# Presentation: 914424

## 2005  Electronic Access Conference

**2005****  Electronic Access Conference**
**                  ****San Diego, California**
**                    ****Atlanta, Georgia**

## Federal UpdateDecember 2, 2005Dan MadzelanOffice of Postsecondary EducationJeff BakerFederal Student Aid

**Dan**

## President’s Fiscal Year 2006 Budget Request

**President’s Fiscal Year 2006 Budget Request**
**Higher Education Act Reauthorization and Reforms**

## Slide 4

## FY 2006 Budget Priorities

**Pell Grants**** **
**Increase the Maximum Grant by $100 Annually for the Next Five Years**
**Eliminate Funding Shortfall**
**Establish $1,000 State Scholars Award**

## FY 2006 BudgetMore Student Benefits

**Allow “Year Round” Pell Recipients **
**Make Active Duty Military Independent**
**Eliminate Pell Grant “Third Award Rule”**
**Improve FSEOG and Work-study:**
**Equitable Institutional Formulas**
**Additional Funding for Graduating Pell Recipients**
**Clarify the “Drug Question”**

## Increase Stafford Loan Limits 
Extend Expanded Teacher Loan Forgiveness 
Retain Variable Interest Rates for Non-consolidation Loans
Standardize Extended Term Repayment Plans 
Re-establish Low Default Waivers:
30-day Delayed Disbursement
Multiple Disbursements
Provide for “Reconsolidation” Loans	

**Extend Expanded Teacher Loan Forgiveness **
**Retain Variable Interest Rates for Non-consolidation Loans**
**Standardize Extended Term Repayment Plans **
**Re-establish Low Default Waivers:**
**30-day Delayed Disbursement**
**Multiple Disbursements**
**Provide for “Reconsolidation” Loans****	**

**FY 2006 Budget****Borrower Benefits**

## Who Pays?

**Everyone!**

## Create a 25 Basis Point Annual Loan Holder Fee for Non-consolidation Loans
Double the Lender Fee on Consolidation Loans 
Eliminate Rollover of Tax-exempt Financed Loans
Reduce Insurance to 95 Percent
Exceptional Performer 
Modify Rules 
Set Insurance to 97 Percent

**Double the Lender Fee on Consolidation Loans **
**Eliminate Rollover of Tax-exempt Financed Loans**
**Reduce Insurance to 95 Percent**
**Exceptional Performer**** **
**Modify Rules **
**Set Insurance to 97 Percent**

**Lenders**

## Guarantors

**Deposit the Guaranty Agency Fee  **
**Reduce Reinsurance by 3 Percentage Points**
**Align Collection Retention Amounts with Direct Loans**

## Institutions

**Eliminate the Perkins Loan Program**
**Recall the Federal Portion of Institutional Revolving Funds**

## Borrowers

**Establish Variable Interest Rates on  Consolidation Loans**

## Students

**Index the Minimum Pell Grant Award**
**Implement a Lifetime Limit on Pell Recipients**

## FY 2006 Program Budgets

- (dollars in thousands)

- Information goes here

## Title IV Aid Available

## P.L. 109-105, Continuing Resolution 
Through December 17, 2005

P.L. 109-78, Higher Education Relief Opportunities for Students (HEROES) Extension 
Through September  30, 2007

P.L. 109-81, Higher Education Act Extension 
Through December 31, 2005

**P.L. 109-105, Continuing Resolution **
**Through December 17, 2005**
**P.L. 109-78, Higher Education Relief Opportunities for Students (HEROES) Extension **
**Through September  30, 2007**
**P.L. 109-81, Higher Education Act Extension **
**Through December 31, 2005**

## H.R. 609 – College Access and Opportunity Act of 			2005

H.R 4241 – Deficit Reduction Act of 2005

S. 1932 – Deficit Reduction Omnibus 				Reconciliation Act of 2005

**H.R. 609 ****–**** College Access and Opportunity Act of ****	****	****	****2005**
**H.R 4241 ****–**** Deficit Reduction Act of 2005**
**S. 1932 ****–**** Deficit Reduction Omnibus ****	****	****	****	****Reconciliation Act of 2005**

## Reauthorization/Reconciliation

**Administration**

|  | House | Senate |
| --- | --- | --- |
| Automatic $100 Pell Increase
Retire Pell Shortfall | No
Yes | Yes
Yes |
| Establish $1,000 State Scholars
Allow “Year Round” Pell | Yes
Yes | No
Yes |
| Eliminate Pell “3rd”Award Rule
Cap Period of Pell Eligibility | Yes
Yes | Yes
Yes |

## Reauthorization/Reconciliation

**Administration**

|  | House | Senate |
| --- | --- | --- |
| Index the Pell Minimum Award
Make Active Duty Independent
Clarify the “Drug Question”
Revise Campus-Based Formula | No
Yes
Yes
Yes | Yes
No
Yes
No |
| Provide Campus-Based Aid for Graduating Pell Recipients | Yes
 | No
 |
|  |  |  |

## Reauthorization/Reconciliation

**Administration**

|  | House | Senate |
| --- | --- | --- |
| Eliminate/Recall Perkins Loans
Modify FWS Community Service
Eliminate “50% Rules”
Eliminate “90/10 Rule” | No
No
Yes
No*    | No
Yes
Yes
No |
| Allow Dual Enrollment Programs | Yes
 | Yes
 |
|  |  |  |

## Reauthorization/Reconciliation

**Administration**

|  | House | Senate |
| --- | --- | --- |
| Increase Stafford Annual Limits
Increase Stafford Lifetime Limits
Retain Variable Interest Rates
Extend Teacher Loan Forgiveness
Standardize Repayment Plans | Yes
No
Yes
Yes   
No* | Yes
No*
No
Yes
No |
| Re-establish Low CDR Waivers | Yes
 | Yes |
|  |  |  |

## Reauthorization/Reconciliation

**Administration**

|  | House | Senate |
| --- | --- | --- |
| Capture Excess Earnings (.25%)
Double Consolidation Lender Fee | Yes
Yes | Yes
Yes |
| Eliminate Rollover of 9.5% Loans
Reduce Lender Insurance | Yes
Yes | Yes
Yes |
| Modify Exceptional Performers
Reduce Insurance for EPs | Yes
Yes | Yes*
No |

## Reauthorization/Reconciliation

**Administration**

|  | House | Senate |
| --- | --- | --- |
| Variable Rates for Consolidations
Allow “Reconsolidation”
Deposit the Guaranty Fee
Reduce Reinsurance | Yes*
No
Yes
Yes    | No
No
Yes
No |
| Use DL Default Collection Rates | No
 | No
 |
|  |  |  |

## Reauthorization/Reconciliation

**Congress**

|  | House | Senate |
| --- | --- | --- |
| Reduce Origination Fees
Reinstate Military Deferment
Modify Academic Year Definition
Provide Single IHE Definition | Yes
Yes
Yes
Yes  | Yes
Yes
Yes
No |
| Revise School-as-Lender Rules | No
 | Yes
 |
|  |  |  |

## Reauthorization/Reconciliation

**Congress**

|  | House | Senate |
| --- | --- | --- |
| Modify Need Analysis Formula

Simplify the FAFSA
 | Yes

Yes | Yes

Yes |
|  | 
 | 
 |
|  |  |  |

## Hurricane Relief

**Hurricane Relief**

## Hurricane Relief

**Hurricane Relief**

**Hurricane Relief**

## Hurricane Relief

**Hurricane Relief**

## Dear Colleague Letter GEN-04-04
General guidance in case of any disaster
Automatic Loan Forbearance
Use of Professional Judgment
Lost Records
Satisfactory Academic Progress
Verification

**General guidance in case of any disaster**
**Automatic Loan Forbearance**
**Use of Professional Judgment**
**Lost Records**
**Satisfactory Academic Progress**
**Verification**

**Hurricane Relief**

## Announcements Posted to IFAP
# 1(K) - Transfer as Regular Student
# 2(K) and #3(R) -  Reporting and Applicant Deadlines
# 3(K) and #1(R) -  Adding School Codes
# 4(K) - Technical Support
# 5(K) – Verification, Dependency Overrides, and  Professional Judgment

**# 1(K) - Transfer as Regular Student**
**# 2(K) and #3(R) -  Reporting and Applicant Deadlines**
**# 3(K) and #1(R) -  Adding School Codes**
**# 4(K) - Technical Support**
**# 5(K) – Verification, Dependency Overrides, and  Professional Judgment**

**Hurricane Relief**

## Hurricane Relief

**Announcements Posted to IFAP**
**# 6(K) and #2(R)– Length of Academic Year**
**# 7(K) and # 4(R) – Extension of Loan  ****	****	****	****	****	****	****Forbearances**
**#8(K) and #5(R) – Campus Based ****	****	****	****	****	****	****	****Reallocation**
**#9(K) and #6(R) – Campus Based ****	****	****	****	****	****	****Reallocation Reminder**
**#10(K) and #7(R) – Spring Eligibility**

## Recent Guidance
Title IV Eligibility for Hurricane Displaced Students
 Exception to Regular student requirement ends December 31, 2005 unless –
Home school will not re-open in winter/spring
Home School will not offer student’s academic program
Awarding Spring Aid to Displaced Students
Can continue to disregard fall disbursements from schools on attached list.

**Title IV Eligibility for Hurricane Displaced Students**
** ****Exception to Regular student requirement ends December 31, 2005 unless –**
**Home school will not re-open in winter/spring**
**Home School will not offer student’s academic program**
**Awarding Spring Aid to Displaced Students**
**Can continue to disregard fall disbursements from schools on attached list.**

**Hurricane Relief**

## ENACTED LEGISLATION
	R2T4 – P.L. 109-66 and P.L. 109-67
 Waive requirements for students to make grant repayments when they withdraw because of a major disaster.
Does not waive institution’s responsibility to reimburse program accounts for funds received for institutional charges.
DCL GEN-05-17

**	****R2T4 – P.L. 109-66 and P.L. 109-67**
-  **Waive requirements for students to make grant repayments when they withdraw because of a major disaster.**
**Does **_**not**_** waive institution’s responsibility to reimburse program accounts for funds received for institutional charges.**
**DCL GEN-05-17**

**Hurricane Relief**

## ENACTED LEGISLATION
	Campus-Based Reallocation – 
	P.L. 109-86
Reallocation of 2004-05 campus based funds –
 To affected schools, and
 To schools that enroll affected    students.

**	****Campus-Based Reallocation – **
**	****P.L. 109-86**
**Reallocation of 2004-05 campus based funds –**
** ****To affected schools, and**
** ****To schools that enroll affected    students.**

**Hurricane Relief**

## PROPOSED LEGISLATION
Loan deferments (no interest) of six months on all loans for borrowers in affected areas.
Allow for break in consecutive teaching service for FFEL and DL Teacher Loan Forgiveness.

**Loan deferments (no interest) of six months on all loans for borrowers in affected areas.**
**Allow for break in consecutive teaching service for FFEL and DL Teacher Loan Forgiveness.**

**Hurricane Relief**

## PROPOSED LEGISLATION
Waiver of Annual and Aggregate Maximums for students whose schools were non-operational.
Cancellation of loans for students whose schools were non-operational.
Allow impacted schools to keep Title IV aid.

**Waiver of Annual and Aggregate Maximums for students whose schools were non-operational.**
**Cancellation of loans for students whose schools were non-operational.**
**Allow impacted schools to keep Title IV aid.**

**Hurricane Relief**

**FFEL and Direct Loan FY 2003 Cohort Default Rates**

##         National Student Loan Cohort Default Rates

**        ****National Student Loan Cohort Default Rates**

- 4.5

**Percentage**

**Issued date:**

**         ****1990      1991      1992      1993      1994      1995     1996      1997      1998     1999     2000     2001      2002     2003    2004   2005**

## National Student Loan Cohort Default Rates

**Default Rate by Sector**

| School Type | FY 2001 | FY 2002 | FY 2003 |
| --- | --- | --- | --- |
| Public – 2 Year | 8.5% | 8.5% | 7.6% |
| Public – 4 Year | 4.4% | 4.0% | 3.3% |
| Private – 2 Year | 6.8% | 6.1% | 6.6% |
| Private – 4 Year | 3.3% | 3.1% | 2.6% |
| Proprietary | 9.0% | 8.7% | 7.3% |
| Foreign | 2.3% | 2.0% | 1.8% |
| National Rate | 5.4% | 5.2% | 4.5% |

**Preferred Lender Lists and Processing Other Lenders Loans**

## Preferred Lender Lists are OK
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.
Does not apply to FFEL/DL choice.

**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.**
**Does not apply to FFEL/DL choice.**

**Preferred Lenders**

**Treatment of**
**“****Alternative” Loans**

## IF  --
 School is aware of the loan and 
 Condition of loan is enrollment, it must be included as –
 Resource for Campus Based Aid
 Estimated Financial Assistance
 Does not matter where loan proceeds are sent or whether school “certified” enrollment. 
 Think about it like an outside scholarship.

** ****School is aware of the loan and **
** ****Condition of loan is enrollment, it must be included as –**
** ****Resource for Campus Based Aid**
** ****Estimated Financial Assistance**
** ****Does not matter where loan proceeds are sent or whether school “certified” enrollment.**** **
** ****Think about it like an outside scholarship.**

**Alternative Loans**

**Treatment of Combat Pay**

## Tax Rules –
Generally non-taxable
Not part of AGI
Reported on 1040s for purposes of EITC
EFC Calculation Rules –
Always include as part of income earned from work 
Tax filers, include as untaxed income on Worksheet B
Non tax filers, do not include on Worksheet B
Will be picked up when income earned from work is used instead of AGI 

**Generally non-taxable**
**Not part of AGI**
**Reported on 1040s for purposes of EITC**
**EFC Calculation Rules –**
**Always include as part of income earned from work **
**Tax filers, include as untaxed income on Worksheet B**
**Non tax filers, do not include on Worksheet B**
**Will be picked up when income earned from work is used instead of AGI **

**Treatment of Combat Pay**

**NSLDS CHANGES**

## Situation – NSLDS reports (on ISIR, web screen, etc.) that an applicant is in a loan default or grant overpayment status but the applicant claims that the problem has been resolved. 
Resolution – Obtain documentation from the entity that reported the defaulted loan or overpayment that clearly shows that the default or overpayment has been resolved.

**Resolution – Obtain documentation from the entity that reported the defaulted loan or overpayment that clearly shows that the default or overpayment has been resolved.**

**Resolving Defaults, etc.**

## Documentation Standard –
Must clearly identify the defaulted loans or overpayments and their current status. 
Must be in writing on the entity’s letterhead or other format that ensures its origin. Must be dated.
Can be an e-mail or other electronic message from the entity that is dated, contains the name and address of the entity, and the name and title of the official who provided the message.

**Must clearly identify the defaulted loans or overpayments and their current status. **
**Must be in writing on the entity’s letterhead or other format that ensures its origin. Must be dated.**
**Can be an e-mail or other electronic message from the entity that is dated, contains the name and address of the entity, and the name and title of the official who provided the message.**

**Resolving Defaults, etc.**

## NEW – Documentation Can Include:
  Direct access by the school to real-time data from the holder’s database.  This includes real-time access using third party software or products.
Must ensure that access is to source data and not to data stored by third party.
Must ensure that data is current and clearly identifies the defaulted loans or overpayments and the current status of those loans or overpayments. 
Print Screen with full details

**  ****Direct access by the school to real-time data from the holder’s database.  This includes real-time access using third party software or products.**
**Must ensure that access is to source data and not to data stored by third party.**
**Must ensure that data is current and clearly identifies the defaulted loans or overpayments and the current status of those loans or overpayments. **
**Print Screen with full details**

**Resolving Defaults, etc.**

## When NSLDS cannot account for full balance of a consolidation loan.
Usually –
Capitalized Interest
Perkins Loan
Health Professions
PLUS
Non Title IV loan
Ineligible loan
Spouse’s loans
Loan not cleared by lender yet
Missing loan

**Usually –**
**Capitalized Interest**
**Perkins Loan**
**Health Professions**
**PLUS**
**Non Title IV loan**
**Ineligible loan**
**Spouse’s loans**
**Loan not cleared by lender yet**
**Missing loan**

**Unallocated Amounts**

## NSLDS will not use ‘unallocated’ amounts when determining if an applicant has exceeded or is close to a loan limit.
Schools can ignore ‘unallocated amounts’ that are reported on ISIRs and on NSLDS Web Screens.
ISIRs and web screens will still report unallocated amounts.
IFAP Announcement Forthcoming

**Schools can ignore ‘unallocated amounts’ that are reported on ISIRs and on NSLDS Web Screens.**
**ISIRs and web screens will still report unallocated amounts.**
**IFAP Announcement Forthcoming**

**Unallocated Amounts**

## Thank You

## 2005  Electronic Access Conference

**2005****  Electronic Access Conference**
**                  ****San Diego, California**
**                    ****Atlanta, Georgia**