# Presentation: 799177

## NASFAA Conference

**Application Processing System Update**
**Seattle, Washington**
**July 2006**

## Today’s Presenters

**Marilyn LeBlanc**
**Director of Application Processing**
**Michele Brown**
**Director of Applicant Products and Customer Service**

## Today’s Topics

- Higher Education Reconciliation Act (HERA) of 2005
- Background
- HERA Implementation Plan for 2006-07 and 2007-08
- Other 2007-08 (non-HERA) Application Processing System Changes
- Paper FAFSA
- Paper SAR, eSAR, and ISIR
- FAFSA on the Web, FAFSA on the Web Worksheet, PIN Site
- New Application Edits

**Notes:**
Good afternoon/morning and thank you for this opportunity to talk to you today about the FAFSA and the application processing system.
Before I get started I want to make sure everyone has the handouts for this session – 
Copy of the DRAFT 07-08 paper FAFSA
Copies of the slides we’ll be going over during this presentation
This slide shows the topics will be covering today:
I’ll start by giving a very brief overview of the Higher Education Reconciliation Act (HERA) of 2005
Starting with a little background information to set the context
And then both Michele and I will talk about how FSA will be implementing many – but not all -- of the HERA provisions for 2006-07 and 2007-08
Once we get through the HERA provisions, we’ll talk about other non-HERA changes we’re making to the Application Processing System for 07-08.
Michele will walk you through changes to --
2007-08 Paper FAFSA 
Paper SAR, eSAR, and ISIR
FAFSA on the Web, FAFSA on the Web Worksheet, PIN Site
New Application Edits
That said, I need to do a little “expectation control” for this session.
In a normal year, we’d be up here telling you about the changes we’re making to the UPCOMING year’s application and application processing system.
It’s very unusual for us to be in a position where we’re talking about TWO application processing year’s!
Needless to say, we have a LOT of information to cover today and I’m not sure we’ll get through it all – but we’re going to try. 
We hope to have time for questions at the end, but feel free to ask questions during the presentation too  

## The Higher Education Reconciliation Act (HERA) of 2005Background and Implementation Planfor 2006-07 and 2007-08 

**Notes:**
So let’s go ahead and get started by going over a little background about the Higher Education Act of 2005 – or what we affectionately call “HERA.”
Once we’ve covered the background, we’ll talk about what our plans are for    implementing many of the HERA provisions – and we’ll do that for both the 06-07 and 07-08 application processing years..

## Conference Report passed the House on December 19, 2005
Conference Report passed the Senate on December 22, 2005
House passed Senate version on          February 1, 2006
President signed into law February 8, 2006

- Conference Report passed the Senate on December 22, 2005
- House passed Senate version on          February 1, 2006
- President signed into law February 8, 2006

**Higher Education Reconciliation Act of 2005**

**7**

**Notes:**
This slide shows a brief chronology of the passage of the HERA of 2005.  

First, the Conference Report passed the House by a narrow margin in December 2005, by a vote of 212 to 206.  
Then it passed the Senate in a slightly different form by a vote of 51-50, with Vice President Cheney casting the deciding vote.  
Since there were differences between the house and senate versions, the bill had to go back to the House 
The house passed the Senate version of the bill on February 2006, again by a very narrow margin.
On Wednesday, February 8, 2006, President Bush then signed the bill into law.
And, as they say, the rest is history.

The law makes $39.7 billion in budget cuts to mandatory programs, including $12.7 billion from student loans.  
The Administration is happy with HERA—particularly with the new programs that supplement the Pell Grant Program by providing additional grant aid to the neediest students, and the reduction of excess subsidies in the FFEL program.  
HERA generally achieves the Administration’s key objectives for reauthorization of the HEA as set forth in last year’s budget proposals of—
Making the student loan programs more efficient and cost-effective, 
Increasing student benefits, and 
Reducing cost to the taxpayer through expanded risk-sharing with schools and lenders.

## HERA changes include –
PLUS for graduate and professional students
Increased annual loan limits
Return of Title IV funds changes 
New grant programs
Need analysis and cost of attendance changes
Student eligibility changes
Today’s focus will be on changes affecting –
The FAFSA
The Application Processing System

- PLUS for graduate and professional students
- Increased annual loan limits
- Return of Title IV funds changes
- New grant programs
- Need analysis and cost of attendance changes
- Student eligibility changes
- Today’s focus will be on changes affecting –
- The FAFSA
- The Application Processing System

**Higher Education Reconciliation Act of 2005**

**7**

**Notes:**
The HERA of 2005 includes a number of changes to the federal student aid programs.you see on this slide.
This slide includes some  of the major changes.
Because we have only a short time today to get through a whole lot of material, we aren’t going to cover all of these changes.
What we will do today is cover the specific changes that affect the –
FAFSA form itself, and
The application processing system 
We’ll look at changes that affect the 06-07 and the 07-08 application processing years.
And, as I said, I hope we can even cover all of these changes.
We did a similar presentation at NASSGAP in June and it took more than 3 hours to get through everything!
Also, we will focus on the operational implementation of these provisions, and not so much on the policy behind the implementation. 
So, because we won’t have time to cover everything that we’d like to cover, I wanted to mention some very important resources that are available to you – 
Here at the NASFAA conference 
And elsewhere. 

## Higher Education Reconciliation Act of 2005

- Other ED interest sessions that include HERA information
- Academic Competitiveness Grant and National SMART Grant Programs Update
- Return of Title IV Funds
- FFEL and Direct Loan Programs Update
- Loan Forgiveness, Cancellation, and Discharge
- General session on Saturday, July 8
- Department of Education Update

**Notes:**
This slide lists other sessions at the conference that will cover HERA changes as well as non-HERA changes.
The dates and times of these sessions are listed in your conference program.
In particularly, I’d like to direct you to the ACG/SMART Grant Program Update,
And, I’d like to make a plug for the General Session on Saturday morning.  
Jeff Baker from FSA and Dan Madzelan from OPE will do a brief overview of HERA and then open the floor for questions.
These two sessions will provide a great deal of policy guidance. 

## HERA Dear Colleague Letters

- GEN-06-02 (3/10/2006) – Enactment of HERA of 2005
- GEN-06-03 (3/14/2006) – Correction to GEN-06-02
- GEN-06-04 (4/5/2006) – ACG and National SMART Grant
- GEN-06-05 (4/27/2006) – Changes to student and institutional 	eligibility
- GEN-06-06 (5/2/2006) – National SMART Grant – eligible majors
- GEN-06-08 (5/3/2006) – Implementation guidance for the ACG 	and National SMART Grant
- ANN-06-05 (5/30/06) – HERA Training Opportunities
- ANN-06-06 (6/14/06) – HERA Webinar
- DCL-06-10 (6/20/06) – Implementing HERA provisions
- Interim Final Regulations (7/3/06) – ACG and SMART Grant

**Notes:**
There is also an abundance of information about HERA on IFAP.  
In fact, there is a link on the IFAP Home Page to HERA related Dear Colleague Letters and Electronic Announcements.
This slide lists the Dear Colleague Letters that have been published to date.
In particular, I’d also like to mention Dear Colleague Letter, ANN-06-05, which announces training ED is doing.  I hope many of you have already attended that training (mention we’ve increased class size for these sessions from 50 to 500, so if you tried to attend earlier, but couldn’t get a seat, please try again).
And, while they are listed here, the ACG/SMART interim final regulations were published on July 3, 2000 in the Federal Register.

## HERA Electronic AnnouncementsOperational Guidance

- 5/5/2006 – High-Level Overview of Operational Implementation
- 5/11/2006 – Upcoming CPS Reprocessing
- 5/17/2006 – CPS Reprocessing Reminder
- 5/19/2006 – Updates to R2T4 on the Web and Archival of PC Product
- 5/23/2006 – Notice of Reprocessing Issue and Resolution
- 6/7/2006 – First draft of 2007-2008 FAFSA Available for Comment
- 6/14/06 – Student Eligibility Requirement for Drug-Related Offenses
- 6/21/06 – Notice of Issue with May 24, 2006 Reprocessing
- 6/23/06 – Additional Reprocessing Scheduled for June 23, 2006
- 6/26/2006 – Reminder: R2T4 PC Product Archival
- 6/26/06 – 2006-07 Updated SAR Comment Codes and Text
- 6/27/2006 – 2006-07 Revised EDE Technical Reference
- 6/2006 – ACG/SMART Operational Guidance

**Notes:**
This slide lists many HERA-related electronic announcement that are on IFAP.

So there is a lot of information about HERA out there already and more will be forthcoming.

## Implementation Approach and Considerations

- Many provisions effective beginning in 2006-07
- Implementation approach and considerations –
- Limit amount of change to 2006-07 Central Processing System (CPS), the FAFSA, and SAR and ISIR
- Implement processes for new grant programs as quickly as possible
- Provide customer software providers enough time for development
- Leverage existing functionality wherever possible

**Notes:**
Everyone at the Department is VERY excited about the HERA changes, many of which will benefit the neediest of our students – and that is what we’re all in this crazy business to do!
But, HERA has placed all of us in a very unusual situation where we have a new law in place that affects our 06-07 application and application processing system
AFTER forms have been printed and distributed
AFTER FOTW went “live” on January 1
AFTER the application processing system has been operating for a number of months!
This obviously presents some real challenges  --  for the Department of Education AND everyone else involved in the aid delivery process.
Because the 06-07 application year is well underway, we had to weigh a number of considerations when deciding how best to implement HERA.
As we go through the implementation of HERA at the operational level, you’ll see that we’ve attempted to:
Limit changing our forms and our systems to the extent that we could
We’ve tried to implement as quickly as possible
While at the same time trying to provide our Software Developers and schools with home grown systems time to change their systems
And, we’ve tried to leverage existing functionality as much as we can, rather than make huge changes to our systems, particularly for 06-07.

## New Grant Programs

**Implementation for **
**2006-07 and 2007-08**

**Notes:**

So let’s review in detail how we plan to implement HERA.

First I, then Michele a little later on, will review the specific HERA provision that changes --
the FAFSA and/or 
the application processing system.

Then we’ll talk about how we’ve implemented, or will implement, each of those provisions – 

First for the 06-07 application processing year – 

starting with students who applied prior to the system change 
and then for applicants who have not yet applied.

Then we’ll cover how we’ll implement for 07-08 – which will be a piece of cake after 06-07!

## Higher Education Reconciliation Act

- HERA Creates Two New Grant Programs
- Academic Competitiveness Grant (ACG)
- National *Science and Mathematics Access to Retain Talent* (SMART) Grant

**Notes:**
One of the most significant, exciting, and – yes – scary, HERA changes is the creation of two new grant programs -- 
The ACG
And the SMART Grant
For reasons that I’ll discuss in a minute, our focus today will be on the implementation of the ACG.  
This slide shows some of the key ACG criteria -- 

## Academic Competitiveness Grant

- ACG Grants require students to be --
- Pell Grant recipients
- U.S. Citizens
- Enrolled at 2- or 4- year institutions
- Enrolled full-time
- Must be a first or second year undergraduate student
- Must have completed a rigorous secondary school program of study
- 1st Academic Year –
- Must have completed secondary school program after 1/1/06
- $750 award amount
- 2nd Academic Year –
- Must have completed secondary school program after 1/1/05
- $1,300 award amount

**Notes:**

This slide shows some additional eligibility criteria that you’re all probably familiar with by now and that we aren’t going to cover in this session.
ACG Grants require students to be --
Pell Grant recipients
U.S. Citizens  
Enrolled at 2- or 4- year institutions
Enrolled full-time

In addition, to be eligible, the student --
Must be a first or second year undergraduate 
Must have completed a rigorous secondary school program of study
1st Academic Year – 
Must have completed secondary school program after 1/1/06
$750 award amount
2nd Academic Year – 
Must have completed secondary school program after 1/1/05
$1,300 award amount

Because there are other sessions at NASFAA that will cover these eligibility criteria in great detail, for the sake of time, this is all I’m going to say about the eligibility criteria. 

## Academic Competitiveness Grant

- ED’s implementation goal -- to design a process to help schools identify students who are potentially eligible for ACG
- Schools can also identify eligible applicants
- Schools are responsible for verifying ACG eligibility before disbursing funds

**Notes:**
Instead, what I’d like to focus on is the Department’s implementation goals, which is – 
To use FAFSA data to --
Assist schools in identifying financial aid applicants who 
Are potentially eligible for to receive an ACG.
Unlike the SMART Grant, 
where schools will have the primary responsibility for identifying eligible students, 
there is a lot the Department can do to help schools to identify students who are potentially eligible for an ACG.
Schools can also identify ACG eligible students on their own -- and many of you have already done that – 
but we thought there were things we could do to 
facilitate the process by making some system changes that would  make the overall identification process easier for you.
Now, of course, as you all know – painfully too well, I’m sure – is that before disbursing aid to a student you have the ultimate responsibility to --
verify that the student really did complete a rigorous program of study in their state, 
that they meet the other ACG eligibility criteria.  
But, we’re hoping to at least make the process of identifying students who are potentially eligible for ACG a bit easier.
So, I’d like to take a few moments to describe how we plan to do this, starting with the 06-07 year and then 07-08.
As I mentioned, we have the issue that many students have already applied for aid for the 06-07 year 
And we have students who have not yet applied, but will apply at some point between now and the end of the 06-07 application processing year (July 2007)
And we’ll have to treat them somewhat differently.
As we go through the changes we’ll highlight those differences. 
Let’s start by taking a look at how we’ll handle students who have already applied for 06-07.

## Academic Competitiveness Grant

**2006-07 Implementation**
- On 6/30/06, began sending letters and e-mails to all 2006-07 applicants (Web and paper filers) who applied prior to 7/1/06 and appeared to meet minimum ACG requirements –
- U.S. Citizen
- Pell eligible
- Graduated from high school after 1/1/2005 (age used as proxy)
- 1st or 2nd year in school
- E-mails and letters inform applicants how to provide ACG information –
- Web site
- Federal Student Aid Information Center (FSAIC)

**Notes:**
On June 30, we looked at all 06-07 financial aid applicants in the CPS – 
Who applied for aid prior to July 1, 2006
To see if they meet ACG criteria (at least those criteria that are already known to us in the CPS).
We queried the CPS database to find students who, on their paper or Web application -- 
 reported on their FAFSA that they were U.S. Citizens
We calculated that they were eligible to receive a Pell Grant 
The graduated from high school after 1/1/2005 (we don’t collect this data on the FAFSA, so we’ll use the age of 20 as proxy)
And, are either a 1st or 2nd year undergraduate student.
On July 1, we sent applicants [and applicant’s parents, if we have their e-mail address] who meet these criteria an email or a letter [letters will go out on June 30] telling them that they might be eligible for an ACG and that we’d like them to provide us with more information so that we notify their schools of their potential eligibility.

The e-mails and letters will also tell students how they can provide this information to us  – 
Students will have the option of  -- 
Going to the Web and providing the information on some new Web screens that we have created (the emails and letters will provide the URL), or 
Or, if the student can’t use the Web to provide this data, he/she can call the Federal Student Aid Information Center (FSAIC) and provide the ACG information to a CSR over the phone.
NOTE:  About 831,000 emails and letters will go out to students; about 530,000 letters will go out to parents.

## Academic Competitiveness Grant

- 	**2006-07 Implementation**
- Web site will “screen” applicants (U.S. citizen, Pell eligible) and ask students –
- Did they or will they complete high school program of study after 1/1/05?
- In what State did they complete high school program of study?
- If that State has approved Advanced or Honors Programs or State Scholars Initiative requirements
- State programs presented to the applicant in a dropdown box
- Applicant selects rigorous program (if any) from dropdown box pick list

**Notes:**
Students who choose to use the Web to provide ACG data will go to the URL listed in the e-mail or letter.
When they arrive at the Web site, we will --  
 “authenticate” the user,
 confirm that we have an 06-07 application on file for them, and 
 make sure that the applicant is still a U.S. citizen and Pell eligible (because a correction could have changed their eligibility) 
If we have an application and the applicant is a U.S. citizen and Pell eligible, we’ll ask the student a series of questions to confirm whether they are likely to be eligible for an ACG, starting with –
Did they or will they complete their high school program of study after 1/1/05? 
And, “In what State did they complete their rigorous HS program? 

If the State the student completed the rigorous HS program (or will complete) has –
  one or more of the approved Advanced or Honors Programs or 
  State Scholars Initiatives that Fred covered in detail this morning, 
 the student will be presented with a dropdown box that lists the approved rigorous programs in that state.
And, if the applicant completed one of those rigorous program of study the he or she can select that program from the from dropdown box “picklist” 

## Academic Competitiveness Grant

**2006-07 Implementation**
- If applicant’s State does not have a rigorous program listed (or student did not complete  rigorous program of study), applicants can tell us if they –
- Took courses similar to State Scholars Initiative, and/or
- Took at least two AP or IB courses in high school with a minimum passing score of 3 or 4 respectively
- FSAIC Customer Service Reps will follow similar process on the phone to collect ACG data

**Notes:**
If applicant’s state does not have an approved rigorous program of study with the Department (or student did not complete a rigorous program of study) –
 the student will have an opportunity to tell us if they completed one (or both) of the other rigorous program definitions that Fred talked about earlier today.
[NOTE These other definitions are  –
The student took courses similar to State Scholars Initiative, and/or
They took at least two Advanced Placement (AP) or International Baccalaureate (IB) courses in high school with a minimum passing score of 3 or 4 respectively]
The Web pages will encourage students to indicate all of the “rigorous high school programs” they completed, although they are not required to. 

FSAIC OPTION – If the student wants to provide this information over the phone rather than on the Web can do so by calling the FSAIC and speaking with a CSR –
 the process will basically be the same except the CSR will enter the data into the system for the student. 

Now, if it turns out during one of these two processes – Web or phone -- that the student doesn’t meet the eligibility AGC criteria – 
the Web or the CSR will tell the students – nicely, of course --  they don’t qualify and that is basically the end of that.

This isn’t necessarily the end of the process though.  If student thinks they are eligible – they can talk to their FAA – schools have the final responsibility of verifying eligibility.

If the student DOES appear to meet the eligibility criteria—
we will capture all of the data they provided and store it in the CPS and 
report out the results to all interested parties.

Let’s go to the next slide and we’ll talk about how that process will work.

## Academic Competitiveness Grant

**2006-07 Implementation**
- For students who provide ACG information and appear to be eligible --
- Student Aid Report (SAR), with comments, sent to students
- Central Processing System (CPS) notifies all institutions of student’s potential ACG eligibility via –
- Comment codes on ISIR, and
- Flat file

**Notes:**
First, we’ll create a new ISIR transaction in the Central Processing System (CPS) for the student.
In addition, we will send Student Aid Reports (SAR) to students that will include comments that indicate which program or programs the student completed (comments 268, 269, 270, and 271).  
Note: these comments were published on IFAP on June 26)
We’ll also send new ISIRs to all institutions listed on the student’s transaction (including state agencies) --
ISIRs will contain—
new comment codes indicating which ACG rigorous program of study the student told us they completed (it can be more than one)
At the same time we send the ISIR file, we will also send a flat file to schools containing ACG data.
We’re creating this flat file that includes data for all students for whom we’re sending ISIRs that day
Some of you might wonder why we’re doing both – well some schools told us it would be easier for them to identify potentially eligible students from this file rather than using the new comment codes.
But, if you don’t want to use the file you can just delete it.

## Academic Competitiveness Grant

**  ****2006-07 Implementation**
- ISIRs sent in new “pushed” message class IGAA07OP to all institutions listed on transaction
- Flat file sent in new message class ED2007OP
- Includes: SSN, Name ID, Name (last, first, MI), Transaction Number, DOB, answers to ACG questions, and rigorous program code
- If school code added later to transaction, ACG data sent to new school on ISIR and in flat file

**Notes:**
These ISIRs will be in a new “pushed ISIR” message class – IGAA07OP, and they will be sent to all institutions listed on the transaction.

The flat file we send to schools will be in a new message class, ED2007OP, and it will contain --
 Student’s SSN, Name ID, Name (last, first, MI), Transaction Number, DOB, answers to ACG questions, and the rigorous program code or codes, if the student indicated that he or she completed one of the state’s recognized rigorous programs.

Also, if school code added later to transaction, we will send ACG data to the new school in an ISIR and we’ll also send along this flat file with ACG data.

So this is what we plan to do for 06-07 applicants who applied for aid prior to 7/1/06.  

NOTE:  Comment Code 268 for a rigorous program or stat scholars incentive program
Comment 269 if AP or IB
Comment 270 if coursework requirement met.
Comment 271 – generic comment that they answered one of the “rigorous programs” questions and may be eligible for an ACG

## Academic Competitiveness Grant

**2006-07 Implementation**
- Students who apply for aid on or after 7/1/06 –
- Online Applicants -- FAFSA on the Web will “screen” applicants for potential eligibility and give applicants option to provide ACG information
- Paper Applicants -- No change to paper 06-07 FAFSA -- filers will be sent comment on SAR directing them to Web site or FSAIC
- SAR sent to students
- Central Processing System (CPS) notifies institutions of potential ACG eligibility on ISIR and in flat file

**Notes:**
Now let’s take a look at what we’re doing for students who apply for aid for 06-07 on or after 7/1/06.
We will handle these students somewhat differently depending on whether they apply using the online FAFSA or a paper FAFSA  –

ONLINE APPLICANTS:  For students who choose to apply online, we’ll capture AGC data as part of the FOTW application.
As always, students to fafsa.ed.gov and enter application data.
Once they have completed the online FAFSA we’ll “screen” the data to see if it they are –
 A U.S. citizen, and
Pell eligible
If so, the online application will give the the student the option of providing ACG information before submitting their FOTW application data – basically, the ACG questions will become part of the FOTW application.
PAPER FAFSA: We’re not making changes to the 06-07 paper FAFSA, so for students who use the paper FAFSA to apply for aid in 06-07, we’ll enter the data from the FAFSA into the CPS and process that data, as always.  We’ll also check to see if the applicants 
 are U.S. citizens and Pell eligible,
And, if so, they will receive comment 267 on their SAR, once their FAFSA has been processed by the CPS –
Telling them that it appears they may be eligible for an ACG and
Directing them to Web site or FSAIC to provide additional ACG information. 

Again, institutions are responsible for verifying ACG eligibility before disbursing funds

## Academic Competitiveness Grant

**2006-07 Implementation**
- Corrections on the Web –
- If student “corrects” transaction by adding ACG data only, resulting ISIR sent in new “pushed” ISIR message class IGAA07OP
- If student makes corrections in addition to adding ACG data, new ISIR will be sent in existing IGSA07OP or IGSG07OP message class

**Notes:**
Students can also use Corrections on the Web to provide ACG data 
Like the process for FOTW filers (on or after July 1), COTW will give students the option to -- 
Provide ACG data only
Or, to make a correction AND provide ACG data

If the student “corrects” the transaction by adding ACG data only, we will send an ISIR to all schools on the transaction in a new “pushed” ISIR message class -- IGAA07OP.
If a student makes a correction in addition to adding ACG data, we will send ISIRs to all schools on the transaction in the existing IGSA07OP or IGSG07OP message class.

One thing worth noting, though, is once ACG data has been provided, we will not let students correct their data.  
The reason for collecting ACG data in the first place is simply to let schools know that an applicant might be eligible. 
What we don’t want to happen is for students to keep changing their ACG data (only) and generating lots of unnecessary ISIRs for schools to have to manage.

## Academic Competitiveness Grant

**2006-07 Implementation**
- FAAs may also enter ACG information in  FAA Access to CPS Online if student is potentially eligible
- Only on initial and renewal applications
- Data cannot be corrected
- Student ACG data may be viewed on
- FAFSA on the Web
- FAA Access to CPS Online

**Notes:**
FAAs can also assist students by entering ACG information in FAA Access to CPS Online if it appears the student is potentially eligible -- 
This can only be done on initial and renewal applications 
Data cannot be corrected in FAA Access
Also, while ACG data (other than comment codes) will not be on the applicants ISIR or paper SAR --
Students can view their answers to the ACG questions on FAFSA on the Web (Student Access)
And financial aid administrators can view the ACG responses on FAA Access to CPS Online (Student Inquiry)

## Academic Competitiveness Grant

**2007-08 Implementation**
- FAFSA on the Web and FAA Access to CPS Online  “screens” applicants for potential eligibility and gives option to provide ACG information
- Paper filers sent comment on SAR directing them to Web site or FSAIC

**Notes:**
For 07-08, the process will be much simpler, 
because we can start the year off on Jan. 1, 2007 giving all applicants to option, right from the beginning, to provide ACG information as part of the application process.
none of this “switching gears” in the middle of an application year. 
That said, though, there will be differences in how we’ll handle Web filers and paper filers.  
In 2007-08, for Web filers, the process will work just like the process we’re using for 06-07 filers who apply after July 1, 2006
The collection of ACG data will be part of the application itself and if it appears the student is eligible we’ll give him or her the option to provide ACG data on FOTW.  

PAPER FILERS:  Because of our perennially problem of not having enough real-estate on our paper application to add a lot of new questions, 
We won’t include any of the ACG questions on the 07-08 paper FAFSA
Like we’re doing for 06-07 paper filers, if the applicant reports on their FAFSA that they are –
a U.S. citizen and 
The CPS calculates that they are Pell-eligible, 
we’ll send a comment (again, comment 267) on the student’s SAR instructing them to  --
go to the Web to provide the information, or 
go to FSAIC and provide the information over the phone. 

## Need Analysis ChangesImplementation for 2006-07 and 2007-08

**Notes:**
Let’s look at HERA changes that affect need analysis and the calculation of a student’s EFC.

## Need Analysis Changes

- Simplified Needs Test (SNT) and Automatic Zero EFC Criteria
- Treatment of Qualified Education Benefits
- Treatment of Small Business Assets

**Notes:**
In this next section, we’ll talk about how we’re implementing the new need analysis provisions that were either added or changed by HERA.
The specific provisions we’ll look at today are listed on this slide:

The new SNT and Automatic Zero EFC Criteria
New Active Duty Military Independence Criterion
Treatment of Qualified Education Benefits 
Treatment of Small Business Assets

## SNT and Auto Zero EFC Criteria

- SNT and Automatic Zero EFC
- Only parent’s type of tax return filed will be considered for dependent students
- Means-tested federal benefit program an alternative to tax return requirement
- Automatic Zero EFC Only
- Income threshold increased from $16,000 to $20,000

**Notes:**
Let’s start by looking at the HERA need analysis changes that Fred described this morning that affect the SNT and Automatic Zero EFC eligibility criteria –
As we discussed, for both SNT and Auto Zero, HERA now requires only the parent of a dependent student to – 
have filed, or 
to have been be eligible to file a 1040A or EZ 
Prior to HERA, our system checked the type of tax return filed by both the parent AND the dependent student.
Also, as an alternative to being eligible to file a 1040A or EZ, parents of dependent students, and independent students  who -- 
were required to file a 1040, but 
who received a means-tested federal benefit in the base year
now meet the SNT and/or Auto Zero EFC criteria (provided they also meet the income thresholds).

And then for Auto Zero ONLY, HERA raised the income threshold from $16,000 to $20,000.

Let’s take a look at how we’ll implement these changes for 06-07– 
Starting with students who have already applied for aid, and
Then looking at how we’ll handle those who will apply for aid after the changes were implemented. 

## SNT and Auto Zero EFC Criteria

**2006-07 Implementation**** **
- On May 19, 2006, two changes made to CPS --
- 1 - For dependent students, updated system to look only at parent’s type of tax return filed to qualify for SNT or Auto Zero EFC
- 2 - Increased Auto Zero EFC income parameter in system from $16,000 to $20,000 for –
- Parents of dependent students, and
- Independent students with dependents other than a spouse

**Notes:**
On May 19, we implemented two of these three HERA changes for 06-07 by making some coding changes to the CPS  -- 
First, we changed the system to look only at 
The type of tax return the parent of a dependent student filed to see if the applicant qualified for SNT or Auto Zero EFC
And second, we increased the Auto Zero EFC income parameter to $20,000 for – 
parents of dependent students, and 
independent students with dependents other than a spouse.

## SNT and Auto Zero EFC Criteria

**2006-07 Implementation**
- CPS reprocessed students who applied for aid prior to May 19 and  –
- Met new HERA criteria for SNT or automatic zero EFC
- Did not already have an EFC = 0 on highest transaction
- Applicants who apply on or after May 19 will have new criteria applied

**Notes:**
Once we made these coding changes in the CPS, we reprocessed students who – 
Had applied for aid on or before May 19, and 
Who met the new HERA criteria for SNT and/or an Auto Zero EFC (with the exception of the new means-tested federal benefit criteria, which I’ll talk about in a minute),
And who didn’t already have a Zero EFC on their highest transaction.
You may be aware that we made a mistake in this initial reprocessing, which resulted in our mistakenly sending out many duplicate SARs and ISIRs to students and schools.
We immediately – 
Detected the problem (but unfortunately too late to prevent SARs and ISIRs from going out)
corrected the mistake, and 
posted an IFAP announcement about the processing mistake and gave specific instructions about how to identify the records that they could ignore or delete because of this error
We then reprocessed records again on May 24 and then again on June 23 -- and this time got it right.  Three times a charm, right?

ALL NEW APPLICANTS coming into the system after May 19, after system changes were made, will have the new HERA-related criteria applied to their application data and will receive the correct EFC (again, with the exception of the means-tested program criteria) – no further reprocessing will need to done for these changes for 06-07.

## SNT and Auto Zero EFC Criteria

- New Means-Tested Federal Benefit Program criteria
- Students may now qualify for SNT or Auto Zero EFC if they or their parents –
- Received benefits from a means-tested federal program
- Meet relevant income thresholds

**Notes:**
Speaking of the means-tested federal benefit program -- 
As I said earlier, independent and dependent students may qualify for SNT or Auto 0 if they or their parents received benefits from a means-tested federal program in the base year 
and they meet the relevant income thresholds – less than $50,000 for SNT and $20,000 or less for Auto Zero).

This is an interesting (and challenging) provision to implement, because we don’t ask questions about whether a parent or student received a means-tested program or programs on the current 06-07 FAFSA – paper or online.
And, as I mentioned earlier, we wanted to limit changes to the systems and forms that we currently have in place for 06-07 – 
So the way that we’ll implement this provision in 06-07 is as follows – [next slide]

## SNT and Auto Zero EFC Criteria

**2006-07 Implementation**
- Will not revise 2006-07 Web or paper FAFSA to collect this information
- If institution learns that parent/student received means-tested federal benefit, but did ***not*** meet SNT or Auto Zero EFC criteria because they were required to file an IRS 1040 form, institution should correct to ‘Yes’ FAFSA question 34 or 72 (was student or parent eligible to file a 1040 A or 1040 EZ?)

**Notes:**
Will not revise either the Web or paper FAFSA to collect this information 
We will soon be be notifying institutions in a DCL of a work-around they can use if they learn that a parent or a student – 
received a means-tested federal benefit, but 
did not meet SNT or Auto Zero EFC criteria because they were required to file an IRS 1040 form. 
In these cases, the work-around is for institutions to change  – or have the student change -- their answer to FAFSA question 34 or 72 (was student or parent eligible to file a 1040 A or 1040 EZ?) to a “Yes”
As long as the applicant also meets the income thresholds, this correction will force the system to “view” the applicant as eligible for either SNT or Auto Zero and calculate the correct EFC accordingly. 

## SNT and Auto Zero EFC Criteria

**2007-08 Implementation**** **
- New SNT/Auto Zero EFC criteria (tax return and Auto Zero income parameter) rolled forward into 2007-08 CPS
- Means-tested benefits questions will be asked about base year 2006 on both 2007-08 paper and online FAFSAs

**Notes:**
For 07-08, the new HERA criteria for SNT and Auto Zero will be built into the CPS on January 1, 2007, from the very beginning.
That way the correct tax return parameters and 
Correct income parameter will be used when calculating an applicant’s EFC.
In addition, on both the paper FAFSA and FAFSA on the Web we’ll ask parents of dependent students and independent students if anyone in their household (as we define it for the purpose of completing the FAFSA) received a means-tested benefit in 2006 (which is the base year for the 07-08 application year).

Making these changes for 07-08 will enable us to correctly determine a student’s eligibility for the SNT or an Automatic Zero EFC and then calculate the correct EFC – schools will no longer have to do the workaround that they have to do for 06-07 applicants.

Basically, 07-08 will be a lot simpler – and cleaner – for everyone involved in the application and aid delivery process. 

This slide shows the new questions on the paper FAFSA.  But, again, the questions will appear on both the paper and online FAFSAs.
It’s a little hard to see, but we have defined the means-tested federal programs as  SSI, food stamps, free or reduced price lunch, TANF, and WIC.
The online and paper FAFSA encourages applicants to indicate ALL of the mean-tested benefits their family received.

## Treatment of Qualified Education Benefits

- Qualified Education Benefits --
- Consistent treatment, and
- Now treated as an asset
**2006-07 Implementation**
- No change to instructions for investment net worth on 2006-07 paper or online FAFSA
- If institution becomes aware that parents of a dependent student or an independent student (or spouse) owns a qualified education benefit, institution must assist student in correcting asset net worth question on the FAFSA
**2007-08 Implementation**** **
- 2007-08 paper and online FAFSA instructions for investment questions will describe how to report qualified education benefits

**Notes:**
As you know, HERA applies a consistent treatment to all “qualified education benefits” so that all are treated as an asset (versus some education benefits being treated as assets and others being treated as resources).
2006-07 Implementation 
In 06-07, we are not making any changes to the instructions for investment net worth on the –
2006-07 paper or 
online FAFSA to account for this change.
However, if and institution becomes aware that – 
parents of a dependent student or 
an independent student (or spouse) 
owns a qualified education benefit, the institution must assist student in correcting the appropriate investment asset net worth question on the FAFSA
2007-08 Implementation 
In 2007-08, both the paper and online FAFSA will include detailed instructions about how to report a qualified education benefit in the  investment net worth questions.

## Treatment of Small Business Assets

- Exclude family-owned and controlled small businesses from asset net worth
**2006-07 Implementation**
- No change to the instructions for business asset net worth questions on the 2006-07 paper or online FAFSA
- If an institution becomes aware that a parent or student reported the asset net worth of a family-owned and controlled small business on the FAFSA, institution must assist student in correcting the question on the FAFSA
**2007-08 Implementation**** **
- 2007-08 paper and online FAFSA instructions for investment questions will describe how to report family-owned and controlled small businesses

**Notes:**
Also, HERA no longer considers family-owned and controlled small businesses as an asset, and
So these types of businesses should not be included as an asset on the FAFSA.
2006-07 Implementation 
In 06-07, we are not making changes to the instructions for the business asset net worth questions on the paper or online FAFSA.
However, if an institution becomes aware that – 
a parent or student reported the asset net worth of a family-owned and controlled small business, 
the institution must assist the student in correcting the question on the FAFSA
2007-08 Implementation 
Thankfully, in 2007-08 both the paper and online FAFSA instructions for investment questions will describe how to report family-owned and controlled small businesses
The slide shows an example of the wording.

## Student EligibilityImplementation for 2006-07 and 2007-08

**Notes:**
Michele presents from here to the end (questions).

## Definition of Independent Student

- Students serving on active duty in the U.S. Armed Forces for other than training purposes are now considered  independent

**Notes:**
The next HERA provision is the new independent student criteria.
Beginning in 06-07, students who are serving on active duty in the U.S. Armed Forces for other than training purposes are now considered to be independent for the purposes of applying for federal is.
This is also an interesting new provision because this is a new question and we don’t already collect the information on our applications for 06-07.
Let’s look at how we’ll implement this change in 06-07 and then in 07-08.

## Definition of Independent Student

**2006-07 Implementation**
- No change to 2006-07 paper or online FAFSA
- If institution becomes aware that an otherwise dependent student is serving on active duty it must submit a “dependency override” to CPS
- CPS will recalculate EFC using independent student formula
- New SAR comment informing students of new active duty military independence criterion --
- Comment on SARs sent to students as part of May 19th reprocessing
- Comment appears on SARs for all dependent student applications and corrections submitted after May 19, 2006

**Notes:**
In 06-07, we will not make any changes to either the paper FAFSA or FAFSA on the Web to ask this new independence question.
Doing this would have changed the form, the system, the ISIR record layout, your systems – and basically everyone else’s – which we felt added to much risk overall to the delivery system.
Instead, we are providing guidance to institutions that if they become aware that an otherwise dependent student is serving on active duty in the armed forces...
They should submit a “dependency override” to the CPS so that the student is treated as an independent student for 06-07. 

To call student’s attention to this new provision for 06-07, we will also include a new comment on dependent student SARs, informing them of new independent criterion and the need to see their school if they meet it  --
SARs sent to students as part of May 19th reprocessing had this comment
The comment will appear on SARs for all dependent applications and corrections submitted after May 19, 2006

## Definition of Independent Student

**2007-08 Implementation**
- 2007-08 paper and online FAFSAs will include new dependency status question in Step 3

**Notes:**
 Like the other HERA changes, 07-08 will be a much simpler process – 

In 07-08, both the paper and online FAFSA will include –
a new question about this dependency criteria
so students who answer yes to the questing will be treated as independent students by the system – no D/O work-around will be necessary.
The slide shows the 07-08 wording on the FAFSA.

## Drug Offenses

- Student eligibility provision modified -  students lose eligibility for Title IV aid only if the drug related offense for which they were convicted occurred *during a period of enrollment* for which the student was receiving Title IV aid

## Drug Offenses

**2006-07 Implementation**
- All students who applied on or before June 30, 2006 (paper or Web) and answered "Yes" (either 2-partial ineligibility or 3-full ineligibility) to drug question, or left  question blank, will –
- Receive e-mail or letter with revised Drug Conviction Worksheet
- Be instructed to correct response to drug question, if necessary
- On July 1, 2006 –
- Drug question wording, instructions, and drug worksheet revised on FAFSA on the Web
- Drug Conviction Worksheet on the Web and FSAIC automated response system revised
- Question on paper FAFSA will not be reworded, but paper filers will continue to receive SAR with revised Drug Conviction Worksheet

**Notes:**
NOTE – about 6,000 emails and letters will go out to applicants on July 1.

## Drug Offenses

**2007-08 Implementation**
- Both paper and online FAFSA drug offense wording updated
- Help text on FAFSA on the Web updated

**2007-08 Application and Application Processing System Changes**

## 2007-08 Application Processing System Changes

- Statistics
- Paper FAFSA
- Paper SAR, eSAR, and ISIR
- FAFSA on the Web
- FAFSA on the Web Worksheet
- PIN Web Site
- Renewal Application Process
- FAA Access to CPS Online
- New Application Edits
- NSLDS Aid History Information

## Application Processing Statistics

- For 2006-07 –
- 94% of applications filed electronically
- 6% of applications filed on paper FAFSA

**Paper vs. Electronic Filers through Week 25**

## The 2007-08 Paper FAFSA

- 60-day public comment period began on 6/6/06
- E-mail  comments to _[FAFSAComments@ed.gov](mailto:FAFSAComments@ed.gov)_
- To view draft FAFSA:
- Go to IFAP at _[http://ifap.ed.gov](http://ifap.ed.gov/)_
- Scroll down to “Publications”
- Click on “FAFSAs and Renewal FAFSAs”
- Click on “By 2007-2008 Award Year”
- Click on “Draft FAFSA Form/Instructions”

## The 2007-08 Paper FAFSA

- 2007-08 FAFSA is yellow and purple
- New packaging:
- Form pages numbered 1 through 4
- Notes pages 5 through 10
- Expanded instructions; one page of “Tips”

## The 2007-08 Paper FAFSA

- States that do not specify priority deadline dates have been moved to the top of the list on front page
- Question numbers 27 & 28 may be eliminated to create space for new questions required by HERA
- #27 – “Interested in student loans?”
- #28  - “Interested in work-study?”
- Enrollment status question moved to first page of application to follow “grade level in college?”

## The 2007-08 Paper FAFSA

- Four college and housing code choices
- Colleges re-numbered on paper FAFSA to 96a – 96h
- Web continues to include six college and housing code choices

## 2007-08 Paper SAR

- Paper SAR will be yellow in color
- DRN will be in the top right hand corner of the SAR; same position as on eSAR

## 2007-08 eSAR and ISIR

- eSAR
- Changing return address to -- “FederalStudentAid”
- Changing e-mail subject line to “FAFSA Results – 2007-2008 SAR”
- ISIR
- Will include up to six school and housing codes
- 2007-08 ISIR record layout posted in late July
- 2007-08 ISIR in flat file format only (no XML ISIR)

## 2007-08 FAFSA on the Web

- Year of minimal change
- Applicants must enter SSN number twice in order to verify accuracy
- Implement Automatic Zero EFC and SNT skip logic enhancements for new means-tested federal benefits program questions
- Will partially mask preparer’s SSN

## 2007-08 FAFSA on the Web Site

- Common look and feel for FAFSA on the Web

## 2007-08 FAFSA on the Web Worksheet

- Changes correspond to changes made on FAFSA on the Web
- For 2006-07, IRS tax information line items were received late – which do users prefer?
- Issue the Worksheet early/on time and incomplete?
- Issue the Worksheet late and complete?
- Other comments on the Worksheet?

## 2007-08 PIN and PIN Web site

- PIN Web site updated to match look and feel of FAFSA on the Web
- No other changes to PIN process or Web site

## 2007-08 Renewal Application Process

- Renewal Reminders sent in early January 2007 (instead of once in November and again in February)
- Students with a valid e-mail address will receive e-mail reminders
- If no e-mail address or e-mail is undeliverable, paper reminder letter will be sent to applicant

## 2007-08 FAA Access to CPS Online

- Same look and feel as FAFSA on the Web
- Will partially mask preparer’s SSN

## 2007-08 Edit Changes

- To prevent schools from viewing/receiving transactions that contain a PJ by another school, a new school code cannot be added to transaction that contains an FAA Adjustment flag

## 2007-08 Edit Changes

- New warning edits if --
- Parent’s or independent student’s tax return status is “Will not file” and sum of earned income is within required range to file a return
- Parent’s AGI equal to student’s AGI
- Dependent student’s AGI equal to Worksheet A
- Parent or student reports receiving TANF or SSI but does not report an amount on Worksheet A

## IPA and Asset Assessment Rates

- Increase in Income Protection Allowances
- To $3000 from $2200 for dependent students
- To $6050 from $5000 for independent students (single) without dependents and married students (without dependents) with a spouse enrolled at least 1⁄2 time
- To $9700 from $8000 for independent (married) students without a dependent whose spouse is not enrolled
- Decrease in Asset Assessment Rates
- 35% to 20% for dependent students and independent students without dependents
- 12% to 7% for independent students with dependents other than a spouse

## NSLDS Changes

- NSLDS will send ACG and SMART data to CPS
- Up to 3 ACG and 3 SMART records will be included on pre-screening record
- New ACG and SMART Overpayment Contact Information will be added
- Grad PLUS MPN flag added to the pre-screening process
- New Grad PLUS loan status codes of D3 and GB added
- A change in loan status will generate a post-screening record to CPS; any change will generate a post-screening reason code of “16”
- Value of “F” (Fraud Convictions) added as a valid value for Pell, FSEOG, ACG, SMART and Perkins Overpayment flags
- Post-screening codes 17 and 18

## 2006 Fall Conferences(formerly Electronic Access Conferences)

**October 30 - November 2**
**Royal Pacific Resort**
- Orlando, Florida

**November 28 - December 1**
**Paris Las Vegas**
- Las Vegas, Nevada

## Slide 61

## Other 

**Noteworthy **
**News**

## Key 2006-07 Application and Application Processing Dates

- May 19: Reprocessing done for limited number of need analysis changes
- July 1:
- Sent notifications about change to student eligibility for drug-related offenses; reworded drug conviction worksheet and drug question on Web
- Implemented new ACG Web screens and student and school notification processes

**Notes:**
Let’s start by reviewing some key dates.
On May 19 – and again on May 24, and yet again on June 21 --  we reprocessed a limited number of records to implement some of the HERA need analysis changes.
On July 1 we –
Sent notifications to students about changes the drug conviction provision –
We also revised the drug conviction worksheet and the drug question on Web.
On July 1, we also – 
Implemented new ACG Web screens; 
And we have created student and school notification processes for ACG.

We will talk about these changes in detail during today’s presentation.

## Other Important Dates

- Beginning the week of August 1:  FSA will begin processing ACG/SMART Grant initial authorizations for GAPS
- Beginning the week of August 6: Schools can draw down funds for ACG/SMART via GAPS
- August 8: Updated R2T4 on the Web available
- August 11:  Schools can download an EDExpress service release that will enable them to create and submit GPLUS origination and disbursement information to COD
- August 12: Schools can submit GPLUS originations and disbursements to COD

**Notes:**
The next two slides list HERA changes that we will NOT be talking about today, other than to mention them here.
Again, many of these topics will be included in other sessions so I strongly encourage you to attend one of those if you want more information..
In addition, we’ve published and will continue to publish additional operational guidance on IFAP and will soon be putting out technical documentation to help you implement the changes.

On July 29, FSA will initiate ACG/SMART funding level increases via the COD Web site. 
GET MORE DETAILS RE: THIS STUFF
School funding data will be available for viewing on the COD website
Schools can begin disbursing funds for ACG, National SMART Grant and Direct Loan PLUS awards for Graduate student borrowers on July 1, 2006
On August 8th, we’ll update our R2T4 on the Web software so that it correctly calculates XXXXXXX [SEE EA on this topic] 
On August 11, we’ll provide an EDExpress release that will allow EDExpress users to enter and store G-PLUS originations and disbursements.
On August 12, schools will be able to submit Direct Loan Grad PLUS loan origination and disbursement records to COD.

## Other Important Dates

- September 1:
- Schools can download full release of EDExpress with enhancements for tracking GPLUS and PLUS origination and disbursement information
- Schools can enter and store ACG/SMART in EDExpress
- Schools can use EDExpress to print ACG/ SMART Grant ESOA’s containing initial funding authorization amounts

**Notes:**
On September 1: 
Schools can use EDExpress to submit GPLUS originations and disbursements to COD
And, schools can enter and store ACG/SMART in their EDExpress software
December 16: COD and EDExpress available to receive and send batch records and responses for ACG and SMART Grant
April 2007: Reporting for ACG and SMART and Loans – this includes reconciliation reports for Direct Loan, and ACG/SMART reports that will operate much like the current Pell reports do.
That’s all we’ll cover about these topics today.

## Other Important Dates

- December 16: COD and EDExpress (full release) available for schools to submit ACG and SMART Grant award and disbursement information
- April 2007: Reporting for ACG, SMART Grant, and loans available

**Notes:**
On September 1: 
Schools can use EDExpress to submit GPLUS originations and disbursements to COD
And, schools can enter and store ACG/SMART in their EDExpress software
December 16: COD and EDExpress available to receive and send batch records and responses for ACG and SMART Grant
April 2007: Reporting for ACG and SMART and Loans – this includes reconciliation reports for Direct Loan, and ACG/SMART reports that will operate much like the current Pell reports do.
That’s all we’ll cover about these topics today.

## Important 2007-08 Dates

**July 2006**
- Federal School Code file updates due
- Draft ISIR Layout available on IFAP

**September 2006**
- Renewal FAFSA Process Guide
**October 2006**
- ISIR Guide
- Summary of Changes to the Application Processing System Process Guide
- Updated EDE Technical Reference
- EFC Formula Guide
- Federal School Code Books mailed

## Important 2007-08 Dates

**November 2006**
- School Electronic Processing Guide
- Revised ISIR Layout in EDE Technical Reference

**January 2007**
**January 1**      FAFSA on the Web, Renewal FAFSA on 						the Web, Corrections on the Web 								available
**January 1**       FAA Access to CPS Online available
**January 2**       Application processing system starts up

## 2007-08 Web Demonstration Sites

- FAFSA on the Web and FAA Access demonstration sites will be available later this year
- To access sites, go to _http://fafsademo.test.ed.gov_
- Enter:
- User Name:  eddemo
- Password:  fafsatest
- Click on FOTW or FAA Access buttons at bottom of screen to access demo site
- Available until December 2007

**Notes:**
FOTW and FAA Access to CPS Online Demonstration Site later this year,  in November  
You can use the FOTW demo site to train staff, or to show students, what they can do from the FOTW site, and how to do it, including–
Completing and submitting a FOTW or RFOTW application
Checking the status of an application
Doing a Federal School Code search
With sample PINs,
Viewing sample SAR data on the Web
Making corrections
Signing electronically
Your staff can use the FAA Access demonstration site to practice using the 07-08 version (which will talk about in more detail later) to see how it works.   
The URL is for both demo sites is:  fafsademo.test.ed.gov.
User name: eddemo
Password:  fafsatest
Click on FOTW or FAA Access buttons at bottom of screen to access demo site.
Both sites will be available until December 2007.