague Letters and other materials until the regulations are published and effective. In general, the regulations will be effective 30 days after they are published in the *Federal Register*.

## Regulatory Outlook

- Academic Competitiveness and SMART Grants
- Interim Final with Public Comment — July 3, 2006
- Revised Rule for Second Year — November 1, 2006
- Negotiated Rulemaking for Third Year — Nov. 1, 2007
- Student Loans, Eligibility, General Provisions
- Interim Final with Public Comment — July 2006
- Revised Regulations — November 1, 2006
- Negotiated Rulemaking — Undecided

## Students and Borrowers

- Fixed-rate Interest Rates
- Increased Loan Limits
- Grad/PLUS Loans
- Teacher Loan Forgiveness — $17,500
- Military Deferment
- Foreign Study
- Repayment Plans

## Students and Borrowers

- College Access Initiative
- Loan Discharge for Crime of Identity Theft
- Consolidation
- Single Holder Rule
- “In School”
- Joint Consolidation Eliminated
- Defaulted Loans
- Loan Rehabilitation
- Fraud Convictions

## Institutions

- Reinstated Low Cohort Default Rate Waivers
- 30-day Delayed Disbursement
- Multiple Disbursements
- School-as-Lender
- New Eligibility Limits
- Required Borrower Benefits
- Use of Proceeds
- Supplement not Supplant Grant Aid

## Financial Partners

- Negative SAP/Floor Income
- Reduced Insurance
- Tax-exempt Financing (91⁄2% Loans)
- Mandatory Default Fee (1%)
- Phase Out Origination Fees
- PLUS “SAP Gap”
- Exempt Claims
- Exceptional Performer

## Regulatory Issues: Loans

- Loan Discharge for Crime of Identity Theft
- Loan Rehabilitation Issues
- Estimated Financial Assistance
- School-as-Lender Definition of Proceeds
- Fraud Conviction vs. False Certification
- Excess Consolidation of Defaults Penalty

## More Information

- “Dear Colleague” Letters
- GEN-06-03 (March 10) – HERA Summary for Loans
- FP-06-05 (April 24) – FFEL Grad/PLUS Guidance
- FP-06-04 (April 25) – Reporting Changes for Lenders
- FP-06-07 (May 11) – Guaranty Agency Financial Report
- ANN-06-05 (May 30) – HERA Training Opportunities
- FP-06-04 (June 2) – FFEL-PLUS SAP Payments
- GEN-06-11 (June 20) – Foreign Schools and FFEL
- GEN-06-02 (June 23) – Consolidations/Single Holder Rule

## Slide 14

## Forms

- FP-06-05 (April 24) – FFEL Promissory Note Addenda and Plain Language Disclosures
- Electronic Announcement (May 19) – Direct Loan P-Note Addenda and Plain Language Disclosures
- Pending:
- Teacher Loan Forgiveness
- Stafford and PLUS Master Promissory Notes
- Consolidation Loan Application/Promissory Note
- Military Deferment
- Identity Theft Discharge

## Questions?

## Thank You ! Dan.Madzelan@ed.gov(202) 502-7816